GAWDA Distributors Object to Calls for Economic Instability, Project Robust Growth Across the Board: Standing athwart negative headlines and consumer sentiment, GAWDA distributors expect a big year
Each year, the first Quarter Issue of Welding & Gases Today is our Annual Economic Forecast Issue. We speak with GAWDA Distributors, Suppliers (page 64), sister organizations like the American Welding Society (page 70) and Compressed Gas Association (page 72) and combine them with the quarterly ITR Economic Forecast (page 77) to paint as complete a picture of the economic outlook of the industry as we possibly can.
One of the biggest lessons I’ve learned from years speaking with Brian and Alan Beaulieu is to tune out the media when it comes to the economy. And that goes double in an election year. Even if they don’t mean to, the 24-hour news cycle treats every story as a political one and makes every election into horse-race coverage. And, like it or not, “if it bleeds, it leads” didn’t become a well-known axiom on accident.
This year is no different. GAWDA Members across the board are projecting robust growth. In all market segments, in all geographies, across product lines, nearly 100% of respondents expect to see growth this year. And nearly everybody expects that growth to be significant. But, when asked about the state of the industry as a whole, it’s much murkier. While not nearly the dire picture that the media projects, respondents went from nearly 100% growth when asked about their company to only 65% saying the overall industry would be up in 2024 (25% say it would be level, 10% say it will be down). Time will tell.
The following are responses from GAWDA Distributors broken down by geographic regions. Thank you to all who participated.
EAST
In 2023, the Eastern Region projected the highest growth in the country, combining to project 9.43% growth for the year. This year, it has tempered those expectations, but only slightly, coming in at 7.83% projected growth. That makes it the second least optimistic region. In 2021 and 2022, the East was the least optimistic region in the country, before its one-year stint as the highest projection.
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Roberts Oxygen
If Roberts Oxygen is able to achieve its 10% growth goal in 2024, it will be based on these three factors, according to President Will Roberts:
- How our customers react to the projected recession
- Our ability to acquire product in a timely manner and in the quantities our customer’s desire
- Our ability to continue to attract and retain great employees.
The company notes that, though COVID and the resulting supply chain issues have made it more challenging to keep a well-stocked store, it is still a goal of the company to keep its retail stores well-stocked so that customers can always find what they’re looking for.
Says Roberts, “We cover a relatively large area from Pennsylvania/New Jersey down to Florida, so we have a nice mix of research, health care, government contracts, manufacturing, food services, and beer/cannabis customers. One ongoing opportunity for the southeast U.S. is the continued population growth in the market and the increased demand that growth brings. We are always looking to expand our footprint into neighboring markets where we see a demand for excellent service. Expansion helps us capture new customers and provide new career opportunities for our employees.”
Roberts entered the Florida market in 2014 with the purchase of Gas Products & Service in Orlando and now operates six locations serving the market, with expectations to continue to grow significantly in Florida and the surrounding southern markets.
West Penn Laco
“There is a lot less uncertainty than at this time last year. We were pleasantly surprised by how 2023 turned out,” says West Penn Laco Vice President John Larsen. “The slowdown in the economy that was predicted never occurred, supply chain issues eased, and sales were better than expected. We expect this trend to continue into 2024.” The company expects its sales to grow 5-7% this year. Says Larsen, “Our customer base is pretty diverse, and this is reflective of the region we serve. Our manufacturing customers and those tied to federal spending (road construction, defense contractors) were busy in 2023 and we expect them to continue in 2024. The only minor disruption is a consolidation in certain business segments. We have seen more family businesses exit by selling to corporations or to private equity firms that are more likely to have national contracts in place.”
Part of the company’s success in 2023 was due to expanding the products and services that it offers to its customers. To continue that success, West Penn Laco will continue to promote new products, including welding automation, in 2024.
GAWDA Members across the board are projecting robust growth. In all market segments, in all geographies, across product lines, nearly 100% of respondents expect to see growth this year.
Dale Oxygen
A combination of new business generation and maintaining its existing customer base will drive Dale Oxygen to expected double digit growth in 2024, according to President Evan Bennear. In Pennsylvania, where Dale has four branches, the metal fabrication business is dominant. To continue to service that industry, Dale will add new hires in 2024 in order to expand its welding automation and advanced fabrication offerings. The company will continue to “look to expand geographically every year in ways that benefit the entire organization,” Bennear says.
Commercial Miscellaneous Sales, LLC
Rising interest rates combined with general Election Year skittishness lead Commercial Miscellaneous Sales to expect a level to slightly down year in 2024. Since COVID, the company has vastly expanded its inventory, doubling its stock levels of most items since. Company President Louis Centofanti does note that the company is looking to increase its bulk gas storage in 2024, which will allow the company to grow in that area. He also notes that the company “continues to slowly expand our geographic radius from our location.” Overall, as the company continues its march to its 20th anniversary in 2026, the company has a cautious but guarded optimism for an uncertain year.
AWISCO
A strong overall economy combined with expected price increases will lead to a 4% growth in 2024 for AWISCO. “AWISCO has embarked on a true e-commerce platform to help our customers do business with us in a better way,” says President Lloyd Robinson. Robinson also points to the Infrastructure Bill as a driving force in 2024. “Construction is the dominant industry in our area and the jobs that are starting now from the Infrastructure Bill should help us greatly in 2024.” He continues, “AWISCO is always looking to expand, either through acquisition or by expanding our product offering to our existing customers. For 2024, we are really trying to increase our automation and process improvement offerings.” The annual AWISCO trade show will take place on May 8, 2024. The trade show attracts nearly 1,000 customers to the company’s Maspeth location to see the latest and greatest products that AWISCO offers.
SOUTH
Last year, the Southern Region of the country was the second most optimistic, expecting 7.57% growth. This year, the region is by far the most optimistic, nearly doubling last year’s projects with an expectation of 13.63% growth in 2024.
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Meritus Gas Partners
Continued growth and acquisition will lead to another prosperous year for Meritus Gas Partners and its family of distributors. Vice President of Product Management Allen Jezouit anticipates a more than 20% growth for the partnership in 2024, even amidst an overall level year for the industry. Part of that growth will come from adding new lines of business to its distributors’ existing operations, like residential propane. “We are operating in multiple regions, so we are looking at national economic drivers and we see a flat year in 2024 as the best-case scenario,” he says. “We will continue to grow through acquisitions, by best practice sharing across our partners and by entering the spec gases business across all markets we serve.” Jezouit specifically points to Southern California and the DFW metroplex as growth markets for Meritus, following the company’s recent acquisitions in those geographies. He concludes, “Election years are rough, and this one may be the roughest in a long time.” Still, the company sees sunny days ahead in 2024.
WESCO
WESCO has spent the years since COVID adjusting to the “new normal” that the pandemic created. “A big factor is finding good employees that want to work. Since the pandemic, it has been very challenging. Employees are crucial for the success of our business,” says President/COO Jenny McCall. “WESCO learned to adjust our strategies to align with the current environment. We position ourselves with the ongoing transformation in the industry. We also remained current and flexible in our approach.” The company expects to see 10% growth in 2024. “Our area is well diversified but if we had to pick a ‘dominant,’ it would be the Shipbuilding industry. Many Government contracts have been awarded so we expect 2024 to be prosperous,” McCall says. The company will unveil its new location with an open house in Spring 2024, which will help contribute to that expected growth in the new year. But, like every year, the company’s success or failure will come down to how it cares for its customers. “We are always looking for growth opportunities. Taking care of the customer is our number one priority, no matter what their needs may be.”
Willard C. Starcher
Improvements to the supply chain over the past several years will have the largest immediate impact on Willard C. Starcher in 2024, according to President John Hill. The company is looking much more closely at its stocking levels to better deal with remaining supply shortages. And though oil & gas companies typically take a “wait and see” approach during election years, Hill still expects to see a 7% growth in 2024.
American Industrial Gases, LLC
According to American Industrial Gases, LLC President Robby Smith, “We stay focused on what we do well and the type of customer we want. We do not try to be everything to everyone, and we especially do not listen to any talking head(s) on TV in the Mainstream Media.” By focusing on its core competencies, the company expects to see growth of 15-20% in 2024. The company has plans to expand in the new year, which will also contribute to that growth. He does note that, “Inflationary pressures caused by the government create an opportunity to raise prices and capture the inflation plus additional margin.” All roads lead to growth for AIG in 2024.
CENTRAL
Traditionally, the Central Region has been the region with the highest rate of respondents to the survey. As a result, it tends to be in the middle of the pack, as far as projections, due to it being less impacted by outliers skewing the average. However, last year, the region was, by more than 2%, the least optimistic in the country, expecting only 5.83% growth. This year, it remains the least optimistic, however it shows how far the baseline has moved, as it projects a 7.5% overall growth in 2024, just slightly trailing the East Coast’s 7.83% projection.
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Wright Brothers Inc.
Labor and Legislation will have the biggest impact on manufacturing, notes Wright Brothers Inc. CEO Jeremy Ramage. Still, the company projects 10% growth for the company and an overall growth of the industry in 2024. “The changing CO2 legislation will definitely impact our region,” he says. “The Midwest continues to be strong in food, beverage and industrial manufacturing. It’s interesting that, despite the uncertainty surrounding CO2 sources, we continue to see steady investments and growth in those markets. We also anticipate an increase in opportunities with Hydrogen and Helium. As a result, over the past few years, we’ve put an emphasis on positioning ourselves to be ready for growth involving those gases.”
Mississippi Welders Supply Co., Inc.
Troy Elmer, who took over as President of MWSCO on October 1, 2023, anticipates an 8-10% growth in top line sales for the distributor in 2024. “Vendor price increases will again play a large role. Although these have slowed, we are still seeing consistent price increases from a large section of our suppliers,” Elmer says. “We are also seeing a continued focus on automation and customers planning to get more done with fewer workers on the floor.” The company recently opened a new location in the Fox Valley area of Wisconsin. Says Elmer, “We are seeing good growth in this area and are very excited to watch this location grow.” He continues, “We will expand our business based on opportunities. We are constantly looking for the next location or product line that will improve the service level to a region or our existing customer base.” Concludes Elmer, “We have never been a ‘just in time’ inventory type of company. We focus on having the products on hand that our customers need. It takes more planning and forward thinking now, but lead times are improving. Agriculture and food processing are large segments of our customer base. General metal fabrication is also a large segment. There are still suppliers struggling with certain products but it’s a much smaller problem than it was a year ago. We do see opportunities with dry ice production in our region.”
American Gases Corp.
American Gases Corp. projects a 7% increase in sales in 2024, though cautions that, as others have noted, that is driven by a precarious work force. American Gases Corp. used the pandemic to rid itself of its unprofitable business and built around its profitable assets. President Scott Bell notes that helium will be a potential growth driver for the company this year, in an environment where he expects the overall industry to grow as well.
CK Supply, Inc.
CK Supply, Inc. conservatively expects to see sales growth of 8% in 2024, according to EVP Brad Dunn. Dunn notes that while there is uncertainty in the economy, CK Supply benefits from a diversified portfolio of customers and most of the feedback indicating a solid pipeline of business activity for 2024. The company has noted an improvement in hiring activity as well as several internal promotions and has budgeted a historically large capex primarily attributed to trucks, cylinders, bulk tanks and CO2 reclamation equipment.
Minneapolis Oxygen Company
An increase in offerings, both products and services, to its end users will be the primary growth drivers in a projected 8-10% increase for Minneapolis Oxygen Company in 2024. The company expects to unveil new product launches surrounding automation this year. Says President Kevin Falconer, “This makes us a more well-rounded distributor for our customers.” The company is also putting an increased emphasis on having more “specialists” on its staff. Combined with its emphasis on automation, the company has also begun producing its own LIN/LOX/LAR, which have been growth drivers for MO2. Falconer concludes that, through COVID, “We’ve become closer to key vendors/suppliers, both primary and secondary. We’ve increased the use of secondary suppliers when we can as well. We’ve engaged in new hiring, training and review practices to keep our employees engaged.”
Indiana Oxygen
A new business pipeline and price increases, combined with the general health of its existing customer base, all add up to a projected 7.0% growth for Indiana Oxygen Company in 2024, according to CFO Josh Davidhizar. The company continues to fashion itself as a “solutions provider” for its customers, as opposed to simply an order taker. Though the company doesn’t have any set plans to increase its product or service offerings this year, “We are constantly evaluating how we can improve our customer service and the products we offer.” IOC concludes, “Our goal is to remain flexible in order to provide the value-added guidance and resources our customers have come to expect from Indiana Oxygen.”
Central Ohio Welding, Inc.
“I expect our sales to increase by about 5%, mainly because of the strength of the regional economy. We have a significant amount of large construction projects locally, and those are fueling regional growth,” says Central Ohio Welding, Inc. Vice President Brad Davis. “The biggest single factor affecting our projections is the ability for our customers to find qualified applicants for the open positions that they have. In Central Ohio, there are an excess of manufacturing jobs and a lack of qualified applicants. This has been slowing the growth potential of the area for the last few years. Secondly, the increase in interest rates slowed down our sales of equipment that wasn’t related to automation. Further changes to rates could either help or hurt 2024 sales.” He continues, “When interest rates were very low, it was relatively easy to plan for a very aggressive growth strategy. With the cost of borrowing now much higher, we are more selectively choosing the places we want to pursue further market share.” The company continues in its search for unique vendors and different product lines that will add value to its customers. “We know that we will never have the buying or pricing power of larger companies, so we try to show different things,” Davis says. “We have expanded into other parts of Ohio where we feel that our ESOP culture and technical abilities would bring something different to the customer base. Going forward, we are looking for customers where we think our skill set and ideas would make a good partnership. For the large local construction projects that we have in the area, we are going to be offering several just-in-time mobile solutions to serve the contractor base.” The company is planning to host an event about welding pipe at its Columbus facility in Fall 2024.
Weldstar
A continued growth in market share will be a contributor to an expected 3% growth for Weldstar in 2024, according to Partner Joe Winkle. In recent years, the company has increased its personnel and its product lines, and has continued investing in capital equipment, all of which will continue to bear fruit in 2024. However, Winkle noted that the political landscape in Illinois provides a difficult headwind for companies to operate in. “Disruptions, taxes and the government driving people and companies out of Illinois,” are all negative disruptors in the area. Still, Weldstar continues to fill the expansion it has had in place in recent years and expects to see growth this year.
WEST
In 2023, the West was the second most optimistic region of the country, expecting to see growth of 7.57%. This year, the region is still the second most optimistic, but that projection has exploded to an expected 9.33%.
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Four Corners Welding & Gas Supply
“We are expecting our sales team to be incredibly aggressive to overcome any economic downturns,” says Four Corners Welding & Gas Supply President Amber Chisamore, who projects a 15% growth for the company, even amidst a projected level year for the industry as a whole. “Employee turnover has been a critical factor and has forced us to change training timelines in order to meet customer needs,” Chisamore notes. “Our area is still very depressed after losing major economic contributors.” However, Four Corners expects to see an additional product line in 2024 with the possibility of a new location, which will help contribute to its growth forecast.
OXARC LLC/Meritus Gas Partners
The four biggest factors that will determine growth for OXARC, LLC in 2024 are:
- The Economy
- Inflation
- Interest Rates
- Election Year
Add it all up, and you’ve got a projection of 8% growth for OXARC against a level industry, according to EVP Jason Kirby. “We are providing new gas delivery options to our customers like Argon and Nitrogen Micro Bulk. We are working on our B-to-C services, and lastly, we continue to expand into new markets through scratch starts or through acquisitions,” says Kirby. “Agriculture is our largest industry. This market is always stable, as everyone needs to eat. It’s the other market segments like high tech manufacturing, electronics, metal fabrication, and construction that are impacted by the economy, interest rates, and inflation.” Kirby notes that OXARC is continually looking for potential partners that will help the company enter into new cities, states or markets. As others have noted, the Presidential Election has the potential to have companies tighten the purse strings, especially in the second half of the year.
Vern Lewis Welding Supply, Inc.
Stacy Lewis Hayes, CEO of Vern Lewis Welding Supply, Inc., expects to see growth of 5% in 2024. However, she notes the possibility of continued inflation or even a possible recession as things that could hinder that projection. Still, “we have upped our game in marketing, online presence, and social media,” she notes. “We are also making sure we have good stock selection for purchases.” One unexpected disruptor that Vern Lewis has had to deal with is the demise of the “home hobbyist.” “People don’t have extra money for hobbies…they are paying for gas, rent and groceries. The most dominant industry we have here in Arizona is fabrication and housing. They should continue to increase.” Though she is optimistic about growth, Hayes notes that, “We are hesitant to expand until we see what this economy is going to do.” The company has recently expanded into hydrotesting, and are actively looking into getting into spec gases, both of which would help drive growth for Vern Lewis.
WestAir Gases & Equipment
In the face of a softening economy, WestAir Gases & Equipment expects to see 10% growth in 2024, according to CFO Tim Van Linge. This growth will be primarily driven by “opportunities in the Hydrogen space with the continued government push for clean energy sources.” WestAir also anticipates investments in several new geographic areas this year, which will help contribute to those growth expectations.
Spectrum Gas Products
Spectrum Gas Products has made a concerted effort, in recent years, to increase its inventory levels, especially on high volume items, as well as bringing on additional staff. Those changes, combined with Spectrum’s excellent service and product availability, will help contribute to a 12% growth in 2024, according to President Darren Bradley. The company has expanded its coverage area by 25% over the last couple of years. That additional staff has come at a cost, however. “Cost of staffing has increased significantly over the last couple of years, especially with drivers and fillers. We have increased our starting wages by almost 30%,” Bradley notes. The company will look to open an additional location, but Bradley notes that, “Commercial property is limited and still very expensive. An additional location will allow for better distribution in this congested region. Will also increase our filling capabilities.”
Norco
Price increases, productivity increases, and technology will all help contribute to an expected 8.58% growth for Norco in 2024, according to Chairman Jim Kissler. However, Kissler cautions that interest rates, labor costs, and the overall state of the economy could impact those projections. Still, through organic growth and planned acquisitions, combined with the recent new markets and geographies that Norco has entered in recent years, 2024 should be a year of growth. Kissler notes that positive results in the Presidential election have the potential to supercharge that growth in the back half of the year.
