Since the mid-sixties, the specialty gases industry has been dominated by the major industrial gas companies, presently, Air Liquide, Praxair, Linde, Airgas and Matheson. This is especially true for the very large and national accounts as well as the high tech industries considered to be out of the technical expertise of the local independent distributor. These exceptions set aside, most end user customers were typically served through local independent industrial and medical gases and welding supplies distributors. These distributors would purchase the specialty gases at a substantial discount and resell them to the retail customer, deliver the product, and service the customer as required. These retail operations were typically under contract with one of the major industrial gas companies as the source of their bulk industrial gas needs such as nitrogen, oxygen, argon, carbon dioxide, nitrous oxide, helium, and hydrogen. This arrangement is mutually beneficial as the major gains the additional market share while the distributor supplies the local customer service. The distributor gains the technical support and brand name recognition of the major and, in many cases, the financial support to grow the local business. It’s a great fit and both sides make acceptable margins. Now fast forward to the new millennium. Never has the industrial and medical gas distributor been faced with such a need to re-think his strategy and approach to his specialty gas business. Though sales continue to grow at a healthy rate, margins are shrinking at an equal rate as previously high end products are being priced as “commodities”. Recent acquisitions and mergers have also introduced an element of uncertainty among independent distributors. Many have become apprehensive about their continued source of high end specialty gas products and equipment, as well as the technical support they need to maintain and expand their production and quality control programs. The majors you have relied upon as paramount to your success are now frequently your competitors. Your continued success will require investments in products and technology that will allow you to become even more independent and less reliant on companies that see you as simply a means to increasing their market share.
Where are you? Where do you want to go? How will you get there?
The bottom line is there are decisions to be made and you can’t go it alone. At Global Calibration Gases we have helped the independent distributor evaluate his ability to become more independent, the key to his success and in some case the key to survival. For many years we have presented the road map in the form of a “Technical Tower”. The tower illustrates a succession of product groups, all increasing in technical demands as you ascend the tower. As technical demands increase, the investment risk increases as do the financial rewards.
Most distributors who have established a profitable specialty gas program with sales in excess of $250,000 annually have invested in local production and analytical technology to produce Tier 1 gases. These gases were easy decisions as simply recovering the added freight expense to procure these products satisfied the acceptable return on investment. In addition, modular equipment is readily available that integrates easily into a distributor’s existing cylinder fill plant. These modules include cylinder bake-outs, high purity fill systems, in-line purifiers, and lab instrument packages.
The Technical Tower© is courtesy of Special Gas Services, Inc
Tier level classifications are courtesy of Purity Plus®, a registered trademark IWDC
All Photos below courtesy of Special Gas Services, Inc
| Modular Equipment | |
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| Cylinder Bake Out courtesy of Special Gas Services, Inc. |
Fill Panel courtesy of Special Gas Services, Inc. |
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| Purifiers Courtesy of Special Gas Services, Inc. |
Analyzer Panel courtesy of Special Gas Services, Inc. |
Of great importance is that this level of technology does not require the addition of a degreed chemist for the program to be sucessful. Excellent candidates can usually be found within the company. These candidates are likely performing functions related to industrial and medical gas cylinder filling and quality control. With this base of knowledge, an additional 2 weeks of hands-on training is sufficient to instruct in the proper techniques related to ultra high purity and zero grade specialty gas production.
This first investment step provides the spring board to easily move into Tier 2 production. This level allows for special application, basic gas mixtures. Relatively inexpensive additions to the already existing equipment are all that is necessary. Additions will include a high load, high sensitivity electronic scale for filling gases by-weight and a basic level of gas chromatography in the laboratory operation.
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Tier 1 and Tier 2 gases comprise the vast majority of the total specialty gas sales realized by the typical medium sized distributor operation. The distributor is content to purchase the remaining high end products through his supply arrangement with his bulk gas supplier, usually one of the majors. The distributor is content in his ability to control his specialty gas business future.
The False Sense of Security!
The distributor may not be in as much control as he may think at this point. The distributor now needs to consider what may happen next. As his specialty gas sales now grows faster than ever due to the competitive edge gained through local production and enhanced customer service as a result of local inventorys, the distributor is still compelled to broker the high end needs of his customers from the distributor's major gas supplier. Since, in most cases, these products are dropped shipped directly from the major to the end user, the identity of the retail customer is now identified. To be sure, the major supplier will monitor these shipments and decide, when the time is right, to approach the retail customer direct for his business. The major now knows what price he needs to gain the business and cut out the middle man. To make a bad situation worse, the retail customer also turns over the distributor's newly acquired Tier 1 and Tier 2 business back to the major since a single vendor now affords an additional level of convenience from "one-stop-shopping". In the eyes of the major, the distributor has fulfilled his original purpose; to build market share for the "soon-to-become competitor". The distributor has out-lived his usefullness and is abandoned. This is an all to common scenerio among independent distributors.
But There is a Defense!
At Global Calibration Gases, our business model is strictly void of any retail customer. Our products enter the market only through independent distributors of industrial and medical gases, welding equipment and supplies. In other words we will never compete with you for your customers. We are dedicated to supply only the highest quality specialty gas mixtures at wholesale prices to the independent distributor. To this pledge we will remain faithful.
We Are The Alternative
Global Calibration Gases LLC
1090 Commerce Blvd North
Sarasota, FL 34243-5053
Tel: 941-722-7203
Fax: 941-722-5700
e-mail: Customerservice@globalcalibrationgases.com