Suppliers Invest In Their Companies

Suppliers to the gases and welding industry are on solid footing in 2015. For the first time in seven years, none of the suppliers interviewed are projecting a decline in sales. (Trust me, the conversations this past quarter have been a lot more pleasurable.) Whether investing in renovated or new facilities, new product development or in personnel, companies are taking advantage of a new, stable economy and investing in their future, all good signs for what is to come in 2015.

There are few predictable conversations when forecasting the future in our industry. The shortage of welders and providers of training for those welders is the one prediction that never seems to change. Scott Mazzulla, president and CEO, Hobart Institute (Troy, OH), is expecting 2015’s enrollment to grow by 30% and notes, “The shortage in welders is in the tens of thousands and demand remains high. Book sales to other learning institutions are also rising.” The school will invest in additional employees to accommodate a second shift and will explore the need for new construction at year-end.

The Independents’ Growth

Many of those we spoke with pointed to the prosperity of the independent distributor as critical to their own success. As GAWDA celebrates this year’s annual convention theme, “Strong, Proud, and Independent,” suppliers are celebrating right along with the strong, proud and independent GAWDA distributor member.

As a strong independent distributor’s exposure increases, Ken Tidwell, president, WDPG Insurance/Horton Group (Nashville, TN), expects his overall premium dollars to grow even as the actual costs of insurance remain level. Tidwell plans to launch two new products during the 1st Quarter: health insurance coverage for distributor members with 100 or fewer insured, and employment practices liability insurance embedded in a general liability insurance.

“As distributors focus more on independently managing their bulk business, they are purchasing transports with their name on it,” says Tim Miller, president, INOXCVA Baytown, TX). Expecting a 2-3% sales increase, the big push for INOXCVA is in automation to create increased efficiencies. Miller adds, “We are investing in training and support of our employees, and those employees are helping to create new efficient ways to accomplish the tasks that support the company’s customers.”

Bill McCloy, managing director, AmWINS Program Underwriters (Charlotte, NC), expects to see a slight reduction in the cost of insurance, but expects his overall premium dollars to increase by 5% as he launches new product enhancements in the 2nd Quarter. McCloy remains bullish on 2015, pointing to his customers’ increased revenues, but does point out one concern. “There are potential changes in the Federal Motor Carrier Safety Administration (FMCSA) requirements in regards to insurance limits. We are monitoring those potential changes and will be ready to respond, to meet the new limits as needed, in order to assure distributors of no disruptions in their operations.”

There is certainly strength when independents take advantage of the various buyers groups that are in operation. Ron Weldon, executive director, AIWD (Overland Park, KS), expects to see a membership growth of 15-20%. He says, “Purchasing revenue should increase by 5-10%, as the independents reap the value of networking with other independents.” The organization will conduct regional meetings to provide more networking opportunities.

After a good 2014, Soumitra Mukherjee, president, Trendex Information Systems (Montreal, QC) expects a 5% sales increase. He says, “The distributor is under pressure to meet his customers’ needs faster. They need the tools to manage their businesses more efficiently and profitably. The days of filing paper are not over yet, but will be soon enough, underscoring the importance of document imaging products.” A new product to be launched in the 1st Quarter will provide distributors with additional customer service tools.

Jim Broughton, president, Dataweld (Bossier City, LA), is seeing a spike in start-ups within the distribution channel. He notes, “As industry veterans leave their employer after an acquisition, they are forming start-ups.” Based on his current sales volume, Broughton anticipates a 5-8% increase in sales. A new salesperson, coming on board by mid-year, will help to market new products. New products slated for introduction this year will facilitate more efficient proof of delivery and order processing functions.

Online Sales

As online sales become more important, distributors and the suppliers who rely on them are paying attention. Rest assured, no one is ignoring this new competitor.

Tom Cregan, president, Evergreen Midwest (Mentor, OH), says, “Whether we like it or not, there are more competitors selling online, into our markets. We must all prepare for it. We are focusing on how this movement to online sales impacts our customers’ base. It is a key to our future.” Cregan expects his company’s e-commerce website (live now) to be fully operational by mid-year. An additional sales and marketing position is being created to further support distributor partners and to help drive a 4-5% sales growth.

Prove Yourself

The gases and welding industry is rife with familiarity. Unknown names and faces are expected to prove themselves while competing with long-time industry veterans. New suppliers must prove themselves (sometimes repeatedly!) and must earn the distributors’ trust. At some point, no longer a start-up and now able to enjoy the credibility that comes with experience, the supplier can now reap the benefits from the blood, sweat and tears that were shed during its start-up years.

Citing more than 10% sales growth over the past three years, Dan Fallon, president, McDantim (Helena, MT), expects sales to continue to grow at a 10% clip in 2015. He notes, “We are differentiating ourselves, and gaining market share as we clarify our product and brand. The company will introduce a new higher-end blender based on the knowledge gained during the past ten years. Fallon also notes, “2015 is a turning point year for us. This industry tends to make decisions once a supplier has proven itself. The reputation that we have built is now resulting in increased sales.”

American Standard Manufacturing’s (Central Bridge, NY) ability to deliver product within shorter time spans is driving a 10-15% growth for his industrial gas business, says David Day, president. “We are gaining ground and taking market share as the marketplace becomes more aware of our brand for faster deliveries.” The company will also introduce a new product which will facilitate more efficient cylinder inspections during the 2nd Quarter.

No longer in the start-up phase, David Anderson, president, Metal Man Work Gear (Appleton, WI), says that new customer acquisitions as well as increased purchasing activity from his established relationships will result in a 20% sales increase. The company will launch new inverter wire feed welders during the 1st Quarter. Plans also call for a new line of helmets for a private label customer. A new 2nd Quarter hire will strengthen operational efficiencies.

“After five years, Harrison Worldwide’s (Santa Ana, CA) name is becoming better known,” says Ron Barnett, vice president. Expecting a sales increase of 20-25%, his team is developing a medical product line that will launch in the 2nd Quarter. He notes, “We are creating more partnerships with our customers, developing products that solve their problems while also improving our inventory management practices and enhancing our product delivery rates.”

As the industrial sector better understands the use of composite material for cylinder transports and how the distributor can recoup initial costs, Luxfer-GTM Technologies’ (San Francisco, CA) sales will dramatically increase. The independent’s desire to grow and offer more services while removing the costs from their operations is fueling a growth of at least 200%, believes Michael Koonce, president. To support this growth the company plans to add another five sales and marketing people in 2015. A 1st Quarter move to new quarters, in order to expand production capabilities, will consolidate the company’s current facilities, doubling total square footage. Plans call for a 2nd Quarter introduction of new cylinder composite technologies, which enable on-board fueling systems allowing the distributor to refuel cylinders in the field.

A Stable Economy

With at least one, if not two years in the black, most suppliers have stopped looking over their shoulders, waiting for a repeat of the recession. Many are looking at the current stability as a platform from which to grow sales, beyond the GNP. Those who are active offshore point to domestic sales as stronger than what they anticipate from their offshore marketplaces.

Expecting modest growth in 2015, Jimmy Woo, vice president, Revco Industries (Santa Fe Springs, CA), expects continued marketplace stability. He will emphasize product knowledge in 2015. He says, “We need to provide more information regarding product performance as opposed to just providing products.” The company will launch heavy-duty gloves to better support the needs of the growing oil and gas market

Pointing to the GDP as the major driver for industrial gas sales, Tim Lowrey, vice president, Applied Cryo Technologies (Houston, TX), notes that his business is pretty consistent and steady. The company is launching new products on a quarterly basis. Lowery says, “I am reminded every day that our customers don’t buy on price, they buy on value. As their needs change, the value that we bring to them changes.”

Taking advantage of overall global and domestic economic improvements, Dennis Richardson, vice president, Thermco Instrument Corp (LaPorte, IN), expects a 5% sales increase. He says, “We have more people dedicated to fulfilling our customers’ requirements.” As more inquiries are communicated electronically, Thermco is stepping up their use of technology to be more user-friendly. Upgrades to their website will make it more user-friendly for PC, mobile phone and iPad users.

The carryover from work picked up in 2014 and the late 2014 launch of a new seamless flux cored wire line will help to support a sales increase of 6-7% for voestalpine Bohler Welding North America (Stafford, TX). Randy Young, regional sales officer, plans to move to a new headquarters and warehouse facility during the 3rd Quarter. The space, three times larger than the current quarters, will accommodate additional inventory and office space, as well as a new welding lab and classroom/training area.

“The economy is headed in the right direction”, says Dennis Nelson, president, Midalloy (St. Louis, MO). Expecting a sales increase of 6-8%, the company will introduce new copper-free and low-alloy products that are unique to the marketplace, supported by additional sales and technical personnel.

New products and an economy on the upswing will support a 10-12% sales growth, according to Jim Wallick, president, Mercer Abrasives (Ronkonkoma, NY). The Ceraflame line of ceramic products introduced late in the 4th Quarter of last year will respond to the need for a high performance alloy for contour and edge work applications. Also on tap for 2015: a new interactive web site.

Newly acquired CPV Manufacturing (Kenneth Square, PA) is budgeting sales growth for the next three to five years. Brian Hoffmann, president, says, “Based on our customers’ projections, our sales will be up by 20% in 2015. With new products on deck for the 3rd Quarter, Hoffmann says, “We are constantly exploring innovations to keep pace with our customers’ changing needs. As the business climate changes, we have to evolve, providing the solutions that will help our customers to compete.”

Better Partnerships Increase Sales

With an improved economy, many suppliers are spending more time solidifying their relationships with distributors and arming them with more information regarding applications. Alliances of all types, whether with distributors or other allied suppliers, are proving to be major factors in projected growth.

Mike Muenzer, general manager, ORS Nasco (Tulsa, OK), is expecting modest growth for the overall industry, anticipating that the distributor’s gas business will grow at a faster pace than the hardgoods side. The company will continue to broaden and invest in their portfolio. He notes, “As we invest in sales leadership and expanding our marketing sales effectiveness, we’re also looking at how we can drive those same investments to further support distributor sales.”

Better utilization of Gullco USA’s (Cleveland, OH) distribution channel will support Dave Hudson, president and general manager, to maintain 2014 numbers. He plans to introduce new training programs, improved data sheets and technical bulletins, and provide distributor partners with case studies that will better illustrate various product applications.

Specialty gas distributors and their suppliers are a big focus for Kareem Afzal, vice president, PDC Machines (Warminster, PA). Expecting to maintain 2014 volume, Afzal says his company will grow as his customers grow. The company is focusing on building and leveraging alliances with the integrators who provide turnkey solutions (including PDC machines) to GAWDA members as they construct fill plants. Plans call for additional regional sales support positions to enhance continued growth.

Expecting additional sales representation to generate a 3% sales increase, Tina Kuo, executive vice president, Genstar Technologies Company (Chino, CA), anticipates the introduction of new products through additional feet on the street. She will spend the bulk of her time creating additional channels for communicating with distributors.

Ed Martin, president, ArcOne (Taunton, MA), says, “After an exceptional 2014, new products will fuel a 5-7% sales growth.” Martin is solidifying his team’s focus on the distribution channel or as he puts it, “the people who pay our salaries.” With plans to introduce new products each quarter, the company also plans to add two additional salespeople in order to focus even more attention on distributor customers.

As his team works more closely with distributors and integrators, Brent Fischmann, vice president, FasTest (Roseville, MN), expects a double-digit increase in sales. “A very aggressive market acquisition program will help us to grow market share,” he says. The company also plans to round out its medical filling product line during the 1st Quarter. Stay tuned for the late 2015 introduction of a new valve design, designed and manufactured in the U.S. A new salesperson to be added in the 1st Quarter will help to differentiate the company’s brand from its competitors.

An upbeat Steve Anderson, president and CEO, Forney Industries (Fort Collins, CO), expects sales to increase by 10-15% driven by accelerating the attention paid to the industrial market. He says, “We are improving our point-of-purchase displays and offering more support to distributors with more product knowledge. With plans to add 8-10 salespeople, sales reps will act as an extra sales arm for distributor partners.” The late 2014 addition of a new 40,000 sq. ft. warehouse will support the 100 new SKUs to be added each week.

Steve Anderholt, president, Western Sales & Testing of Amarillo (Amarillo, TX), expects sales to increase by 15-20%, largely due to a better economy and a new joint venture. Joining with EdasaInfra, Anderholt’s team will introduce a line of cryogenic tanks and trailers. Anderholt says, “We’ll also have a retest presence in Mexico as a result of our partnership.” The company also plans to launch a new electronic gas valve during the 1st Quarter.

Frank Salvucci Jr., president, Anthony Welded Products (Bakersfield, CA), and his team are spending more time on the road, demonstrating their patented Load N Roll product, partnering with more distributors. As it becomes an industry standard, sales are projected to increase by 20%. Salvucci will also introduce a more interactive, user-friendly website.

Improved Delivery Times Are Key

As the economy improves, more suppliers are investing in their inventory. In an environment that dictates that we meet our customers’ needs instantly, whoever can deliver the product the fastest may be the one to capture the sale. A fill-rate that was acceptable ten years ago, or even five years ago, is just not feasible in today’s environment of instant gratification.

The economy won’t do a lot to help or hurt Rex Larkin, vice president, Reelcraft (Columbia City, IN), who expects sales in 2015 to show a similar 5% increase that he enjoyed in 2014. The company plans to expand its inventory of faster moving items and ship more products from stock. He says, “We are in an ‘Amazon world’ as more customers expect more and more speed when it comes to execution.”

After a 38% sales growth in 2014, Ed Cooper, president, ELCo Enterprises (Jackson, MI), is confidently anticipating sales growth for the next few years. Introducing new products throughout the year, the company plans continual investments in new product development. To support growth new marketing positions are to be added over the course of the year. Plans also call for opening new satellite distribution centers to enhance product delivery timelines. Cooper says, “Our goal is to work more closely with the distributor and to warehouse products within a two-hour driving distance from key markets.”

Jimmy Walker, president, Saf T Cart (Clarksdale, MS), expects sales to increase by 6-7% over and beyond the 11% growth that he enjoyed last year. The company plans to shorten its delivery cycles and improve on its fill rate with an expanded inventory. According to Walker, the goal is to decrease delivery cycles by half.

Expecting similar growth that he enjoyed last year, Curtis Brown, president, California Cylinder (Upland, CA), anticipates additional sales of 20% for 2015. To support that growth, the company will move into a new building, tripling their square footage. Attributing growth to his company’s ability to provide customers with prompt deliveries, Brown plans to add two additional salespeople and four additional support people. Brown says, “We are taking advantage of automated technology in order to enhance our service levels. As an example, we’re investing in new packaging technology.”

New Market Niches

Given the strength of the marketplace, many companies are developing new applications for existing products and will tap into new market niches.

Thermacut’s (Claremont, NH) laser consumable product line is opening new doors and driving a slight growth in sales, sales Kevin Bonneau, co-president. New laser and plasma products to be introduced at mid-year will provide solutions in performance and offer cost savings. Additional MIG and TIG welding accessories will also be introduced. The company plans to add a 5,000 sq. ft. warehouse to be completed during the 1st Quarter. A new salesperson to be added during the second half of the year will provide additional support for customers in the Southwest.

With new products that will target new market niches scheduled for the second half of the year, Isabelle Schmitz, vice president, Rotarex North America (Mt. Pleasant, PA), expects sales, supported by new customer acquisition, to grow by 5%. She says, “We are enhancing our ability to provide our customers with the right products for specific applications.”

New business opportunities coming from the alternative fuels arena will help to drive a 10% sales growth, according to Jack Finn Sr., CEO, FIBA Technologies (Littleton, MA). A move from 100,000 sq. ft. to a new 380,000 sq. ft. building completed during the final quarter of 2014, will support an additional 100 new hires. Plans call for two new products during the first half of the year.

Expecting sales growth that will be better than the 10% sales growth of 2014, John Kaylor, president, Abicor Binzel (Frederick, MD), explains, “We’ve grown our sales staff and restructured them, with more of a focus on key market segments and key accounts, as opposed to geographical territories.” New products including MIG guns, robotic equipment, and laser processing equipment will also support growth. With plans to focus on new welding-related niche markets, the company is adding two salespeople during the 1st Quarter.

New Technologies Remove Operational Costs

Suppliers, like everyone else, continue to look for ways to remove costs from their operations. As we attempt to remove costs that do not add value to our customer, year after year, it becomes increasingly challenging. Fortunately, incorporating new technologies can make us leaner.

Jerry Leary, president, Koike Aronson (Arade, NY), expects domestic sales to drive growth of 5%. The company is continually looking for ways to remove costs from their operations, though with plans to add four professional positions during the first half of the year, it will not be through reduced headcount. Leary explains, “By investing in updated product lines, we often can reduce our manufacturing costs. With updated controls, we can automate cutting processes and welding positioning processes, removing additional costs.” Two new cutting machines will be introduced during the 1st Quarter and a new positioner will be introduced during the 3rd Quarter.

While projecting sales growth of 8-12%, Ashley Madray, vice president, Gas Innovations (LaPorte, TX), still points to the need for continued efficiency improvements. He says, “It will be difficult because we have been getting more efficient for several years. We still need to work smarter. We need to continually look for new technologies that support these efforts.” One such example is the late 2014 purchase of an ultrasonic testing machine for testing and requalification of cylinders at end of the year.

New Products

New product development is on the upswing. Suppliers are investing in R&D in order to protect their market share and to gain market share. Suppliers are keenly aware of the need to fill the void, developing new technologies and new products that meet their customers’ needs and to be the first to deliver that new solution.

Hypertherm (Hanover, NH) is placing an increased emphasis on new applications for its cutting technologies. Evan Smith, president, says that new products scheduled to be introduced throughout the year will include next generation technologies that will drive economic benefits for the end-user. Those next generation technologies will also drive a 5-10% increase in sales

A new product launch scheduled for the 2nd Quarter will boost WEH Technologies’ (Katy, TX) sales by 10%, says Andreas Wolfort, general manager. Wolfort says, “We’re introducing an ergonomic product which will automatically enhance worker safety and reduce workplace injuries.” A new service center is up and running, and the company will move into a new larger facility during the 1st half of the year.

“A new 80,000 sq. ft manufacturing facility in Troy, Ohio, will manufacture tubular welding electrodes and will contribute to an 8% sales growth”, says Dale Stager, president, Select-Arc (Fort Loramie, OH). With plans to add an additional 20-25 people in 2015, Stager is upbeat about the potential for his team. Also President of Arcos Industries (Mt. Carmel, PA), Stager anticipates sales growth of 5% over 2014 numbers. Both companies will introduce new products throughout the year.

American Torch Tip (Bradenton, FL) will place increased attention on sales and new product development in 2015. Jack Walters, president, notes that four new hires scheduled for the 1st Quarter will help drive an 8% sales growth. New products which include ergonomic torch handle designs for MIG welding and plasma cutting, and an improved and expanded gas apparatus product line are planned for this year.

Dusty McClintock, vice president and general manager, Worthington Cylinder Corporation (Columbus, OH), says new products will support double-digit growth in 2015. McClintock plans to introduce a bulk cryogenic container in the 1st Quarter and newly designed cryogenic vessels in the 2nd Quarter. The company plans to build a new facility, consolidating existing facilities during the first half of the year. The Midwestern location will be the North American cryogenics hub. Plans also call for additional key account managers, customer service representatives and sales engineers to be added throughout the year.

Pointing to the higher tech segment of automated controls as the sweet spot, Ric Boyd, managing partner, Cryovation (Hainesport, NY), expects to grow sales by 10%. The company plans to launch three new products in the 2nd and 3rd Quarters that will fill a void within the industry. The company is also heightening its west coast presence with the recent relocation of one of its engineers to a California office.

Saying that he is just returning to pre-2009 numbers, Gary Watson, president, Watson Coatings (St Louis, MO), expects sales to be up by 10-12%. He explains, “Paint was the last thing anyone thought about as the economy recovered. Now as customers replenish their inventory of cylinders, they are painting or re-painting them.” Continually improving his product, Watson will introduce a faster drying coating during the 1st Quarter.

A large basket of private label OEM-quality parts and a turnkey marketing support package are driving a sales increase of 10-15%, believes Steve Fyffe, president, Astaras (Largo, FL). The company will add 10,000 sq. ft. to support their near term growth, with a move to a new location. New MIG torches and ceramic products are planned for the 1st Quarter. Plans also call for an additional four sales and marketing support positions.

Increased Training Efforts

Investments in training can pay off major dividends. Suppliers are making investments in training schools and classrooms at their facilities. Many are taking advantage of online technologies to provide more training in a cost-effective manner. The rule of thumb is very simple: Use whatever mode that works.

Expecting growth of slightly less than 7%, Mark Johnson, vice president, Osborn (Cleveland, OH), will continue to introduce new, very technical and highly customized products. He says, “We are paying more attention to the welding distributor, helping them to understand how to use the depth and breadth of our product line. Not every user wants the same thing.”

Bug-O Systems (Canonsburg, PA) is expanding upon a training program previously offered only at the company’s headquarters. The company will now host regional training programs. Norm Stead, director of sales and marketing, says, “Training is a huge commitment and investment. We want to make access to training available to all of our partners’ employees. Internally, we are also focusing on customer service training and making sure that all of our employees have a better understanding of welding processes. Several new automation product introductions will support an 8-12% sales increase.

“Major oil and gas projects will support a low, double-digit sales growth,” says Doug Hughes, president, Mathey Dearman (Tulsa, OK). With plans to add a project management position and two engineers, the company plans to focus on its new product development efforts as well as its speed to market. Hughes is also focusing on providing more distributors with more training support and will introduce a web-based training program this year.

Increased Market Share

Strategic growth incorporates market share growth. As suppliers introduce new products, processes and programs, they plan to increase market share. Assuming that their sales growth will just keep pace with the marketplace’s growth is just not enough.

As the restaurant and brewery niche markets project growth of 2-3%, Scott Rosenbaum, vice president, Miller Carbonic (Aurora, IL), expects his sales to increase by 3-6%. The company will focus on creating a more diversified customer base by stressing new product development. A good problem to have: The company is quickly depleting the extra square footage it gained when it moved to an expanded facility in 2013.

With an eye toward long-term growth, Gene Huegin, president, PFERD (Leominster, MA), believes the market will yield a growth of 5-7%. Not willing to settle, he is projecting growth of one-and-a-half to two times that number, driven by market share gains. The company is investing in a new training center in order to help distributor partners improve their processes and remove costs. New products to be introduced in the 2nd Quarter are designed to replace traditional grinding wheels and will emphasize 6” discs. Plans also call for additional salespeople to serve specific niche markets.

While many talk about a stable economy, no one seems to be entering the year with plans for stability. Suppliers will shake up our industry with new products, new hires, new construction, increased support of their distributors partners and, most of all, new business. The best news of all is that investing in 2015 will benefit both the supplier and the independent distributor.

PFERD…one and a half to two times is 9 or 12

Gases and Welding Distributors Association