Scaling New Heights

Distributors strive to reach a higher pinnacle in 2008.

For many distributors, 2007 was a year that will be hard to beat. Double-digit sales increases and record-breaking months contributed to an overall sense of confidence about the state of the industry.

As a result, some distributors are cautious in their predictions for 2008. In many cases, distributors simply feel that while 2008 will be another good year, the tremendous growth they’ve been experiencing cannot be sustained at the same levels. In addition, concerns about supplier consolidation and the ever-rising costs of doing business are giving some distributors pause. But GAWDA members aren’t sitting by idly—many are engaged in recruiting, expanding and otherwise seeking new avenues for growth, including everything from e-commerce to ethanol. They are also looking for help from their manufacturers and suppliers.

In Welding & Gases Today’s Sixth Annual Business Forecast, distributors across the United States were interviewed about their success strategies for the coming year. Overall, 81% of distributors surveyed expect to realize an increase in 2008, while an additional 16% expect sales to at least remain level. Overall, distributors should realize an average growth of nearly 11% in 2008, proving that there are still new heights to be scaled in this economy.

Eastern Zone Distributors Get in Front of Opportunity
The past few years have been good ones for most Eastern Zone distributors as growing markets in construction, pharmaceuticals and medical gases, among others, have given distributors plenty of opportunity to showcase their services. Altogether, 86% of Eastern Zone distributors expect another increase in 2008, with the remainder predicting level sales. Distributors in the Eastern Zone will realize an average of 10% growth by taking steps that will allow them to seize the growth opportunities around them—hiring drivers and plant workers, adding inventory and investing in e-commerce.

“We are targeting biotech and pharmaceutical markets as welding supply sales in this region remain flat.” Bo Martin Middlesex Gases & Technologies   “To maintain and attract good people, we recently upgraded our health insurance and our retirement plan.” Wayne Rapine G&E Welding Supply Company   “Our customers appreciate it when our salespeople let them know quickly about new and exciting products on the market.” David Houser Houser Welding Supply Company   “If we hire anybody, it will be a floater who can both run the counter and drive a truck.” Dave Teator Ravena Welding Supply   “Our marketplace has shifted from the steel industry to the computer and medical industries.” Donald Rosenthal Economy Welding and Industrial Supply   “Our company will invest in a new computer system that will reduce human error and help us increase revenue.” Kevin Rubenstrunk Robinson’s Industrial Gas & Equipment Corp.   “We try to meet with our manufacturers at least three or four times a year so we’re confident we understand each other.” Warren Terrell T & T Supply Company Inc.   “With so much supplier consolidation, it’s important for us to become as independent as possible.” Bill Secreto Penn Oxygen & Supply Company   “We constantly look at our health insurance to make sure we give the employees a good plan without bankrupting ourselves in the process.” Pete Matarese Liberty Supply   “Maintaining and expanding market share is always a challenge. We never run out of good competition.” John W. Bragg N. H. Bragg   “In addition to our normal hiring channels, we are recruiting recent college graduates who are willing to learn new things.” Jim Earlbeck Earlbeck Gases & Technologies

Middlesex Gases & Technologies (Everett, MA) looks forward to a 20% increase in sales. In September 2007, the company acquired a distributorship in Lowell, Massachusetts, so a primary challenge is incorporating the acquisition into Middlesex’s operations. “Most of their people, including the former owner, are staying on board with us,” says Chairman and CEO Bo Martin. “Geographically there’s an overlap of accounts and truck routes, so we’ll realize a lot of efficiencies as we consolidate those, and this will help us expand farther north into southern New Hampshire.” The company is looking into adding an argon microbulk delivery vehicle in late 2008, and will add online ordering capabilities for welding equipment.

“We have a lot of customer demand to order online,” says G&E Welding Supply Company (New Castle, DE) President Wayne Rapine. “It has the potential to put us in front of new customers too, because a lot of people out there buy through the Internet.” Rapine plans to have online ordering capabilities up and running by the fourth quarter of 2008, which will help spur 10% growth. The company plans to add a new sales representative and possibly a driver. Rapine has been looking for several years for a location to expand, but the company now has outgrown its facility to the point where the search is becoming more aggressive. “It’s hard to move a whole location, so ideally we’d like to expand where we are, but for that we’d need to acquire one of our neighbors.”

One key to achieving 18% growth in 2008 will be “beating the bushes a little harder,” says Houser Welding Supply Company (Somerville, NJ) President David Houser. The company will add a salesperson to get in front of customers and search for new accounts, and will increase inventory by approximately 40%. “We want fewer back orders. If our customers call us today, we want to be able to send a complete shipment so that they have it the following day.” An ongoing focus for the company will be maintaining open communication with employees. “I like to keep everybody abreast of what’s going on so they’re as knowledgeable as possible. We have meetings a couple of times a month where everything is up for discussion and everybody can take notes.”

“We’ve been very busy, and we expect that to continue,” says J. F. Martin Inc. (Philadelphia, PA) President Joseph Martin, who predicts that an active construction industry will provide a 10% increase in sales. The company will purchase two new trucks this year, and plans to hire an additional driver to keep up with growth. Martin anticipates that collections will continue to be a challenge. “We just have to make a lot of phone calls.”

The construction business will help N. H. Bragg (Bangor, ME) achieve 5% growth. “We added a person to our sales staff who spends a day or two each week calling on construction sites, something we have not done in the past,” says President John W. Bragg. Bragg will invest more in print advertising, including fliers and newspaper ads, and will continue to emphasize inventory management services for customers. “We work with them to identify the items they never want to run out of, and we agree on a price ahead of time so they don’t have to do requests for quotations. Then we check their inventory on a periodic basis and replenish it for them as needed.”

Ravena Welding Supply (Ravena, NY) will concentrate its sales efforts in a wider geographic area. “We’re south of Albany, New York, but we’ve never really looked into the Albany area because there are a couple of other suppliers up there,” says President Dave Teator, who predicts 5-10% growth. “But we think there’s room to grow in that location.” The effort follows on the heels of the company’s recent renovation of its showroom, an investment that already is proving its worth. “We put in new lighting, and all the welding machines are spread out in an 800 sq. ft. area, which really opened everything up. Our customers love it, and we’ve seen a 10-15% uptick in customer traffic.”

The steady growth Wilson Supply Company (Cumberland, MD) enjoyed last year will continue in the form of a 5% increase. The mining industry will help to fuel new growth, and the company will add fill plant workers to keep up with demand. Hiring and training will be Wilson Supply Company’s most important investments. “We need to keep current with new developments in product technology,” says President Sam Bramande.

“We’re a relatively new company—we purchased it about four years ago—and we’re still growing,” says Economy Welding and Industrial Supply (Pittsburgh, PA) President Donald Rosenthal, who predicts a 20-30% sales increase. The company will move into the “next tier of the marketplace” to attract new customers and will add several employees, including a driver, customer service representative, accountant and possibly a salesperson. Rosenthal’s most important investment will be moving to a new headquarters facility in Pittsburgh by the end of 2008. “We’re still in the planning stages. If we can’t find something suitable to purchase in the next few months, we will build.”

Robinson’s Industrial Gas & Equipment Corp. (Holtsville, NY), which focuses on the medical gas market, will experience 2-3% growth. “We do a lot of business with nursing homes, and they are filling up with patients and using more oxygen,” says Operations Manager Kevin Rubenstrunk. As a result, many customers are switching from packaged gas to bulk. Rubenstrunk notes that doctors and dentists are changing the way they use gases, with many dentists moving away from nitrous oxide, while some doctors are using it for the first time. To balance these fluctuations, the company will make a greater effort to target industrial customers.

Sales will be level this year for Seaboard Welding Supply (Oakhurst, NJ) after a 10% decrease in 2007. “Construction in our area is down, and sales to the government are getting tighter,” says President Brian Nowell. “We deal with the Coast Guard and the Navy, and they’re under pressure to cut their budgets, which means they’re putting off purchases they otherwise might be making now.” Seaboard Welding Supply is taking a closer look at the local market to mine for new prospects and may expand its hydrostatic test facilities. “We do testing for other companies as well as our own cylinders, and there’s a big market for that.” An ongoing challenge is the shortage of helium. “A pretty good segment of our sales are in the helium industry, and now we’re having trouble getting that product. We’re going to have to develop a whole new approach for how we seek helium business.”

T & T Supply Company Inc. (Corona, NY) is gearing up for a major sales push. In the fall of 2007, the company added three salespeople to its team, so the secret to achieving 12-15% growth this year will be “cold calling, knocking on doors and making friends,” according to President Warren Terrell. If the effort pays off, T & T will hire additional drivers and clerical help. The company’s biggest investment in 2008 will be training for both new and established employees. “We’ll be doing clerical and computer training, as well as product training, which will be our primary focus. Fortunately, a lot of our manufacturers assist us with training.”

Penn Oxygen & Supply Company (Jeannette, PA) will focus on selling more to existing customers and seeking new ones. “We’re so small that my partner and I do all of the selling,” says President Bill Secreto. “We’d like to put another guy on the road, but financially we’re not able to do that right now.” The company will invest in cylinders and possibly a truck upgrade this year to facilitate 10-15% growth. “It’s a challenge for us to reinvest because we’re still working on paying down our debt from buying the business. So even though we’d like to add a microbulk delivery vehicle, we’re not in a position to do that yet. Once we get the debt paid down, we’ll be able to make decisions a little more easily.”

“Our business is driven by the fabricators in the area, and they all seem to be very busy at the moment,” says Pete Materese, president of Liberty Supply (Leominster, MA), who anticipates his company will see 10-12% growth. Liberty Supply will install in-house filling equipment by the 2nd Quarter of 2008, as well as one or two new employees to handle the filling. “Our last four gas suppliers have all sold their packaged gas operations, so now my last remaining supplier is also my competitor. We’re taking this course to become more independent.”

Jim Earlbeck, president of Earlbeck Gases & Technologies (Baltimore, MD), expects sales to remain level after a 37% increase in 2007 that presented plenty of challenges. Employees have been working a lot of overtime, and the company is doing its best to keep them happy. “We’ve gotten more liberal with time off and flexible schedules.” Earlbeck hopes to add three employees in engineering, sales and inside business operations. The company also is trying to become more efficient. “We’ve revamped our internal paper flow to eliminate probably 25% of the steps we were taking.” The efficiency theme will continue into 2008 as Earlbeck looks into investing in new computers and software.

Determined to Succeed in the Southeastern Zone
Distributors in the Southeastern Zone will take advantage of every opportunity they can this year. Overall, 77% expect an increase, which will lead to average regional growth of 8%. Distributors will invest in marketing, service capabilities, and hiring and training talented employees who can take their companies to the next level.

“Because all of our employees need to multitask, it takes about two years for us to train a new hire.” Tommy Hagan Logan Hagan Welding Supply   “If I find a quality person who I know can be successful, I will hire him or her even if we don’t really need another employee right then.” Tony Powell Welders Depot of TN

Welding & Therapy Service (Louisville, KY) looks forward to a 5-6% increase due in part to growth in health care and construction. “We’re going to invest in the specialty gas end of the business, making a lot of the mixes that we currently buy from other distributors,” says COO and Vice President of Administration Dwayne Culver. Adds President Paul Greiling Jr., “That will mean more intensive marketing. We’re going to do some outreach, and salespeople are being targeted toward specialty gas.” The company is looking to add a new branch to enable it to “leapfrog into the next territory,” according to Greiling, and will add employees in specialty gas, distribution and marketing.

“I’ve done a lot of legwork going into 2008,” says Delta Welding Supply (Hartfield, VA) President H. Craig Revere. “New manufacturing plants have come into the area, and we have gotten in on the maintenance of them.” New industrial accounts will drive 6-8% growth for the company. Delta Welding Supply’s greatest challenge will be keeping an eye on overhead and looking for ways to reduce the cost of operations. “I’ve cut back on inventory by 10-15%, getting rid of dead inventory and some of the bigger welding machines. Cylinder management, particularly regarding dead accounts, will be another big focus.”

Willard C. Starcher (Spencer, WV) Treasurer Carol Hill predicts that ongoing pipeline construction in the region will lead to a 20% sales increase. “We’re focusing on maintaining good relationships with the welders and providing a lot of customer service.” The company experienced significant growth in 2007, so the primary challenge will be keeping up the pace. To do so, Hill will add a driver and a salesperson, and the company will invest in cylinders to keep up with demand.

“We had a really good 2006 and 2007, and it’s tough to sustain this kind of growth, so I think we’ll be level in 2008,” says Rusty Warden, vice president of Mid-South Welding Supply (Meridian, MS). With construction and fabrication booming, Mid-South has seen a constant flow of business. “Because of that, we don’t have to exude all of our energy into our sales force. So for the next year our focus is going to be on training issues and updating our infrastructure.” Among Mid-South’s possible investments are updates to the company’s pumping, hydrotesting and repair facilities.

Deacy Welding Supply (Savannah, GA) added a new salesperson in late 2007, which should help the company achieve a 10% increase. Deacy launched its first Web site in the fall, and General Manager Bernie Weber is considering implementing a new computer system to allow the company to take its Web site to the next level. “We’re looking to add online sales.”

“We’ve been working hard, making a lot of calls and taking care of customers. It’s just good, old-fashioned sales work,” says Sadler Welding Products (Dothan, AL) President J. D. Sadler. After achieving a series of record-breaking months in 2007, Sadler expects to realize an increase of 10% in 2008. Sadler’s goal is to open two new locations this year, and his present challenge is finding employees that will allow the company to make that leap. “We would like to hire several new people for positions from the fill plant and warehouse to route sales. But these days, prospective employees are not knocking down our door, and it’s especially difficult to find employees with enough gumption to make scratch-starts successful.”

Sales should remain level for Compressed Gases of Augusta (Augusta, GA) after a good 2007. “I’m a little concerned about the economy,” admits President Charles Loveless, “but most of our customers have work that is carrying over into 2008.” This past fall, Compressed Gases of Augusta set up a brand-new service department for welding machines that will serve as a source of extra revenue, and Loveless plans to hire an additional driver before the end of the 1st Quarter. The helium shortage remains a challenge. “Not being able to get helium will hurt us, if this continues. I have one customer that uses a large volume of helium to test motors for leaks, and they’ve had to cut back on their production because we’re not able to supply their total needs.”

Interstate Welding (Murphy, NC) opened a new branch in Georgia last summer, which will contribute to an increase of 25%. “It’s getting busier and busier every day,” says Office Manager Greg Bradshaw. Interstate Welding is considering opening another branch in 2008, but that will depend on whether the company continues to experience sufficient growth. “The housing market has come to a standstill in our area. We’re hoping that will pick up at the beginning of the 1st Quarter.”

The housing market is causing apprehension for Logan Hagan Welding Supply (Statesboro, GA) President Tommy Hagan as well. “In the fall we began to see a shift. Although that market doesn’t affect us directly, sooner or later it trickles down to the entire local economy.” As a result, he expects sales will be down by 5%. A strong local university economy will help to offset the shift in the housing market, and Hagan plans to hire three employees for sales, cylinder requalification and billing, but with the increasing cost of fuel, Hagan is reluctant to expand the company’s trade area. As customers begin to slow their investments in new equipment, the company is emphasizing its repair capabilities. “We’re trying to help our customers get the most life out of their equipment.”

Weld Direct Corporation (Jacksonville, FL) will make an effort to be more visible in the marketplace, leading to a 5% increase. “We’re making sure we’re out there introducing ourselves to everybody,” says President Alex Bryant. Weld Direct customers whose business is tied to the housing sector—such as builders of handrails and custom fencing—experienced a noticeable decline in late 2007, but Bryant isn’t overly concerned about the impact on his company. “The housing market is such a small segment of our customer base that it isn’t going to radically change our sales. We’re hoping for a positive economic environment.”

“People who are involved in housing believe the economy will be down, but that just means business will shift to smaller businesses involved in maintenance, and we will focus on them,” says Welder Services (West Palm Beach, FL) President Steve Knight, who expects to realize an increase of 3-5%. Knight plans to add one more route driver in 2008. “I work my drivers on a commission basis. An average driver can produce anywhere from $15,000 to $22,000 in excess sales on a route per month, and when he is able to put extra money in his pocket by selling consumables to the customer, that keeps him interested in staying here.”

2008 will be a year of increased exposure for O2 Plus (Carrollton, GA). “We’ve been in business for ten years, and there are people in our own hometown who don’t even know we’re here,” says President M. Shane Miles, who anticipates a 5% increase. The company will invest in online advertising and local sponsorship opportunities, such as Little League tournaments and high school sports. Miles will launch an e-commerce site in January. “It will offer regular e-commerce retail to anyone who visits our page, but we’ll also have it set up so our larger customers can log in to their accounts online and submit purchase orders.”

Marketing and advertising will be a major emphasis for Welders Depot of TN (Loudon, TN). “Our growth is going to come from increased local market penetration,” says President Tony Powell, “and marketing is becoming a more integral part of how we get our name out.” To achieve a 10-12% sales increase, the company will invest in more professionally made advertising materials and possibly radio advertising, and Powell is looking into sponsorship opportunities that target local hobbyists, like street rodders. The company will add one or two salespeople and some new lines of welding equipment.

Central Zone Distributors Predict Steady Growth
Distributors in the Central Zone predict that 2008 will be a solid year for sales, with 77% expecting an increase and the remainder anticipating that sales will remain level, resulting in 9% regional growth overall. A strong construction industry in many parts of the region will be a big contributor to that growth, but Central Zone distributors aren’t just waiting for sales to come to them—they’re getting out in front of customers, expanding their personnel and facilities, and targeting markets including repair, robotics and specialty gases.

“The insane cost of doing business, as far as fuel and compliance, is a challenge.” Brian Hartje Bemidji Welders Supply   “In order to grow, we need to buy cylinders, so balancing that growth and investment is like walking a tightrope.” Doug Huber Huber Supply Company   “We are rehabbing our tube trailers and will invest in additional equipment for smaller pipeline tests.” Linda Slaughter Gano Welding Supplies   “As our sales increase, we need to increase product capability, so we will add cylinders and tanks.” Ryan Siefkes Evergreen Supply   “Customers want less and less inventory at their facilities, so we try to stock it for them and get it there quickly.” Dave Ungru Koehler Welding Supply   “When customers become demanding about price, we offer them other services, like checking their inventory.” Tom Budae Flint Welding Supply Company   “When we hire a new employee, we pair them up with a senior employee to help them learn the business.” W. Scott Griskavich Badger Welding Supplies   “We will update our informational Web site more frequently to catch the attention of more potential customers.” Karen Hersick All American Welding Supply   “Our customers are more interested now in automation, lasers and robots.” Dave Weigel Oxygen Service Company   “We will reinvest in the asset base we have, whether it’s adding new cylinders or reworking trucks.” Curt Towne Depke Welding Supplies

“Manufacturing has held steady and construction has been stronger over the last year, and I think that will continue,” says Curt Towne, president and chief executive officer of Depke Welding Supplies (Danville, IL), who looks forward to an increase of at least 8%. The company’s efforts will focus on staying on top of new projects as they come into the area and making contact with contractors as early as possible, as well as reaffirming ties with current customers. “Our salespeople are renewing contact with some of our smaller customers that we need to spend more time with.”

General Welding Supply Company (Martins Ferry, OH) re-entered the medical gas business in late 2007. “A lot of people have been getting out of medical because of all the regulations,” says Vice President Jim Godez. “We’ve been out of it for 10 or 12 years now, but we decided to get back into it because there will be fewer competitors, which should open some doors for us.” The company now provides residential propane out of all three of its locations, which will continue to be a strong point. Godez looks to make at least two acquisitions in 2008, which will help drive 10-15% growth.

“The way things have been going lately, it’s been up and down, up and down,” says Welder Service Co. (Toledo, OH) President Steven Homrighaus, who anticipates 2008 sales will remain level with 2007. He expects to pick up new customers due to recent distributor consolidation in the Toledo market. “It’s a matter of strategically putting salespeople in the right position. We have to be in the right place at the right time to take advantage of the transition in ownership.” Welder Service Co. is moving into the welder repair business. “I don’t know how much it’s going to affect our overall sales, but it’s a way of offering more to our customers.”

“I’ve been calling on people in the pipeline industry to make contacts for the coming year,” says Bemidji Welders Supply (Bemidji, MN) President Brian Hartje, who anticipates that pipeline activity will fuel 10% sales growth. “Often they’re from out of the area, so we try to get hold of them before they get here so they know we want to do business with them.” In late November, the company completed the move of its Grand Rapids, Minnesota, branch to an over 5,000 sq. ft. facility—more than double the size of its previous facility—in a more visible location on a corner lot, and with an expanded showroom. “We’re hoping it will bring more people in the door. The more product we can show, the more we can sell.”

Gano Welding Supplies (Charleston, IL) also looks to local pipeline construction to help the company achieve 5% growth. “We have tube trailers available for pipeline testing, which construction companies are always happy to learn,” says President Linda Slaughter. “We have other equipment available to do smaller pipeline tests, which we recently started promoting, so we hope that will pick up a bit.” The company added an e-commerce site in late 2006 that is showing slow but steady growth. “It’s definitely broadened our base. Now we have customers from all over the United States and Canada buying from us online.”

After significant growth in 2007, Evergreen Supply (Aberdeen, SD) President Ryan Siefkes anticipates his company’s sales will remain level. “There’s been a huge increase in plant construction in the South Dakota area due to alternative fuels—ethanol, power substations and biodiesel.” The company’s mantra for the year will continue to be, “Give the people what they want.” Says Siefkes, “Whatever the construction industry needs in terms of products is what we’re going to have.” Evergreen Supply recently updated its computer system to become more efficient.

A revolution Koehler Welding Supply (Madison, IN) President Dave Ungru undertook five years ago will continue to pay dividends, to the tune of a 10-15% sales increase. “We’re trying to become a single-source supplier, concentrating on a 20-mile radius. We’re in the middle of nowhere, so local companies had to wait for everything to be shipped in. I made a commitment to some of the factories that we would stock things they couldn’t get locally, and we’ve since done that for a lot of customers.”

Ungru’s biggest investments this year involve both people and facilities. “We recently hired a new salesperson, and we will hire a new driver and at least one more warehouse employee. Once all of them are on board, our next investment is to put a fill plant in toward the end of the year.”

The local market has been fairly steady for Flint Welding Supply Company (Flint, MI), but that is mostly due to ongoing contracts. “Two or three years ago, money was plentiful and everybody wanted to spend it,” says President Tom Budae. “Now there aren’t as many new contracts coming in because everybody’s waiting for funding.” The company is actively pursuing the business that will come with new regional construction projects, and Flint Welding Supply’s salespeople will be pounding on more doors than ever to find new avenues that will help the company achieve 5-10% growth. “We can’t just sit around and wait for business to come to us.”

Badger Welding Supplies (Madison, WI) President W. Scott Griskavich foresees that sales will level off in 2008. “We were up double digits in both of the last two years, but we’ve seen people trimming back in some sectors, specifically manufacturing.” Griskavich is considering adding new products for metalworking and power tools, and will invest in two or three new trucks, as well as improvements to his company’s facility, including new garage doors and material handling equipment. The company’s biggest challenge will be retaining customers who are becoming ever more price conscious. “Sometimes they just need a gentle reminder that we stuck by them through hard times, and that we are giving them better service than they’re going to get anywhere else with lower prices.”

“We’re going to be knocking on more doors to find opportunities,” says Karen Hersick, president of All American Welding Supply (Plymouth, IN), who anticipates growth of 10%. “A lot of the companies around us have been bought out, and sometimes the major distributors overlook the small mom-and-pop customers in favor of big industrial accounts.” The company expanded its personnel in 2007, and this year Hersick’s most important investment will be in strengthening the company’s team through more training, including increased vendor training. “We know that we need to keep training constantly. I’ve been in this industry for many years, and even I learn something new all the time.”

“There’s a lot of heavy industrial construction on the horizon for 2008,” says Oxygen Service Company (St. Paul, MN) President Dave Weigel. “Manufacturing is doing very well, and we’re seeing a lot of capital equipment being sold for additional production capabilities.” Weigel anticipates his company will see growth of 8% thanks to more aggressive efforts in bulk gas and machine rental. Oxygen Service Company recently invested in an argon microbulk delivery unit, and will add a salesperson to focus on bulk gases, microbulk and specialty gases, which have proved to be growing markets for the company. Weigel plans to capitalize on the company’s growth by adding a new branch and expanding the company’s headquarters facility.

Sales will be up by 20% at A-OX Welding Supply Company (Sioux Falls, SD). “It’s a matter of increased marketing,” says President Thomas Elliott. “We’re putting a good team together, getting out more and investing in more training from both GAWDA and AWS.” In July, the company opened a branch location in Yankton, South Dakota, and will open at least one more in 2008. Elliott plans to emphasize specialty gases, lasers and robotics, and will add a specialty gas fill plant by the 4th Quarter. His biggest challenge remains finding qualified employees. “I desperately need employees for sales, marketing and accounting, and finding drivers is a never-ending problem. We’re limited only by our ability to handle more customers.”

Managing Growth in the Southwestern Zone
Although many distributors in the Southwestern Zone note the strength of the energy industry in their region—including oil, natural gas and, most recently, ethanol—and the resultant increase in sales they’ve experienced over the last few years, some express concern that the boom cannot sustain itself. Even so, most predict 2008 will be another growth year, with 71% anticipating an increase ranging from 5% to 70%, resulting in 11% growth overall. The secret will be hiring wisely, training constantly and not overextending beyond their capabilities to provide best-in-class customer service.

“We’ve tried a lot of different recruitment strategies, but we still get our best employees through word of mouth.” Janice Bandy Metroplex Service Welding Supply   “We joined a buying group last year, which has helped us enormously in being able to stay competitive.” Rosendo Gonzalez Hereford Welding Supply   “We will build a platform on the east side of our building to accommodate parking and more cylinder storage.” Larry Sharp Blanks Welding Supply   “I’m doing what I can to hold my costs, but if I need to hire people so I can do a better job than my competition, I will make that investment.” Craig Duncan Winfield Iron and Metal   “With welding and cutting getting more high-tech, my salespeople and repair people have to be well trained to serve customers.” Bo Shaw Jr. Shaw Oxygen Company Inc.   “More customers are using technology in their business dealings, and we need to have the capability to handle that.” Kevin Curbo TexAir Welding Supply   “Even with all our customers’ costs going up, we can still beat the price issue with service.” John Hutchings Tri-County Industrial Supply   “Our customers are growing to be more technical by nature, and they are requiring that we bring more to the table in terms of product innovation.” Ira Kleinman Arkansas Welding Supply

“The oil and gas business here is driving the economy. We’re just trying not to outpace ourselves,” says Janice Bandy, president of Metroplex Service Welding Supply (Fort Worth, TX), who hopes to continue the company’s several-year-long run of double-digit increases with 10% growth. The company will continue to focus on servicing its longtime customers and may expand its Fort Worth headquarters. Bandy would like to add three or four more employees in 2008, but finding and retaining employees remains her biggest challenge. “Unemployment is very low in our area thanks to the oil boom, and employees will jump ship for another 25 cents per hour. We think we’ve put together a good package for a small company—good health insurance, a profit sharing plan—but it’s hard finding people now who care about benefits instead of the bottom dollar.”

Munn Supply (Enid, OK) too is facing the challenge of keeping up with an increasing volume of business with its current level of staff. “The oilfield has come into a tremendous boom again and sucked the labor force dry,” says President Phil Treadwell, who expects to see a 10% sales increase. “There aren’t enough welders or CDL hazmat drivers, and even the oilfield can’t hire the number of people they need.” The company is aggressively seeking new hires to take some of the burden off current employees, and in the meantime is finding ways to streamline its operations, such as upgrading its computer system and consolidating delivery loads.

Chickasha Industrial & Welding Supply (Chickasha, OK) Vice President Judy Nelson anticipates sales will level off in 2008 after a 20% increase last year. “We have a significant amount of oil and gas activity going on, but I don’t think it’s possible for sales to skyrocket again as much as they did in 2007.” To keep up with the growth the company experienced last year, Chickasha Industrial has invested significantly in increasing its cylinder fleet, and in 2008 the focus will be on maintaining inventory levels so that the company can provide customers with the products they need when they need them, rather than placing orders and waiting.

“We’ve had a lot of oilfield advances, but they tend to peak and valley quickly,” says Derrick Campbell, owner and manager of Schad & Pulte Welding Supply (Gainesville, TX). “The momentum doesn’t continue.” As a result, Campbell expects his company’s sales to be level. Schad & Pulte is putting a new route truck in place that will carry more merchandise, and the company will conduct more in-house workshops with vendors. Campbell will invest in marketing to make local businesses more aware of the variety of products and services the company offers. “We have new logos, and we’re going to do some print work. We’ve relied on word of mouth for many years, but other companies are spending more money on printed material, and I think that’s something we need to pay more attention to.”

“We had a big surge in 2007,” says Hereford Welding Supply (Hereford, TX) President Rosendo Gonzalez. “Two ethanol plants were built, and we were extremely busy with them. But some of the big business we’ve been collecting will dry up after the plants kick off in early 2008, so I expect sales to be level.” Gonzalez will keep in touch with the ethanol plants to try to solicit some of their ongoing specialty gas business and plans to add a line of safety equipment. “The new clientele that have come into our area are very safety conscious, and we want to be able to serve that need.” His biggest challenge will remain keeping up with regulatory changes. “More paperwork keeps being piled on us, and it’s hard for us as a small company because we don’t have the luxury of having a safety director. Somebody has to take the initiative, and that usually winds up being me. GAWDA is a big help.”

Managing growth will be the biggest challenge this year for Tri-County Industrial Supply (Alvin, TX) President John Hutchings, who predicts sales will be up by 60-75% in 2008 due to a recent change in ownership that is “kicking the company into a new gear.” Hutchings explains, “I bought this company in March 2007. My son-in-law is our salesperson, and he is a driving force behind a lot of our growth, plus we’re putting on a lot of expansion capabilities—buying cylinders, adding another truck and expanding the employee base.” Hutchings would like to add two or three employees over the next year, including an additional salesperson to keep up the momentum.

“A lot of ethanol plants are moving into the area,” says Clovis Equipment & Supply (Clovis, NM) President Mark Steinle. “And the dairy industry is sustaining a nice, steady business, with new dairies being built and repairs on older dairies, so that’s been a nice bump in our business.” Steinle predicts sales will be up by 5-10% as the company does its best to make sure it has sufficient cylinders and product on hand to service its growing customer base. Finding quality employees remains a challenge, so the company has increased its pay scale, and this year Steinle is looking into retirement and pension funds as a new employee benefit. His biggest challenge remains fighting the pricing pressures imposed by national distributors. “Our margins are lower because of them. Customers are becoming more and more price-conscious, so we joined a co-op several years ago to help our buying power.”

“Every time one of the majors acquires a local independent, we get some of the fallout because some people just don’t like to do business with big companies,” says Larry Sharp, president of Blanks Welding Supply (Fort Worth, TX). Sharp will be calling on the customers of two recently acquired local distributorships in order to achieve 16-20% growth. Blanks Welding Supply will be putting a full-time salesperson on the road for the very first time and hiring a new truck driver. Sharp sees customers becoming more aware of the impact of transportation costs on their bottom line. “More and more they will accept a delivery fee from us rather than have their trucks come and pick up their order, so I make it a selling point that we’re set up to do that.”

A reduction in industrial business in northeast Louisiana leads Shaw Oxygen Company Inc. (Monroe, LA) President Bo Shaw Jr. to predict that his company’s growth will not be as robust as it has been the last couple of years, but he still anticipates a 5% increase due to activity in other markets. “With commodity prices so high, local farmers have more money to spend on things like welding machines. We’re seeing a lot of natural gas pipelines coming through our area, too, and we have some of that business.” Shaw is considering supplying chlorine now that the only local supplier is getting out of the chlorine business. A major concern is the escalating consolidation of gas suppliers. “As distributors, we have fewer and fewer choices, which is kind of scary.”

Supplier consolidation will be Air Supply (Dallas, TX) President Mike Wallis’ biggest challenge. “The market is consolidating so much that I have long-term worries about where we will get certain products if we can’t do it ourselves.” In order to help the company become more independent, Wallis will invest in new cylinder purchases. “Ideally, we would like to pump all of our own gases, but economies of scale don’t make that viable.” To achieve 10% growth, the company is focusing on developing internal systems to guarantee a positive customer experience, a process Wallis has begun with the help of a consulting firm. “Once we find a good way of doing something, we want to repeat that. It helps me to delegate responsibilities to other employees, and the employees like it because it gives them more authority and responsibility.” Wallis implemented an online management system in which employees log customer problems, and the employee tasked with addressing that issue must solve it within 24 hours. Managers check the log daily to ensure that all problems are being addressed, and the system ensures that the company can spot patterns as they emerge and make any necessary changes. “If we can solve a problem in the beginning, it will be one-tenth the problem it would become farther down the road.”

WiN Welding Supply (Fort Worth, TX) President Warren Hankammer anticipates growth of 10-15% due to a strong manufacturing market and the construction of natural gas pipelines in the area. The company’s customer base traditionally has been heavily industrial, but Hankammer is looking into a more consumer-oriented medical niche. “If we do this new venture, we would purchase an additional truck and hire a salesperson or salesperson-driver.” Hankammer finds that, more and more, customers are turning to WiN Welding Supply for technical expertise. “It used to be that our customers had welding supervisors or welding engineers on staff who knew as much about welding machines as a lot of our salespeople. Now that’s very rare, and when we can convince customers that we’re worth the extra nickel because we have that in-house expertise, it works to our advantage.”

“We’ve seen a decline in employment levels in the industries we serve over the last couple of years,” says Craig Duncan, president of Winfield Iron and Metal (Winfield, KS). “The local businesspeople see a softening to flat in their business, so I’ll be the recipient of that.” Duncan hopes to hold any decline to no more than 5-8%. He’ll concentrate on providing better service and more product knowledge for customers. “We’re going to attempt to get more of our vendors in to update us on products. We have to find ways to help our customers reduce their costs, and then that education passes back in sales to us.”

TexAir Welding Supply (Henderson, TX) President Kevin Curbo looks forward to 11% growth based primarily on an increase in medical gas sales. “Traditionally we sourced it and did not pump our own. We’ve added analytical and certification capabilities and hired additional staff to pursue that business.” TexAir welcomed a new sales manager and two new salespeople in late 2007, so this year Curbo will invest in a variety of training programs for salespeople: “Manufacturer training, Dale Carnegie—whatever we can do to enhance the sales effort.”

“We have some new management in the business, and I’m expecting good things in the near future,” says Ira Kleinman, CEO of Arkansas Welding Supply (Hot Springs, AR), who predicts 5% growth. Kleinman hired a new president in April 2007, and the company is in the process of revamping its IT infrastructure. Gross margin pressure continues to be the company’s biggest challenge, and Arkansas Welding Supply is addressing that by reorganizing its sales force—both assigning salespeople to new territories and hiring new salespeople—and investing heavily in training for salespeople. In fact, training will be the company’s most important investment, both in technical product knowledge and IT. “We need to train everybody to use more advanced tools than we had in our old computer system.”

Sunny Skies Ahead in the Western Zone
Distributors in the Western Zone predicted the highest gains of any GAWDA zone this year: 92% of Western Zone distributors anticipate an increase, at an average of 16%. The reasons are varied—strong industrial expansion, a booming medical gas market and growth in the pharmaceutical industry, among others. Western Zone distributors are ready to take advantage of every opportunity by hiring, adding filling capabilities and hitting the street with good, old-fashioned legwork.

“All of our salespeople have laptops so they can provide information immediately when they’re at a customer’s site.” Joe Smith Quimby Corporation   “Margin pressure continues to be our biggest challenge, which is why we belong to a buying group.” Patrick Wilke Sierra Welding Supply Company   “People who understand the basic sciences do well at our company, and I’m always on the lookout for science majors to hire.” B. Evan McAllister Nitrox Inc.   “We’ve attracted some big new accounts recently based on word of mouth from satisfied customers.” Eric Younger Colorado Welding Supply   “Our region is experiencing a market shift from traditional industrial business to biotech and liquid gas customers, so we’re focusing on procedures to meet their needs.” Marvin Rodgers III Alliance Gas Products   “We’re seeing a lot of mode change as our customers move into bulk.” Douglas Wells Cryospec   “I’m seeing more specialty gases coming into play in the medical market.” Darren Bradley Spectrum Gas Products   “We are constantly training employees in order to keep up with our customers’ demands for technical knowledge.” Willie Watt Gem State Welders Supply   “We’ve become more diversified in the products we sell, so that even if one section of the business slows down, other parts stay strong.” Greg Walmsley OXARC   “Internet sales are a big challenge. Customers get frustrated because we can’t compete with online prices.” David Melo Melo’s Gas & Gear   “Training in everything from safety to customer service will be our single biggest investment.” Jim Wooldridge Pacific CA Systems

Driving an expected 12-13% growth for Quimby Corporation (Portland, OR) will be the company’s recent facilities changes, including a new fill plant in Tualatin, Oregon, and a new branch in Longview, Washington. Vice President and General Manager Joe Smith will build on the company’s expanded capabilities by adding three salespeople, as well as employees for fill plant and e-commerce operations. “We’ve been very internally focused and wrapped up in what we’ve been doing as a company. In 2008, I want us to be more externally focused.” Finding the right people to ensure continued growth will be Smith’s biggest challenge. “We’ve begun hiring some younger people, bringing them into the business knowing that it may be years before they’re up and running at full speed.”

Sierra Welding Supply Company (Sparks, NV) President Patrick Wilke is considering options for opening a new branch, and may hire an additional driver and inside salesperson. “We want to be careful, though. I don’t hire people only to lay them off later. My employees know that, so they’re willing to work a little harder when they need to, and if the growth is sustainable, we’ll add people.” The company saw a 20% increase in 2007, and Wilke plans to pursue business related to local industrial expansion to achieve an additional 10% increase in 2008. “There are some big projects going on in the area, and the key to winning that business will be service, not necessarily pricing.”

“We’re going crazy,” says Nitrox Inc. (Lynnwood, WA) President B. Evan McAllister, who predicts growth of at least 50%. The company, which provides only medical gases and related equipment and services, expanded into Portland, Oregon, in 2007, and will expand into Canada in 2008. “We do the piping equipment for hospitals, and that’s exploding. We’re going to be doing a lot more in surgery centers and private doctors’ offices.” McAllister plans to double his staff of 11 within the next year by adding drivers, technicians, verifiers and salespeople. “We’ve had so much business coming to us, we haven’t had a need for a salesperson knocking on doors for the last several years, but we’re starting to do that again.” The company also provides testing and verification services to major gas suppliers, which McAllister anticipates will continue to grow as the suppliers expand their operations.

The biggest challenge for Colorado Welding Supply (Colorado Springs, CO) will be “growing pains,” says President Eric Younger. After a series of record months in 2007, Younger expects to realize additional growth in the 10-15% range, and will hire three drivers and salespeople to keep up with demand. “We’re still putting on a ton of customers. All I can attribute it to is our reputation and customer service. We’re entering into our eighth year, and I think we’ve established ourselves so that people realize we’re the real deal.” Colorado Welding Supply’s most important investment over the next year will be a fill plant that will be up and running by late 2008 or early 2009.

Alliance Gas Products (Oakland, CA) is in the process of developing a fill plant that will come online in early 2008. “We grew almost 30% last year, and we’re stretching our growth without the plant,” says General Manager Marvin Rodgers III, who anticipates that 2008 sales will be up by another 15-20%. “We have some customers already waiting to do business with us.” The company is looking for a location to move its Belmont, California, branch this year, and will add three or four new employees, mostly in production. To better service the needs of customers, particularly those in the biotech industry, Alliance Gas Products recently launched an e-commerce platform for placing gas and hardgoods orders. The site currently is available only to a handful of customers, and the company will roll that out for its entire customer base later in 2008.

The most important investment Cryospec (South San Francisco, CA) will make this year is finding and training new employees for driver and customer service positions. The company will put two more salespeople on the street this year, but President Douglas Wells makes a distinction: “We don’t hire salespeople—we develop them. We bring people in and teach them the industry, then bring them up from a client service position to an outside sales position.” A sales increase of 20% will come from growth in the biopharmaceutical industry—the company’s area of specialization—and focused sales calls on specific clients. “We’re a very specialized company, which gives us an edge over competitors who are more generalist.”

“A lot of welding supply companies in California are getting away from medical gases because of all the state requirements, so there’s less competition,” says Spectrum Gas Products (Costa Mesa, CA) President Darren Bradley, who anticipates sales will grow by 20% as a result. Spectrum Gas Products will be doing more marketing, primarily through dental organizations, and will continue its strategy of targeting smaller doctors’ offices. Bradley’s most important investment will be finding a new headquarters facility by the end of 2008. “We’re currently renting three buildings because we’ve expanded so much in the last couple of years and are looking to purchase a building to house all of our operations.” Some of Spectrum Gas Products’ customers have begun moving toward ultrasonic testing instead of hydrostatic testing, so the company is researching to decide if it should go that route. Regulatory compliance continues to be a challenge, but, Bradley notes, “GAWDA really helps us keep on top of everything.”

“There’s been a huge slowdown in construction in Arizona, so our numbers are probably going to be level for the first time ever,” says A & B Supply (Lake Havasu City, AZ) President Ross Hobday. “But we’re opening stores anyway and just going for it.” The company opened a new branch in Fort Mohave, Arizona, in the summer of 2007, and Hobday plans to open two more in Kingman and Parker, Arizona, by the end of 2008. “We’ve pretty much saturated our market, so we need to expand.” In the last year, the company diversified its operations by opening an industrial clothing store and supplying propane in bottle and bulk form, so those will continue to bring new customers. Hobday’s most important investment this year will be purchasing larger tanks for the company’s fill plant.

The energy business brought High Country Gas & Supply (Grand Junction, CO) a successful year in 2007, and one that owner Robert Distel hopes to repeat in the form of an 18-19% sales increase. “We’re pushing sales harder, getting our salespeople out there on the street, and our truck drivers are on the lookout for anything new coming into town. We’re also watching the Internet to find out about any new companies that are coming into this area.” Over the next year, Distel plans to open a branch in Rifle, Colorado, in the 1st Quarter, and would like to increase the company’s pumping capabilities. “Right now, all we’re doing is oxygen. I’m hoping to get into some others, like argon and CO2.”

“Plastic plants have moved in and fuel plants are being built,” says Gem State Welders Supply (Twin Falls, ID) President Willie Watt, “and many of the plants that have been here for a long time are doing some major expansion and construction projects.” To achieve 10% growth, the company will continue to invest in local advertising, but the emphasis will be on sales calls and service. Watt plans to hire another driver in the spring. Profitability in the face of rising prices will continue to be a challenge. “Although sales will be going up, the costs of insurance, fuel and everything else are going up also. We have to shop for the best rates, and we certainly compare prices among our suppliers.”

An active construction industry in the Pacific Northwest will help OXARC (Spokane, WA) achieve 10% growth, as will an acquisition the company completed in October 2007. President Greg Walmsley anticipates that his salespeople will work harder to “turn over rocks” this year. He plans to hire additional plant and warehouse personnel and drivers, and will invest in continued product training for employees, both at manufacturer schools and at the company’s Spokane training facility. That product knowledge is especially important as Walmsley observes the power of improving customer productivity in securing competitive accounts. “For the last few years, we’ve had an employee on staff whose sole responsibility is our ‘masters program,’ going out to customers and identifying areas where they can realize improvements by changing to different gases or wires. We’ve gained new business as a result of that.”

Nonresidential construction is behind the growth experienced over the last year at Melo’s Gas & Gear (Bakersfield, CA), and President David Melo expects this to continue. “We’ll see at least 5-7% growth.” Melo will invest in facility changes, including a new branch between the company’s Bakersfield and Fresno locations, and this year Melo’s Gas & Gear will be “dipping its toes” into the medical gas business. “We have an aging population, and I think that’s where we’re going to need to be to continue growing. As construction wanes, we’re going to have to rely on other things.”

How accurate were distributors’ forecasts for 2007? Take a look back at last year’s Business Forecast.

Pacific CA Systems (Yakima, WA), which has a niche in the sale and transport of cryogenic liquids, has seen growth across all sectors of its customer base, from agriculture to industrial gases. President Jim Wooldridge plans to add more equipment and hire more drivers to help secure 20% growth. The company recently doubled the size of its facility, and in 2008 Pacific CA Systems will begin advertising its tank rehab services. “We’ve always had tank rehab capabilities, but just for in-house use. With the shop expansion, we’ll have the ability to do work for outside customers.” Managing growth continues to present a challenge. “We added ten new employees last year, including a controller to keep an eye on finances and another dispatcher, and we split some responsibilities that used to be handled by one person. We also implemented new computer programs for bookkeeping and tracking trucks, and we’re getting ready to grow again.”