CryoGas September 2015 Vol. 53, No. 09 by Gasworld Publishing LLC

Special Anniversary Edition

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SEPTEMBER 2015 Volume 53 Number 9

The source of timely and relevant information for the industrial gas and cryogenics industries. CONTENTS FEATURE ARTICLES

PAGE

Then and Now

Gas Industry, Quick in Response to Aid Rescue

The Compressed Gas Association

The Gases and Welding Distributors Association

The Linde Distributor Association

Development of the US Industrial Gas Industry From 1990 Onwards

Airgas — Growth through Acquistion

Air Products — A Quarter Century of Coverage in CryoGas

Praxair, Inc. — Leading in North America

Linde — 1990-2015: A Momentous Chapter in the Linde Story

Air Liquide — Investing in Innovation

MATHESON — The Evolution of the US Gas Business

Evolution of the Global Helium Business — 1990-2015

Hydrogen Production and Consumption in the US — The Last 25 Years

The Future of Cold

Norco, Inc. — Big Decisions, Big Projects

Middlesex Gases & Technologies — Keeping Pace with Changing and Emerging Markets

nexAir — Forging Forward with New Growth Opportunities

Arc3 Gases, Inc. — New and Familiar Faces

ILMO — The Angles of Approach

A Changing Landscape — How 25 Years of M&A Reshaped the Industry

Regulatory Trends and the US Industrial Gas Industry

Cryogenic Distribution & Technology Improvements Drive Chart Industries

IT Solutions for the Industrial Gas Industry, Computers Unlimited Delivers

The History (and Future) of Cylinder Tracking

A Look Back at 25 Years of Cylinder Manufacturing

Ratermann Manufacturing — Creative Solutions Customers Depend On

Products and Services for the Compression Industry

Art of Selling — 40 Years Later… It’s All About Relationships

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SEPTEMBER 1990

SEPTEMBER 2015

You’ve noticed by now that we’ve changed our name from the Cryogenic Information Report to the CryoGas International! CryoGas International reflects our newsletter’s expanded mission of reporting on cryogenic, gases and related systems on an international scale. We have a commitment to stay on top of worldwide developments in related technologies and markets, and to present this information in a concise and useful manner. Since we started publishing the Cryogenic Information Report in January 1990, we have:

CryoGas International will continue its commitment to even greater comprehensive reporting of the industry’s important technology and market developments.

Twenty-five years into the business, CryoGas International continues to be at the forefront of information delivery on the industrial, medical, and specialty gas industry in a “concise and useful manner,” as Kay Deans wrote in her September 1990 editorial. The delivery of our content has changed radically since 1990, however, as we have kept pace with the rapid developments in the communications revolution. Since we started publishing CryoGas International in 1990 we have gone from 32 to 48 pages (or more), from black and white to color (1998), and from manual layout to digital printing (1998). In addition we have developed an online presence with www. cryogas.com (1999), a digital subscription (2012), a Facebook page, a Twitter account, and a LinkedIn Group. Most recently we put all of our content online at www.gasworld.com (2015) and are now publishing a quarterly Specialty Gas Report supplement. The first issue of CryoGas International contained 16 pages of news (see some examples in our “Then and Now” section on page 6) as did our last issue. Our commitment to being the best news aggregator for the industry remains. In terms of other content, we have transitioned from patent filings to more indepth reports on gas markets, products, new technology, etc. This issue is entirely unique and designed especially for our 25th anniversary. It has been my great pleasure to serve as researcher, writer, and editor at CryoGas International for the past 16 years, first under my industrial gas mentor, Buzz Campbell, and more recently under our global gas guru, John Raquet. It has been an honor to work with these men and the many contributors — writers, advertisers, designers, service providers, and most especially my team (former and current) both here and in the UK — who make CryoGas International the publication it is today.

Kay Deans, Editor

Aggie Baker, Editor

Increased the amount of news reported. Provided insight into and more comprehensive reporting on cryogenic systems, technologies and product/market developments. Expanded coverage of industrial, medical and specialty gases and their related systems. Broadened our reporting to include international events and developments. We have also added and expand features such as: Interviews with key industry executives. International patents. Reports on industry conferences. Reviews of key players, management changes and financial results.

EDITORIAL Agnes H. Baker, Managing Editor abaker@cryogas.com JJ Koczan, News and Features Writer jkoczan@cryogas.com Jon Evans, Design and Production jon.evans@gasworld.com Eduardo Pelitti, Latin American Correspondent eduardo.pelitti@fibertel.com.ar ADVERTISING & MARKETING Tim Rice, Media Sales Manager trice@cryogas.com Brian MacIsaac, Media Sales bmacisaac@cryogas.com

PUBLISHER John W. E. Raquet, Publisher gasworld Publishing LLC john.raquet@gasworld.com ADVISORS John R. Campbell, President Intelligas Consulting J.R. Campbell & Associates, Inc. jrcampbel2@gmail.com www.intelligasconsulting.com

SUBSCRIPTIONS

Print — $150 1-year Online— $150 1-year Print and Online — $240 1-year For more options and for Terms & Conditions, see gasworld.com/subscriptions Change of email address notices should be sent to trice@cryogas.com. Subscribe online at gasworld.com/subscriptions

Maura D. Garvey, Director of Market Research Intelligas Consulting J.R. Campbell & Associates, Inc. mdgarvey@verizon.net www.intelligasconsulting.com

CryoGas International (ISSN-1052-0139) is published monthly by gasworld Publishing LLC., 5 Militia Drive, Lexington, MA 02421, USA; TEL: 781-862-0624; FAX: 781-863-9411; E-mail: cgi@cryogas.com. Periodical postage paid at Boston, MA and additional mailing offices. Postmaster: Please send address changes to: CryoGas International, 5 Militia Drive, Lexington, MA 02421 or trice@cryogas.com. Unauthorized reproduction is illegal. For permission to photocopy articles, contact the Copyright Clearance Center, 222 Rosewood Drive, Danvers, MA 01923, USA; Tel: 978-750-8400. For reprints, contact publisher directly. ©2015 by gasworld Publishing LLC.

September 2015 – CryoGas International

Then and Now

Letter from the First Publisher

Letter from Our Publisher

CryoGas International has been blessed from its beginnings with a small but very talented group of people in both its editorial and business activities. My wife Caroline has given me and CryoGas critical encouragement and continuing support in developing CryoGas from our original idea to start a journal on the industrial gas business. One of Caroline’s critical responsibilities was to keep me out of trouble, often a big task. As there were no journals covering our industry in the late 1980s, Kay Deans, our market researcher in consulting, and I jumped at the opportunity to buy the Cryogenic Information Report (CIR) in late 1988. Kay went to Colorado to close that deal and became its first editor, concentrating on cryogenic technologies and patents. At the time, CIR was the only journal covering new patents that for our industry. We had 200 subscribers. In 1989 Bob Keeley, a former Boston Globe journalist, came aboard and brought us to a new level. He quickly decided to change CIR’s focus to the US and international industrial gas business. We reformed the journal in January 1990 to CryoGas International. At that time my daughter Lori Frieling, with experience in marketing and advertising, established an advertising platform in CryoGas and brought in our first advertisers, many of whom are still active in the magazine today. Maura Garvey, Aggie Baker, John Miaskowski, and Jayne Freitas came on board between 1997 and 2000. Maura was our Director of Market Research and a features writer, and today continues as the primary gas industry analyst and writer on markets, technologies, and products for the magazine. Aggie began as a business researcher under Maura and eventually became Managing Editor in 2005. She introduced the concept of issues focused on a particular gas or gas market and has done a terrific job in planning, organizing, writing, and editing CryoGas. Aggie always did an excellent job managing me as well, when I wanted to delay the run to the printer for that last important news item or that ad for a good advertiser with a last minute product launch. John Miaskowski took the lead as Sales Manager in the further development of advertising and introduced us to GAWDA. Jayne Freitas, the voice of CryoGas International to our callers, served as our in-house Advertising Support and Office Manager. This group was important in the sale of CryoGas in 2013 to John Raquet. John Raquet, Aggie, and the current CryoGas–gasworld team are now developing a new and aggressive direction for the magazine to fit the times and challenges of print and digital publishing. It is important today that information on industrial gas markets, technologies, and companies be available in a timely fashion as our industry’s players develop solutions to new challenges and create new market opportunities. I have greatly enjoyed the past 25 years with CryoGas and wish continuing success and great good fortune to John Raquet and his team in their pursuit of publishing excellence.

In September 1990 John “Buzz” Campbell, the publisher of The Cryogenic Information Report, decided to rename the magazine he acquired a year earlier to CryoGas International. What’s in a name you may ask? Well, if it becomes an institution, a lot I reckon. In our business of industrial gases, there have been household names that have existed dating back to the industry’s commercial beginning some 100-130 years ago — AGA, Air Liquide, Airco, BOC, Linde, Messer, and Union Carbide to name a few. Since then, other companies have evolved such as Airgas, Air Products, and Praxair. As you will read in this special anniversary issue, there have been a lot of changes over the past 25 years in our industry, especially in the North American market, with several names “disappearing.” Yet one thing is very common to all — the passion, the interest, the engineering excellence, and more importantly, the personalities that have remained across the spectrum of companies operating in our sector. I believe central to all of the above has been the reporting on our industry by CryoGas International, which has fostered the development of the industrial gas industry over the past 25 years. While I have been the publisher of CryoGas International for only two years, my actual association with CryoGas dates back to 1994, only four years after the launch of the publication. We all remember the black and white print magazine landing on our desk in those early days — containing news and also reams of patent information. Back in 1995/6 I suggested that it would be good if CryoGas International contained more global/regional articles. Buzz took me up on my offer and I began writing features on China, Europe, and the Middle East from my UK base. The publication on the outside has remained the same ever since and many would say has become an institution. I have heard readers describe it as the equivalent of the Harvard Business Review and that they anxiously anticipate its arrival each month. I was proud to be associated with CryoGas in the 1990s. I became more distanced in the 2000s when I created gasworld (a friendly rival). Why did I do that? Well quite simply, to give the rest of the world a journal like CryoGas, but one that was focused on world markets outside the US. Now the proud owner of both CryoGas International and gasworld, I intend to continue to ensure that CryoGas remains recognized as the best business journal for our industry, particularly in North America. The magazine’s loyal readership has a thirst for news, information, and business intelligence on the largest regional gas market in the world. CryoGas will continue to provide all that and more through an enhanced website, digital offerings, and the addition of the Specialty Gas Report supplement. Congratulations to the team — past and present — for providing stimulating and informative content for 25 years. I am honored to serve as the Publisher of CryoGas International.

JR (Buzz) Campbell

John Raquet

September 2015 – CryoGas International

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September 2015 – CryoGas International

Then and Now

Then and Now We looked at the stories printed in our inaugural edition of CryoGas International in September 1990 and tried to find out what is happening at those companies today. Needless to say, about half of the companies mentioned in our 1990 news section no longer exist. Of those that do remain, many have new names (as noted). The companies we contacted were enthusiastic about filling us in on where they are today, making this a very enjoyable and interesting few pages to put together. Also in this section is a look back and forward at our nation’s most significant event in the past 25 years, 9/11, and our industry’s participation in the rescue efforts, clean-up, and rebuilding of the New York’s Twin Towers area. We also have updates on some of the associations that have been, and remain, important to our industry, including the Compressed Gas Association, the Gases and Welding Distributors Association, and the Linde Distributors Association. We thank those groups for their contributions to this issue.

NEW GAS PLANTS — SEPTEMBER 1990 Liquid Air Corporation (Walnut Creek, CA), [now Air Liquide] the leading supplier of merchant gas products in Alaska, will expand its Anchorage, AK air separation plant capacity by 10 tons/day. The expansion is scheduled for completion in the first quarter of 1991. Total capacity after the expansion will be 20 tons/day and will serve the liquid nitrogen, liquid oxygen, and cylinder gas needs of customers in the welding, medical, and oil service industries.

tia, with oxygen, nitrogen, and argon gas. A new 90 tons/ day on-site cryogenic oxygen plant, to be built by Liquide Air Engineering Corporation in Montreal and assembled at the mill site, will replace the existing 450 tons/day Liquid Air unit built in 1971. The project represents and investment in excess of $8 million. Scheduled startup is September 1991. Sydney Steel Corporation recently replaced their old open-hearth steelmaking and blast furnaces with a 150-ton electric arc furnace. The company targets production of TODAY more than half a million tons of finished product from scrap Air Liquide’s Anchorage Alaska air separation plant has metal. Sydney Steel Corporation has been a customer of a capacity of 60 tons per day for the production of oxy- Liquid Air for over 70 years. gen and nitrogen. The company’s cylinder fill plant in Anchorage produces a wide range of medical and indus- TODAY trial products. Air Liquide operates five branch locations David Asselin, Manager of Communications for Air Liqfor the sale of bulk, cylinder gases and welding products. uide Canada reports that Sydney Steel closed their activities Primary markets served by Air Liquide region: medi- in Sydney, Nova Scotia 15 years ago. The air separation cal, oil, military, mining, fabrication, fishing, and retail. unit on the site was removed in 2001-2002. According to the Sydney Steel Museum’s website (sydneysteelmuseum.com), the Blooming Mill and Billet Mills commissioned in 1902, eventually became the SydNEW GAS PLANTS 1990 ney Steel Corporation and rails were the chief product. SydCanadian Liquid Air, Ltd. (Montreal, Quebec, Canada) ney Steel fought to remain profitable through the up and [now Air Liquide] signed a long-term agreement to supply downs of the steel markets. Its attempt to modernize its old Sydney Steel Corporation’s steel mill in Sydney, Nova Sco- open-hearth steelmaking and blast furnaces with a 150-ton

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Since the 1990 inception, CryoGas International has been the industrial publication of choice for MVE Cryogenics and Chart Industries. The depth of research provided by the knowledgeable and dedicated staff has provided great foresight into the gas industry and a reputable format for staying connected to help our organization grow. Congratulations on this anniversary milestone. We look forward to another 25 years! Tim Neeser, VP Marketing & Applications Development, Distribution & Storage, Chart Industries 6

Congratulations on this major milestone! For 20 of Noble Gas Solutions’ 75 years in business, we have relied on CryoGas International for its unique insight, insider market data, news and strategies. Few aspects of our business have remained constant like CryoGas International, who hasn’t wavered in providing us well-founded information that we can trust. It is a testament to CryoGas’ topnotch staff and industry leaders like Buzz Campbell, who we call on time and time again. J. David Mahoney, President/CEO, Noble Gas Solutions September 2015 – CryoGas International

Then and Now

electric arc furnace ultimately did not pay off and the gov- foresee any major changes in the activities of the company. ernment-owned operation sought an outside buyer. When James Strader will continue to manage the facility. this failed, the government elected to close the plant in 2000 and Air Liquide Canada lost a valued customer. TODAY Today AGA is part of Linde Gas. Linde held purchasing negotiations with both Messer Griesheim of Germany and AGA of Sweden in the mid-1999, but was unable to comNEW MANUFACTURING PLANTS plete a deal with either. When the EU Commission was unSEPTEMBER 1990 willing to approve a takeover of Messer, Linde refocused its Cryoquip, Inc., a member of the Cryogenic Industries Group efforts on AGA and was ultimately successful in acquiring (Santa Ana, CA), recently completed the first phase of the the business in 2000. AGA had established a strong presconstruction of their new facility in Murrieta, CA. The ence in the US through several acquisitions like the one we 100,000 ft2 facility will manufacture and assemble the full reported on in 1990. line of Hex Industries’ vaporizers, cryogenic deflashers, food freezers, SF6 carts, and other cryogenic systems. Cryoquip See more on this topic in “A Changing Landscape: How 25 Years primarily serves customers in the domestic industrial gas of Mergers and Acquisitions Reshaped the Industry,” on page 54 market and also exports many of its “high-tech” vaporizers. of this issue. Plans call for two additional phases that will include offices, additional manufacturing areas, testing, and storage facilities. Executives at Cryoquip take a great deal of pride in the fact that disruptions to their production schedules ACQUISITIONS/JOINT VENTURES were minimized; over 98 percent of their shipments were on SEPTEMBER 1990 time. Cryoquip will continue to minimize disruptions until Associated Respiratory Services (A.R.S.) (Edmonton, Alberta, Canada) and VitalAire, a wholly-owned subsidiary the facilities are completed in 1992. of Canadian Liquid Air, Ltd., have signed an agreement to merge their operations. The new company, A.R.S./VitalAire, TODAY Cryoquip, LLC still maintains its headquarters at its facili- will be jointly owned (50/50) by Associated Respiratory ty in Murrieta, California and has grown consistently from Holdings, Inc., an employee-owned company, and VitalAire that one branch in 1990. The company now has a global Corporation. The new entity will be headquartered in Alberpresence, with facilities in six countries. In 1996, Cyroquip ta and will operate 41 branches in 10 provinces. Don Smailes, founder of Associated Respiratory Servicopened in Malaysia, in 1999 in Australia, the United Kingdom in 2000, China in 2003, and in India and Brazil in 2005 es, Inc., is President of the merged operation. A.R.S. has and 2009 respectively. Cryoquip’s focus and commitment been a distributor of Liquid Air’s oxygen systems since to provide the best possible customer service, along with its 1978. A year ago Liquid Air acquired a 35 percent equity global reach, enables the company to provide world class stake in A.R.S. technology from local sources. Today, Cryoquip’s capabilities span the entire spectrum TODAY of cryogenic equipment from the fabrication of cold box- According to David Asselin, Manager of Communications es used to manufacture the liquefied gases themselves to for Air Liquide Canada, Associated Respiratory Services equipment that stores and uses the gases in a multitude of (A.R.S.) was eventually bought in its entirety by Air Liqapplications. According to the company, Cryoquip is the uide Canada’s subsidiary VitalAire. VitalAire Canada is a largest manufacturer of this type of equipment in the world member of the Air Liquide Healthcare network operating in and is known for its capabilities in designing and fabricat- 30 countries, and brings leading technologies, products, and ing specialized equipment in volume production or special- respiratory healthcare excellence to Canada from a worldwide community dedicated to innovation. ized custom designed equipment.

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ACQUISITIONS/JOINT VENTURES SEPTEMBER 1990 AGA Gas (Cleveland, OH) has acquired Ohio Welding Products, Inc. (Cincinnati, OH), a leading gas and welding equipment supplier, from Kenneth W. Strader. The company was established in 1959 and has over 20 employees. It has been an AGA distributor for the past two years. Terms of the July 20, 1990 transaction were not disclosed. AGA does not September 2015 – CryoGas International

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PEOPLE — SEPTEMBER 1990 Alex Zeballos, General Manager of Cryogenic Industries, Inc. (Santa Ana, CA) has been elected to the Board of Directors of the National Hydrogen Association (Washington, DC). The Association was founded in February 1989 to foster the development of hydrogen technologies, to encourage their use in commercial and industrial applications and to promote the use of hydrogen in energy applications. 7

Then and Now

The organization has grown rapidly, and the Board needed representation for small business. Mr. Zeballos will represent the interests of small business. TODAY In November 2010, the National Hydrogen Association and U.S. Fuel Cell Council, which represented different sectors of the industry, merged to form The Fuel Cell and Hydrogen Energy Association (FCHEA). The FCHEA is the trade association dedicated to the commercialization of fuel cells and hydrogen energy technologies and represents the full global supply chain, including material component and system manufacturers, hydrogen producers and fuel distributors, government laboratories and agencies, trade associations, utilities, and other end users. Alex Zeballos is now the Product Manager for ACD’s Pump Division. ACD is a member of the Cryogenic Industries Group (Santa Ana, CA). Zeballos continues to be heavily involved in new hydrogen pumping applications. He notes that growth in these applications has been phenomenal in the United States, Europe, and now Japan.

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PEOPLE 1990 Airco Gases (Murray Hill, NJ) [now Linde] is constructing a merchant air separation facility to replace its 23 year old plant in Buffalo, NY. The plant, which is expected to come on stream by July 1992, will produce nitrogen, oxygen, and argon for US and Canadian Markets. Royden Vice, President of Airco’s Industrial Gases Division, commented that the new Buffalo facility will be an integral part of the Airco’s northeast and midwest plant network, which includes air separation facilities in Kittery, ME; Selkirk, NY; Arroyo, WV; Springville, IN; Joliet, IL; and Fostoria, OH. TODAY Today, Royden Vice is Chairman of the Board of Waco International Holdings Pty Limited, South Africa, since retiring in July 2011 after ten years as the company’s CEO. The Waco Group of companies has subsidiaries in the UK, Australia, New Zealand, Chile and southern Africa. After his Airco Gases position, Royden was CEO of Industrial and Special Products of the UK-based BOC Group, responsible for opCongrats to CryoGas International on 25 years! CryoGas has consistently been one of the best resources in the industry for news, education, and success stories. Horton appreciates the information we receive, as well as the outlet CryoGas provides for us to inform the industry on the latest trends in risk management and insurance for the welding and gases industry. Tony Hopkins, Vice President / Risk Advisory Solutions, The Horton Group 8

erations in over 50 countries and revenue of $4 billion. He was also Chairman of African Oxygen Limited (Afrox) from 1994 – 2001 and Afrox Healthcare, which successfully listed in 1999.

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PRICE CHANGES — SEPTEMBER 1990 Airco Industrial Gases (Murray Hill, NJ) [now Linde] is increasing schedule prices of all gaseous helium up to 10%, effective August 20, 1990. The price increase has become necessary due to “escalating crude helium costs, higher transportation costs and increasing capital requirements for capacity expansion and distribution equipment,” explained Brian Haley, Vice-President Marketing and Commercial Development. TODAY The factors for price escalation today are much the same as they were in 1990, but with some new twists. In the past 25 years a lot of pricing pressure has resulted from supply/ demand imbalance and the actions of the US Bureau of Land Management (BLM). The BLM is responsible for managing the United States’ Federal Helium Reserve and for selling crude helium to private-sector helium refiners, who market and sell helium to both government and private sector users, which controls much of the US supply of helium. See “The 2014 Worldwide Helium Market,” CryoGas International, June 2014, page 32.

As Phil Kornbluth reports in his article on page 36 of this issue (see “Evolution of the Global Helium Business), after three years of struggling with helium shortages and supply allocations, industry participants today are struggling with the challenges associated with too much supply. These challenges include difficulty meeting Take or Pay commitments, excessive inventory, and an insufficient number of helium containers to hold the growing inventories. It is difficult to estimate exactly when helium markets may rebalance, but most industry participants estimate that the oversupply could persist for another year or more. And what are Brian Haley’s thoughts on helium today? CryoGas International caught up with Haley at his home in South Carolina. Haley told us he left Airco in 1992 and went to work for Calgon, a Division of Merck, where he led Happy 25th Anniversary CryoGas! Union Engineering appreciates CryoGas International as a respected resource providing us with accurate and timely industry-leading news and reports on the latest developments in the ever-changing industrial gases industry, helping Union Engineering to ensure that we provide our customers with the most advanced technological knowledge. Here’s to the next 25 years and beyond! Bettina Barsoe, Union Engineering September 2015 – CryoGas International

Then and Now

its worldwide water treatment business. In 1993 he joined Holox as CEO. After that Haley headed up LifeGas until his retirement in 2005. When asked if he had any opinion on the helium business today, Haley happily replied, “I assure you I have absolutely no insight into the helium market. Ask me how I played golf yesterday or how many fish I caught with my grandchildren last week.” What a perfect response! We wish Haley all the best in his retirement.

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MARKETS — SEPTEMBER 1990 SRI International Releases New Hydrogen Study According to SRI International’s latest hydrogen study, the liquid hydrogen business is North America became more competitive in 1989 in response to the construction of the two new liquid hydrogen plants. Airco Industrial Gases [now Linde] announced construction of a new plant in Magog, Quebec, Canada (scheduled for completion in April I really appreciate the work that CryoGas does to connect people and ideas in the global packaged gas business. On a personal note, it was an article that I wrote in CryoGas over 10 years ago that opened the door to our first cylinder tracking project with one of the majors. It has been a great fit ever since. Thank you CryoGas! Tim Fusco, CEO, TrackAbout

1990) and Hydrogen AL Co. Ltd.’s new plant in Becancour Quebec, Canada, came on-stream in 1988. Since 1983 and until Hydrogen AL’s plant came on-stream, Air Products & Chemicals, Inc, (Murray Hill, NJ) and the Linde Division of Union Carbide Corporation (Danbury, CT) [now Praxair] were the only liquid hydrogen producers in North America. TODAY According to Daryl Brown (author of “Hydrogen Production in the US: The Last 25 Years,” on page 40 of this issue), since 1990 there have been only two new liquid hydrogen plants in North America. Praxair built these. One was built in 1995 in McIntosh, Alabama, and the other in 1997 in East Chicago, Indiana. Praxair is now completing the expansion of its Niagara Falls plant by 50 percent, which combined with the capacity of their Ontario, California plant, gives them a little over 50 percent of the total North American capacity of 105 MMSCFD. Air Products is a close second with a little less than 40 percent of the total capacity in three CryoGas has been our passport to the world of packaged gases. Your global readership includes just about every country on earth. What a remarkable achievement. With kindest regards and utmost respect we say, “Have a happy 25th!” Jim Glessner, Chairman & Chief Storyteller, TrackAbout

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Then and Now

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TODAY Air Products reported net income of $359 million, up 14 percent versus prior year, and diluted earnings per share (EPS) of $1.65, up 13 percent versus prior year for its fiscal third quarter ended June 30, 2015. Third quarter sales of $2,470 million decreased six percent versus prior year.

TODAY Today Hoffer offers the ICE Cryogenic Flow Computer for cryogenic tanker applications. The ICE Cryogenic Truck mounted system provides the industry with the best in cryogenic flow measurement. The ICE Integrated Cryogenic Electronics is Hoffer’s most advanced truck-mounted cryogenic flow metering system. The design culminates from over 40 years of Hoffer experience with cryogenic fluid measurement. The full color graphical display and electronic touch screen ensure user-friendly operator interface and provide direct access to all measurement and configuration parameters.

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plants, mostly at its New Orleans, Louisiana location. The most interesting news is the new liquid hydrogen plant being constructed by Airgas in Calvert City, Kentucky. Not only is this the first liquid hydrogen plant constructed in North American since 1997, it is Airgas’ first liquid hydrogen plant and their only industrial-scale hydrogen plant.

FINANCIAL NEWS — SEPTEMBER 1990 Air Products & Chemicals, Inc, reported sales of $712.8 million and net income of $56.8 million, or $1.02/share, for three months ended June 30, 1990. Net income for the current quarter was 6% higher than the $53.3 million, or 0.97/ share, the company reported in last year’s third quarter.

QUARTERLY GAS PRODUCTION DATA 1990 The US Department of Commerce would like to report gas production (M28) on a quarterly basis according to the Federal Register, July 17, 1990, p. 30,732. TODAY The US Census Bureau terminated the collection of data for the Current Industrial Report program which included the quarterly collection of data on industrial gas production. The last MQ325C(04)-5 on industrial gas production, the “Industrial Gases — Summary 2004,” was issued ten years ago in August of 2005.

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EQUIPMENT & SERVICES — SEPTEMBER 1990 Turbine Mini-Flowmeter Provides Accurate Cryogenic Flow Measurement The Hoffer Mini-Flowmeter (MF) is suitable of low flow CryoGas International has been an important partner to TaylorWharton Cryogenics LLC though the years to help us demonstrate our company’s strengths in the industrial, medical, and specialty gases industry. They provide us with an avenue to connect with our customers and partners like no other medium. Congratulations to CryoGas International, and thank you for your remarkable, in-depth reports for the last 25 years. Chris Kasuba, Vice President/General Manager CryoIndustrial, Taylor-Wharton Cryogenics LLC 10

EQUIPMENT & SERVICES 1990 Matheson to Package All Semiconductor Gases in Exclusive Ultra-LineR Cylinders In its efforts to be more responsive to the needs for the semiconductor industry, Matheson Products (Secaucus, NJ) announced that, effective immediately, all of its semiconductor gases will be packaged in Ultra-LineR cylinders and where deemed necessary, with stainless steel valves. Ultra-LineR is a family of cylinders, specially designed to maintain gas purity levels required by the semiconductor industry. They feature inert barriers tailored either to resist the specific corrosive properties of the gases, or to eliminate cylinder wall interactions that affect purity. William J. Kroll, Matheson’s Senior Vice President for Sales & Marketing, said, “Not only had Matheson striven to improve the purity of semiconductor gases, but just as importantly we have worked long and hard to improve packing commensurately.” As a result of its experience in We at Luxfer Gas Cylinders congratulate CryoGas International on your 25th anniversary. You have many readers at Luxfer, including some who have been relying on your magazine since its inception. Luxfer provides high-pressure cylinders to gas companies around the world, so it is very important for us to keep up with the latest news and trends in the industry; reading CryoGas International is a valuable, trustworthy way for us to do so. Dan Stracner, Director of Communications, Luxfer Gas Cylinders September 2015 – CryoGas International

Then and Now

Compressed Gas Filling Solutions

specialty gases business for more than 60 years, Matheson has found that the cylinder is another potential source of contamination and, therefore, must as also receive special attention. TODAY According to MATHESON, photovoltaics and microprocessor technologies have pressed the gas manufacturers to race to develop and produce the highest purity gases for manufacturing semiconductors, solar cells, computers, flat panels, phones, etc. Gas purity continues to play a state-of-the-art role in the electronics industry today, with higher gas purity enabling the fabrication of higher density semiconductors in a continuous cycle. See: “MATHESON: The Evolution of the US Gas Business,” on page 34 of this issue.

As for William J. Kroll, he remains a leading figure at MATHESON and is now the Executive Chairman of the Board for MATHESON and Senior Management Director for Taiyo Nippon Sanso Corporation, MATHESON’s parent company.

September 2015 – CryoGas International

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Then and Now

Gas Industry, Quick in Response to Aid Rescue Following the tragic events of September 11, 2001, CryoGas International published a special issue in October of 2001, commemorating our nation’s loss.

Here is a part of that story.

In a matter of minutes following the most horrific chapter in the history of the United States, true American heroes have emerged from all walks of life. From the passengers of ill-fated flight 93 who fought to regain control of their hijacked airliner in the face of certain death to the hundreds of police, firefighters and rescue workers who made the ultimate sacrifice, or those who have worked tirelessly around the clock since that fateful moment at 8:48 a.m. on Tuesday, Sept. 11, 2001, the list continues to grow. All across the country, ordinary Americans have been looking for ways to do their part either by giving blood, making donations, offering to volunteer, or even just by flying the flag at their homes or on their vehicles. Our extended family of worldwide gas producers, distributors, and equipment and service providers is also striving to do its part Almost immediately after the World Trade Center Towers had collapsed, representatives of the major gas companies, Air Products, Praxair, and BOC among them, were all speaking together on a conference call, trying to decide what they could do to help and how they might achieve their goals. Local distributors were also called into action. For our 25th Anniversary issue, we asked Lloyd Robinson, President of AWISCO, which serves the New York City and

An AWISCO tube trailer at Ground Zero in New York, 2001.

the surrounding area, to recall for us the events of that day and the days that followed.

Here is AWISCO’s story.

September 11, 2001 was a gorgeous late summer day in New York City. From AWISCO you could see all of lower Manhattan. I had my bags packed for California to play some golf with my brother. Starting around 9:30 am you could see some of the smoke of the first tower. The early report indicated that the smoke was from a small plane that flew into the World Trade Center and it was no big deal. Work went on as usual until about an hour later when the second tower was hit. The reports of terrorism started to come in on the news, any employee with children in the NYC public schools went home to figure out how to get their kids out of school safely. The smoke was billowing across lower Manhattan into Brooklyn and Queens. All of this was visible from AWISCO. At around noon as the towers fell it was clear that our services were going to be needed. The first call came from a city agency and then some of the contractors

CryoGas International has provided Packaged Gas Distributors with continuous valuable information regarding processes, profit improvement, marketing, and operations from a variety of contributors. It serves the Packaged Gas Industry with perhaps the only publication that focuses on their needs. Along with industry trends, a distributor can utilize this information to develop their strategic plans with measurements that are relevant to their business. I have referred my clients to their publication for information and ideas that resonate in their business and prepare them for growth and success. Congratulations to CryoGas International on 25 years of service to the industry! Paul Matlock, TAP RESOURCES 12

that were working in the area started to call. Somehow we made contact with NYPD and our trucks were allowed into Manhattan. The first deliveries were for oxygen, acetylene, and any gas apparatus we could find. We made three trips that afternoon. Around 6 pm I decided to go home. It was surreal — there were no cars on the road and a 35-minute commute home took about 20 minutes. No sooner did I open my front door when my cell phone rang. It was my lead driver, Anthony Kruithoff, calling to tell me that the crews needed more oxygen and acetylene. Going back to the office was even more surreal, as by now checkpoints were established everywhere. Luckily a police officer knew what we were doing and allowed me back to AWISCO to meet my driver. We both loaded as much as could fit and sent him back. The aftermath and all the business was good for AWISCO, but our willingness to get the job done is what really made me proud. Led by our salesperson Dennis Bicocchi, AWISCO really became the go to company for the clean-up.

The 9/11 Memorial stands at Ground Zero today. Photo credit Joe Woolhead.

The Cavagna Group congratulates CryoGas International on its 25 years of service to our industry. Your publication provides valuable, real-time news on important issues that face our markets. By using this information, we can provide additional service to our customers by better navigating market trends. CryoGas, along with our other industry commitments, allow Cavagna Group to augment our global initiative to ‘Think Globally, but Act Locally.” Your publication continues to publish relevant industry news in a professional and useful format. Keep up the fine work. David S. Ellis, Vice President Sales and Marketing, Cavagna Group September 2015 – CryoGas International

Then and Now

Happy Anniversary CryoGas! Thank you for 25 years of dedication to global packaged gases. Your collaborative approach of sharing information serves to make us a safer and more efficient industry. Can’t wait to see what the next 25 brings! Happy 25th! Doug O’Dell, VP of Sales, TrackAbout

I find that CryoGas International is a very useful tool for everyone related to the industrial gas market, providing relevant information about industry trends, excellent market analysis, and the latest developments about equipment and technologies. Congratulations! Eduardo Pelitti, Independent Business Consultant

Congratulations to CryoGas International on celebrating 25 years as a respected industry publication. The Aquasol Corporation also proudly reflects on the past 10 years, as we have quickly become an internationally recognized leader in welding consumables and advanced pipe purging devices. We thank CryoGas for providing us with the latest industry news as we continue our success in advancing purging technology.” Lauren Merrick, Communication Associate, The Aquasol Corporation

I look forward to reading CryoGas International every month. This magazine is an excellent source of information on the industrial gas industry. The articles are extremely well researched and nicely written. This publication helps me to learn about new developments and keep abreast of market trends in a very cost effective manner. Congratulations on achieving a very significant milestone and best wishes for the future! Goutam Shahani, Business Development Manager, Linde Engineering North America Inc.

Ranch Cryogenics, Inc. (RCI) would like to congratulate CryoGas International and its dedicated staff on the commendable milestone of 25 years of service in the Industrial Gas Industry! RCI has been working with the staff for many years and is very appreciative of everything CryoGas brings to the table. I speak on behalf of everyone here at Ranch that we look forward to working with CryoGas for another 25 years! Trey Duffy, GM/VP Ranch Cryogenics, Inc

I look forward to each issue of CryoGas International and enjoy reading up on many customers we know throughout the industry. In addition, the compressed gas industry is essential for our business and CryoGas International is a good source to learn about innovations, technology, and future trends. It is a valuable resource and superbly done. Congratulations CryoGas International on 25 years! Jon Davignon, Marketing Manager, Galiso, Inc.

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Then and Now

The Compressed Gas Association

The Compressed Gas Association (CGA) was founded in 1913, and during our 102 year history CGA’s steadfast mission has been the promotion and continuous improvement of the safe, secure, and environmentally responsible manufacture, transportation, storage, transfilling, and disposal of industrial, food, and medical gases (liquefied, non-liquefied, dissolved, and cryogenic), and the containers and valves used to hold those gases. CGA has witnessed the gases industry transition from the horse and buggy era into the digital internet connected age. We have been involved in virtually every regulatory change affecting the gases industry in the last century. As our industry has matured and grown, so too has CGA. I would like to share a small portion of CGA’s key milestones of just the last quarter century.

only focus by the early ‘90s was evolving into today’s formal programs and working arrangements to globally harmonize the standards and practices within the gases industry. Today CGA is an integral partner with our sister associations around the world, and we work closely with them to harmonize existing standards, develop new standards, and promote responsible industry self-regulation. With our partners we have successfully globally harmonized numerous key industry standards and together promote use and adoption in regulations of our collective safety standards around the world.

Global Harmonization

Evolution of CGA Publications

As the world’s regional economies have evolved and merged into today’s global economy this facilitated growth in the use of our industry’s products around the globe. Consolidation in the gases industry has led to the major gas companies building operations networks around the world. Often they took their regional (home) based safety and operations standards with them as they expanded. It was not un-common in the developing parts of the world to see competing companies use different standards in the same country or one company using different standards in different countries. Some of these differences were (and are) necessitated by various regulations and by the late 1980s this was resulting in a patchwork quilt type of approach to international standards in the gas industry, and the need for global harmonization was apparent. For CGA what began in 1913 as a US

With our partners we have successfully globally harmonized numerous key industry standards... Although CGA publications are technically voluntary standards, a substantial focus over the last 30 years has been to expand the number of publications incorporated by reference in regulations. While CGA’s mission is safety, that includes the promotion of effective and appropriate regulations. Our members’ devotion to safety, demonstrated by our continually improving safety record, gives CGA the credibility to self-regulate. In this context “self-regulate” means the development of (and adherence to) the safety information contained in CGA publications as the effective and appropriate methods to manufacture, transport, store, and dispose of our products in a safe manner for our employees, our distributers, our customers, and the public. To help expand adoption of CGA publications in fire and building codes, CGA became an American National Standards

CryoVation wishes CryoGas International a very happy 25th Anniversary! The industrial gas industry has profited from CryoGas International and their continued dedication to bringing the latest news, trends and developments to its readers. CryoVation congratulates CryoGas International on this milestone and looks forward to many more successful years, in both contributing and benefiting, from this vital publication. Chelsea D’Ariano, Director of Marketing, CryoVation 14

Institute (ANSI) accredited standards developing organization and those publications to be adopted into codes are targeted to be American National Standards. Over the last 15 years CGA representatives have become progressively more active as members on a number of committees and task forces within the National Fire Protection Association (NFPA). Once a CGA publication is referenced in an NFPA standard, and that standard is adopted by local municipalities and state legislatures around the nation, those CGA publications become the minimum legal requirements. Over the last few decades this process has seen numerous CGA publications transition from industry best practices to legal minimum requirements.

Building and Growing Key Relationships

Where CGA standards are not formally adopted into regulations our relationships with regulatory agencies have led to, in some cases, CGA standards being informally adopted by that agency as the minimum standard. Take for example the labeling of medical gas containers. By law drug companies are required to have their labeling approved by the agency, and there are a couple of formal processes established by FDA regulations to accomplish that. Resulting from CGA’s working relationship with the FDA, the agency has accepted (by lack of enforcement to the contrary) the requirements in CGA publication C-7 as the labeling requirements for medical gases. There are many other examples where our strong relationship with the FDA has evolved into the FDA using enforcement discretion, such as not requiring compliance with certain regulations like expiration dating/stability studies or calculation of

DataOnline, the M2M company that supports a “Better World, Connected,” congratulates CryoGas International, the B2B magazine that keeps us informed about the world of industrial gases, on the celebration of its 25th year in business. DataOnline depends on CryoGas to deliver the business intelligence we need. We look forward to working with CryoGas over the next 25 years in connecting our worlds. Robert Barnacle, President, DataOnline September 2015 – CryoGas International

Then and Now

yield. However, CGA has communicated to the FDA that this undocumented approach to regulatory oversight is not an appropriate way to regulate. This core difference of opinion with the FDA, in spite of a strong relationship, has yielded one of the largest changes in CGA in its history and that is the developing and strengthening of relationships with congressional legislators. CGA had never been a lobbying group, but this difference of opinion has prompted us to reach out and forge relationships with members of Congress. These efforts have resulted in significant Federal legislation for medical gases in the Food and Drug Administration Safety and Innovation Act (FDASIA), where certain widely used medical gases were approved as drugs via legislation, exempted from the traditional drug user fees, and which require the FDA to modify the regulations to be appropriate for medical gases. In another federally targeted effort, medical

gases were exempted from track and trace requirements and such federal legislation preempts states from creating requirements inconsistent with that exemption. CGA’s lobbying effort includes working with state governments as well. For example, we have had recent success in the passage of a bill in Florida relative to the wholesale distribution of medical gases. Although our lobbying has been limited to medical gases we are in a position to expand that scope if needed to promote safety in an appropriate and effective manner. CGA has also worked to solidify relationships inside our own industry. Early in the 21st century CGA and the Gases and Welding Distributor Association (GAWDA) began to strengthen their relationship. Today GAWDA participates in CGA committee activities and their members have direct access to CGA standards and CGA staff participates in GAWDA’s Board of Directors and Safety Committee meetings.

CryoGas International is a great resource for Acme Cryogenics allowing us to reach out to not only our customers but other industry leaders. Congratulations on your 25 years and many more to come! Acme Team, Acme Cryogenics

The Future

It takes an active organization to identify, collate, disseminate, and respond to the volume of regulatory initiatives faced by the gas industry today. One of the things that has not changed over the last 30 years is the dedication of CGA members and their willingness to invest their sweat equity. Without the commitment of our members over the last three decades CGA’s record of proactive self-regulation would have been a very different story to tell. At CGA we see no slowing down of regulatory activities in the foreseeable future. We believe we have an organization and set of work processes that have been fine-tuned and well tested over the last three decades, and with the continued dedication of our member companies are prepared to effectively deal with whatever challenges the future holds both domestically and internationally.

Congratulations on a quarter century of publishing! As a helium gas supplier, Zephyr recognizes the importance of having a reliable industry resource like CryoGas International. Here’s to the next 25! From the Helium Team at Zephyr Solutions

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Then and Now

The Gases and Welding Distributors Association Founded in 1945 as the National Welding Supply Association (NWSA), the Gases and Welding Distributors Association (GAWDA) has represented the distributors and manufacturers of welding supplies and materials, medical gases and food gases. The association was formed to facilitate the industry’s supply chain and to promote the value of distribution. Interestingly, even at the inception of NWSA, the welding supply industry hinged, in large part, on the distribution of industrial gases. Many NWSA members grew the gases side of their businesses and began to incorporate medical gases and food and beverage gases into their product offerings. In 2002, to more accurately reflect the changing industry and membership, the National Welding Supply Association changed its name to the Gases and Welding Distributors Association, “GAWDA,” at the opening Business Session of the 58th Annual Convention.

This year, GAWDA is celebrating its 70th anniversary. GAWDA serves over 500 gases and welding distributors and manufacturers. It is the major trade association representing the industrial gases and welding supply industry. Dating back to the original purpose of NWSA, the association is dedicated to achieving two goals for its members: (1) Safe Operation of Welding Equipment and Supplies (including compliance with government regulations), and (2) Economic Vitality of Distributors of Welding Equipment and Supplies. Today, GAWDA continues to support this mission by providing members with access to several expert safety and compliance consultants. GAWDA consultants provide direct support as well as timely webinars to keep members ahead of industry issues. GAWDA also partners with several other organizations to further give its members access to safety standards, educational opportunities, scholarships and discounted business services. The association also leads the industry in providing networking opportunities through its Spring Management Conference, Annual Convention and Regional meetings. Members are kept informed through GAWDA’s extensive website, gawda.org, periodical publications and e-newsletters. GAWDA members are an active group. Over 140 volunteers take part in leadership roles, 12 standing committees and 14 event planning meetings. On January 1st of this year, GAWDA

CryoGas International has been a terrific resource for WestAir, helping us to keep our finger on the pulse of the latest product and industry trends. Staying abreast of relevant news on the latest industry trends is a critical component to making sure WestAir has the latest products and technology to pass on to our customers. Connections with industry publications and associations are an important factor in our commitment to exceptional customer service. Congratulations to CryoGas International on 25 years of service to the industry! Dan Fairchild, Director of Marketing & eCommerce, WestAir Gases & Equipment 16

GAWDA partners with several other organizations to further give its members access to safety standards, educational opportunities, scholarships and discounted business services. transitioned to self-management and opened its offices in Hollywood, Florida. GAWDA was previously managed by Philadelphia-based Fernley & Fernley, Inc., America’s First Association Management Company, from 1947 to 2009 and by the Miami based, American Welding Society from 2010 to 2014. Being a part of GAWDA means not only being a part of the industry’s foremost resource for safety and compliance information, education, and networking, but also provides an opportunity to share in the pride derived from the rich history of the association, stay on the cutting edge of the constantly-changing industry, and help set the direction for the exciting future of the distribution of gases and welding supplies and equipment.

ASCO CARBON DIOXIDE highly appreciates CryoGas International as a professional information source regarding latest news, technologies and applications out of the North American industrial gas industry. From the very first day, we were part of this success story and able to witness all changes and market developments. We want to congratulate CryoGas International to the milestone of 25 prosperous years and want to say thank you for the longstanding partnership. We are looking forward to an exciting next quarter of century.” Marco Pellegrino, Managing Director, ASCO CARBON DIOXIDE LTD September 2015 – CryoGas International

Then and Now

Linde Distributor Association Flourishing for Over Two Decades The Linde Distributor Association (LDA) recently completed its 22nd annual meeting where distributors had an opportunity to share ideas for business improvement and meet with preferred vendors to discuss the latest product offerings or their latest deal. Formerly known as the Airco Distributor Association, the LDA has sustained ongoing relationships with key vendors for over two decades. The LDA now has 62 member companies who have over 400 retail locations throughout the US. Together, LDA members make over $1 billion in annual purchases from the association’s 50 preferred vendors, and have earned some $30 million in rebates in the group’s lifetime. The products purchased include: wire and cable, abrasives, tools, gas apparatus, leathers and clothing, MIG and TIG replacement parts, plasma cutting equipment, replacement torch tips, welding helmets, cylinders, cryogenic storage equipment and tank maintenance services. Mark Falconer, President of Minneapolis Oxygen Company and Co-chairman of LDA, said, “Minneapolis Oxygen has been a member of LDA since its inception in 1993. It’s been both a pleasant and profitable experience. It is the most respected

and successful buying group in our industry because of our dedication and loyalty to our vendors.” Linde North America, a member of The Linde Group, a world leading gases and engineering company, provides marketing and administrative support to the association. In 2011, Linde changed the name of the association to the Linde Distributor Association. “This name change made all the sense in the world,” said Falconer. “The Airco name hasn’t existed since the 1990s. Linde gives us the support and name recognition of a global gases company that is critical to the viability of the association. The LDA name allays any confusion that might have existed in the market. More importantly, it reinforces and leverages the impact of Linde’s commitment and will help retain and encourage the active participation of existing distributors, as well as help recruit new members.” ADA earned Airco President’s Award in 1994. A plaque was presented at annual Airco President’s Award ceremony. Rod Belden, chairman of O. E. Meyer Company, a welding and medical gases distributor in Sandusky, Ohio, accepted the Award on behalf of ADA distributors along with key

Compressor Products International (CPI) would like to congratulate CryoGas International on 25 years of successful, trustworthy reporting. Your industry expertise and journalistic integrity have continued to grow CryogGas into a well-respected industrial business journal that both our employees and customers know to value. The relentless dedication of the entire CryoGas staff continues to give CPI the ability to stay up-to-date and informed about the newest technologies, economic trends and industry news. As a leading manufacturer of precision engineered components for reciprocating compressors, CPI highly appreciates your work. Congratulations! Bill Favenesi, President, Compressor Products International September 2015 – CryoGas International

“LDA hasn’t merely survived for over two decades. It has, in fact, flourished despite the consolidations and acquisitions that took place during that time.” Airco managers. A plaque is still prominently displayed at Linde headquarters in Murray Hill, New Jersey. On the occasion of LDA’s 20th anniversary, Belden, who was one of the association’s first co-chairmen, said, “We were all pretty green at the buying power game at the time. But we all worked together — the distributors and Airco — to get it off the ground. I’m truly proud that O.E. Meyer is still a member and that the association has blossomed into a real force in the industry benefiting so many independent distributors.” Terry Hall, who has been co-chairman of LDA since1996, said, “LDA hasn’t merely survived for over two decades. It has, in fact, flourished despite the consolidations and acquisitions that took place during that time. And I think all our distributor members and vendors would agree!”

Congratulations CyroGas International for 25 years of excellent reporting and analysis on the business and technologies driving the industrial, medical, and specialty gas industry. Your magazine has been a leading business journal covering many areas of the gas industry with relevant and trending news, columns, and feature articles. CryoGas International has been an important element for ENMET in building our business by communicating with our customers and promoting our gas detection solutions. Thank you for your commitment in providing a quality publication for 25 years! We wish you many more years of success. Nancy Aulisa, Marketing Communications Manager, ENMET, LLC 17

Development of the US Industrial Gas Industry From 1990 Onwards

Development of the US Industrial Gas Industry From 1990 Onwards By J.R. Campbell John R. “Buzz” Campbell has over 50 years of experience in the industrial gas industry and is considered one of its leading experts. Buzz was the publisher of CryoGas International from 1990 to 2013. We asked him to give us his perspective on developments in the US gases industry for this special anniversary edition. After working for 13 years for Air Products and for five years at Burdox (later sold to AGA), my wife Caroline and I began an industrial gas industry consulting business in 1981. We purchased the Cryogenics Information Report in 1988 to enhance that business. In 1990 we transformed that report into CryoGas International, the publication you are reading today, and made it into the leading source of information and intelligence for the industrial gas community. My experience with Air Products, a major gas producer, and later with Burdox, a distributor-oriented company with on-sites and piggy-back liquid production, gave me a deep understanding of the developments in marketing, technology, and finance among the majors. The contacts I made during this time enabled me to keep abreast of the world of cryogenics and industrial gases as I served as Publisher of CryoGas and consulted on worldwide gas projects and mergers and acquisitions. I remain an advisor to CryoGas, a principal at my new venture with Maura Garvey, Intelligas Consulting, and an M&A advisor with Leaders LLC. In total I have 53 years in the business, which gives me a unique perspective on the US industrial, medical, and specialty gases

US GDP & US Industrial Gas Business 1980 to 2014 ‘90-’14 ITEM

1980

1990

2000

2010

2014

US Economy – Real GDP ($ Bil)1

6,450

8,955

12,560

14,784

16,086

% AGR from Prev Period (1965 @ $4.0 Tril)

4.9%

3.3%

3.4%

1.6%

2.1%

US Industrial Gas Business ($ Bil)2 3

4.2

6.1

9.5

17.0

20.7

% AGR from Prev Period

4.1%

4.5%

6.0%

5.0%

5.2%

Multiple of % AGR-US IGB to % AGR-US GDP

1.2

1.3

3.6

2.4

2.11

2.7%

681

756

1,150

1,287

Increase in above Share

394

137

% Increase that Year from Prev Period’s Year

11%

52%

12%

$US IGB Share per $MM of US GDP 4

(1) (2) (3) (4)

2.5%

US GDP Chained to 2009 to adjust for inflation JRC Inc. estimates during the period The sale of Gases/Services for Majors to Distributors are excluded The share of the US Economy in US$ Source: Intelligas Consulting of JRC Inc.

Table 1

business. Here is my look at the US industrial gas industry — its markets, modes of service, and some of the exciting changes that technologies have enabled for both gas producer and distributor. One of the biggest pieces of this story relates to how mergers and acquisitions have, and continue to, reshape the industrial gas industry. Be sure to see Brian Deveaux’s article on this topic on page 54 of this issue.

Business Development

Table 1 shows the development of the US Industrial Gas Business (US IGB) from

CryoGas International is the one magazine I look forward to because it is cutting edge and introduces the latest industry trends. CryoGas reaches unique markets since it is international compared to the other publications we advertise in. Another strong point for us it the fact that we receive CryoGas monthly — that’s important to a business owner. We find it an excellent medium for SafTCart to introduce new products and we appreciate that. Jimmy Walker, Sr., SafTCart Founder and Owner 18

636

%AGR

1980 to 2010 in increments of 10 years, then to 2014, together with a comparison of its share of the US GDP and its growth. The US GDP is in $ billion, “chained” to 2009 to dampen the effect of inflation. The value of the US IGB is also in $ billion, from Intelligas’ tracking and modeling of the US IGB from the late 1960s. The 1990 US IGB’s share, $6.1 billion, of the 1990 GDP, $9.0 trillion, developed to a $20.7 billion share in 2014 of the $16.1 trillion 2014 GDP. The percent Average Growth Rate’s (AGR) in IGB and GDP are 5.2 percent and 2.5 percent, respectively.

During my various positons within the industrial gas market over the past 20 years CryoGas International has been a valuable resource for market trends, new gas applications plus new product requirements. The value of industry publications and their associations with customers and suppliers promotes open dialogue leading to the best solution for each application. Congratulations to CryoGas International on 25 years of service to the industry! David Bell, President Witt Gas Controls LP September 2015 – CryoGas International

Development of the US Industrial Gas Industry From 1990 Onwards

The growth in the US IGB’s share of the US economy — $681 per million of GDP in 1990 — compares quite favorably with $1,287 per million of US GDP in 2014. This represents an increase of 2.7 percent/ year. The percent AGR of US GDP of 2.5 percent accounts for the 5.2 percent AGR in IGB from 1990 to 2014. From 1965 to 1980 the US economy’s GDP grew from $4 trillion to $6.5 trillion, for an AGR of 4.6 percent. Significant increases in productivity and investment rates and high employment occurred in this time period in the basic economic segments of automotive, weapons, space, steel, and chemicals, electronics and semiconductors, residential and commercial construction, and infrastructure. These were all important IGB markets. Conventional wisdom held that our industry’s growth rate was at least a multiple of 1.5 times US economic growth. By 1990, however, US real growth had shifted away from the development of basic industrials to a more intense development of high tech segments like semiconductors and software, which fed the fast growing consumer and industrial electronics markets, in particular micro-computers. By this time the US IGB was also feeling the shift in industrial output away from the US to Asia. The US economic growth from 1980 to 2000 was 3.3 percent with the industrial gas industry growing at 4.1 percent/year, a 1.24 multiple of US GDP. By 2000, the nation was approaching an economic bubble, which burst in 2001/2, leading us into recession. Rapid recovery took place with accelerated developments in high tech. In conjunction with this there was a period of tremendous speculative financing in housing, which led us into the financial debacle of 2007/8. Between 2000 and 2010, the economy had an AGR of only 1.6 percent, due to the deep recession that lasted until 2010. Our analyses of the 2000 to 2010 period indicate that for the industrial gas industry,

this was not the case. The US IGB experienced an unusual growth rate of 6.0 percent AGR during this time, reaching total sales to end-users of $17 billion in 2010. This high growth is explained by the first seven years of that decade, which included the super-heated growth in housing and related spending, acceleration in healthcare spending, and a ramp up in unique gas and gastech medical innovations such as helium for MRI. It was also a period in which increases in prices resulted from factor cost increases. In addition, prices did not get reduced during the recession. Adding to the growth was the continued rapid development of On-site Pipe (OSP) hydrogen for refineries including the increases in natural gas pricing with contract pass-throughs. This led to stability of IG revenue streams which had a high proportion of fixed contract take-pay pricing. These characteristics of our industry speak to the steadiness of the US IGB’s historical and future development. In the current period, 2010 to 2015, the US IGB has had steady participation in the US economic recovery, but has experienced a much slower, and choppier, growth rate. Consolidation within the industry continues and with this wider scope come lower costs. The majors continue to develop their offshore businesses, which account for an increasing share of their corporate revenues and earnings.

Changes in Gas Markets

Recent statistics for the US steel industry show a peak in 2006 with raw steel production at 109 million tons. The steel industry hit a low of 60 million tons in 2009, experiencing a precipitous drop of 45 percent during the most recent recession. Steel production was back to 98 million tons in 2014 for a recovery of 90 percent of peak, but is forecast to reach only about 85 million tons in 2015. Steel has provided a major market base for on-site oxygen capacity since WWII.

CryoGas International is a valuable resource enabling Sherwood Valve to better serve our customers by continuing to provide quality, relevant news on the latest industry trends. Connections with industry publications and associations are an important factor in our commitment to exceptional customer service. Congratulations to CryoGas International on 25 years of service to the industry! Laura Doty, Marketing Communications Manager, Sherwood Valve, LLC September 2015 – CryoGas International

With China’s steel capacity at almost 850 million tons/year (versus our 85 million tons in 2015) and its industrial economy slowing, the steel industry will struggle to maintain current production in the face of increased imports, even with continuing US growth. While that does not by itself affect the fabrication side of our economy, it does suggest that steel will not play any role in US on-site oxygen capacity growth and the gas industry’s ability to recover more argon as a byproduct from steel. Basic steel as an important market for industrial gases continues to decline. Metals fabrication has always been a big part of US industrial gas demand. For the past 25 years, the US IGB has done well in assisting fabricators with new gas applications as these industries work to improve efficiency and quality in welding and cutting. On the other hand, gas volumes have suffered with the movement of significant fabrication operations offshore. While oxygen and fuel gas volume growth has slowed, new applications of higher purity and more expensive gases, gas mixtures, and the use technologies have kept this market sector in place, if not experiencing exciting growth. Variations and expansion of argon-based welding, nitrogen as a backing gas in laser cutting, nitrogen with new gas mixtures in laser welding in a wide variety of new fab processes, and the more recent return of fabrication from offshore, suggest a modest uptick in the US fabrication market. Robotics continues to take on a larger role in the automation of welding and cutting, which has been developing since the mid ‘60s. This is likely to continue shifting volumes of fabrication gases from packaged to bulk, reducing the average price of fabrication gases. Since the late ‘60s electronics, semiconductors, photovoltaics, and a wide variety of enabling gas application technologies have provided large growth opportunities for gas players that invest capital, skills, and inno-

Worthington Industries congratulates CryoGas International for 25 years as the leading source for industry news related to industrial, medical and specialty gases. We are delighted to be sharing in the celebration, as Worthington Industries also celebrates its 60th anniversary this year. We look forward to serving the industrial gas industry together for many years to come. Autumn Owdom, Marketing Coordinator, Worthington Industries 19

Development of the US Industrial Gas Industry From 1990 Onwards

vation in those markets. The increasingly complex purity of “plain vanilla” gases, exotic mixes, and in the “glops” used in chip layers and circuit path-widths has been remarkable. Much of this market’s fabrication volumes have moved to Korea, Taiwan, and China stunting volume development here, but providing offshore opportunities for US and international gas players. Those markets will continue to provide US demand opportunities for new requirements with purities required, monitored, and controlled at the molecular level. Moreover, the related expansion of the products, technologies, and supply chains developed over the last 50 years for semiconductors now provide opportunities in the development and production of photovoltaic arrays. In the inorganic and organic petrochemical sector, the discovery, recovery, and processing of hydrocarbons will continue to provide new requirements and higher demand for industrial gases and related services. The development of crude oil and gas from shale with new fracturing technologies has been key to the development of US GDP since 2000. The US IGB has enjoyed participation in this large scale development with the supply of liquid nitrogen (LIN), liquid carbon dioxide (LCO2), and specialty gases to oil and gas interests as well as providing significant services. In addition, the increased availability of natural gas liquids provides potential expansion of oxygen, nitrogen, synthesis, and specialty gases. This sector should offer one of the largest potentials for growth for the US IGB. The food and beverage sector has had growth for many years. Cryogenic and gas applications for LIN and LCO2 took off in the mid ‘60s, then leveled off in the late ‘90s with changes in refrigeration and the use of non-cryogenic nitrogen. The food and beverage sector, however, should return as a growth driver for gases with continued developments in agriculture, transport, storage, and particularly in the processing

and packaging of a wider variety of foods. Food processing developments continue to move from batch processing to continuous processing systems, which are likely to use more “food gases” to reduce costs, increase quality, and cope with the changes to greater and more imposing FDA regulations on food safety.

Modes of Delivery

Markets and customers are served in IGB owned and operated delivery, storage, and use systems. In the industrial gas business there are three key product/service modes: On-site Pipe, Bulk, and Packaged gases.

On-site Pipe Business

Food processing developments continue to move from batch processing to continuous processing systems, which are likely to use more “food gases”. Medical and healthcare has been and will continue to be one of the largest gas markets in the US. The attention to safe medicines, medical practices, and cost reduction will spur increasing uses of medical grade gases and an increasingly large array of medical gases. It appears to us that the medical side of specialty gases has a particularly bright future for increases in demand with the expansion of automated diagnoses and therapies. On the other hand, there will likely be more pressure on medical oxygen delivery as Obamacare focuses on cost reduction and the results of treatments, rather than the expanding the number of treatments. However, the US (and world’s) demographics of the patient market of aging populations, amplified by important wellness and less

The ownership and upper management at Metro Welding Supply always look forward to the next edition of CryoGas International. The magazine provides a current pulse on the industry from both a distribution and manufacturing perspective. The insight provided by CryoGas International helps our team navigate the every changing landscape of the compressed gas industry. Congratulations to the staff of CryoGas International on 25 years of valuable service to the industry! Gary Stoneback, Metro Welding Supply Corp 20

costly preventive medicine, are likely to stimulate a much larger market for medical gases during the next five years.

The on-site pipe business is categorized by its two important parts: (1) on-site facilities that pipe oxygen (O2), nitrogen (N2), hydrogen (H2), carbon dioxide (CO2), and synthesis gas a short distance from a plant dedicated to a single (or very few) customers with volumes larger than bulk liquid can economically supply; and (2) large pipeline systems which ship O2, N2, and H2 from multiple plant facilities long distance, to customer groups with large volume and service requirements. While there are many dedicated on-site plants in the US, the most significant pipelines are on the Gulf Coast in Louisiana and Texas with an extensive customer base in chemicals, petrochemicals, and refining, and in the greater Chicago area serving the steel industry and some chemicals. Both OSP platforms have provided for a significant share of total US O2, N2, H2 and synthesis gas supply, for much of US argon recovery, and for the integration of piggy-backed liquid plants. OSP oxygen volume grew very fast with the development of new BOF steel capacity in the late 1950s and continued with the expansion of the US chemical industry and refinery applications for O2 and N2 shortly thereafter. In the 1970s the installation of dedicated single column N2-only on-sites took hold. In the late ‘70s non-cryo membrane and pressure swing adsportion and vacuum pressure swing adsportion air separation plants to produce O2 and N2 arrived from Linde (UCC) and several non-IGB

CryoGas International is GenOx Transportation’s go-to source for up-to-date industry news, best practices, new market opportunities, and supply issues. With a strong commitment to positive customer experiences and the highest levels of safety, we must have a reliable source of information on industry developments to continually improve our operations. We thank and congratulate CryoGas International on 25 years of exemplary reporting. Kevin Mathews, President/CEO, GenOx Transportation, Inc. September 2015 – CryoGas International

Development of the US Industrial Gas Industry From 1990 Onwards

players in Europe and the US. Those smaller volume plants produced 95–99 percent purity levels, had lower capital investments, and began to satisfy lower purity requirement levels at lower unit cost. Also by the late ‘70s, the use of large on-site production of H2 began to shift from customer owned and operated H2 plants to IGB OSP sale-ofgas H2 with emerging volume and transaction growth rates of 15 percent per year until the recession of 2008. Since then, on-site development on all fronts has slowed with the leveling off of US steel production, the maturation of large scale N2 volume development, the slowdown in the large volumes of high purity N2 for the semiconductor sector, and leveling off of OSP H2 demand with the decline in sour crude imports. Regarding the technologies supporting US (and international) OSP and liquids production, there continues to be significant improvements lowering specific power use (kwh/ccf), specific capital ($/ton per day, after adjusting for inflation), and higher spigot purities. Compressor and expander efficiencies, higher turndown rates for rotating equipment, and higher on-stream factors have maximized output recovery, reduced operating factor costs, and increased onstream reliability. Process efficiencies have also improved with higher performance extended surface heat exchangers, greater use of packed columns, and much higher levels of process monitoring and control of flow/pressure/temperature with much more powerful automation and less reliance on in-place operating and maintenance labor. While these improvements have been going on for many years, they have accelerated in the US during the past 25 years. The problem now is that market demand needs to accelerate to benefit from these technology improvements. An example of a secondary level to this problem is that the benefits from improvements in argon recovery and process economics from large volume O2 plants is now neutralized by the slowdown in OSP O2, which may make the availability of liquid argon (LAR) for increased bulk and packaged demand difficult to achieve.

Bulk Business — Markets

In the US, there has been steady growth in the volumes and values of merchant bulk for liquid oxygen (LOX), LIN, LAR, LCO2, liquid hydrogen (LH2), and liquid September 2015 – CryoGas International

helium (LHe) delivered in tankers, ISOs, and micro-bulk, and gases in tube trailers. This growth occured from the 1960s to the recession of 2008, with some intervening cyclical economic dips. Much of that growth was from a very large increase in piggy-back and greenfield ASU liquefier capacity feeding the natural growth in demand for air gases. This was complemented by significant volume and cost improvements and by the advantages in bulk over high pressure delivery. While LOX demand grew steadily to absorb new ASU O2 and LOX capacity built in anticipation of that demand, it was LIN that took off in the 1970s. Nitrogen demand managed to absorb the lower incremental cost advantages of processing air, which is 80 percent N2. The manifold uses of both gas and liquid N2 that developed have been a significant part of the growth of our industry for the past 50 years. LIN demand, with its wide range of gas and liquid at -320°F, drove the volumes of liquid in the late 1980s to where LIN capacity utilization and deliveries reached a level of 2.5 times that of LOX. That rate of applications put the US gas industry in the position of leading the development of new N2 applications that have since become common internationally. Practically all industrial operations use some form of LIN, vaporized for gas or as super cold liquid. Nitrogen is now used widely at all purity levels from low to ultra high, with impurities at the ppb level. It is delivered via a wide range of modes and in many varying volume requirements. Few people realize that nitrogen has become one of, if not the, largest “chemical” used in the US today. While hydrogen has been in common use for some time in small volumes, LH2 was first used in US space propulsion developments in the late 1950s. The availability and lower sourcing cost of LH2 has expanded the market for hydrogen in the US and it is now a commonly used product. Practically all of the “old” US merchant hydrogen sourcing was produced as a byproduct from chlor alkali plants with H2 gas delivered in tube trailers and cylinders. Now LH2 produced from very big plants is delivered to large customers as liquid and to medium/ small customers from repackaging depots in tube trailers or cylinders. This is a notable development of the US IGB during the past 25 plus years.

Bulk Business — Distribution Technologies

The recent technology improvements in merchant bulk supply have been many and are a continuation of developments that started with the beginnings of merchant liquid deliveries in the late 1950s. The size, variety, and efficiency of bulk delivery has been significantly expanded with standard liquid customer stations being increased to 15,000 gallons, large horizontals being increased to over 250,000 gallons, and liquid cylinders assuming a much higher level of delivery and customer storage than in 1990. All can now be routinely configured for much higher working pressures of 600 psi with widely varying withdrawal rates and vaporizer hook ups and much less maintenance. Tankers and ISO tanks are design/built with higher payloads. LIN tankers generally having more than 7,000 gallon payloads, and improved internal designs and insulation applications. In bulk distribution, one of the biggest changes has been in the automation of scheduling and dispatch. This has been enabled by the development of automated sensing systems which continuously monitor tank inventory levels. Sensing systems enable short internal uploading of inventory information for computerized next day scheduling. These have significantly increased payload efficiency by increasing volume per delivery-mile, decreased customer involve-

US Distributor Type Business 2014 $ Billion

Majors

Ind Distrb.

Total

Gases Micro-bulk

0.23

0.15

0.38

Packaged

4.02

2.90

6.92

Other

0.35

0.25

0.60

SubTot Gases

4.60

3.30

7.90

Gases % Share

61%

46%

54%

HardGoods

2.90

3.80

6.70

HG % Share

39%

54%

46%

Total

7.50

7.10

14.60

Table 2

Source: Intelligas Consulting

Development of the US Industrial Gas Industry From 1990 Onwards

ment, and created more supply reliability. Micro-bulk distribution is another innovation that has improved delivery and off-loading practices. Started in the mid1980s with small scale deliveries of LCO2 in CO2 liquid cylinders to fast-food restaurants, micro-bulk replaced deliveries of 20 and 50 pound high pressure CO2 cylinders. By 1990 this liquid delivery system had been modified to fit LIN. LAR and LOX micro-bulk delivery with submerged pump technology followed. Improved fleet operations, delivery equipment costs, and reliability have reduced overall operations and maintenance costs and safety. This bulk delivery performance has made the US IGB one of the most efficient and safest tanker fleets among large US tanker fleets. See “Cryogenic Distribution & Technology Improvements Drive Sustainable Growth for Chart Industries,” on page 62 of this issue for more on this topic.

In addition to improvement in transportation operations, advances in core storage, pump, and vaporizer systems related to the distribution of industrial gas also have been significant in the past 25 years. Examples are many. To name a couple, there is food freezing with LIN and LCO2 and the improved capabilities of piping, manifold, control and management systems for in-fab design/build/operations in the semiconductor industry. Strategies and practices like these provide a base for further expansion of the gas business and create new demand structures, products, and services during the coming years.

Distributor Type Business & Packaged Gases

The US Distributor Type Business (DTB) is an important part of the US industrial gas business. The DTB is particularly impor-

tant in servicing the millions of smaller customers with gases, hardgoods, and related services and includes all components of the typical distributor’s revenue stream. We discuss the DTB in terms of Gas, Hardgoods, and Other. Gas is defined as the revenues for gas product sales, cylinder rent, and related services; Hardgoods include cutting and welding, medical DME systems etc.; and Other is other revenues unique to the typical distributor’s gas business in that local market, e.g. home healthcare, beverage CO2, W&C equipment repair, swimming pool service, etc. In our model, the revenues of the major gas producers are reported separately from the revenues of the privately owned Independent Distributors, which we estimate at about 850–900. The majors in the packaged gases business include Airgas, Praxair’s PDI, and MATHESON, each with significant revenues from the DTB, together with an aggregate of Air Liquide, Air Products, and Linde, which have less direct participation in the DTB. The independents range in size and scope of annual revenues of at least $1 million from small “Mom & Pops” to the largest with revenues of as much as $300 million. While a few of the independents might have a Homecare Business, we do not include that business segment in DBT. The wholesale value of that Homecare oxygen is included in our US Gas Model. The US DTB is unique in industrial distribution because of the significant fixed assets required on the gas side of the DTB, in combination with the more routine working capital invested in all parts of the DTB. Table 2 profiles the US DTB Revenue Model for 2014. As shown, total estimated revenues from the 2014 DTB are $14.6 billion, of which $7.9 billion, or 38 percent, is for gases and related purchases. (We exclude the sale of gases to distributors in this model to avoid double counting of revenues.) The

nexAir has been genuinely appreciative of CryoGas International and its goal to provide relevant, up-to-date content on trends and best practices in the industrial gas industry. We eagerly await the new issue’s arrival each month and frequently cite its articles, as they truly serve as a reliable source for industry news and insights. nexAir has been lucky enough to be able to contribute some unique content over the years from many of our team members, and we are grateful to CryoGas for our continued partnership and their dedication to distributors. We congratulate the magazine on its 25 years and look forward to the years to come! Bill Proctor, President, nexAir 22

total of 2014 DTB hardgoods is $6.7 billion. This is not included in our US Gas Model. The DTB model shows the majors, which now include Airgas, with a share of 61 percent of DTB gases. Airgas’ significant gas and related revenues are over half of the total of the majors. (In our model Airgas, formerly considered a distributor, became a major gas company in 2007 after it bought Linde’s merchant bulk business.) An interesting shift in the supply chain of gases during this last 50 years has been the changing role of the major gas producers and of their distributors. In the 1960s all the majors were concentrating on the rapid development of OSP and their merchant bulk businesses, with aggressive moves in OSP and liquids sourcing in the steel, chemicals, and refining markets. At that time, Linde Division of Union Carbide, Airco, and Chemetron/NCG were in the compressed cylinder gas business with much of that distribution handled by over 2,000 independent welding and gas distributors. Several of those produced their own gases from small high pressure oxygen and carbide fed C2H2 plants. Many of the distributors rented cylinders from the majors, who exercised fairly tight control over their distributors. In those days the average DTB hardgoods to gas mix was about 80:20 percent. In the 1970s the DTB was still concentrating on hardgoods, with the Linde Division of Union Carbide, Airco, and Chemetron as significant players in the design/ build/supply of welding and cutting and medical equipment, with a combination of direct and distributor sales. By the late ‘70s increased interest in US gases participation had became international with Messer Griesheim buying Burdett and AGA buying Burdox, both substantial gas distributor-producers. In 1982 Airgas started up with its first acquisition of Connecticut Oxygen and quickly became a very active

CryoGas International is a great resource that I utilize to stay connected to the important issues related to the industrial gas business. It is an enjoyable periodical to read and provides me with valuable information on the business and technologies that are involved with the industrial and medical gases industries. The company news section provides me with a great way to stay on top of the current events, as well as the people and businesses that I am familiar with in this sector and am interested in following. The staff at CryoGas has been great to work with and I wish them 25 more successful years!” Doug Morton, Vice President – Sales, Eleet Cryogenics, Inc. September 2015 – CryoGas International

Development of the US Industrial Gas Industry From 1990 Onwards

buyer of independents. In 1986, the Linde Division of Union Carbide decided to exit the DTB business as part of its restructuring after its problems in Bopal, India, but scrapped that exit plan 1988. In 1992, the Linde Division (US) was spun out of Union Carbide into Praxair. Praxair formed Praxair Distribution Inc. (PDI), a wholly owned subsidiary from its packaged gases and hardgoods distribution business, which accelerated its DTB development while maintaining its independent distributor network. In 1996, Praxair acquired Liquid Carbonic which included a substantial CO2 business together with its bulk and DTB gas business. By the end of the 1990s Airgas had acquired over 230 companies. Significant consolidation of the DTB independents had occurred by this time, putting new emphasis on acquisitions. This increased the investment potential of the US IGB. In 1999, Linde bought AGA’s international business, which together with AGA’s then substantial US gas business put Linde into the US bulk and DTB business. Nippon Sanso bought Matheson and Tri-gas, which had been formed with spin-offs from the merger of Big 3 into Air Liquide. By 2000, the DTB was buying all its air gases and most of its other gases from the majors and its gas-to-hardgoods mix shifted to 40:60 percent. Part of this growth in gases was enabled by the purchase of the independents’ cylinder fleet, which started in the ‘70s. Rental of that fleet had dramatically increased distributor cash flow. From the mid‘60s, privately held companies managed to increase control of their own businesses and actually became more “independent” and able to change gas suppliers more easily. This, together with the independents’ increasing share of their markets, led some of the majors to question their lower returns on DTB capital and their participation in the DTB. Their evaluations turned on the decision of further investment and consolidation in the DTB or to exit. In 2000, Air Liquide and Air Products attempted a breakup of BOC after Praxair’s merger attempt. That effort failed, as did other more modest attempts at consolidation. Air Liquide sold off much of its DTB in pieces over two-plus years, and in 2002 Air Products sold its entire DTB to Airgas. BOC followed with the sale of its DTB to Airgas. With The Linde Group’s purchase of BOC September 2015 – CryoGas International

in 2006 and Linde’s required sale of its bulk business to Airgas in 2007, the consolidation process came to a halt with the US IGB’s six major gas players now solidly in place. With some very notable further consolidation of the US DTB independents, that arrangement is now what shows the 2014 revenue structure of the DTB.

Independents are expanding their cylinder business with much more efficient, fully integrated and automated cylinder filling plants, with palletized cylinder deliveries becoming the norm. Within the DTB, the gas side of the distributors’ businesses has flourished. It now has better managed cylinder control and rentals, and increasing volumes of high purity gases and more costly specialty gases. The DBT also has greater levels of merchant bulk, micro-bulk delivery systems, and some tanker operations, all of which service larger volume customers. It also gives greater attention to the complex details of running a capital intense distribution business. Independents are expanding their cylinder business with much more efficient, fully integrated and automated cylinder filling plants, with palletized cylinder deliveries becoming the norm. The DBT has barcoding of cylinders, which minimizes the loss of cylinders and improves customer service. It is also characterized by a growing array of gas application skills, which enables distributors to sell and service new metal fabrication markets and their related enabling technologies. The combination of more powerful MIS and computer-based management tools is providing distributors with the ability to manage sales forces, costs and period expenses, asset utilization, and people more effectively. Distributor associations, including AIWD, BIG, GAWDA, IDA, IWDC, LDA, etc., are figuring out how to aggregate

best practices, performance benchmarks, and other collaborative tools to assist their members improve their short and long term profitability.

In Summary

The US started out and remains the principle exception to the major gas producers’ international domination of the world’s industrial gas business. The US remains unique in having established a strong independently owned component of its gas business. Today, the question is not so much whether this will continue, but rather how it will progress. There will certainly be fewer independents by 2030, but the remaining group will be large in their scope of operations, have considerable capital and strong cash flow, and will be led by clever owner/managers. In the short run, the sourcing for products like argon, helium, rare gases, and others will have to be developed further or shortages will be a hindrance to US economic development. In the long run, as the industrial gas industry develops products and services that are outside its “traditional and ubiquitous supply of plentiful air,” it will face the challenge of relying on raw materials that come from outside our industry. There are plenty of new markets on the horizon for the IGB, and solving problems with innovative technology and environmentally friendly gases is our strong suit. For example, the CO2 business is part of our industry’s scope. The CO2 emissions issue can be ours to solve as CO2 solutions are part of our portfolio. Growth vectors relating to the development of cleaner and more efficiently produced energy from fossil fuels, and the faster development of alternative energy sources, are other areas of interest for the IGB. In the past 25 years, CryoGas International has delivered all of the above information and intelligence to those interested in our industry. It has been great fun for me. I am certain that the next 25 years of CryoGas will be just as useful and enjoyable. I look forward to continuing my association with our industry’s finest journal. John “Buzz” Campbell is a Principal at Intelligas Consulting, a J. R. Campbell & Assocs. Inc. company of which he is President, and an Associate with Leaders LLC. He can be reached at jrcampbel2@ gmail.com. 23

The Gas Companies — Finding Their Niche

Airgas Growth Through Acquisition Peter McCausland, Executive Chairman of Airgas, discusses the structural change in the US gases business over the last 25 years — something in which the company has blazed a trail en route to its position today as a major industry player. When CryoGas International began in earnest in 1990, Airgas, Inc. was a relatively new entrant to the US gases business. The company was established as a “nest egg” investment by ex-Messer employee Peter McCausland in 1982 via the acquisition of Connecticut Oxygen Corporation (Connox). It was a fitting start for US Airgas, as it was originally known. Realizing that the distribution side of the industrial gas business in the US was ripe for consolidation, McCausland led Airgas along a path of smaller acquisitions and rapid revenue growth. By the 1990s, the company had absorbed nearly one hundred acquisitions and had generated both the cash flow and borrowing capacity to continue the aggressive development strategy that CryoGas would go on to document throughout its news pages. It’s a journey that has served Airgas well. When viewed alongside many of its industrial gas contemporaries, it is still a youthful company — but Airgas is today the largest distributor of packaged industrial, medical and specialty gases, as well as welding and cutting equipment, and one of the largest distributors of safety supplies in the US. As the leading consolidator in the last 25 years, Airgas also exemplifies the evolution in the US gases market over this timeframe, shifting toward a more vertically integrated marketplace. Reflecting on then and now, McCausland told CryoGas, “Twenty-five years ago, the US industrial gases market was very different from the rest of the markets in the world. While industrial gas companies outside the US were mostly vertically integrated, the US packaged business was extremely fragmented. “Today, the US packaged market is much more consolidated. Our estimate is that the share of ‘independents’ has dropped from 85 percent to 45 percent in this timeframe, so the US is moving toward the vertical integration model that is prevalent in the rest 24

of the world. “Airgas has been the leading consolidator over this period of time,” he continued. “Packaged gases are our principal business, but years ago we had to compete against companies that were much bigger and had far greater resources than we did at the time. One of the main reasons we have been successful is because of our focus on serving our customers very well at the local level. We have a decentralized organization model which gives local managers the responsibility and autonomy to serve customers. We believe that ‘local’ matters a great deal and our organizational structure supports this customer-centric philosophy.” McCausland explains that this model has allowed Airgas to grow organically and positioned it to ultimately purchase the packaged gas and hardgoods businesses of more than 400 independent distributors, and the U.S. packaged gas businesses of Air Products, BOC, and Linde, in the last quarter of a century. This, he adds, provides Airgas with an “unrivaled” platform. That platform, while inherently focusing on packaged gases, has grown to include a large gas production business in the US through the acquisition of Linde’s divested bulk business and the development of Airgas’ own supply chain capabilities. McCausland explains, “From our roots as a local distributor of commodity gases, Airgas has evolved into a national partner providing a full range of products and services to large, leading corporations and smaller, specialized enterprises alike.” “Our main focus over the years has been packaged gases, but, through the acquisition of Linde air separation units and the internal development of our capabilities, we have secured our gases supply chain in a significant way.” Airgas has clearly left an indelible mark on the US gases business in the last 25 years, particularly in its role at the fore-

Peter McCausland

“Packaged gases are our principal business, but years ago we had to compete against companies that were much bigger and had far greater resources than we did at the time.” front of M&A activity and a shifting marketplace. So what has Airgas recognized that no other player has in this period? “Our biggest differentiator was, and continues to be, our ability to recognize the local nature of our business,” McCausland concludes. “We continuously evaluate and improve upon our organizational model and the right combination of national, regional, and local resources so we can continue to deliver to our customers. “Our customers benefit from partnering with a company that has all of the resources, efficiencies, and experience you would expect from the market leader, while also retaining the personalization, customer service, and responsiveness that you’d find in a smaller, local company.” September 2015 – CryoGas International

The Gas Companies – Finding Their Niche

Air Products A Quarter Century of Coverage in CryoGas In honor of CryoGas International’s 25th Anniversary, Air Products takes a moment to reflect on some of the company’s highlights and challenges since CryoGas first began its comprehensive reporting on the industrial gas industry. At the time CryoGas was preparing to publish its first magazine, Air Products was already a leader in the industrial gas industry. Spurred by new clean air regulations, increased use of high-sulfur crude oils, and larger demands for transportation fuels, the company was at the forefront of building hydrogen processing equipment for oil refiners, and was the leading global supplier of refinery hydrogen for making cleaner burning transportation fuels. In the 1990s, Air Products also embarked on what would become a decade of moves to strengthen its position in the electronics industry. The company grew its business in Asia by forming joint ventures in Japan and Indonesia, establishing a new subsidiary in Singapore, and opening new facilities in Japan to supply products to the semiconductor market. It was during this time that Air Products became the worldwide leader in the production of nitrogen trifluoride, which continues to be the pre-eminent chamber cleaning material for the semiconductor industry. In addition to growth in the electronics industry, Air Products completed acquisitions of Carburos Metálicos, which today is a leading industrial and medical gases supplier in Spain, and Permea, Inc., a leading supplier of membranes and adsorption gas separation systems for noncryogenic industrial gas production. In the decade that followed, Air Products continued making strides toward becoming one of the world’s leading integrated industrial gas companies by growing other business segments and launching several game-changing technologies in the marketplace. For example, Air Products fortified its global leadership position in liquefied natural gas technology by introducing its AP-X® liquefaction process technology, a debottlenecking process that enables as much as a 60 percent capacity increase in production without sacrificing existing efficiency. During CryoGas’ quarter century 26

Seifi Ghasemi

Air Products employees, many who suffered their own personal losses as a result of the storm Katrina, worked vigorously to restore operations at the Air Products facility. of coverage, Air Products manufactured and delivered its 100th heat exchanger for the liquefaction of natural gas and expanded its world-leading capability by opening a second manufacturing facility to make even larger heat exchangers. In addition to successful business activities, CryoGas has also reported on some challenging times for Air Products. The company faced some difficulties in 2005 when its industrial gas complex in New Orleans, Louisiana, was inundated with more than eight feet of water after Hurricane Katrina made landfall. Air Products employees, many who suffered their own personal losses as a result of the storm, worked vigorously to restore operations at the facility. The company achieved the

milestone of “substantial operations” in just over two months, helping to relieve a constrained liquid hydrogen market. By the end of the decade, Air Products had made advances in other businesses. The company completed an acquisition that built on its surface science expertise to enhance service for the industrial and institutional cleaning market. Air Products also became the leading gas supplier in central Europe after acquiring the industrial gases business of BOC Gazy in Poland. In recent years, Air Products again expanded its leadership role in the production and delivery of hydrogen. In 2012, the company dedicated the world’s largest hydrogen plant and pipeline supply network located on the Gulf Coast and stretching from the Houston Ship Channel in Texas to New Orleans, Louisiana. Air Products now provides hydrogen to customers connected along the 600-mile pipeline from over 20 hydrogen production facilities. Just one year later, another hydrogen milestone was marked when Air Products and Technip celebrated two decades of operational excellence and success. The over 20-year relationship, which continues toSeptember 2015 – CryoGas International

Air Products: A Quarter Century of Coverage in CryoGas

day, noted the longest and most productive global hydrogen alliance supporting the oil and gas industry around the world. The alliance capitalizes on each company’s expertise and was formed to meet refining industry demands for outsourced hydrogen to make cleaner burning transportation fuels. Innovation has been another strongpoint of Air Products, and CryoGas has covered its unprecedented achievement in Texas, where the company announced the successful operation of its carbon capture project. Working under a United States Department of Energy (DOE) Demonstration Project, Air Products’ facility in Texas is capturing approximately one million tons of carbon dioxide (CO2) per year for use in an enhanced oil recovery process. DOE estimates that an additional 1.6-3.1 million barrels of oil would be produced annually from the CO2 injection. This unprecedented achievement comes by way of an Air Products innovative technology, is the first-of-its-kind operating at such a large scale, and has not been accomplished anywhere else in the United States. Perhaps one of the biggest changes over the last 25 years — in fact, one of the biggest changes in Air Products’ 75-year history — occurred in July 2014, when Seifi Ghasemi was appointed Chairman, President, and CEO of the company. Mr. Ghasemi introduced a new strategy to the company’s employees and shareholders, and began a major restructuring of the company. As a result, Air Products is well positioned to achieve its goal of becoming the safest and the most profitable industrial gas company in the world, providing excellent service to its customers. While Air Products has seen many changes over the past 25 years, there are some things that remain the same — things that are deeply rooted in the Air Products culture. Since the company’s founding in 1940, Air Products employees are steadfast in their focus on safety, doing business with integrity, their passion for understanding customer needs and exceeding their expectations, and caring for the environment and communities where the company operates. With this kind of solid foundation, Air Products looks forward to celebrating many more years of success alongside of CryoGas. September 2015 – CryoGas International

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The Gas Companies – Finding Their Niche

Praxair, Inc. Leading in North America Senior Vice-President Anne K. Roby talks to CryoGas International about the 25 year-rise of today’s Praxair, Inc. to a $12 billion global industrial gases major in 2014. At the time of the birth of CryoGas International, the story of one of the biggest industrial gas majors was in the making. By 1992, Praxair, Inc. became a formally independent company, a brand derived from the Greek term ‘praxis’ (practical innovation) and the company’s fundamental raw material — air. Under the leadership of Chairman and CEO H. William Lichtenberger, the newly founded Praxair made “tremendous progress” in its ability to better serve its customers while improving its profitability, and engaged in vigorous M&A activity along the way. This included one of the first significant mergers in the industrial gases industry, as Praxair acquired Liquid Carbonic, then the largest carbon dioxide producer worldwide. The company has come a long way since then. Dennis H. Reilley picked up the baton of President and CEO from the retiring Lichtenberger in 2000 and continued its path of progression, seeing sales rise from $4.6 billion in 1999 to $9.4 billion in 2007 when he was succeeded by Praxair’s Chairman, President, and CEO today, Stephen (Steve) F. Angel. With 2014 sales of $12.3 billion and 27,000 employees in more than 50 countries, Angel presides over the largest industrial gases company in North and South America, and one of the largest worldwide. M&A activity — one of the biggest trends in the US gases industry over the last quarter of a century — has played a role in this route to the top, as Anne K. Roby, Senior Vice-President, affirms to CryoGas International. “Acquisitions have played a large role in Praxair’s growth. Praxair changed the playing field when it completed one of the first major mergers in the industrial gases industry with the purchase and integration of Liquid Carbonic,” she says. “Also, while others divested their packaged gases 28

businesses, Praxair grew through acquiring independent packaged gas distributors and created a national presence.” “With our relentless focus on being the best performing industrial gases company, Praxair has set the performance standard in safety, profitability, return-on-capital and productivity.” “There has been significant change in the industrial gases business over the past 25 years,” Roby reflects. “Industrial gas companies have become more specialized, moving from divisions of larger companies to standalone entities. The sale of gas business model, based on long-term contracts, has strengthened in atmospheric gases and expanded to include hydrogen supply to refineries. The demand for hydrogen has increased dramatically over this timeframe, driven by changes in crude oil composition and diesel fuel regulations.” Praxair’s steady push for growth has also driven the development of technological innovations and new applications to satisfy customer needs. “One key technology we added to support the growth of hydrogen was our innovative 2.5 billion standard cubic foot high-purity hydrogen storage cavern. This new method of storage allows for increased supply reliability for our customers,” Roby notes. Praxair also pioneered the AOD (Argon, Oxygen Decarburization) process for stainless steel production, which over 75 percent of the world’s supply of stainless steel use today, while oxygen injection through multiple, wall-mounted injectors has become the industry standard since the invention and application of Praxair’s patented gas injection system. These are developments that perhaps demonstrate a wider trend in the industry where new applications are concerned; the industry has experienced strong growth driven by a dramatic increase in the intensity of industrial gases used in most industries.

Anne K. Roby. Photo courtesy of Praxair, Inc.

“Praxair’s early focus on sustainable development has enabled us to respond to customers’ needs for improved efficiency and environmental stewardship.” Another dynamic that has shaped the North American gases industry over the last 25 years is the expansion of plant capacities and capabilities. Technology has enabled plants to be both bigger and smaller, giving rise to the standard 3,000 tons per day (TPD) plants of today. Roby affirms, “As our customers’ definition of ‘world-class capacity’ increases, so do plant sizes. In 1990, a 1,000 TPD plant was considered large, but today we see 1,500 to 3,000 TPD plants as typical or September 2015 – CryoGas International

Praxair, Inc. — Leading in North America

part of the standard product line.” “Simultaneously, small plants have become more common. Praxair was first to develop and commercialize small non-cryogenic oxygen plants with our Vacuum Pressure Swing Adsorption (VPSA) technology. The capacities of these plants continue to evolve as plants range in size from 20 to 250 TPD. In addition, we have seen steady growth in small nitrogen plants with sizes decreasing over time.” So where does Praxair go from here? “The Americas, where we serve a strategic mix of developed and emerging countries, will remain integral to our business,” Roby explains. “Going forward, we will continue our laser focus on understanding and meeting customer needs, project execution, building density, driving energy efficiency, and developing world-class applications technologies.” Praxair will also continue to make sustainability a core focus of its operations — a consideration that may well shape the next 25 years in the gases industry. The company has been something of an industry pioneer in this area, recognized by its selection in the Dow Jones Sustainability World Index for 12 consecutive years — the only US chemical company with this distinction — and its inclusion in the CDP S&P 500 Climate Disclosure Leadership Index, one of only three companies to have done so for seven consecutive years. Roby concludes, “Praxair’s early focus on sustainable development has enabled us to respond to customers’ needs for improved efficiency and environmental stewardship. Praxair helps customers enhance their environmental performance while minimizing our own use of environmental resources and maximizing our environmental, economic and social contributions.”

Reporting on the business and technologies driving today’s industrial gas industry September 2015 – CryoGas International

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The Gas Companies – Finding Their Niche

Linde 1990-2015: A Momentous Chapter in the Linde Story

Chronicling 25 years of CryoGas International covers a vast array of developments in the US gases industry, many of which relate to Linde North America. The last two decades in particular have been significant in driving the company to where it is today — a major force in the region’s gases industry, with over 4,000 employees throughout the US, Canada and the Caribbean and annual sales of more than $2 billion. The roots of Linde North America can be traced as far back as 1879 in Chicago when German engineering pioneer Carl von Linde — founder of Linde AG and arguably the gases industry itself — sought to promote the internationalization of his budding business in Europe. In the US, he had sold the patent rights to his refrigeration and ice machines to German-American Friedrich Wolf in Chicago. But before he could market his air liquefaction plants in the US, von Linde needed to have the American patents and, after what would become years of lengthy hurdles and patent disputes, eventually decided to found his own company in the country. December 1906 would see von Linde travel to Buffalo to purchase land and set in motion the construction of an oxygen factory, culminating in the founding of Linde Air Products. Opened on Thanksgiving Day in November 1907, the factory became the first oxygen production plant in the US. By the outbreak of World War I, the company had built a dozen factories and supplied the most important industrial regions in the US with not only oxygen, but also acetylene and welding equipment. Subsequent share dilution and divestment resulted in Linde Air Products being taken over by Union Carbide in 1917, later becoming Praxair, Inc. (see “Leading in North America”, page 28). Though still active in the country, Linde AG gradually lost its rights to the name “Linde” in the US for several decades. By the time of CryoGas International’s 30

The Linde North America plant in La Porte, Texas. Officially started up in June, 2015, Linde’s new plant in La Porte produces oxygen, nitrogen, and argon. Photo courtesy of Linde.

The 1990s would prove to be a progressive period for Linde’s interests in the US, acquiring AGA AB and the Sunox Inc. gas company in Charlotte through subsidiary Holox Inc. birth in 1990, Linde was keen to step up its presence again in North America. The company was successful in 1996 with the strategically important purchase of the Pro-Quip Corporation (TPQ) in Tulsa, Oklahoma, which was, among other things, the world market leader in small hydrogen plants. After this acquisition, Tulsa was built up to become a new ‘Linde center’ in the US and in 1999, Linde moved the subsidiary Lotepro Inc. from New York to Oklahoma. Both companies would later (2001) become part of the newly formed Linde Process Plants Inc. The 1990s would prove to be a progressive period for Linde’s interests in the US, acquiring Swedish industrial gas company AGA, AB — already a regional

player in the US having purchased Burdox of Cleveland, Ohio in the late 1970s — and the Sunox Inc. gas company in Charlotte through subsidiary Holox Inc. Linde AG also successfully entered the US hydrogen and carbon monoxide business through a $122 million cooperative agreement with Millenium Petrochemicals Inc. in 1998. But one of the most important dates for Linde in the US before the turn of the century was January 1, 1999 — when the group’s North American operations were once again permitted to use the name ‘Linde’. Having repurchased these rights from Union Carbide’s spin-off, Praxair, Linde once again owned the rights to the Linde name and trademark in the US. Investment continued as the 21st century began. In December 2005, after several acquisitions of independent distributors, Linde announced the acquisition of the specialty gas company Spectra Gases of Branchburg, New Jersey. An even bigger development occurred in 2006 when Linde AG closed the acquisition of The BOC Group, including all of its assets in the US. Recent years have seen Linde continue to go where the growth is, acquiring Florida-based home healthcare company Lincare Holdings Inc. in the summer of 2012 for $4.6 billion. The investment was immediately accretive to Linde’s aspirations in the megatrend healthcare industry, with noticeable uplift created in Linde’s fiscal results in the years that followed. All of which leaves Murray Hill, New Jersey-based Linde North America as one of the biggest manufacturers and suppliers of industrial, specialty, and medical gases and equipment in the US in 2015. Boasting one of the industry’s strongest distributor networks with over 400 sales, retail, plant, and depot locations, one might say that the last 25 years has been a momentous chapter in Linde’s US story — and has truly realized the vision of its founder over a century ago. September 2015 – CryoGas International

The Gas Companies – Finding Their Niche

Air Liquide Investing in Innovation American Air Liquide Holdings, Inc. explains why innovation and technology development has been central to the group’s activity in the US market over the last 25 years. When Air Liquide acquired electronics materials company Voltaix Inc. in June 2013, it invited synergies in molecule discovery and scale-up and came as one of the biggest deals for the company in the US in recent years. It also cited a desire to stay at the forefront of innovation — in electronics and specialty gases — as part of the motivation for the deal. This is significant as Air Liquide looks back over the last 25 years with CryoGas International; innovation has been at the heart of Air Liquide’s business in the US in this timeframe, the company proudly says.

New Technologies and Processes

Air Liquide has been operating in the US since 1969 through its American Air Liquide Inc. subsidiary, stepping up its presence considerably in 1986 with the $1 billion acquisition of Houston-based industrial gas producer Big Three Industries via Paris-headquartered parent company L’Air Liquide. Though it would also take the opportunity to pick up Messer’s industrial gas operations in the US (incurring various anti-trust divestitures) in 2004, and most recently Voltaix, for Air Liquide the last 25 years has been less about the overall trend for acquisitions and more about innovation. This has been essential, explains Heather Browne, Director of Communications at Air Liquide USA LLC, to keep up with changing customer demands in this time. “As customer needs have evolved, so has the industrial gases industry. First and foremost, technological advances have resulted in new and better ways to meet growing customer needs in an ever-changing marketplace.” “From Air Liquide’s perspective, we have imparted new technologies and processes in our business over the last 25 years, resulting in a more innovative, efficient, and sustainable solutions. And 25 years later, serving our customers in a safe, 32

high-quality manner remains the focus of our business.” “Innovation is at the heart of Air Liquide’s business,” Browne affirms. “So over the course of the last 25 years, we have worked to adapt to our customers needs, imparting new technologies and innovative product and service offerings.” Hence the integration of Voltaix two years ago. The company is now part of a US Air Liquide operation spanning more than 5,000 employees, 200+ locations — including over 140 industrial gas plants — and around 2,000 miles of pipeline supplying mainly oxygen, nitrogen and hydrogen to an array of end-user industries. The Americas account for 23 percent of Air Liquide sales worldwide (2014). It’s an operation that the company continues to invest in via research and development (R&D), innovation and new application technologies. In fact, Air Liquide established the Delaware Research and Technology Center (DRTC) in Newark in 2007, home to more than 100 researchers representing over 20 nationalities. This is backed up by the Air Liquide Group’s strong background in innovation since its formation in 1902, and more than 1,000 researchers across its 10 R&D centers around the world today. Air Liquide cites these credentials as

“As customer needs have evolved, so has the industrial gases industry... technological advances have resulted in new and better ways to meet growing customer needs in an ever-changing marketplace.” one of the company’s key differentiators in the US over the last 25 years. Browne adds, “The company’s 100+ year history is a key differentiator. We have a long-standing reputation in the industrial gas market for bringing an extensive portfolio of capabilities to our customers, providing innovative offerings safely and reliably to help them grow and prosper.” “Innovation has continued to drive improved technology and greater efficiencies in both plant design and industrial process, resulting in greater capacity, efficiency and overall sustainability.” With the widely held view that innovation is one of the key challenges facing the industry going forward, one could argue that Air Liquide is well placed to head into the next quarter century. September 2015 – CryoGas International

The Gas Companies – Finding Their Niche

MATHESON The Evolution of the US Gas Business

First of all, congratulations to CryoGas International on 25 years of excellent service to the industrial gas market. Anyone who’s been in business for that length of time knows that it takes stamina, leadership, and quality to reach these milestones. Well done! MATHESON has been asked to comment on how the US industrial gas business has evolved over the past 25 years, what our company’s role has been, and how our plant capabilities and capacities have developed over this timeframe. To comment on these topics, we need to look back a little further into the history of the gas business. Adam Matheson started Matheson Gas Products in 1927 and was the first commercial producer of specialty gases in the US. At the time, there was an emerging demand for higher purity supplies of gases such as oxygen, nitrogen, and carbon dioxide — which in those days meant anything over 99.5 percent. From the 1920s to the 1980s Matheson Gas Products developed and supplied specialty gases and gas mixtures mainly for research and military applications. Customers ordered specialty gases and equipment mainly from the Matheson Gas Products catalog, which was the authoritative resource on specialty gases for decades. Matheson Gas Products started with one

MATHESON Air Separation Unit, San Antonio, TX

plant in North Bergen, New Jersey, which later moved to East Rutherford, New Jersey. By the mid-1980s, 10 full service regional plants served the US. At first, the specialty gas plants were strategically located to allow delivery directly from the plants to the customers. Over time, the direct delivery model evolved into the use of inventory depots and distributors, and the locations of manufacturing sites became less important. The demand for specialty gases would see a dramatic increase beginning in the 1970s, fueled by the “energy crisis” and the emergence of electronics manufacturing. Photovoltaics and microprocessor

technologies pressed the gas manufacturers to race to develop and produce the highest purity gases for manufacturing semiconductors, solar cells, and later, computers, flat panels, phones, etc. Gas purity continues to play a stateof-the-art role in the electronics industry today, with higher gas purity enabling the fabrication of higher density semiconductors in a continuous cycle. As interest in the environment grew, federal regulations and the Clean Air Act drove the demand for complex gas mixtures and EPA Protocol Gases. A year before Cryogas International published its first issue, Matheson Gas Products became fully owned by the Nippon Sanso Corporation in Japan. Nippon Sanso also owned Tri-Gas in Dallas, Texas. Seeking to establish a powerful and independent North American operation, Nippon Sanso merged Matheson Gas Products and Tri-Gas to form Matheson Tri-Gas in 1999. Since 2000, MATHESON has added 17 new ASUs (air separation units) through new construction and acquisitions. MATHESON’s ASU Strategy is to invest capital in growth markets to strengthen the reliability of the company’s existing network. The Strategy vertically integrates cylinder gas and product distribution in step with bulk capabilities. The goal of the Strategy is to meet the total gas (cylin-

MATHESON Gas Supply Options 34

September 2015 – CryoGas International

MATHESON – The Evolution of the US Gas Business

der and bulk) and equipment needs of all customers safely, reliably, and profitably. The new MATHESON ASUs were designed and constructed using the worldclass technology of parent company, Taiyo Nippon Sanso. Other ASUs in the MATHESON fleet have been upgraded. MATHESON’s network of plants and facilities has increased dramatically in the past 25 years. Between 2004 and 2015 MATHESON has made numerous acquisitions, including: Linweld, Valley National Gases, Western International, Polar Cryogenics, Cedar Rapids Welding Supply, Aeris, Five Star Gas & Gear, Advanced Gas Technologies, ETOX, Quimby, US Airweld, A&F Welding, Whitmer, Evergreen Supply, Continental Carbonic Products, Sims Welding, and the Hawaiian operations of Air Liquide. MATHESON now has facilities in 43 states and offers coast-to-coast supply (and Hawaii) of bulk and packaged gases, as well as a full complement of gas

handling equipment, welding supplies, and safety supplies. On-site air separation units and pipeline distribution is another area of expertise offered to customers. MATHESON is a lifecycle supplier of helium — including the development of source wells, the provisioning of transfills, and all forms of helium supply — including helium capture and recycling. MATHESON operates helium sources in both the US and Europe and operates six US transfills, with more planned. MATHESON is also a supplier of commercial and residential propane with approximately 60 locations serving residential customers. When it comes time to celebrate anniversaries such as the 25th year of CryoGas International, it is an occasion not only for celebration, but also for grateful reflection on how we — our entire industry — came to be what we are today. This retrospective on the evolution of MATHESON, is also a reflection of the gas industry itself:

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Since 2000, MATHESON has added 17 new ASUs through new construction and acquisitions. MATHESON’s ASU strategy is to invest capital in growth markets to strengthen the reliability of the company’s existing network. a business characterized by steady growth and healthy partnerships. In celebration with our friends and colleagues at CryoGas International, success in the publishing field — especially over the last 25 years — is no small feat. It serves as its own tribute to the consistent good work of the people behind it. For all of us, the next 25 years should be as interesting as the last!

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Evolution of the Global Helium Business

Evolution of the Global Helium Business 1990 — 2015 By Phil Kornbluth Congratulations to CryoGas International on reaching the 25th anniversary of publishing its first issue! Throughout its history, CryoGas International has always shown a keen understanding of developments in the helium business and has done an excellent job of keeping its readers informed on helium-related topics affecting their businesses. Of course, the only constant in the global helium business has been change, and the 25 year period coinciding with the life of CryoGas International has seen a great deal of it. Let’s start at the beginning. What was the helium business like circa 1990? The helium business was very US-centric in 1990. Approximately 80 percent of the world’s helium production came from a half dozen helium refining facilities that were tied-in to the US Bureau of Mines’ (BOM) Crude Helium Pipeline and Storage System that stretches 425 miles from the Cliffside Field near Amarillo, Texas, through the Texas and Oklahoma panhandles, and then northeast from southwestern Kansas to its terminus in Bushton, Kansas. The US midcontinent area and the Hugoton Field, which provided the helium bearing gas from which this helium was produced, were truly the center of the helium universe. The only significant helium production not linked to the BOM Pipeline came from Exxon’s massive natural gas processing facility located in LaBarge, Wyoming, which initially produced approximately 800 million standard cubic feet (MMscf) per year of liquid helium, or more than 15 percent of then-current world production, beginning in 1986. The only significant commercial helium production from a source outside of the United States came from a plant in Odolanow, Poland that produced less than 100 million scf per year, or 2–3 percent of world production. The business in 1990 was dominated by the three companies who owned the refining capacity that was tied to the BOM Pipeline — the Linde Division of Union Carbide (now Praxair), Air Products and Chemicals, and 36

the British company, The BOC Group (now The Linde Group). The only other companies that were basic in the helium business (i.e. controlled supply at the source) were Air Liquide and Messer Griesheim, who became basic as a result of a contract they signed to purchase helium from Exxon. On the demand side, 1990 was a very exciting time for the helium business. Magnetic Resonance Imaging (MRI) was in the early stages of a period of rapid growth that would eventually make it the single largest application for helium and, by far, the largest application for liquid helium. MRI systems utilize liquid helium as the refrigerant that cools the superconducting magnets at their core to temperatures where they lose their resistance to electricity. The early MRI systems were sometimes referred to as “CryoHogs” because they required as many as three separate magnet cooldowns and had much higher boil-off rates than we see today. MRI also made very important customers out of the companies that manufactured MRI systems including General Electric, Siemens, Phillips, Picker, Technicare, Diasonics, Toshiba, and others. There was quite a feeding frenzy among the major industrial gas companies to secure their business, with Air Products and BOC emerging as the early winners. MRI drove double-digit demand growth for helium throughout the 1990s and, as MRI systems were installed throughout the world, it was the primary catalyst for the build-out of the gas companies’ liquid distribution networks into new markets where liquid helium was previously unavailable. Besides MRI, helium demand associated with the manufacture of optical fiber also drove growth during the 1990s, especially in the second half of the decade. Companies such as Corning, AT&T, and others, became major helium customers. Toward the latter half of the 1990s, when both MRI and optical fiber were both driving helium demand, growth rates were in the mid-high teens per year.

Besides the high rate of growth, the 1990s also saw several important developments on the supply side. In May 1993, BOC and Air Products signed agreements to begin purchasing liquid helium from Russia for export to Western Europe. While production from Orenburggazprom’s plant located in Orenburg was relatively modest, Orenburg became the second non-US source and Gazprom/Russia, with huge reserves of helium bearing gas in Siberia, became a participant in the global helium business for the first time. Messer Griesheim also secured a portion of the Russian source. In 1995, the first large scale production from a source outside of the US began at Arzew, Algeria. At Arzew, a joint venture between Sonatrach and a separate joint venture, between Air Products and Air Liquide, produces liquid helium from the adjacent LNG (liquefied natural gas) plant’s vent gas. This plant, which has nameplate capacity of roughly 600 MMscf per year, was significant in that it was the first time that helium was produced from LNG waste gas and it expanded helium recovery potential to natural gas with much lower helium concentrations than were previously viewed as economically viable. With two additional non-US sources by the end of the 1990s, the helium business was beginning to become slightly less US-centric. Politics also impacted the helium business during the 1990s, with the major event being the passage of the Helium Privatization Act of 1996. This legislation mandated the sale of crude helium from the US Federal Helium Stockpile (sales of crude helium commenced in 2003, delaying helium shortages until 2006) and forced the shutdown of the Bureau of Land Management’s (BLM) Exell, Texas, helium refining facility, which ended the BLM’s sale of both gaseous and liquid helium in competition with the private sector. The availability of gaseous helium from the BLM at a “posted price” that was not reflective of market conditions September 2015 – CryoGas International

Evolution of the Global Helium Business

had distorted US pricing for gaseous helium and depressed profitability in that segment to some degree. The BLM continued as the operator of the BLM Crude Helium Pipeline & Storage System and continued to sell crude helium (instead of pure) for sale to government users. Since 2000, most of the bigger stories related to the helium business have been about supply. There have been two periods of fairly severe shortages driven by delays in new supply or outages of existing supply as well as a period of surplus capacity that the industry is currently experiencing. But let’s start with a look at demand. In the early 2000s, the demand party caused by MRI and optical fiber manufacturing began to ease. MRI magnet and system manufacturers became much more efficient in their use of helium, as they mastered the art of cooling down magnets (only) a single time and shipping them cold, while also learning how to minimize helium boil-off. While the number of installed MRI systems continued to grow, the retirement of old CryHog machines combined with more efficient helium use greatly reduced the helium demand growth associated with MRI. Also, in the early 2000s, demand for optical fiber dropped off, as the telecom companies had installed more optical fiber capacity than the world required. People began to talk about “dark fiber,” which was essentially fiber optic cable that was installed, but unutilized due to a lack of demand for the additional bandwidth. While global growth rates for helium demand slipped into single digits for much of the post-2000 period, the big story on the demand side was the geographic shift in demand from North America, Europe, and Japan to the emerging Asian economies. While the developed economies experienced unexciting single digit growth or less, demand for helium in China, Korea and Taiwan grew at double digit rates as electronics manufacturing shifted into these lower cost markets. By the time the helium shortage of 2011–2014 reduced helium shipments worldwide, China, Korea, and Taiwan were all among the world’s largest helium markets. On the supply side, the BLM began to sell crude helium from the Federal Helium Stockpile in 2003, helping to keep the helium refining capacity that was linked to the BLM running at capacity and delaying September 2015 – CryoGas International

helium shortages until later in the decade. The trend toward non-US production continued, as the Qatar 1 plant, with capacity in excess of 600 MMscf per year, commenced production in October 2005. This source, which was shared 50:50 between BOC and Air Liquide, was the second largest non-US source and the second plant whose feedstock was the waste gas from LNG production. Like the Algerian source, the Qatar 1 source came with difficult logistics and relatively long supply lines to major helium markets. With access to supply from ExxonMobil, Arzew, Algeria and Qatar 1, Air Liquide was beginning to close the gap with Air Products, BOC, and Praxair. In April 2007, production began from a second Algerian plant located in Skikda. Linde secured this source and became the industry’s fifth (if my arithmetic is correct, by this time Air Liquide had gobbled up Messer) prime supplier of helium. The Skikda plant was also producing helium from the waste gas of an LNG plant. Due to a major explosion that destroyed three trains of the LNG plant, the Skikda Plant was limited to less than 50 percent of nameplate capacity until late 2013. Linde’s acquisition of BOC in September 2006 also had a significant impact on the global helium business. Linde replaced BOC as a global major in the helium business, but a new fifth prime competitor was created when the anti-competition authorities in both the US and Europe forced Linde to divest a significant chunk of the helium assets acquired from BOC. Taiyo Nippon Sanso Corporation acquired most of the divested assets and became the first Japanese gas company with a basic position in the

helium business. The years 2006 and 2007 were a period of tight supply and supply allocation as the BLM Pipeline System began to lose capacity due to depletion of the Federal Reserve (Helium Shortage 1.0). At this time, the Skikda and Qatar 1 plants also produced below expectations, and industry supply was periodically reduced by maintenance shutdowns at ExxonMobil’s Wyoming plant and at other sources. Due to overall tight supply and crude helium delivery allocations, the BLM Pipeline was no longer able to provide the swing capacity on which the industry had traditionally relied to balance supply and demand. Helium markets returned to a comfortable balance during 2008–2010 when worldwide economic activity experienced a severe recession and demand for helium fell. The 2010s started out on a positive note with ample supply and the start of production from Linde’s Darwin, Australia plant. Darwin was the fourth plant processing waste gas from an LNG plant and the sixth non-US source. As it turns out, this was the calm before the storm. Beginning around March of 2011, the industry experienced a severe shortage of helium that lasted for roughly three years (Helium Shortage 2.0). This shortage, unprecedented in both its depth and duration, was almost entirely driven by production shortfalls. There were a number of significant supply constraints and outages that suppliers had to deal with during this period, including: outages of the BLM’s Crude Helium Enrichment Unit that greatly reduced the effective capacity of helium refining facilities tied to the BLM; sustained allocation of crude helium

An aerial view of Linde’s Otis, Kansas Helium Plant. Photo courtesy of Linde. 37

Evolution of the Global Helium Business

1990 – 2015 Summary 1990

2015

Liquid He Plants*

Non-U.S. Plants

97%

U.S. Share Of Capacity

~55%

>30 BCF

BLM CHe Stockpile

6.7 BCF (12/31/14)

Prime Suppliers

LNG-based Sources

MRI Share Of Market

~20%

Container Fleet

Transfills

*Expected to be in operation during 2015 Figure 1 Source: Kornbluth Helium Consulting

deliveries to the helium refiners; prolonged maintenance outages at ExxonMobil’s Wyoming plant in both 2011 and 2012; and production outages/shortfalls at the plants in Arzew, Algeria, and Orenburg, Russia. This “Perfect Storm” of circumstances resulted in a worldwide supply shortfall of roughly 20 percent (and far worse at times) throughout much of the period, with all of the major helium suppliers forced to allocate supply to their customers. Besides the tremendous inconvenience of not being able to acquire the helium required for their businesses, helium customers were faced with prices that doubled as a result of the shortage. In some instances, where access to helium was critical to production of optical fiber or semiconductors, spot prices reached astronomical levels. Applications that were considered non-critical, most notably party balloons, had their helium supply cut off completely. While Helium Shortage 2.0 persisted, there was increasing concern that the BLM would lose funding for operation of its pipeline at the end of its fiscal year 2013, potentially removing three billion scf of capacity from world markets. In fact, new legislation was required to prevent the helium business from going over what was commonly referred to at the time as the “Helium Cliff.” With the helium business continuing to struggle with the helium shortage, this would have been a disaster, which would have demonstrated to the world just how vital helium is to many critical industries. 38

While passage of new helium legislation was viewed as a “no brainer,” Washington gridlock and several areas of disagreement between helium refiners and non-refiners delayed the new legislation. Fortunately, common sense prevailed and the Helium Stewardship Act of 2013 (HSA) was signed by President Obama during the first week of October 2013, just before the deadline. With passage of the HSA, the Helium Cliff was avoided and the BLM Pipeline System remained in operation, with funding for maintenance and required investments in additional compression. The volume of crude helium offered for sale by the BLM will decline each year, due to the depletion of the Federal Helium Stockpile, reducing the capacity of the helium refining facilities linked to the BLM Pipeline. The BLM will sell an increasing quantity of crude helium each year via auction and these auctions will open to a larger group of potential buyers, with the intent of providing non-refiners increased access to the Federal Helium Reserve. Once the Federal Helium Stockpile has been reduced to three billion scf, the BLM will end commercial sales of crude helium and the BLM’s crude helium stockpile will only be available to government users. The three billion scf threshold may be reached after 2021. With passage of the Helium Stewardship Act, and the prospect of new supply from the massive Qatar 2 project, as well increased production from Linde’s Skikda, Algeria source, there was finally anticipa-

tion of the end of supply shortages. The Qatar 2 Plant, which is shared between Air Liquide, Linde, and Iwatani (now the sixth prime supplier of helium), ramped up quickly after a Fall 2013 start-up to reach full capacity of 1.3–1.4 billion scf per year by early 2014. Around the same time, the installation of an LNG mega-train at Skikda finally provided the feedgas required to increase Linde’s Skikda production from around 250 MMscf per year toward its 600 MMscf potential. With all of this new supply entering the market at roughly the same time, world helium markets quickly shifted from shortage to oversupply. Exacerbating the oversupply was the fact that some helium demand was lost during the extended shortage due to a combination of replacement of helium in non-essential applications and more efficient use of helium, including increased recycling. While helium markets are now flush with supply, demand for helium emerging from the years of shortage can best be described as sluggish, and is most likely less than it was pre-Helium Shortage 2.0, due to demand destruction during the shortage. After three years of struggling with shortages and supply allocations, industry participants are now struggling with the challenges associated with too much supply. These challenges include difficulty meeting Take or Pay commitments, excessive inventory and an insufficient number of helium containers to hold the growing inventories. It is difficult to estimate exactly when helium markets may rebalance, but most industry participants estimate that the oversupply could persist for another year or more. So there you have it — 25 years of CryoGas International and 25 years of change in the global helium business, which has grown larger, more internationally diverse, more competitive, and more volatile due to the decline of the BLM Pipeline and an increasingly complex supply chain. Phil Kornbluth has worked in the helium business continuously for the last 32 years, including stints running the global businesses of BOC Gases and the MATHESON subsidiary of Taiyo Nippon Sanso Corporation. He is currently President of Kornbluth Helium Consulting, LLC and can be reached at Phil@KornbluthHeliumConsulting.com. September 2015 – CryoGas International

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Hydrogen Production and Consumption in the US

Hydrogen Production and Consumption in the US The Last 25 Years By Daryl Brown There have been a lot of changes in the last 25 years. In 1990, a share of Apple cost only a dollar, the internet was used mostly by the federal government and a few universities, and your phone stayed at home. Dramatic changes have also come to the US hydrogen industry. While the demand for hydrogen has increased significantly, the provision of hydrogen by merchant gas companies has increased from practically nothing in 1990 to the single largest source of “on-purpose” production in the US today. On-purpose is the sum of captive (produced and consumed by the end-user) and merchant (produced by another company and sold to the end-user). Excluded here is hydrogen recovered from byproduct process streams, which is a significant source in an oil refinery. Worldwide, captive hydrogen production occurs mostly at ammonia and methanol production plants, and at crude oil refineries. The same is true in the US, but the largest amount of captive hydrogen in the US is produced for oil refining, while for the world it is for ammonia production. Captive and merchant hydrogen production in the US since 1990 is shown in Figure 1. Total production grew quickly in the 1990s, leveled off for about eight years, and then con-

tinued growing over the last decade. The flat period in between was hardly stagnant, however. The production of both ammonia and methanol fell sharply, driven mostly by more expensive natural gas prices. The combined drop in hydrogen production for these two chemicals was offset, however, by increased merchant and captive refinery hydrogen production, particularly the former.

The Outsourcing of Refinery Hydrogen Production

It is not much of an exaggeration to state that merchant hydrogen production in the US is synonymous with the increase in refinery hydrogen demand since 1990. Approximately 90 percent of US merchant hydrogen production is delivered to refineries. Although the need for hydrogen and syngas (the H2 and CO mixture resulting from steam reforming of methane) in the production of ammonia and methanol is obvious from the basic chemical synthesis reactions, hydrogen is the lifeblood of an oil refinery. Hydrogen has several uses in a refinery, with the greatest demands associated with sulfur removal and other forms of hydrotreating, and hydrocracking of heavier crude oil con-

US Captive and Merchant H2 Production 10 9

MMT Hydrogen

8 7

Total

Merchant

5 4

Refining

Ammonia

Methanol

1 0 90

Figure 1

8 98 000 002 004 006 00 010 012 2 2 2 2 2 2 2

stituents into more valuable lighter products. In the early years of oil refining hydrogen needs could be met by recovering it from various process off-gases, most notably that from heavy naphtha catalytic reforming. Later, as hydrogen demand exceeded the off-gas supply, refiners started installing captive hydrogen capacity. The passage of the Clean Air Act in 1990 and more rigorous fuel desulfurization requirements in California required significant changes in the way that refineries were operated. The investment in process equipment required to produce cleaner fuels left many refiners short of the capital required to build the corresponding hydrogen capacity. The industrial gas companies stepped in to build and operate the required hydrogen facilities and merchant hydrogen production mushroomed as shown in Figure 1. In 1993, highway diesel fuel was first limited to 500 ppm. “Ultra-low” (15 ppm) diesel was required by 2006 to allow catalyst-based emission control devices to meet other vehicle emissions requirements (e.g., particulate, NOx). These requirements were extended to off-road vehicles in recent years. Regulation of marine fuels has occurred most recently, with a limit of 10,000 ppm established in 2010, dropping to 1,000 ppm this year. Sulfur regulations for gasoline generally came later than diesel because crude oil sulfur content is higher in the heavier fractions such as diesel and residual fuel oil. A limit of 120 ppm was established in 2004, which was further reduced to 30 ppm in 2006. Starting in 2017, the limit for gasoline will drop to 10 ppm. Several other factors have contributed to the rising demand for refinery hydrogen. The demand for and prices offered for specific refinery products will affect the target slate of products within refinery processing constraints. Pushing the slate toward lighter products generally requires more hydrogen. Heavier crudes require more hydrogen to produce a given slate of products. Sour crude September 2015 – CryoGas International

Hydrogen Production and Consumption in the US

(i.e., crude with above average sulfur content, in contrast to low-sulfur or sweet crude) requires more hydrogen for its removal. The average quality of crude oil processed at US refineries over the last 25 years is shown in Figure 2. The data indicate a significant increase in sulfur content that occurred mostly over a five-year period starting in 1996. Crude API gravity generally decreased (became heavier) from 1990 to

2005, but has since climbed back to where it was in 1990. The recent sharp rise in average API gravity is a direct result of the significant increase in generally lighter oil production from shale formations. US hydrogen demand is expected to keep rising significantly in the immediate future as low natural gas prices are driving a renaissance in the US chemical industry, particularly for ammonia and methanol plants.

Refinery Crude Quality

Daryl Brown is a Senior Research Engineer at the Pacific Northwest National Laboratory, operated by Battelle Memorial Institute for the US Department of Energy. Among other duties, Brown maintains the Hydrogen Analysis Resource Center (hydrogen.pnl.gov/cocoon/morf/ hydrogen) for the Department of Energy’s Fuel Cell Technology Office. The data presented in this article were developed by Mr. Brown from various public information sources, but are not necessarily endorsed by either the US Department of Energy or Battelle Memorial Institute.

33.0 32.5 32.0 31.5 31.0 30.5 30.0 29.5 29.0 28.5

1.60 1.40 1.20 1.00 0.80 0.60

Wt% Sulfur

API Gravity

Demand at oil refineries should continue climbing too. In addition to the latest fuel sulfur content requirements noted above, more rigorous regulation of sulfur content in jet fuel and marine fuels may be coming too. Increased refining of fuels for export is also spurring demand. Finally, merchant hydrogen producers could become particularly busy if the outsourcing of hydrogen at ammonia plants, as announced for a new plant being built by BASF and Yara, becomes a new trend.

0.40 0.20 0.00 90

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The Future of Cold

The Future of Cold By Toby Peters During the summer months, most of us rely on air conditioning units in offices, shops, and in our homes to make the rising temperatures more comfortable. In fact, in the part of America known as the air conditioning belt, which stretches from California to Florida, life would be unbearable if buildings could not be kept artificially cool. Some have even attributed Ronald Reagan’s victory in the 1980 presidential election to the booming air conditioning sales in the southern states three decades earlier, which triggered mass migration of people to the “sunbelt” changing the political map of the United States. But cooling doesn’t just make our lifestyle more pleasant. It is absolutely essential to modern life. Cooling allows us access to fresh food, modern healthcare, and digital communications. Without cooling, these vital services would break down. However, research and investment into “green” cooling lags well behind the money that is pumped into both electricity and heat. As a result, the majority of the cooling technologies we rely on are fossil fuel based and disproportionately polluting. With resources under ever-greater strain, and the world’s largest economies under pressure to green their energy systems and improve resource efficiency, it’s time that cooling was given the environmental consideration it deserves. It’s time we invested in new clean, efficient technologies, and created infrastructure to enable us to “do cold smarter.” The US uses more energy to keep cool than the rest of the world combined. Approximately 16 percent of total US energy consumption is used to cool commercial buildings. Homeowners spend some $11 billion each year to keep their homes cool, sending roughly 100 million tons of CO2 into the atmosphere. In California, more than 30 percent of total peak power demand in the summer is used to power air conditioning. In addition to the built environment, if you consider what it takes to transport food and life-saving medicines from one side of the US to the other, the pollution for cold technologies begins to add up. And as al42

most 20 percent of industry in developed economies relies upon the cryogenics industry in some way, the impact of cold industries in the broader sense — from refrigeration to air-conditioning to cryogenics — is therefore far greater. Put it simply, America is an economy that is built on cold. The fact that America leads the world in demand for cold is unsurprising given that it’s the birthplace of the modern cold industry. In 1940, Ohio-born Frederick McKinley Jones brought the first mobile refrigeration unit to market, replacing trucks full of ice with an innovative compressor system. This vital piece of technology helped to establish an uninterrupted cold chain, connecting cold stores and warehouses around the country with the refrigerators in our homes. It enabled meat from Texas to be transferred to markets in New York, and medical supplies to be transported around the country unspoiled. It transformed disparate cold infrastructure into an integrated cold system. Now there are estimated to be more than 400,000 refrigerated vehicles on the road in the US, making it the world’s largest market for transport refrigeration. Although this has Heat exchanger (2) providing cooling to goods compartment from refrigeration unit Heat exchanger (1) providing cooling to goods compartment from cryogen Cryogenic storage vessel

Refrigeration unit and Dearman engine

Liquid nitrogen is pumped through a heat exchanger inside the truck, where it acts as a heat sink, cooling the compartment down. The nitrogen – now a gas – is fed into the Dearman engine where it mixes with warm water and expands rapidly, generating power. This power is used to drive a conventional refrigeration cycle, which cools the compartment further.

been an overwhelmingly positive development, enabling a nation to be fed and a healthcare system to flourish, it is not without problems. The secondary engines, which keep refrigerated vehicles cold, are almost exclusively powered by diesel and, despite their relatively small size, emit disproportionately high levels of CO2, particulate matter, and NOx pollutants into the atmosphere. If cleaner alternatives are not adopted, these 400,000 inefficient and often unseen polluters will go on using an unnecessary amount of oil and producing an unnecessary amount of dangerous pollution on our city streets. Moreover, they will continue to be outdated remnants of inefficiency in an increasingly resource efficient, decarbonised energy system. It must be said, there have been incremental improvements in refrigeration in recent years. In response to legislation and increasing pressure to phase out the use of refrigerant gases that leak and contribute to global warming, many operators are now moving towards the use of CO2 as a refrigerant. Last year CO2 products accounted for almost a third of new equipment purchased in North America. While this is certainly a cleaner refrigerant — CO2 has a global warming potential (GWP) of 1, whereas commonly used refrigerants can have a GWP of almost 4,000 — it does not make refrigeration clean. Refrigeration pollutes in four ways: refrigerant leakage, NOx, particulate emissions, and noise. CO2-based refrigeration units are still powered by diesel, and therefore still emit substantial amounts of NOx and particulates to the atmosphere. These small engines can emit up to 29 times the pollution of a main truck engine. To make refrigeration truly clean, we need more than a little-by-little approach. With the projected growth of refrigeration demand, deploying diesel-powered units to meet demand will be disastrous for the environment and health. Dearman, of which I am Chief Executive, is bringing to market a commercially viable, zero-emission alternative to the diesel units that still dominate the market. September 2015 – CryoGas International

The Future of Cold

Cryogenics are at the core of this clean cold technology. Dearman technology utilizes liquid air or liquid nitrogen, which mixes with warm water and expands rapidly in a high-efficiency piston engine. The atmosphere is 78 percent nitrogen, but there is significantly less demand for it compared to gases such as oxygen, argon, or neon. Therefore, when air is liquefied for separation, excess nitrogen is often vented as waste. Dearman technology can use the superfluous nitrogen to power a zero-emission engine. The Dearman refrigeration system uses liquid nitrogen to generate both power and cooling, meaning it is far more efficient than systems that use the nitrogen for cooling on its own. The system emits no NOx, no particulates, and no CO2. This is just one of the clean cold technologies that will enable a paradigm shift in refrigerated transport. Within 50 years, cooling will be the dominant energy requirement in much of the world. Simultaneously we need to make our total energy systems more economic and resource efficient, less carbon intensive, and less polluting. We need to ensure our energy model is sustainable, affordable, and resilient, and that it fully recognizes the

real value of potential resources that are under-utilized. For this exercise to be undertaken fully, it requires cold to be included, considered, mapped, and addressed by sustainable infrastructure. Crucially we need to recognize the role cryogenics can play as a means of storing cold, harnessing renewables to better meet our need for cold. Just as America led the first cold revolution in the 20th century, bringing air conditioning, refrigeration, and chilled food to the reach of ordinary people. So, it has the opportunity to lead the 21st century clean cold revolution. It has the capacity to utilize investment in new clean cold technology. When paired with America’s global academic might, the US has the ability to instigate a new resource efficient cold system, which doesn’t rely on polluting out-dated diesel technology, but rather harnesses the established cryogenics industry to catalyze a new “cold economy” capable of supporting thousands of new jobs. Such fundamental change calls for cross-industry collaboration and system-level thinking around how cold is provided, used, and even recycled, as well as investment into research and development of eco-

nomically viable clean cold technologies. At the moment the UK is taking the lead in developing this new system level approach and to developing cutting-edge clean cold technologies. The US is the undisputed world leader in the development of clean tech. It has the investment might and the willingness to take entrepreneurial risks required to take the lead from the UK and drive development of global clean cold infrastructure forward. In 1940, one innovation unified the global cold chain — 75 years later, there is the opportunity for innovation to create a new industry entirely — “clean cold.” A thriving cold economy would create jobs, export opportunities, and major positive environmental impacts. But to realize this potential, we must start doing cold smarter. Toby Peters is Chief Executive of Dearman, the clean cold technology company based in London, England. He is also Visiting Professor in Power and Cold Economy at the Birmingham Energy Institute, University of Birmingham, England.

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Distributors Doing New Things

How Industrial Gas Distribution Has Changed in 25 Years No question that, as we look back on our 25th anniversary, we have seen some huge changes in the way the gases industry works. Over the next few pages, we will highlight a selection of gas distributors who have each brought something unique to the industry over the last 25 years. Each one will look back to where they were in 1990 and speak to some major change — whether it was Norco building their own ASUs or nexAir signing onto a joint venture with Praxair — that brought their business to where it is today. These key moves are what ultimately define companies when success or failure is measured, and we are thrilled to be able to bring you the results of these candid conversations about who these firms are and what they do. — JJ Koczan

Norco, Inc. Big Decisions, Big Projects Norco, Inc. operates over 66 branches in Idaho, Oregon, Washington, Montana, Nevada, Utah, and Wyoming and has been in business over 65 years as a gas distributor. In 2002, Norco built its first Air Separation Unit (ASU) in Nampa, Idaho, in order to meet growing demand near its home base in Boise. The project was such a success, and Norco’s business continued to grow at such a rate that in 2009, they added a second ASU to their operations in Moses Lake, Washington, further marking a rare shift for a distributor into gas production. Norco has kept growing its business through acquisitions since, and Ned Pontius, President, took some time out to describe the ways Norco has changed in the years since the first ASU construction. CryoGas International: What led to Norco’s decision to build an ASU in 2002? How has being your own gas producer affected the way Norco does business? Ned Pontious, President, Norco, Inc.: Norco made a large push to develop gas sales around the year 2000. Due to the geography, and the reality that it was 350 miles each way to the closest competitive air separation plant, it was decided that we would look at building our own plant in Boise, Idaho. We did that in 2002 and had great success in loading that plant. As we continued to add loading, we saw a need to expand our production with a larger plant in the Northwest. In 2009, we added a second air plant to meet our current needs and provide additional volume for growth. 44

industrial product is manufactured in the same air plant.

Norco Moses Lake ASU

Having the mindset that we are a producer does affect how we sell gases, as it makes us truly a full line producer from small packaged gas products to large bulk gas products. CryoGas: What were some of the early challenges in building and working with the first ASU? How were they addressed? Ned Pontious: When Norco built our first plant we had very little plant operation experience. We recruited an operator that was familiar with the plant we installed, and that was a good decision to help us move onward as we operated the plant and trained more operators. One of those operators then went on to run our new plant which we installed in 2009. CryoGas: What are the differences between producing specialty gases and standard IG for home medical or industrial clients? Ned Pontious: Really there are not a ton of differences. Lot number identification and tracking is required when doing medical gases, but in actuality medical and

CryoGas: How has Norco managed to keep up with the changing needs of the medical industry over the last 25 years? Ned Pontious: This is a loaded question! In the medical industry, there have been changes in reimbursement from Medicare and insurance companies every year for the past 15 years. Lower reimbursement has put us on a path of continual improvement in our internal and external processes so that we can maintain profitability with fewer and fewer people. CryoGas: Has it been difficult for Norco to keep its roots in Boise while at the same time expanding the reach of the company? Ned Pontious: No, not really. We have always been privately held with the ownership being here in Boise. We like the Northwest and have never considered changing our roots to another area. CryoGas: Will Norco expand its production capability beyond where it currently stands? Ned Pontious: We are always looking at ways to improve our production capability in every aspect of our business, whether small packaged gases or large air separation plants. CryoGas: Thanks to Ned Pontious and Norco for helping us look back on 25 years in the gases industry. September 2015 – CryoGas International

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Distributors Doing New Things

Middlesex Gases & Technologies Keeping Pace with Changing and Emerging Markets A premier supplier of specialty gases, cryogenics, micro-bulk, and bulk gases in New England, Middlesex Gases & Technologies has focused on becoming the technical resource for biotechnology and life science companies. With three specialty gas locations, the company has dedicated resources for biotechnology and life science companies. This represents a shift from the company’s earlier days when welding and fabrication were the market drivers. CryoGas International interviewed the sales team at Middlesex to learn how the industrial gas distribution business has changed for them over the past 25 years. CryoGas International: How have medical applications for gases evolved since 1990? Oxygen is still oxygen, so how have the needs of Middlesex’s customers changed? Guy Sylvester, Senior Product Engineer, Specialty Gases: The opportunity for medical gases has increased quite a bit over the last 25 years. The medical device sector has grown significantly in the Boston area and this has created a need for a wide range specialty gases. We also have seen increased demand for medical gases with the influx of clinics, pain centers, and small surgery centers. Hospitals are now using more sophisticated medical mixtures for calibrating blood gas analyzers and lung diffusion mixtures. CryoGas: How do you keep pace with developments in research and technology? Mike Lee, Specialty Gas Manager: The sales team at Middlesex keeps abreast of the fast moving developments within the life science industry by staying on a constant learning curve, interfacing with equipment manufacturers, networking with those in the New England life science community, and researching to see what companies are coming to New England. Technology changes quickly in the life sciences so knowing the fast movers and game changers is paramount. Partnering with OEMs early on in the development of 46

any equipment that depends on gases for its operation is key to putting Middlesex in the forefront of that development. Following the research trends, company buy-outs, and the national and global shift of where companies start, develop, and ultimately end up for the production stage of their growth pattern is key to knowing where to put our energy. We are fortunate that many companies chose to start in the greater Boston area, which has an existing biotechnology base and an available high quality workforce. Middlesex works with people of a very high caliber. This puts the welcome burden on the sales team at Middlesex to be on their game in every way. Our work requires us to extend our own personal learning curve at every opportunity. We need to be able to assure clients that they are working with seasoned professionals in the field and that we are familiar with their science, their applications, and their requirements. CryoGas: Does Middlesex see its locations in Massachusetts as giving it a regional advantage in serving research markets? Steve Powell, Specialty Gas Sales: Massachusetts is home to some of the best universities and hospitals in the world and the most advanced research in life science, medicine, and biotechnology is being done right here in the Commonwealth. There is a distinctive regional advantage to being located in Massachusetts, but we also consider ourselves fortunate to be able to support these companies that are on cutting edge of research and medicine. CryoGas: How will the Plainville, MA plant serve the region’s research needs? Steve Powell: Research is not just confined to the Boston and Cambridge biotech hubs. It’s really spread throughout the region. Some of the best research scientists are emerging from the universities in southern, central, and western Massachusetts, as well as Rhode Island and these areas have been very welcoming to biotech, pharmaceutical, and life science

companies. Our Plainville facility is fully equipped to support the customers within these regions and is an extension of our focus to be the leading provider to the biotech, life science, and pharmaceutical market in the Northeast. CryoGas: What was Middlesex’s business like 25 years ago? Ron Perry, Director of Sales and Marketing: Twenty five years ago Middlesex Gases & Technologies was Middlesex Welding Supply. Most of our sales force was committed to servicing welding accounts around the area. We had one salesman making calls into the research market. As the fabricating market began to fade and larger companies moved out of our location, it became clear we needed to restructure our focus on a growing market in the life science research area. In 1992 Middlesex decided to change its name to reflect its new focus and Middlesex Gases & Technologies was voted on. Our success today was due to having the foresight to change with our industry. Today we have several sales people focused primarily on Bio Pharma and even our welding salesmen split their time between Industrial and Research. We also have two separate websites devoted to each field: middlesexgases.com for the Bio Pharma and mgtweldingsupplies.com for the fabrication side. The traditional gases to hardgoods ratio — 50/50 — in a typical welding house began to shift in the 1990s. Today the gases to hardgoods ratio is closer to 80/20, with a larger concentration on gases, which results in greater profits overall. CryoGas: We’d like to thank the team at Middlesex Gases & Technologies for sharing their story of how a distributor can successfully adapt to changing markets. September 2015 – CryoGas International

Distributors Doing New Things

nexAir Forging Forward with New Growth Opportunities Taken over any period, a company’s progress can be clunky and haphazard, it can falter altogether, or it can move forward in a coherent pattern of progress with well-strategized movements and a vision of what it wants to be in the future. A quarter-century is a long time, but across that span, nexAir has grown its operations in Tennessee, Georgia, Florida, Alabama, Arkansas, Louisiana, and Mississippi, embarked on building their own hydrogen fill plant in 2010, and in 2012, undertaken a joint venture with Praxair that has helped further their geographic reach. As the company celebrates its 75th anniversary, President Bill Proctor was recently interviewed about these avenues of growth. CryoGas International: Twenty-five years ago, what did your hydrogen business look like? What markets did you serve? How big was your hydrogen business? How was hydrogen delivered? Bill Proctor, President, nexAir: Twenty-five years ago, nexAir was a smaller business than it is today and our gas business was primarily cylinder gases. At that time, hydrogen was only supplied in cylinders and we were outsourcing those cylinders. While we have a much larger footprint today, back in 1990, we were only serving the Mid-South, including west and middle Tennessee, east Arkansas and north Mississippi. And as we’ve grown, our percentage of sales from both our general gas business and from hydrogen is much larger today than it was 25 years ago. CryoGas: What changed between 1990 and 2010 in the hydrogen market that led you to decide to invest in your own hydrogen fill plant in 2010? Bill Proctor: Prior to spending an initial $1.5 million to build a hydrogen plant in Memphis, nexAir was transporting hydrogen here from a plant in Tennessee on tube trailers. Building our own fill plant dramatically reduced freight costs and made nexAir the only hydrogen distribution center within a 250-mile radius of Memphis. We can now service more customers 48

and distributors with reduced expenses overall. CryoGas: Has operating this plant changed your business model for hydrogen? Bill Proctor: Part of the investment rationale for building a hydrogen fill plant was nexAir’s decision to focus on the overall gas business. Transporting trailers across Tennessee was expensive and was a growth hurdle for the company in terms of its gas strategy. Now, our fill plant allows us to support spot project operations and increase our wholesale gas offerings to other distributors. Additionally, from a cost standpoint, this opens the door to hydrogen opportunities that were out of our reach 25 years ago, and it has put nexAir in a position to be a more efficient and an overall better hydrogen supplier to our customers. We’ve experienced sizable growth in tube trailer hydrogen and in the spec-gas grade cylinder business as a result of the plant. CryoGas: How has your 2012 JV with Praxair changed business for nexAir? Bill Proctor: Praxair was nexAir’s longtime supplier and with our unique joint venture, nexAir was able to have a larger and denser geographic area, extending our reach into the majority of the southeastern United States. The JV also formalized the already-strong partnership between nexAir and Praxair, allowing us access to a go-tomarket strategy that supplies a gas in any mode — from the smallest cylinder to an on-site air separation plant. Following the JV, nexAir is now more vertically integrated, from manufacturing the product to providing liquid gas to the end user. The JV added eight new locations, and since 2012, nexAir has added an additional 10 locations and grown our topline business by 40 percent. CryoGas: What do you see for the hydrogen business in the years ahead? Where are the growing applications? Bill Proctor: Our hydrogen plant provides 6.0 hydrogen in addition to industri-

al grade, so having the ability to produce spec-gas grade hydrogen makes nexAir a more viable supplier and presents an opportunity for growth. Other growth opportunities include generator cooling, heat treating, and laboratory applications. CryoGas: What advantage does the recently opened demonstration lab in Memphis bring to nexAir’s headquarters? Bill Proctor: nexAir uses our demonstration lab for training salespeople, operational employees, and our customers. Automation training frequently accompanies sessions in the classroom areas, which makes the training very valuable. This allows us to highlight the technology as well as to demonstrate the value of the equipment in a setting similar to a customer’s. Additionally, nexAir sells everything in our demonstration lab, so it gives customers a chance to see the product in action, ask questions, and learn more about its functionality before making a large capital expenditure. nexAir also services and installs these pieces of equipment. In many cases customers cannot afford any downtime if these large pieces of equipment malfunction, and being able to service these pieces in a timely manner has been a huge benefit to nexAir. CryoGas: Has the model of growth through acquisition changed nexAir’s company philosophy? What does nexAir look for in a potential acquisition? Bill Proctor: nexAir’s philosophy has always been very customer-centric and that’s not changed. We are extremely selective when it comes to acquisitions and any company we acquire must be based on the criteria that it is: 1) culturally a good fit, from operations to employees; 2) in a market believed to be receptive to our company philosophy; and 3) in a location that allows opportunity to expand into other markets for additional scale and synergy. September 2015 – CryoGas International

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Distributors Doing New Things

Arc3 Gases, Inc. New and Familiar Faces Perhaps nothing has helped establish the current shape of the industrial gases business in the last 25 years so much as the culture of mergers and acquisitions. And while it doesn’t make for as much drama, not all takeovers are hostile and not all partnerships are one-sided. Enter Arc3 Gases, Inc. The newborn brand is the result of the 2013 merger of Machine & Welding Supply Co. and Arcet Equipment Co., two longstanding, independent industrial gas and welding supply distributors in the Southeastern US. Arc3 Gases, now with over 50 store fronts, serves the industrial markets in Virginia, the Carolinas and Georgia, and its beverage carbonation services network extends from Delaware to Florida. CryoGas International interviewed Christopher Aldredge, VP of Business Development, to get a better sense of the transition for brands and operations. CryoGas International: How did the 2013 merger between Machine & Welding Supply and Arcet come about? What led the two companies to join together and how do they complement each other? Christopher Aldredge, Vice President of Business Development: The very initial discussion, like so many of these types of things, was casual and general. It took place at a distributor council meeting back in May of 2011 between Ray Dillard, then VP of Arcet, and Jeff Johnson, then VP of Sales and Marketing at Machine & Welding Supply. Jeff and Ray discussed the challenges independents were facing, and I believe it was Ray who posed the question as to what it might mean for our companies if we could work together. What followed was a series of quiet meetings over a very long period of time, during which the vision for Arc3 Gases was created. Our commitment to this vision and to each other was formalized in October of 2013 — this is when Arc3 Gases was established as the holding company for Arcet and Machine & Welding. The driving force in our coming together was the shared desire to further secure the 50

unique value we believe the independent distributor brings to employees, customers, and suppliers. The two businesses complemented each other in so many ways, but if I had to sum it up I would say, when considering histories, values, people and approaches to the market, it was a bit like twins separated at birth. Throw in the uncanny geographic fit, and the decision to come together made a whole lot of sense. CryoGas: What have been some of the challenges as the merger has gotten underway? Christopher Aldredge: The most significant challenge has been to balance an eagerness to make things happen quickly while being very careful not to create unnecessary disruption for our customers and for the great folks we have taking care of those customers. A big and very visible step, formally rebranding as Arc3 Gases, was just taken on June 15 — we are very excited about this and think it offers some clarity of identity and direction that is important and very consistent with the vision that started us on this journey. CryoGas: What are the next steps in your process? Christopher Aldredge: While we have accomplished a great deal in our integration process, important work still remains ahead of us. The most important project we have underway right now is merging our two separate operating systems into one. We are fortunate to have great leadership on this project and also in the fact that we are already using the same software packages. In many ways this will be a capstone step to our integration work. CryoGas: What is the advantage of a gradual approach to uniting the two legacy brands, as opposed to an all-at-once, ripthe-BandAid-off merger? Christopher Aldredge: It’s interesting that you phrased the question that way. From a brand standpoint, we actually have taken a “rip-the-BandAid-off” approach.

While we took the time necessary to do our research and carefully plan, we executed a hard brand conversion on June 15 — meaning the new Arc3 Gases brand quickly emerged and the legacy brands are now very quickly receding. One of the keys to being able to do this, versus a lengthy co-branding period, was an extensive advance communication effort with employees, customers, and vendor partners. As far as merging the organizations themselves, the gradual but steady approach has worked best for us. One of our goals after the merger was to keep the pace of change moderate so that we didn’t undermine the successful way Arcet and Machine & Welding have always gone to market. These are relationship-centered businesses, and, again, minimizing disruption for employees and customers has been a very high priority. Fortunately, we are able to take our time, plan carefully, and consider how we are impacting people we care about in every step we take. CryoGas: How will Arc3 continue to grow once the merger is complete? Christopher Aldredge: There’s no real magic or new answer to this, I don’t believe. Like we think it is for all of our fellow independents, our future success is all about having an amazing team of talented people who work incredibly hard for our customers. We certainly are very interested in new markets and acquisition opportunities, and we do feel we offer something quite unique to fellow distributors on that front — but whatever the next deal, move or opportunity may be, it still all comes down to people. CryoGas: Thanks to Christopher Aldredge and Arc3 for giving us a glimpse at a merger in progress! September 2015 – CryoGas International

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Distributors Doing New Things

ILMO The Angles of Approach

Named for the first state line its business crossed — that between Illinois (IL) and Missouri (MO) — ILMO Products Company has grown since being founded in 1913 into a multifaceted, diverse company providing medical, industrial, and specialty gases to a swath of regional locations. With branches set up for medical, specialty gases, and most recently propane, ILMO has kept an eye on growth and future markets while reliably serving established customers with a focus on the quality of its products and the expertise of its service. In wanting to know more about the different sides of ILMO’s business, CryoGas International spoke to CEO Linda Standley, President Brad Floreth, Specialty Gas Lab Manager Travis Nelson, and Marketing Director Blair Austin. CryoGas International: What has allowed ILMO to keep pace with the changing needs of the medical industry over the last 25 years? How has the growth of homecare affected ILMO’s business? Brad Floreth, President: Supplier locale plays a larger role for healthcare providers than it does for many other industries we serve; our close proximity to medical centers, hospitals, clinics, and home healthcare providers benefits those customers and in turn, us. Linda Standley, CEO: The expansion of our customers’ healthcare systems — say, from a hospital and a few offices 25 years ago to an integrated system of dozens of hospitals, clinics, and offices today — has allowed us to grow alongside these customers and the industry. Brad Floreth: The sophistication and rapid growth of the medical industry hasn’t always translated to growth for us. For example, affordable, easy-to-use oxygen generators have allowed medical facilities to directly supply their own oxygen, and the increasing trend of medical buying groups have decentralized purchases, often rewarding national suppliers over regional distributors. 52

Blair Austin, Marketing Director: The latter, we feel, will soon come full-circle and trend back to local suppliers as buyers grow unsatisfied with the drop in customer service levels and response time that can accompany a transition away from regional distributors. As a result of the growing and changing medical industry, we’ve witnessed our clientele diversify. While once we supplied a customer base consisting mainly of hospitals and clinics, we now service pharmaceutical manufacturers and biotech laboratories that range in size from start-up to global enterprise. All have similar product needs, but the volume and frequency of consumption for each can vary greatly. Insights gained by working to solve the problems facing a start-up directly translate into useful experience when working with a global enterprise to develop best practices. This allows us to leverage our experience in order to help all our customers be more successful. Brad Floreth: Led by procedural and equipment advances in healthcare, ILMO

benefits today from a large crossover between our Specialty and Medical Gases divisions. We now produce and fill our own specialty and medical gases, previously purchased from other gas vendors. These gases and gas mixtures are used for the calibration of medical devices, lasers, and other diagnostic equipment. Aside from device mixtures like blood gas mixes and lung diffusion mixes, we produce drug mixes (including Heliox and Carbonox). Blair Austin: Additionally, we branched into health and wellness in a big way, becoming one of three leading suppliers to those testing workforces and civilians with breath alcohol calibration (BrAC) gases, including both handheld and ignition interlock devices. ILMO Specialty Gases provides dry gas standards to states, municipalities, and workplace testing entities throughout the United States, Canada, South America, Europe, and Australia. The wellness and health safety arm of healthcare has been a notable change in the past 25 years. Linda Standley: The growth of homecare September 2015 – CryoGas International

ILMO — The Angles of Approach

has afforded ILMO rapid niche growth, especially as we adapted to better support medical van filling (i.e., med vans) in most of our stores. To support this growth, ILMO added new and larger bulk tanks, increased training, and improved customer scheduling. We added a Safety Manager, as well as increased unique branding and marketing dedicated to “ILMO Medical Gases.” CryoGas: The success of ILMO’s efforts can be seen in the company being added to the 2015 Watch List for Industrial Distributors, but is there something specific at the root of ILMO’s growth that has led to that success? Brad Floreth: The Recession stung us, as it did many distributors and the industries they serve. Like most others, we had to adjust our expectations for several months, and it isn’t ideal that on the heels of the recession our Central/Southern Illinois region is now facing a stagnant domestic ag-manufacturing industry. That said, we’re still growing our customer base and the geography we serve. I believe our success stems from having the right team with which to weather the storm. This is proven by our retention of customers by helping them increase proficiencies through process and product changes. Linda Standley: We’ve always sought to differentiate ourselves on service and knowledge rather than declaring ourselves a lowest-price provider. Our customers constructively challenged us to prove that in these past few years when they needed cost-savings and efficiencies all at once and were willing to change providers to keep their doors open. Our team made all the difference, and our customers responded to that, both current and prospective. Travis Nelson, Specialty Gas Lab Manager: We invested in equipment and program expansions to improve our specialty and medical gas capabilities, including a Servomex 5200 for our device and drug mixes, capable of more precise measurements than our previous paramagnetic analyzer, and an NDIR for medical devices containing Carbon Monoxide and Carbon Dioxide. Beyond medical uses, we’ve added an FTIR spectrometer to enhance laboratory capabilities; a new Weldcoa blend cell and gravimetric balance both allow us to minimize uncertainty within the graviSeptember 2015 – CryoGas International

metric blending process. Perhaps most notable, the ILMO Specialty Gases laboratory earned and has maintained an ISO/IEC 17025:2005 accreditation for both chemical testing and chemical calibration of compressed gas mixtures, as well as ISO Guide 34:2009 accreditation as a Certified Reference Materials Producer. .

“As a result of the growing and changing medical industry, we’ve seen a diversification in our clientele, in the sectors of the medical industry growing and thriving in our geography.” Blair Austin: Externally, our new Medical Specialist serves as a technical and strategic guide to our medical customers, providing best practices, safety and performance enhancement recommendations, and coordination of healthcare-related gas and product purchases. The recent addition of a dedicated safety manager and full-time applications specialist (a CWI) allow us to increase the training, process auditing, and technical support we offer our customers in all industries. CryoGas: Has changing federal regulation on gases been a factor in ILMO’s continued drive toward efficiency? Travis Nelson: The FDA is aggressively increasing their regulation of food gases, impacting many of our customers involved in food processing as well as those in blanketing, freezing, and the packaging process. By actively participating in the dialogue surrounding changing regulations, we position ourselves to respond quickly to our customers’ developing needs. CryoGas: How will specialty gases continue to grow?

Travis Nelson: As technology continues to progress, the need for tighter tolerances on calibration materials and higher purities for gases will increase as well. Enhanced measurement capabilities, though welcome, will require improved quality and process controls to ensure the customer remains confident in the materials they procure from ILMO. Linda Standley: We’ll continue to diversify as our customers’ industries do. US and global environmental policies have led to significant changes in testing and quality assurance, which means our calibration protocol gases will be in demand for the foreseeable future. On the flip side, companies are constantly testing to develop new products that will impact our food, air, and drug supply, which provides direct growth opportunities for the use of our gases in their laboratories and subsequently labs responsible for regulating those very products. CryoGas: Is the future in propane? Brad Floreth: While propane is a slow and steady game, we’re thrilled with our pace of expansion and the market share we’ve secured where we have launched. Our marketing efforts are intensified in this pursuit to ensure our approach appropriately matches the unique consumers of propane, be they for forklift operations, temporary heating for contractors and farmers, or rural residents using propane to heat their homes. CryoGas: What’s the most critical thing ILMO is focused on improving for their customers right now? Blair Austin: Our customers’ buying behaviors are diverse and evolving, requiring us to remain agile in both our approach and service to them. Though gases and gas-related products and equipment remain a small portion of their supply chain spend, we are focused on better understanding how they want to do business with us to mutual benefit. We’re in the midst of a Voice of the Customer study, ensuring customer input will play a significant role in directing the strategies, tactics, and operations on which we focus. CryoGas: Thanks to ILMO for this exclusive look at some of the many facets of their business. 53

A Changing Landscape

A Changing Landscape How 25 Years of Mergers and Acquisitions Reshaped the Industry By Brian Deveaux There are few subjects that have impacted the industrial gas industry in the United States over the past 25 years more than mergers and acquisitions (M&A). Not only has M&A activity impacted the players involved in the industry, but it also has reshaped the structure of the supply chain for how gases are produced and distributed to end user customers. Consider that in 1990, the major players in the US market included BOC, Air Liquide, Air Products, Messer, AGA, and Praxair (known still in 1990 as the Linde Division of Union Carbide Company), each of which had both production (onsite/bulk merchant gas) and distribution (packaged gas) segments of their business. Airgas, Matheson, Valley National Gases, and several thousand privately owned (i.e. independent) businesses focused almost exclusively on the packaged gas segment of the market. Linde AG had very little presence in the US and there were no major players whose business was focused exclusively on the production segment of the market. This picture would begin to change in the 1990s, but the pace of change would pick up dramatically in the first part of the new millennium. Figure 1 contains a chronological list of a few of the more meaningful transactions to occur in the industry between 1990 and 2015. The paragraphs that follow elaborate on some of these transactions and highlight the impact they have had on the structure of the US market. See: “Decades of Deals,” CryoGas International, August/September 2006, page 68, to learn more about how M&A impacted the industry prior to 1990.

The 1990-1999

In 1992, the Linde Division of Union Carbide Company (UCC) was spun out into its own publicly traded company called Praxair. This independence from UCC set the stage for a period of rapid growth for Prax54

air, much of which would come through acquisitions. Some of the notable acquisitions for Praxair in the 1990s included Liquid Carbonic in 1995; Wilson Oxygen (TX) in 1996; Parry Corp. (OH) in 1996; GasTech (IN) in 1998; and Whitmore Oxygen (UT) in 1998. Linde AG (Linde), whose presence in the US was somewhat limited entering the decade, expanded in the area of technical gases in 1996 with the acquisition of Sunox (NC) through its Atlanta-based subsidiary, Holox. Linde would enter the hydrogen and carbon monoxide business through a cooperative agreement with Millenium Petrochemicals and would expand further in the US in 1999 through its acquisition of the medical oxygen business that became known as LifeGas. Airgas started the 1990s at less than $300M in total revenue; it would exit the decade at more than $1.5B. From 1990 through 1999, Airgas acquired a total of 229 companies, including 42 acquisitions in 1996 alone. Also in 1996, Airgas entered into a joint venture with National Welders Supply, the largest privately owned distributor of industrial, medical, and specialty gases at the time. National Welders had 45 locations in five southern states, three air-separation units, and $120 million in annual sales. This investment pushed Air-

gas over the $1 billion sales mark for the first time in its history. Other notable transactions to occur in the 1990s included the formation and subsequent initial public offering for NuCO2; the acquisition of Texas-based Tri-Gas by Nippon Sanso subsidiary Matheson, forming Matheson Tri-Gas; and the merger of Standard Welders Supply with Mid-South Oxygen to form nexAir.

The 2000-2009

While the decade of the 1990s had its fair share of significant M&A transactions, none would reshape the industry like the transactions that would occur in the first decade of the new millennium. The deal frenzy of the 2000s started early in the decade and remained strong until the global financial crisis which began in 2008. By the end of the decade, the major players in the US market had changed, and the structure of the supply chain for packaged gases had been altered in a meaningful way. Linde had been holding purchase negotiations with both Messer Griesheim of Germany and AGA of Sweden since mid1999, but had been unable to complete a deal with either. When the EU Commission was unwilling to approve a takeover of Messer, Linde refocused its efforts on AGA and was ultimately successful in September 2015 – CryoGas International

A Changing Landscape

acquiring the business in 2000. AGA had established a strong presence in the US through its acquisition of Burdox (OH) in the late 1970s and several subsequent addon acquisitions. Linde would solidify its position in the US with its 2006 purchase of BOC, but after BOC had sold its packaged gas business to Airgas in 2004. Airgas’ acquisition of BOC’s packaged gas business followed a similar transaction with Air Products in 2002 through which Airgas acquired Air Products packaged gas business. The Air products acquisition added 88 locations to the Airgas footprint including 36 gas fill plants and 44 retail stores. The BOC acquisition would add an additional 120 locations across 21 states. While these transactions greatly expanded Airgas’ packaged gas footprint across the United States, its 2006 purchase of eight air separation units (ASUs) and related bulk gas business from Linde more than tripled Airgas’ oxygen and nitrogen production capacities and transitioned Airgas into a major player in the US merchant gas business. Only a year later, Airgas would acquire the packaged gas business of Linde in a deal that included 130 locations in 18 states, with more than 1,400 employees, generating $346 million in revenues. Other notable acquisitions by Airgas in the decade included Puritan Bennett (2000); UIG (2003); Aeriform (2006), and Merriam-Graves (2008).

The deal frenzy of the 2000s started early in the decade and remained strong until the global financial crisis beginning in 2008. 2004 also saw a major move by Air Liquide into the US market when it acquired Messer’s businesses in Germany, the UK and the US. Following the lead of Air Products and BOC, Air Liquide divested the packaged gas portion of Messer’s US business, which it accomplished through the sale of its Gas Technology & Services (GTS) division to a management-led buyout group, and subsequent sale of its Constar subsidiary to Praxair. Furthermore, in order to complete its acquisition of Messer’s US assets, Air Liquide was required by regulators to divest six ASUs and related assets operated by Messer in CaliSeptember 2015 – CryoGas International

fornia, Texas, Louisiana, and Mississippi. The buyer for these assets was Matheson Tri-Gas. This 2004 purchase of Messer’s bulk gas assets would mark the beginning of a period of rapid growth for Matheson Tri-Gas. Part of the impetus for this growth was the merger of Matheson’s Japanese parent Nippon Sanso with Taiyo Toyo Sanso (also in 2004). The newly formed Taiyo Nippon Sanso Corporation (TNSC) had its sights set on becoming a global leader in the industrial gas industry. With TNSC’s support, Matheson would acquire Linweld (2006); Polar Cryogenics (2007); Five Star Gas and Gear (2008); AERIS (2008); Advanced Gas Technologies (2008); and ETOX (2009). Of particular note is Matheson’s 2009 acquisition of Valley National Gases from private equity firm CI Capital. CI Capital (known at the time as Caxton Iseman Capital) had acquired Valley National Gases in 2007 for a reported $327M (Source: Capital IQ). Under CI’s ownership, Valley completed eight acquisitions of its own, expanding from 75 branches to 95 branches covering 18 states. According to interviews with CI management, the firm had not intended to exit its investment as quickly as it did, but concluded “we’re getting a great price for the business and we’re very happy with the outcome.” CI’s interest in the industry would re-emerge in 2011 when it acquired a controlling interest in Tech Air (Danbury, CT). Praxair remained an active acquirer in the 2000s starting with a joint venture between Praxair, Welco Gases and CGI Industries in 2000. This JV would eventually expand in 2007 to include the GTS portion of Messer’s business that had been spun out to its management team in 2004. Other meaningful acquisitions for Praxair in this decade included Mittler Supply (2007) and Kirk Welding (2008). Other noteworthy transactions to occur in the 2000s included a five-company merger in Northern California that created AERIS; Norco’s 2008 acquisition of Gases Plus; and NuCO2 being taken private by Aurora Capital Group. Also of note in this decade is Norco’s emergence as a producer or bulk merchant gases, having built its first ASU in 2002 followed by a second one in 2009. While not directly related to any specific acquisition, there is no doubt that Norco’s growth, which has been fue-

Industrial Gas Industry Transactions 1990 – 2015 Year

Transaction

1992

Matheson buys Tri-Gas

1995

NuCO2 goes public

1996

Praxair spun out of Union Carbide

Airgas JV w/National Welders Linde (Holox) buys Sunox nexAir formed

1999

Linde (Holox) buys Lifegas

2000

Linde buys AGA

2002

Airgas buys AP packaged gas business

2003

Airgas buys UIG Air Liquide buys Messer assets in US

2004

Matheson buys six ASUs from Air Liquide/Messer Griesheim GTS formed in MBO Praxair buys Constar from Air Liquide/Messer Griesheim Linde buys BOC

2006

Airgas buys Linde bulk gas assets Matheson buys Linweld Airgas buys Linde packaged gas Praxair (Welco/CGI) — GTS JV Praxair buys Mittler CI Capital buys Valley National

2008

Norco buys Gases Plus

2009

Matheson buys Valley National from CI Capital

2010

Air Products makes unsuccessful bid for Airgas

2011

CI Capital buys Tech Air

2012

Linde buys Lincare

2013

Arc3 Gases formed

2014

Scott-Gross/American Welding & Gas join forces

Praxair buys NuCO2

Figure 1

A Changing Landscape

led in part by an estimated 20 acquisitions over the past 25 years, factored into the decision to make these investments. See “Norco, Inc. — Big Decisions, Big Projects,” on page 44.

2010-2015

Following in the wake of the global financial crisis that began in 2008 and continued well into the current decade, M&A activity in the industry slowed somewhat. Impending tax changes created a flurry of activity toward the end of 2012, but even that level of activity paled in comparison to the activity of the prior two decades. Perhaps one of the most notable transactions of the first half of the current decade is the one that didn’t happen. A bid by Air Products to acquire Airgas in 2010, which started off as a “friendly” overture, quickly turned hostile. After a year-long battle that would include several key decisions by the Delaware Chancery Court, Air Products formally withdrew its tender offer in February 2011.

The transactions of the past 25 years have not only changed the names and the number of players, but more importantly have changed the dynamics of the supply chain. Airgas has remained one of the most active acquirers throughout the first half of this decade with notable acquisitions including Pain Enterprises (2011); ABCO (2011); Nordan Smith (2012); and Encompass Group (2013). Praxair has also remained active where its notable acquisitions have included TWSCO (2011); American Gas Group (2011); AOC (2012), and NuCO2 (2013). In May 2010, Matheson acquired Western International Gas & Cylinders (TX), the largest acetylene wholesaler in the world, and manufacturer of cylinders, valves, and related handling equipment. Matheson’s other acquisition activity this decade has included its acquisition of Continental Carbonic (2014) and Sims Welding (2015). One of the most active acquirers of late has been CI Capital-backed Tech Air. With 56

its July 2015 acquisition of L&M Welding Supply, Tech Air has completed eight acquisitions in the last 12 months, expanding its business to 30 branch and fill plant locations serving customers in the Northeast, South, Southwest, and West. Other transactions of note to occur since 2010 include the 2013 acquisition by Norco of 10 respiratory care and medical supply locations from Care Medical/Walgreens; the 2013 transaction that saw two multi-generation family-owned business, Arcet Equipment Company (VA) and Machine & Welding Supply Company (NC) join forces through a 50/50 merger to form Arc3 Gases; and Scott-Gross (KY) joining forces with American Welding & Gas (MT) in 2014 to create one of the largest independently owned distributors in the US.

Where Are We Today?

As noted previously, the US industrial gas players in 1990 included six major producer/distributors and several thousand distributors (including several publically traded companies). The transactions of the past 25 years have not only changed the names and the number of players, but more importantly have changed the dynamics of the supply chain. Today we see an industry with three major producer-only companies, four producer/distributors (including Norco), and the estimated number of independent distributors at less than 1,000.

Where Are We Heading?

I believe we are heading back toward a picture that looks more like the picture we saw in 1990 than what we see today

(i.e. more producer/distributors and fewer producers-only). Air Products expressed a clear desire to get back into packaged gases based on its hostile bid for Airgas in 2010 and I suspect that desire remains intact under the new Air Products regime. Air Liquide and Linde management are likely having similar discussions in their boardrooms. Whether the Airgas board would be receptive to another overture is anyone’s guess. With Mitsubishi’s new majority ownership at the Taiyo Nippon Sanso level, MATHESON’s long-term strategy in the US is likely under review. With the continued emergence of large independent regional distributors (e.g. Norco), I suspect we will see more independents considering investing in their own production capacity. Will we ever get back to the point of having no major players focused exclusively on the production segment of the market? I suspect not, but whatever happens, mergers and acquisitions will certainly continue to play a major role in how the industry takes shape in the future.

Brian Deveaux is a founder and principal of Leaders LLC, a mergers and acquisitions firm which advises companies in the industrial gas and cryogenic equipment industries throughout the United States and globally on acquisitions, sale transactions, mergers and other corporate transactions. He can be reached at 888-583-7770 x3 or BDeveaux@ Leaders-LLC.com. September 2015 – CryoGas International

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Regulatory Trends and the US Industrial Gas Industry

Regulatory Trends and the US Industrial Gas Industry By Bob Yeoman Today gases touch virtually every manufacturing process for nearly any product you can think of. For example, at the very least, practically every manufacturing company needs cutting and welding gases to perform simple maintenance and repair tasks. The actual production equipment companies used by companies to make products required gases to build and assemble them. In a broad variety of industries — from steel making, to shipbuilding, to food, chemical, and pharmaceutical processing, and on to high tech industries like electronics and fiber optic manufacturing — gases are integral to the manufacturing processes. Finally, gases are essential to sustaining life under the sea, on the hospital operating table, and in outer space. With such a myriad of uses it should come as no surprise that the gases industry is also one of the most highly regulated industry segments in America. As the uses for gases expanded in the last half century, so too have the regulatory requirements for manufacturing, storing, and shipping those products. This article will recap some of the notable regulatory challenges the industry has faced over the last three decades and how that has affected our industry.

Department of Transportation

As far back as the early 1900s, when industrial and medical gases began to enter commercial distribution, the US Department of Transportation (DOT) has been involved in regulating both the equipment used to store and transport gases and the requirements to offer those products for shipment over the road. DOT gradually and continually evolved its requirements as the gas industry grew and changed. For example, as the industry began to transition from a high pressure cylinder supply chain model to one in which the delivery of cryogenic liquids became more common, the DOT instituted requirements to accommodate and facilitate that change. Today’s DOT regulations are ever evolv58

These changes significantly impacted scheduling drivers and their potential availability during the work week. Today, DOT is moving to have most drivers use electronic logs instead of paper logs. Just recently DOT disallowed the use of mobile phones while a commercial driver is behind the wheel. These are recent examples of ever tighter commercial driver regulations. As the gas industry transitioned from a high pressure cylinder supply to the delivery of cryogenic liquids the DOT instituted new requirements. Photo: Weldship

ing to harmonize with hazardous material regulations globally. In the mid-‘70s DOT introduced wide reaching comprehensive regulations that affected every aspect of shipping and transporting gases. The Hazardous Materials Transportation Act, enacted in 1975, forms the principal set of regulations in place today regulating hazardous materials such as gases in intrastate, interstate, and foreign commerce. This has led to gas companies having to implement emergency response plans, conduct formalized employee training programs, and implement drug and alcohol testing programs for certain employees. It regulates what documentation must be created and managed to ship product, and what markings must be on transport vehicles and product containers. In the late 1980s DOT enacted requirements for commercial vehicle drivers to obtain a commercial driver’s license (CDL). This regulation ensured that all drivers were properly and fully trained to operate the type and class of vehicle they were driving. Drivers in the gases industry were now required to take a written test and undergo a background check, as well as undergo a periodic physical. In the late ‘90s and early 2000s DOT began implementing changes to the number of hours a driver could drive, and how long they had to rest between stints behind the wheel.

Occupational Health and Safety Administration

The Occupational Health and Safety Administration, known as OSHA, was created in the early ‘70s. Over the ensuing decades its regulations have made fundamental changes in the work place environment at every gas facility. For example, in the early ‘80s the typical gas facility employee would likely be equipped with safety shoes, safety glasses, gloves, and maybe a hardhat. At many independent distributors in that era summertime often looked like a day at the beach, with employees wearing shorts, sneakers, and tee shirts. Today, personal protective equipment (PPE) requirements have significantly evolved. In addition to the basic PPE requirements of the ‘80s, employees today are likely to sport some form of flame retardant clothing, hearing protection, a personal/portable oxygen analyzer, and high visibility outerwear. At major gas company locations the wearing of shorts, tee shirts, or even short sleeve shirts in the

Personal protective equipment is now required for many employees at gas distribution operations. September 2015 – CryoGas International

Regulatory Trends and the US Industrial Gas Industry

summer is a thing of the past. Since the early ‘90s accident prevention has evolved from campaigns and slogans to a basic element of everyday life for most companies. In the gas industry this has resulted in no small part due to the work by the Compressed Gas Association (CGA). The CGA has been instrumental in our industry in focusing and maintaining a bright spotlight squarely on safety. CGA has also played a key support role by developing and disseminating the tools, training, and techniques that promote and support safe operations throughout the gases industry. Beyond that, through CGA, our industry has learned to share information about our failures, so that everyone can learn from accidents and incidents, and hopefully prevent them from re-occurring. This type of collaboration was very rare 25 years ago. See “Compressed Gas Association,” history on page 14.

In the mid-‘90s OSHA released a landmark set of regulations known as “Process Safety Management,” or PSM. For the bulk gas producers PSM took programs considered best practice, such as risk assessments, employee involvement, and pre-start up safety reviews and made them into mandatory requirements. Other standard compliance elements, such as permit to work, management of change, emergency planning and response, and incident investigation became more rigorous and became mandatory requirements under PSM. Implementing PSM was a huge undertaking for the bulk gas companies, involving large investments of resources and manpower. PSM fundamentally and forever changed how hazardous material manufacturing and processing plants were managed.

FDA: Drugs

The regulation of medical gases stretches back nearly 100 years. The evolution of Food and Drug Administration (FDA) medical gas regulations over the last two and a half decades have been well chronicled in the pages of CryoGas International. See more: “Medical Gases Back in FDA Spotlight,” CryoGas International, April 2012, page 36, and others. September 2015 – CryoGas International

While the Good Manufacturing Practice regulations were introduced in the late ‘70s, as recently as 25 years ago medical gases were still regarded by FDA as being on the fringes of pharmaceutical manufacturing requirements. In some instances the FDA was not sure what to do with medical gases, as evidenced by the debate between the FDA and the gas industry in the early ‘90s over whether carbon dioxide was even a drug and subject to being regulated by the FDA. Twenty-five years ago the gas industry was petitioning the agency for exemptions from numerous regulatory requirements. However, a series of tragic incidents which took place throughout the ‘90s forever changed the FDA’s opinion on where medical gases fit into their regulatory philosophy. By the late ‘90s the FDA began directing over half of its field inspection capacity onto the gases industry. This unprecedented crack down on a single segment of the pharmaceutical industry led to dramatic improvements in the focus on compliance in the gas industry. Through CGA the gases industry rolled up their collective sleeves and began implementing changes that resulted in raising the compliance bar throughout the industry. Today, the accepted medical gas compliance requirements manufacturers are expected to meet are generally consistent with what other lower risk prescription drug manufacturers are also expected to meet. A recent significant change has seen the FDA finally approve medical gases, a drug that has been around more than 100 years. Historically the FDA classification of medical gases has been “Un-Approved Marketed Drug.” In 2013 the FDA cleared the way for medical gases to become an “Approved Drug.” For most prescription (Rx) drugs, achieving approved status means submitting a New Drug Application to the agency and navigating through all the approval steps and hurdles. That process can be both time consuming and expensive. Building on CGA’s relationship with the FDA, and CGA’s evolving influence with key Congressional members, our industry was able to find a compromise solution with FDA that allowed manufacturer’s to achieve approved status without undergoing the time and expense of the new drug application process. Since most medical gas companies have no ex-

In 2013 the FDA cleared the way for medical gases to become an “Approved Drug.”

perience with the New Drug Application process, most people in our industry do not appreciate the full magnitude of the accommodation CGA was able to achieve with the FDA in this area. Yet another key evolution over the last 25 years is the training and certification required for technicians that install and maintain health care medical gas systems. Twenty-five years ago union plumber organizations were actively lobbying state legislatures to grant them exclusive authority to install medical gas systems, including the bulk supply system. Our industry recognized there was a need to formalize the training and certification requirements deemed necessary to safely install and maintain bulk health care systems. Working with the National Fire Protection Agency (NFPA) and the American Society of Sanitary Engineers (ASSE) a series of technical, training, qualification, and certification requirements was developed and implemented. Over the last 25 years the process of installing bulk health care systems has evolved to resemble the process to install a drug delivery system. Today our industry has instituted formal requirements for system sizing, assembly, purging, system testing, alarm testing, and customer hand over. In the 21st century the men and women that install and service bulk health care systems are some of industry’s most highly trained and experienced technicians, holding multiple credentials attesting to their capabilities. That is in sharp contrast to the technicians of just 25–30 years ago. 59

Regulatory Trends and the US Industrial Gas Industry

FDA: Food

Twenty-five years ago gases used in the manufacture of food were not on the FDA’s radar. Even carbon dioxide, which is a direct ingredient in carbonated beverages, was not looked at by the agency. Instances of product contamination at beverage plants were not uncommon events. In 1990 carbon dioxide producers employed very little in analytical capability. It was simply deemed unnecessary. Today, gases such as carbon dioxide are considered “Food,” just like meats, fruits, and vegetables. CO2 plants now sport sophisticated analytical suites, and new product grades, like Beverage Grade have been introduced to the market. With the pending implementation of the Food Safety Modernization Act (FSMA), we are on the cusp of a new era of food regulation that will broadly impact every food and beverage gas supplier. See more: “FDA Revises Proposed Rules for Food Safety,” CryoGas International, December 2014, page 48, and others.

Other Regulatory Impacts

Certainly the Environmental Protection Agency (EPA) has had a profound impact on many companies in the gases industry. Oxygen cleaning solvents, many of which had been long standing industry accepted standards, today are no longer available. Unfortunately, while these solvents were highly effective most of them also were ozone depleting substances, and have been regulated out of existence. Many of those same solvents along with other materials now considered hazardous/toxic to the environment were improperly disposed of (by today’s standards) 25 years ago. Today, EPA regulations put in place over the last three decades, have gas companies around the US engaged in ongoing cleanup and remediation activities at many of their legacy facilities. Another example of change resulting from evolving environmental regulations relates to the lime produced as a byproduct from the manufacture of acetylene. Three decades ago it was not uncommon for acetylene producers to sell the lime for road stabilization or pH adjustment. Today, largely due to stricter environmental regulations, acetylene producers have to pay to have the lime trucked away and 60

on the gases industry approach to plant security have been tremendous. In the 1980s chemical and gases plants generally had an open gate policy. Today, gaining access to chemical plants and gases facilities that process hazardous materials can be akin to getting through TSA security at an airport.

The Future Today, gases such as carbon dioxide are considered “Food,” just like meats, fruits, and vegetables.

“properly” disposed. Sometimes a lessening of regulation can have a significant impact. For example, a transformative, but not well appreciated regulatory impact on the gases industry has been the deregulation of the electric energy industry. Twenty-five years ago electric utilities generally ruled a specific geography. Gas companies looking to build an air separation unit (ASU) searched around for the best deal, and plants were built in various geographies based on power costs and availability. In those days if you saw one ASU you could bet their competitors would only be a few miles away. When over 50 percent of your production cost was electric power, you did the math, and that generally decided where the plant went, unless you were serving a specific customer, such as a steel mill. However, as the power companies started to become deregulated they were able to compete in new and non-traditional markets, and in new ways. Gas producers had to become ever more sophisticated in managing how, where, and from whom they purchased their energy. Today the major gas companies have central operations centers where they coordinate the production of their product, the delivery logistics, and energy management in order to stay on top of their production costs. Most of this production and energy management is done online and in real time. While some of this has been facilitated by new technologies, it is still a far cry from 30 years ago when every plant production assistant phoned the home office daily with production data, which was tabulated into the cutting edge technology of that era — a computer spreadsheet. And all of this was facilitated by deregulation. The events of 9/11 also had a notable impact on regulations. The effects of that day

One thing seems certain — there will not be less regulation in the future. Since the 1990s there have been various promises from both the legislative and executive branches of government to cut regulations. Somehow those efforts all seem to lead to more, not less, regulation. An interesting and developing trend we are seeing is that regulatory agencies are adopting risk-based approaches to compliance. Instead of the regulators developing detailed laundry lists of compliance requirements, they are having firms conduct risk assessment and then using the output of those risk assessments to develop controls for their business to address the identified risks. While this puts more of an initial burden on the regulated company or industry, it should eliminate having to comply with requirements that are simply not applicable to the gases industry, or even worse, having to repeatedly explain to government inspectors why a specific requirement does not apply. A well done risk assessment becomes the road map of the decisions made and the supporting justification on how you meet applicable compliance requirements. In our opinion the regulatory focus in the gas industry will be on food regulations for the next 18-24 months as the FDA continues to roll out the full set of FSMA provisions. It has been our honor to have reported on many of the changes in regulations over the last 25 years, and we look forward to continuing to keep readers of this magazine updated with the latest regulatory news in the coming months and years. Bob Yeoman is President and CEO of B&R Compliance Associates LLC (Lehigh Valley, Pennsylvania), a consulting firm specializing in medical gases, safety management, and other regulatory compliance management issues relating to the compressed gas industry. He can be reached at (610) 868-7183; Email bob. yeoman@brcompliance.com. September 2015 – CryoGas International

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September 2015 – CryoGas International

Equipment and Technology — The Changing Supply Chain

Cryogenic Distribution & Technology Improvements Drive Sustainable Growth for Chart Industries By Tim Neeser and Paul Shields Twenty-five years ago there was grave concern that on-site gas supply solutions would largely displace distributed cylinder gas and merchant liquid supply modes. While on-site gas generation continues to evolve and play an active role in a wide range of industrial gas end use applications, the merchant liquid model continues to thrive. This is a result of continued improvements in equipment and aggressive management of all aspects of production and distribution costs. Variable duty cycles and purity requirements also favor merchant liquid based supply modes in many applications.

Liquid Storage & Distribution Equipment Trends Bulk Markets

As cryogenic trailer transports have evolved to higher payloads, ground storage equipment has gradually increased in capacity to accept full trailer loads along with room to spare for additional gas molecule inventory. Suppliers and end users have realized the value of installing larger storage tanks to help offset the rising distribution costs. The user also sees the added security benefit of excess molecule storage on site that mitigates supply risks. A reflection of this is noted in reviewing the history of bulk tank production at Chart Industries. In 1990, bulk tanks were offered in a capacity range of 315 gallons to 11,000 gallons. The average size bulk tank at that time was around 6,000 gallons. Today, sizes for industrial gas storage range from 525 to 15,000 gallons, and the average size is 13,000 gallons for the major gas producers. New bulk tank demand has increased steadily for units 6,000 gallons and larger in size. In 2000, Chart began working on technology improvements in telemetry to further reduce delivery costs. The remote monitoring of tank inventory has allowed gas suppliers to reduce the refill point at the customer site from 40 to 20 percent without the risk of a runout. This technology was also rapidly adopted by the micro-bulk market where level monitoring is even more im62

portant. With micro-bulk liquid storage, the user does not have the excess gas molecule storage to absorb for delivery tolerance or unforeseen production increases compared to bulk users. Today, telemetry is generally considered a standard feature on all new permanent installations.

market has gradually grown from high pressure cylinder displacement to become an alternative to transportable liquid cylinder and small bulk supply.

Micro-bulk Markets

The biggest impact in cryogenic gas distribution and storage in the last 25 years is the emergence of micro-bulk, a solution offering all the benefits of fill on-site storage to end users traditionally served by full for empty swap deliveries. The development of bulk CO2 for fountain soft drink carbonation was the genesis of true micro-bulk. Gas distributors realized moving molecules instead of metal was the right solution for their larger packaged gas customers to reduce costs throughout the entire molecule value chain. Bulk CO2 has continued to flourish from its earlier days in 400 lb. tank capacities serving one establishment to 1000+ lb. tanks today used in a variety of applications from swimming pools to microbrewery installations. For some restaurants, bulk CO2 has become as common as the grill requirements on new expansions. To support the micro-bulk movement for industrial gas distribution, Chart announced the Perma-Cyl® line of micro-bulk storage containers in the mid-1990s. The original offering of 450 liters in medium tank pressure gradually grew to 2,000 liters and then to 5,500 liters at very high pressure offered today. The Chart ORCA™ delivery equipment also improved along the way from 1,500 gallons to 4,500 gallons capacity. The technology in the ORCA back-end emerged with a variable speed submerged pump, auto shut off with the Perma-Cyl tank, and submerged metering for inert service at a flow of 40 gpm. Since those paradigm-shifting days, the pump performance gradually changed to 100 gpm at twice the delivery pressure to reduce fill times and to support laser assist nitrogen gas accounts, so prevalent today. The growth in the micro-bulk

To support the micro-bulk movement, Chart announced the OrcaTM delivery unit and the Perma-Cyl® line of micro-bulk storage containers in the mid-1990s.

Applications Trends

The list of applications served, by both bulk and packaged gas, has expanded rapidly during the last 25 years, forcing an evolution of tank design at Chart Industries. Notable applications are nitrogen for laser assist gas and gas chromatographs, argon for ICP-MS machines, vacuum insulated CO2 receivers, engineered systems, and improvements at the fill plant. Recognizing the standard bulk tank is designed for gas applications, Chart began working on a design for a tank specifically for fill plants. In the early, 1990s, Chart announced the newly engineered Siphon 100®. The Siphon 100® is designed for dual pump liquid removal while managing the heat load for peak pump performance and molecule efficiency. The Siphon 100® is just one example of how tank designs have changed to adapt to the application requirements. Laser assist nitrogen gas solutions emerged to meet this rapidly changing market. The Trifecta®, the Perma-Cyl® VHP, and HP2™ bulk tanks provided customers with options to meet their gas distribution model in this high-pressure, high flow, high capacity application. A key application perfect for micro-bulk was the laboratory market. GC’s and ICP-MS equipment consumes nitrogen and argon at rates below what would support a conventional bulk installation. September 2015 – CryoGas International

Cryogenic Distribution & Technology Improvements

Micro-bulk creates a continuous gas supply that eliminates costly recalibration resulting from full for empty cylinder exchanges.

The Trifecta® provides customers with options to meet their gas distribution model in high-pressure, high flow, high capacity gas applications.

Traditional CO2 receivers were generally foam insulated and built with low temperature rated carbon steel vessels back in the ‘90s. Today, vacuum insulation is recognized as a lower life cost alternative by most customers and pressure strengthening facilitates the use of a stainless steel inner vessel for food grade compliance and maximum safety. The increasing abundance of CO2, primarily from ethanol production, and the demand for new applications from MAP (Modified Atmosphere Packaging) to food chilling/freezing creates continued growth in CO2 distribution. Another recent trend has been the desire for producers, distributors, and end users to buy completely engineered systems. These bulk installations typically include storage, vaporization, and manifolds sized and factory supplied to meet end use requirements. Recent trends have shown customers are not only looking for the complete solution, but the complete installation as well.

Air Separation Equipment Trends

At the heart of the cryogenic separation process, producing pure components of oxygen, nitrogen, and rare gases, are the brazed aluminum plate fin heat exchangers

Heat exchangers have increased in size by three-fold. September 2015 – CryoGas International

(BAHX). To support the increase in molecule storage capacity and the growth demand for industrial gas, this mission critical piece of capital equipment has improved in sync, solely with the aims of delivering cost and efficiency savings. BAHX are custom engineered and consist of alternating layers of corrugated fins (secondary heat transfer surface) separated by parting sheets (primary heat transfer surface), stacked together to form a composite block that is bonded together in a vacuum brazing process. Perhaps the most notable of all the developments in the past 25 years is the steady increase in core block sizes and today, Chart is capable of manufacturing exchangers that are over three times larger per brazed load in its vacuum furnaces. For the customer, larger units means increased product flow through a single unit versus having to purchase multiple units, which has obvious potential for reduced CAPEX, but also cost savings through reduced shipping and installation costs. It also affords customers with increased options for optimization and packaging. Improved manufacturing techniques and processes have also resulted in other crucial developments, critical to meeting the demands of today’s industrial gas requirements. Design pressures capabilities have increased steadily from 900 psig to 2,300 psig. In practical terms this means that customers are better able to optimize process cycles and plant design, which helps support their objective of an overall total low cost solution. The requirement for increased tolerances on leak tightness, both between process streams and to atmosphere, was driven in the ‘90s and aughts by the requirement for ultra-high purity (UHP) nitrogen used in semi-conductor manufacture. The test method uses helium and in 1990 the standard was a leak rate not exceeding 1x10-³ torr-liters per second. UHP nitrogen demanded a proof rate 1,000 times better than that, which was achieved to the extent that it’s now often the norm for general industrial gas requirements, and Chart has manufactured units with a guaranteed leak integrity 1,000,000 times better than the original specification. Improved manufacturing techniques have also led to increased thermal performance through Chart’s development of dozens of new and improved designs for higher performing fin geometries (second-

ary heat transfer surface) with less pressure drop and enhanced manufacturability. Chart also has increased the footprint of our plant by 1.4 x the previous size and added three brazing furnaces. From a customer’s perspective this allows Chart to continue to support their growth in demand for the product and continue to optimize our manufacturing processes to reduce their costs. With cost control in mind, Chart has migrated production of the older, lower pressure BAHX to a brand new state-of-the-art production facility in Wuxi, China. This parallels with the major demand for industrial gas plants and the strategies of the major industrial gas players, including the indigenous ones increasingly prominent in the industry today. As you’d expect, software development has more than matched manufacturing development and Chart has continuously developed its thermal and hydraulic design and rating software for improved thermal and mechanical solutions to meet increasingly challenging industrial gas exchanger designs with numerous cases. Sophisticated 3D modelling systems have developed to facilitate plant optimization through the provision of early equipment configurations and projected forward to predict potential fatigue damage and equipment life expectancy. During the past 25 years, Chart has developed technology and new products internally but also has focused on growing by acquisition. Included in the latter are purchases of European-based Marston, Ferox, Flow Instruments, and GOFA; China-based ZBOC, CEM, Golden Phoenix, and Xinye; and USA-based CVI, PEI, Cryenco, Northcoast, MVE, Cryotech, Thermax Inc., Sequal, and AirSep. As a result, Chart has the capability to participate in all phases of the industrial gas market from liquefaction through distribution and a wide range of end use applications. Tim Neeser is Vice President of Marketing & Applications Development for Chart Distribution and Storage. He can be reached at Tim.Neeser@ chartindustries.com. Paul Shields is Director of Marketing for Chart & Energy & Chemicals. He can be reached at Paul.Shields@chartindustries. com. 63

Equipment and Technology — The Changing Supply Chain

IT Solutions for the Industrial Gas Industry Computers Unlimited Listens, Develops, and Delivers Computers Unlimited (CU) of Billings, Montana, has been a leader in information technology (IT) development for the industrial gas industry for more than 25 years. CryoGas International talked with company President David Schaer about CU’s technology and how it has enabled the industrial gas industry to improve its service and operations. CryoGas International: David, thank you for taking the time to share some history of IT for the industrial gas distributor with us. Can you briefly describe how CU got its start and what was happening in the 1990s when CryoGas first started covering the industrial gas industry? David Schaer: CU’s roots began right here in Billings, Montana, when we developed our first software system for a local gas and welding distributor over 30 years ago. The ‘90s were a period of rapid growth and expansion for the company from strong demand from a variety of distributor sizes and needs across the United States, Canada, and Mexico. Back then, technology and systems had their own unique set of challenges yet we were still able to get the job done. Today, the same kinds of challenges still exist but the problems are being solved with a new set of technologies and supply chain relationships. It’s been great to be able to provide our unique perspective and talents to help service the needs of today’s industrial gas and welding supply distributors.

we understand a distributor’s business processes and challenges, the better job we can do at developing a software experience that will positively impact the bottom line.

David Schaer

CryoGas: We see Computers Unlimited was an early member of GAWDA, having joined National Welding Supply Association (its previous name) in 1981. How has that association helped your business?

Schaer: GAWDA has been an integral part of CU’s business from the very first year we joined the association. It provides incredible opportunities to learning about the needs of the industrial gas distributor and we have gained invaluable insight into the dynamics of the entire industry. Without question, the opportunity to visit face-to-face with distributors, vendors, and industry consultants helped shape the evolution of the TIMS software product.

Computers Unlimited developed its first software system for a local gas and welding distributor over 30 years ago.

CryoGas: Describe some of the early challenges CU faced in working with distributors. How do you convince someone they need software when they don’t know it yet? Schaer: We believe the best approach starts by listening to a distributor’s needs before jumping into any software demonstration. We take a collaborative approach to development which has been successful throughout our entire history. The more

CryoGas: In what ways has IT become more integrated with distribution processes? Schaer: IT has had a dramatic impact on most if not all aspects of a distributor’s business. A great example of this is the use of mobile devices and electronic payments on streamlining the order to cash cycle. Mobile devices can be used to eliminate paper tickets and automatically invoice the customer at the point of delivery; and instead of mailing out cylinder rental invoices, the entire transaction can be automated with integrated credit card processing capabilities. The end result — lower labor costs, greater control of cylinders, and better cash flow. CryoGas: Has there been a generational shift among distributors in how CU’s customers relate to technology as part of their business? Schaer: Our customers remind us on a daily basis just how important technology is to their businesses and we take that very seriously. Each new generation brings a new perspective and expectation on technology. We believe it’s important to provide them with perspective on how it can be applied to new and traditional business processes alike. Today’s generation is very much of the mobile mindset, which is why it’s critical that business systems be mobile too. CryoGas: How have gas customers’ needs changed over the last 25 years and how has CU addressed those needs? Describe how CU’s shift from desktops to the internet to the cloud and mobile devices fits into addressing changes in customer practices. September 2015 – CryoGas International

IT Solutions

Schaer: Customers are always looking for ways to streamline business processes, reduce transaction costs, and operate their business more efficiently. We believe advances in technology serve the purpose of streamlining and shortening a given business process, strengthen customer relationships, boost employee productivity, and make it easier to measure business performance. At CU, our job is to discover and implement new software capabilities and technologies that will benefit our customers over the long term. Responding to changes and implementing specific technologies is a marathon, not a one mile sprint.

and easily. These technologies enable you to transform your data from a commodity into a gold mine and viewed from your desktop, tablet, and smartphone in a ubiquitous manner.

CryoGas: How has the value of data and the idea of data as a commodity changed what CU does with the TIMS software? Schaer: Data will remain a commodity as long as it’s difficult to access and cumbersome to analyze. We overcome this hurdle by utilizing industry standard technologies like Microsoft SQL database and Excel to central store business transactions and analyzing vast amounts of data quickly

CryoGas: Is there a balance between anticipating a customer’s need and dictating a market? Schaer: The best way to anticipate customer needs is to stay close to their business. We accomplish this at our annual Users Group conference, now in its 29th year. It’s a great way to learn about our customers’ needs and gain insight into industry dynamics at the local level. Dictat-

CU holds an annual Users Group Conference to learn about its customers’ needs.

ing a solution to a market seldom works. There will always be leaders and laggards when it comes to embracing new technologies. The challenge is to develop solutions that the majority of your customer base will use. It’s a balancing act between developing new innovations, making small improvements to existing features, and maintaining overall stability. CryoGas: What’s after mobile for CU? Schaer: Mobile is an exciting space to be in right now. We’ve always viewed mobile as an extension of the TIMS software platform and developing mobile products under this philosophy allows us to connect the sales person, driver, and customer in new and exciting ways. We’re looking forward to releasing a number of new mobile apps over the next year which we believe will redefine how industrial gas and welding supply distributors do business. Stay tuned! CryoGas: We really appreciate for your contribution to our 25th Anniversary Issue. Thank you.

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Equipment and Technology — The Changing Supply Chain

The History (and Future) of Cylinder Tracking By James S. Glessner Most people are familiar with the bulkiness of the first computers and the first cellphones. Similarly, in the 1980s, rugged handheld scanners used in industrial applications were the size of large bricks, and just as heavy. They usually stopped working when dropped, which happened often, especially when users got frustrated with them. If you wanted to print a receipt for what had been scanned, you had to attach the handheld via cable to a printer, a printer which was carried around in a case that resembled a briefcase. To be completely fair to 1980s-style scanners, the equipment ergonomics were only as good as the components that were available to build the devices at the time. Those components were large and hence the devices were big and cumbersome as well.

Despite these obstacles, at the time rugged handhelds were at the cutting edge in the budding field of devices that could read barcode labels. Barcodes were an emerging way to rapidly identify separate products or assets as unique and distinct units tied to data in a database, and they were beginning to be deployed across multiple industries. If a barcode label fell off a product, it could be replaced cheaply, unlike bulkier attachments. A barcode scan could auto-identify physical assets and eliminate error-ridden manual data entry. In 1974, the first grocery store barcode was scanned to help speed up the process of accurately tallying grocery bills at the register. Collecting data and interpreting it via computer was in its infancy, but this kind of labeling and scanning system was starting to be deployed across multiple industries in the late 1970s and early 1980s. Early innovators like FedEx were using this budding label and scan system, deploying handheld scanners to track the packages they were shipping, despite the handheld’s drawbacks. Why? Because as more and more products and packages leave their owner’s sphere of control, manual methods of keeping track of them become increasingly inefficient and unmanageable; as FedEx CIO Rob Carter put it, “You can’t manage what you can’t measure.”

Managing What You Own

The Motorola DynaTAC 8000X — the first commercially available, hand-held cellular mobile phone. Image by Redrum0486 - Licensed under CC BY-SA 3.0 via Wikimedia Commons. 66

When Jack T. Butler, II was in his 20s and working the night shift at the family business, Butler Gas Products Company, he was asked by a friendly competitor who visited the Butler plant, “Where are all your empties?” Jack didn’t know exactly so he asked his father, Jack A. Butler, the founder of the business who said, “They are on our trucks being returned from customers.” Butler Gas was spending precious cash resources to buy their own cylinders rather than rent them from gas suppliers. Cylinders were expensive so they bought just enough to turn around from one cus-

tomer and deliver the next day to another. There were no empties just sitting around. According to Butler, the philosophy of owning your own cylinders, your own assets vs. renting them, is the same philosophy as owning your own house vs. renting it. This idea was compelling to Butler Gas then and continues to influence the gas industry as a whole. In 1945, an association of gas distributors had formed, calling itself NWSA (National Welding Supply Association), now known as GAWDA (Gases and Welding Distributors Association). At their meetings in the 1960s, the members discussed the favorable economics of owning their own cylinders, as well as their own filling equipment and production facilities. For more on GAWDA see, “The Gases and Welding Distributors Association,” on page 16 of this issue.

At NWSA, Jack’s interest in emerging technologies landed him the job of ChairSeptember 2015 – CryoGas International

The History (and Future) of Cylinder Tracking

man of the Management Information Committee. The mission of that committee was to keep moving the independent gas distributor along with increased use of new technologies like cylinder tracking, palletized production plants, specialty gas filling, barcoding hardgoods, etc. Jack’s motto was, “Why technology? Because it works.” An offshoot effort of the committee was called the Barcode Task Force. The task force’s first job was trying to decide what symbology to use for barcode labeling cylinders and hardgoods. It was a tossup and mixed reviews between two widely used barcode symbologies: one that could handle alphanumeric characters (3 of 9) and one that was all numeric (UPC). Connie Robinson (industry consultant), Bill Higley, and David Haas (both gas distributors) served on this task force along with Jack. Connie and Jack decided to visit Payne Brothers in Hammond, Indiana (an early adopter of tracking cylinders) in order to evaluate the barcode symbology being deployed. What they discovered at Payne was the creative solution of walkie-talkies used to transmit cylinder serial numbers via the operator’s voice on the plant floor and transcribed in real time by the office staff. Barcode labels that were used on each cylinder matched the serial numbers indelibly stamped on the cylinder shoulder. That meant the barcode symbology had to be able to use both alpha and numeric characters; UPC therefore was ruled out and 3 of 9 won the day. In 1986, Butler Gas — with a significant investment in their own cylinder assets — decided to do cylinder tracking using the Area Technologies’ system, which was upgraded to using the “brick-like” laser scanners to read barcodes. Jack remembers a big learning curve for his employees to adopt this new way of doing business. It took a very dedicated management team in order to keep everyone’s eye on the ball. Printing barcode labels (using the cylinder serial number) and labeling/initializing cylinders was a major project. Considering the time it took cylinders to return from the field, it took a couple years to fully label and initialize all of Butler Gas cylinders at that time. Other than Area Technologies, there were a few other upstart cylinder tracking solutions initiated by industry-specifSeptember 2015 – CryoGas International

ic software companies like Barry Weir, Computers Unlimited, DataWeld, Infonetics, Trendex, Equinox, and TrackAbout, who had handfuls of customers that were doing cylinder tracking. Also there were some home-grown cylinder tracking projects initiated by General Air in Denver, Colorado, and Haun Welding in Syracuse, New York. Both continue to use their own tracking systems to this day. In 1989, John Whiting, an industry veteran and consultant, was asked to do a Profit Improvement Study at Butler Gas. When John arrived for the study Jack Butler gave him a plant tour. John had experience with cylinder tracking when he worked at AGA and wanted to see what kind of accuracy Butler Gas was getting by conducting a random test. He wrote down a cylinder serial number he saw in the production facility and immediately climbed the stairs to the office and asked Sandy Gobrish, cylinder tracking administrator, “Where is the cylinder with this serial number?” Sandy queried her tracking system database and said affirmatively, “That cylinder is downstairs in our production facility.” “Impressive results,” John replied.

Onward and Outward

Along with the independent gas companies, by the 1990s and early 2000s, all the major gas suppliers were making forays into cylinder tracking. However, having large facilities spread out far from each other globally had its own unique set of challenges — ones that enterprise solutions at the time had a hard time handling. To deal with this technical gap, several of the majors set about building their own tracking systems in targeted regions around the world. Unfortunately, the early versions of these solutions often fell short as well — and many of them were abandoned by satellite plants months and years into using them. In 2003, at Air Liquide, an engineer named Albert Atkins was given the task of trying to turn this trend around and manage a team that would find or build a tracking system that would deliver on its promises. Albert recalls, “In previous tries, tracking solutions were focused on meeting internal expectations regarding data management and reporting to better manage the business but forgot one key element — the operator experience for the filling plant

and delivery drivers. What finally made the difference at Air Liquide was finding a solution that married the modern technology available to make the user experience as easy as possible with a customizable data-management and reporting tool that allowed the company to use the data collected to manage our assets in a better way, both internally and externally. Once we demonstrated the ability to do both, in a relatively cost-effective way, upper management was ready to support the project.” According to Elizabeth Wallace (who led the tracking team at Air Liquide after Albert and is now VP of Product Management at TrackAbout), along with the confluence of the right technology coming about at the right time, what really made the difference this time for the majors was a renewed buy-in from upper management to create strong implementation teams, along with creating incentives for far-flung plants to fully adopt and use the technology. Once the right technology was adopted and embraced, these companies saw a return on investment and subsequently started building large parts of their business around these tracking solutions. Elizabeth now says that she should “have a barcode tattooed” on her, after extensively traveling for the past eight years implementing tracking solutions at several of the major gas companies in a dozen countries. She believes that tracking technology is a “must have” industry solution that comes down to a simple philosophy, “To compete, you have to be able to know where your assets are.”

Today and Tomorrow

Independent and major gas companies have continued to upgrade their tracking systems over the years. Although the design of handheld scanners has rapidly improved since its early days, its costs have remained fairly high, and upfront investment is probably the major factor that has held back some in the industrial gas industry from adopting automated tracking systems. Although today’s leading tracking solutions end up paying for themselves multiple times over in ROI, that initial outlay of capital can be painful. Luckily, because other products have rapidly evolved in the broader consumer market, in 2015 we now have devices that can rapidly scan barcodes, have all 67

The History (and Future) of Cylinder Tracking

TrackAbout smartphone application scanning a cylinder into the system. Photo courtesy of TrackAbout, Inc.

the same capabilities as rugged handhelds and then some, and are inexpensive to purchase or already exist in many people’s pockets. Those devices you already know, and probably already own: smartphones like iPhone and Android. You may have already experienced being checked out of a store by an employee using a smartphone or tablet like a portable cash register and scanning device. New technology just released this year enables smartphone cameras to scan barcodes in succession and as rapidly and accurately as a rugged handheld. This is nothing short of revolutionary for any industry that uses barcodes to manage or track their products. The near future (next 10 years) of cylinder tracking is bright. Billions of people already own and use smart mobile devices

(tablets, smartphones, etc.). Barcodes are ubiquitous, and NFC (Near Field Communication) and more broadly RFID (Radio Frequency Identification) tags have become a reality. Rapid scanning of barcodes, QR codes, and reading of NFC tags by the affordable smart devices will increase adoption of cylinder tracking throughout the world. Of the several hundred million cylinders in the world today it is estimated that only about 10 percent are currently being tracked. It’s predicted by industry experts that smart device scanning will increase the number of assets tracked by 15 percent per year. However, it’s not just tracking and quality control that the gas industry needs to be worried about as far as managing their assets. As the internet has put more and more

1st Generation Cylinder Tracking 1980 – 2000

information at consumers’ fingertips, consumers now demand (and expect) immediate information about the products they use; and so companies across many industries are faced with liability and customer service issues if they fail to provide that information in a timely manner. Yet another advantage of smartphones is that they can deliver that information to the asset user anywhere — including standing right in front of a product at its use point. Smartphones combined with asset management software solutions offer a really unique way of not only managing your assets, but also engaging those that use your assets. Although not often discussed, one of the main reasons for FedEx’s incredible success was not simply its innovative tracking system that it developed for quality control, it was the fact that they offered information gleaned from this system to customers. In 1979, FedEx gave customers the ability to call in and find out where their package was, and in 1994 was one of the very first companies to allow customers to track packages online. Fedex.com was actually one of the very first examples of usable, searchable consumer information on the web, even predating all but the earliest web search engines. FedEx, as well as the early tracking adopters in the gas industry, understood how important information was (and is) to success and profitability. To paraphrase Fred Smith, the founder of FedEx: The information about the asset is as important as the asset itself. James S. Glessner is Chairman of TrackAbout and CEO of Lockhouse.

2nd Generation Cylinder Tracking 2001 – 2015

Barcodes

Barcodes with Check/Sum Validation

Large/Thick Barcode Labels (not sticky enough)

Small/Thin Barcode Labels (super sticky)

2D Barcode Labels (includes extra info)

QR Coded Labels (includes URL)

Large Laser Scanners

Small Optical Scanners

Large Mobile Printers (using a cable connector)

Small Mobile Printers (using wireless)

Servers Behind the Firewall

Servers in the Cloud

NFC (R&D)

NFC (Short Range Tags)

RFID Tags/Handheld Readers

RFID Tags/Portal Readers (R&D)

September 2015 – CryoGas International

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Equipment and Technology — The Changing Supply Chain

A Look Back at 25 Years of Cylinder Manufacturing A Report from Worthington Cylinders Worthington Industries takes a closer look at the changes in cylinder technology and manufacturing during the last quarter-century — changes that have made gas and liquid storage more convenient for the end user and more efficient for gas distributors and producers. A lot can happen in 25 years. In 1990, the year CryoGas International published its inaugural issue, the World Wide Web was in its infancy and mobile phones were strictly phones — not the sophisticated tools we use today. Although these technological advances seemed highly innovative at the time, the level of technology we enjoy today was barely imaginable a quarter-century ago. Not surprisingly, the industrial gas industry has a similar story, with cylinder design and manufacturing technology evolving dramatically to support new markets and market demands. Worthington Industries, which is celebrating its 60th anniversary this year, has been at the forefront of innovating gas and liquid containment for more than 40 years by making lowrisk, cost-effective technology available for gas transport, on-board fueling, on-site fuel and power generation, and portable, on-demand applications.

Technology for Global Markets — Industrial Gas, Alternative Fuel, Oil and Gas, Power Generation

Using safety as the foundation of its design and manufacturing processes, Worthington Industries’ pressure cylinders business has

Cylinder design and manufacturing technology has evolved dramatically to support new markets and market demands. 70

grown from humble beginnings as a $2.4 million, narrowly-focused refrigerant cylinder manufacturer to a global industry leader producing more than 81 million units and $1 billion in revenue. The company’s expertise and experience in materials engineering of carbon and stainless steel, aluminum, composite, and fiberglass; metal forming and welding; and design engineering, including systems and applications that use its storage technology, extend to a wide variety of markets and applications. For industrial gas markets, Worthington has pioneered ways to decrease cylinder weight and increase pressures, improving transportation efficiency. For propane marketers, Worthington’s product design and manufacturing processes produce aluminum propane forklift tanks up to 33 percent lighter than steel tanks and 20-pound steel portable propane tanks that are the lightest in the industry. “We’ve continued to evolve the type I cylinder technology to benefit industrial gas customers by safely accommodating ultra-high pressures while removing weight from cylinders. We eliminated up to five percent of the cylinder weight and increased pressures to 400 bar (5,800 psig) on our newest type I cylinder,” said Dusty McClintock, Vice President and General Manager of Worthington Industries Industrial Products business. Worthington’s cryogenic liquid storage and transport solutions offer a similar distribution benefit — efficient distribution of more molecules, with liquid technology storing 15 to 17 times more molecules than a compressed gas high pressure cylinder. Worthington has recently expanded its portfolio to extend this technology to customers, including beverage carbonation cylinders, liquid cylinders, trailers, and bulk storage for industrial gases.

In addition to weight and pressure solutions focused on benefiting distributors, Worthington has designed enhancements to its products that benefit end users with a safer, easier interface. Changes include improved grips on refrigerant and propane handles, and redesigning the value orientation and head ring of its liquid cryogenic cylinders. As global market demand for alternative fuel storage increases, Worthington has evolved fuel storage for natural gas, hydrogen, and propane autogas that is as lightweight and safe as possible, while maximizing the amount of fuel for the allocated space in the vehicle.

Worthington offers the only fully integrated CNG fuel systems in the industry for heavy-duty/Class 8 vehicles.

Worthington’s new production processes, materials science, and design engineering produce a wide variety of on-board fuel storage solutions, including both cylindrical and toroidal propane autogas cylinders, type I and III cylinders for compressed natural gas (CNG) and type III cylinders for hydrogen and LNG systems. Worthington is also actively working to improve storage and distribution technologies for type IV cylinder technology. Examples of Worthington’s focus on decreasing cylinder weight are its propane autogas toroidal cylinders, which fit in the trunk of a passenger car, saving valuable cargo space. The company manufactures these cylinders with a proprietary process September 2015 – CryoGas International

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A Look Back at 25 Years of Cylinder Manufacturing

that allows the use of thinner-gauge steel, making the cylinders 30 percent lighter than competitive products. Where both weight and durability are important, Worthington’s ultra-light type III composite cylinders are ideal. These cylinders are used for applications like the top of a bus, where weight must be kept to a minimum to avoid a top-heavy situation, or for delivery fleets that want to maximize payload. Worthington recently announced its largest diameter type III cylinder — a 26.2-inch model, ideal for Class 8 heavy-duty and refuse trucks, and the company continues to enhance liner materials and coatings to achieve higher performing, more durable products. In addition to on-board fuel storage, Worthington has developed fuel systems for natural gas that maximize space and fuel efficiency. For on-road applications, Worthington offers the only fully integrated CNG fuel systems in the industry for heavy-duty/Class 8 vehicles. Worthington’s LNG fuel systems are used in fuel tanks and fuel supply systems, for on-road and off-road applications like marine and the emerging mining and rail applications.

“We’ve continued to evolve the type I cylinder technology to benefit industrial gas customers by safely accommodating ultra-high pressures while removing weight from cylinders.” For the unique needs of mobile equipment fueling, off-pipeline power, offshore, and traveling operations, LNG can be a cost-effective option to propane, heating oil, or diesel. Worthington has experience designing, developing, and building more than 2,000 unique LNG projects, with components including ISO containers, engineered tanks, trailers, bulk storage and regasification, and bunkering for marine applications. As domestic oil and natural gas exploration continues to grow, Worthington Industries is exploring ways to minimize well pad footprint and increase the purity of processed materials at the well site. Worthington manufactures storage and 72

Worthington has experience designing, developing, and building more than 2,000 unique LNG projects.

processing equipment for the surface-level exploration and production market, including steel tanks for storing oil and fiberglass water storage tanks for all major US shale regions. The company also designs and manufactures processing equipment, including proprietary gas and oil separation products that are setting a new standard for highly efficient well pad design.

Resources Extend Technology to Unique Markets

Worthington’s uniquely skilled in-house team, global experience, and stability as a $3 billion diversified manufacturer have allowed the company to become more innovative around customer solutions in consumer products, fire and safety, aerospace, and other markets. In consumer products, Balloon Time, a safe, portable helium kit designed for inhome use, celebrates its 30th anniversary this year and has grown to be a globally recognized brand, available in mass market and party goods stores around the world. The product provides party hosts a convenient alternative to renting an industrial helium tank or visiting a local party store and stuffing the balloons in their automobile for the ride home. Worthington also markets a complete line of Bernzomatic® and Worthington™ joining technologies products, including torches, hand-held fuel, solder and brazing products, and Bernzomatic® and Coleman® propane camping gas cylinders. The company designs and manufactures handheld oxygen, propane and MAP-Pro™ fuel cylinders and is the industry-leading manufacturer of Bernzomatic and Worthington-branded hand torches. “Our fuel

and flame engineers continually look for new ways to improve our products and develop technology for new markets,” said McClintock. “Although the primary user of these products are professional plumbing and HVAC technicians, we’re seeing interest from DIYers, chefs, adventurers and artists who are using hand torches for a variety of tasks.” Worthington has also extended its technologies to fire and safety, aerospace, and military markets, offering the lightest steel cylinder available for breathing air (7.1 kg, 6 L 300 BAR) as well as lightweight, type III composite breathing air cylinders, and steel and aluminum cylinders for fire suppression systems. The products are designed to match unique fire and military brigade preferences, including different capital needs and local work environments. For aerospace and military markets, Worthington has addressed weight and space challenges by designing for unique applications like emergency oxygen for crews, inflation of escape slides, and ejection seat propulsion.

Safety and Commitment to Customers and Industry

In a business that involves storage and transportation of compressed gases, safety has always been the number-one priority at Worthington Industries. The company prides itself on being a safe place to work and is committed to only producing products to the highest safety and quality standards. “We manufacture millions of products every year to world class quality levels that ensure superior safety and functionality. In fact, as the largest pressure vessel manufacturer in the world, many of our people serve on boards of global regulatory organizations, providing a manufacturing perspective that helps guide quality and manufacturing standards,” said McClintock. Looking back, it’s clear that the technology enabling safe, efficient storage and transportation of gas and liquid has continued to evolve as market demands change. With 60 years of manufacturing experience, and more than four decades serving the industrial gas market, Worthington Industries continues to stand out as a worldwide expert and low-risk solutions provider for gas and liquid containment. September 2015 – CryoGas International

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Equipment and Technology — The Changing Supply Chain

Ratermann Manufacturing Creative Solutions Customers Depend On It seems that the only constant to business over the past 25 years is that the technology we use today will be different tomorrow. However, the business basics have stayed the same — delivering outstanding customer service, providing quality products, and backing those products up with knowledge. As we reflect on the past 25 years with CryoGas International, the big difference we see between 1990 and 2015 is the way in which we deliver our products and services, and the additional customer solutions we have been able to provide. Fax machines, three-colored paper receipts, land lines, and now even emails can be considered “vintage” office tools in some circles. Technology like the smartphone offers a computer in your pocket and enables an array of new services. Communicating your new products and services can now be done 24/7. This has resulted in climbing standards for customers and faster delivery requirements. On the spectrum of technology, the gases and welding industry is somewhat unique. Many applications within the industry are technologically advanced and can range from supporting the processes that get men and women into space to working on stemcell research. Yet, other gas and welding applications in some traditional fields have not adapted with new technological advances. Those working in the gas and welding industry, our customers, represent a broad cross section of people including seasoned veterans and entry level employees, all working within the enormous breadth of markets served by industrial gases. Finding the right balance between old media messages and information delivery and the complex and fast changing world of social media can be tricky. Ratermann Mfg. has worked diligently to develop vital tools to bring solutions to its customers, regardless of their level of experience or media preferences. Ratermann Mfg. has a catalog of 200,000 products available online. Over the last 20 years, our team has developed and organized our catalog as a reference guide of not 74

only our products, but of industry standards and regulations as well. Our catalog houses over 20,000 products, six different segments, 19 different sections of products, and an entire section dedicated to reference data and training. We strive to have this be a knowledgeable guide to any employee within the industry, no matter what the level of experience. Twenty-five years ago, we simply could not have created a printed reference guide/catalog that resembles what we offer today. Graphic and print technologies at that time made producing such a catalog cost prohibitive.

In addition to our expansive print reference guide/catalog, we also have a digital version as mentioned above, a website, and a mobile app for the digitally-aged millennial. Most recently, our marketing team developed the Ratermann Manufacturing app on which customers can make notes, place orders, and find literature to answer everyday questions related to the industry. With today’s technology, a person can do so much more work within a given time frame. It also allows us to invent solutions for the “old ways” that were often frustrating and time wasters. For example, ordering hoses in the past could be a tedious task, trying to match the correct hose to the correct application. In 1990 a customer would be faced with the task of verbally describing either what was required for their hose application or perhaps what they wished to duplicate. This was a time consuming task and much more daunting than placing a hose order today. Replacing yesterday’s verbal or written order is Ratermann Mfg.’s online “Hose Builder,” which guides customers through

the hose building and ordering process. The Hose Builder was developed to minimize frustration and increase productivity for our customers. Hose Builder is conveniently accessible online and is able to process orders 24 hours a day. In just a few easy steps, it guides customers to the exact hose they need based upon their specifications. From the choices offered on the screen, customers simply choose their application, gas type, and length, and Hose Builder will generate high pressure and cryogenic hose and fitting options. Similarly, Ratermann Manufacturing has created “Sign Builder.” In the past, ordering signage involved the same process as ordering hoses. A customer would have to find, describe, and place an order verbally or in writing. The customer would then receive and approve a proof or hope to receive the correct product. Regulatory and safety compliance is now at the forefront of our customers’ concerns and signage plays a big role in compliance. Ratermann recognized the need to offer an online tool for signage. With “Sign Builder” our customers have 24 hours a day access to online information, which allows them to create needed signs, whether custom or standard. Layout and proofing is done online and the signs are shipped directly to the customer. Technology will keep evolving and advancing and we will always strive to continue to progress with these advances, looking for the most user-friendly, convenient, and efficient ways for our customers to do business. Ratermann Mfg.’s foundation was built on the belief that our customer’s convenience and needs are always first. This is a constant and has not changed over the course of our existence, nor will it in the future. As always, our customers are still able to call our knowledgeable customer service reps but today they also are able to use new tools such as our e-commerce website, digital catalog, Hose Builder, and Sign Builder. Our goal has always been and will continue to be the most “Value Added” supplier in our industry. September 2015 – CryoGas International

2015 ANNUAL CONVENTION

THE PHOENICIAN § 6000 EAST CAMELBACK ROAD § SCOTTSDALE, AZ 85251

SATURDAY, OCTOBER 10, 2015 2:00pm – 6:00pm

(Early Bird) Convention Registration

SUNDAY, OCTOBER 11, 2015 8:00am – 6:00pm

Convention Registration

8:00am – 9:00am

Executive Committee Meeting

9:00am – 12:00pm

Board of Directors Meeting

1:00pm – 2:00pm

Regional Chair Meeting

2:00pm – 3:30pm

Committee Meetings

5:00pm – 7:00pm

President’s Welcome Reception

7:00pm

Industry Hospitalities

MONDAY, OCTOBER 12, 2015 7:00am – 6:00pm

Convention Registration

7:00am – 8:00am

Networking Breakfast

8:00am – 12:00pm

Opening General Business Session

12:00pm – 1:00pm

Past President Luncheon

2:00pm – 5:30pm

Contact Booth Program

5:30pm

Industry Hospitalities

TUESDAY, OCTOBER 13, 2015 7:00am – 1:00pm

Convention Registration

7:00am – 1:00pm

Golf Tournament

11:30am – 3:30pm

Women of Gases and Welding Event

3:30pm

Industry Hospitalities

WEDNESDAY, OCTOBER 14, 2015 7:00am – 1:00pm

Convention Registration

7:00am – 8:00am

Networking Breakfast

8:00am – 12:00pm

Closing General Business Session

1:00pm – 6:00pm

Young Professionals Event

7:00pm – 10:00pm

President’s Farewell Gala

Equipment and Technology — The Changing Supply Chain

Products and Services for the Compression Industry CryoGas International Interviews CPI CPI is an international manufacturing and services company providing the highest quality products and services to the compression industry. Its compressor equipment is used in air separation units (ASUs) where dozens of design configurations are used based on specification requirements for the final product. CryoGas International interviewed David Schroeder, Vice President of Technology, of CPI to see how the compressor equipment for ASUs has changed in the past 25. CryoGas International: Today CPI is a leading manufacturer of precision engineered sealing components for the compression industry, a supplier of packing, piston, and rider ring product lines, and a designer of compressor valves. In 1990, what was your range of product offerings? CPI: Our company is over 100 years old and was built on our primary range of sealing product offerings, including packing and wiper rings, piston and rider rings, and valves. CPI has enhanced these products with design and material upgrades over the last 25 years, in part thanks to significant advancements in polymer technology and computer simulation. Recently, we expanded our service capabilities, such as strategically placing over 20 service centers for reconditioning products close to customer locations. We also added field service crews that work on both onshore and offshore customer sites all over the world and acquired a line of lubrication components and systems that complement the many lubricated compressor applications. CryoGas: In 1990 the average ASU had a capacity of about 500 tons per day. With production capacity now possible up to 5,000 tons per day, today’s ultra-modern facility pushes technical boundaries. How has CPI’s product portfolio been designed to meet these changing needs? CPI: One of the biggest changes in the industry over the past 25 years is the increased utilization of assets. There are no 76

more stand-by units for extra capacity, which places a premium on equipment and component reliability and service. Our parts needed to be designed correctly, installed properly, and perform to or above the expectations of our end users. As design and material technology has changed, we have been able to extend equipment run times to meet our customers’ needs. We continue to work in partnership with our customers to develop best practices for application, operation and service intervals to further extend product life and allow better predictability. CryoGas: What are the key safety requirements that need to be addressed to ensure the safe operation of the newest compressors with high capacities? CPI: Safety has always been our number one priority within our operations for our employees and our visitors. That attitude also extends to our sales, engineering, and service technicians who spend much of their time on customer sites. Luckily, the industry we operate in places a high priority on safety, which includes providing extensive training and certifications, conducting daily safety review meetings, and spreading the general message that it is each employee’s duty to stop work if they come across a situation that is potentially unsafe. Our products also contribute to creating a safe environment. For example, our seals are designed to eliminate the leakage of process gas beyond the compressor. CPI continues to be on the forefront of upgrading our products to meet the needs of our industry as safety and regulatory limits evolve. CryoGas: Energy savings has been and continues to be a major driver in ASU design. How has CPI been involved in making ASUs more energy efficient? CPI: The products in our portfolio that most directly affect the efficiency of a compressor are our compressor valves. Over the years, CPI has advanced the materials and designs of our valves to provide a combination of performance and reliability. Additionally,

the evolution of computer simulations has allowed CPI to accurately model the performance of our valves so that we can minimize horsepower losses while operating in a range that limits stresses on our sealing components, springs, and hardware. CryoGas: What do you consider to be the most significant change in ASU compressor technology over the past 25 years? CPI: CPI optimizes seal and valve designs for compressors that we serve and provide parts for, which allows our customers’ operations to run continuously for a much longer time than they previously experienced. Part of that process included developing and optimizing our polymer-based materials to run in extremely difficult, dry-running environments and customizing the design of our rings and valves for individual applications. CPI also partners with our end users to incorporate the designs, monitor performance and make modifications over time. Additionally, we offer a combination of handson training and field service when needed. This kind of partnership is mutually beneficial, as they work on their part to maintain their compressors, optimize their auxiliary equipment and control their operations. Working together results in run times that were previously considered unachievable. CryoGas: What’s on the horizon for new technological developments in compressor technology for the industrial gas industry? CPI: We see a continued progression towards using data from monitoring devices such as CPI’s Valvealert™ to optimize the performance of compressors. This ranges from the view of the entire compressor to the performance and condition of all individual components. Many parts of the critical plant assets are already monitored, but CPI expects this sort of monitoring to expand to virtually all parts of the equipment and plant operations. However, we will always combine technology and data with technical, hands-on service that provides a link between design and actual operations. September 2015 – CryoGas International

Middle East

& North Africa

Industrial Gas Conference Dubai, 7-9 December 2015

Join the Must-Attend Industrial Gas Conference of 2015! Today’s Vision – Tomorrow’s Reality Taking place at the Jumeirah Beach Hotel in Dubai from 7–9 December, 2015

Keynote Speaker Announced!

Key agenda topics

‘Homecare Markets in the Middle East’ Tom Blades Executive Member of the Board The Linde Group

+44 (0) 1872 225031

September 2015 – CryoGas International

•

MENA Merchant Gases Market

•

Raising the Standards of Safety

•

Growth Drivers within MENA

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Get your Early Bird ticket no w!

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Art of Selling 40 years later… It’s all about Relationships By Art Waskey As Cryogas International celebrates its 25th anniversary, it’s appropriate to take time to reflect on what’s changed. For sales professionals, it’s a new paradigm in customer relationships. My first exposure to a sales cycle occurred in 1974 when my employer, Airco Welding Products, selected me to attend a professional sales program developed by IBM called POPS (Practice of Professional Selling), to become a regional trainer. The sales cycle I brought back to Houston for our eight Regional Sales Engineers (Texas, Oklahoma, and New Mexico) and their 50 distributor’s sales reps included the following basic steps: (1) introduction (small talk); (2) product presentation; (3) handling objections; and (4) closing the sale. The training included role playing with emphasis on the product presentation (features and benefits), handling the customer’s objections, and types of closures. Minimal emphasis was placed on the introduction; most time was spent on what I’ll call “snake oil” strategies for handling objectives and closing the call. Interesting enough, you can still Google for “Types of Closures.” I was surprised at some of the techniques I found: Opinions Count (“In your opinion, would this solve your problem?”); Assumptive Close (Put an X in the signature line and hand the customer the form); and — get this —The Porcupine (“Would you like it in red or green?”). As a young engineering graduate, I can still remember my response when a representative from Airco interviewed me and suggested a career in sales. I replied, “I just crammed five years of engineering into four and placed at the top of my class, and for what … so I could become a salesman?” Fortunately, I was given some excellent career counseling suggesting my personality was much better suited for technical sales. So, 40 years later - what’s different in professional sales? Let’s look at the prevailing sales cycle: (1) Build a relationship of trust; (2) the customer discloses his need; (3) get a commitment from the decision maker; (4) prove the value of the product, and; (5) demonstrate the product. The core to the typical sales cycle today is a relationship of trust. If the customer chooses to not allow you to build trust, move on to the next account — you’re wasting your time. Once you establish trust, never betray the customer’s confidence. I remember a sales training call I made with a new rep to a purchasing agent. I told this person I wouldn’t send him a quote until I could get to know him. He rudely told me I was wasting his time and to get out! Upon dismissal, I advised my trainee that if the buyer handled prospective vendors that way, it would also be reflected in his internal relationships and he wouldn’t keep his job long. Years later, we have that business with a replacement purchasing agent. Prospective college graduates view sales careers much differently than my generation. Why? Because 40 years later, it’s all about relationships. Art Waskey is Senior VP of Sales for General Air Services and Supply Company in Denver, Colorado. He can be reached at awaskey@generalair.com. 78

Calendar 2015 September 9–10, 2015 GAWDA Gettysburg Regional Meeting Gettysburg, Pennsylvania gawda.org September 13–16, 2015 AIWD Annual Convention New Orleans, Louisiana aiwdconvention.com September 13–18, 2015 17th International Conference on RF Superconductivity British Columbia, Canada srf2015.triumf.ca/ September 15–17, 2015 WESTEC 2015 Los Angeles, California westeconline.com

October 20–21, 2015 Gulf Coast Conference Houston, Texas gulfcoastconference.org October 26–27, 2015 Trade & Trends Food Show Secaucus, New Jersey ttfoodshow.com October 26–29, 2015 HHP Summit 2015 Dallas, Texas hhpsummit.com October 27–29, 2015 SOUTH-TEC 2015 Charlotte, North Carolina southteconline.com October 27–30, 2015 Gastech 2015 Singapore gastechsi.com

September 22–23, 2015 JEC Forums Boston Convention and Exhibition Center Boston, Massachusetts jeccomposites.com

November 9–12, 2015 FABTECH 2015 Chicago, Illinois fabtechexpo.com

September 22–24, 2015 AWS 18th Annual Aluminum Conference San Diego, California aws.org/conferences October 11–14, 2015 GAWDA Annual Meeting Scottsdale, Arizona gawda.org

November 15–19, 2015 Fuel Cell Seminar & Energy Exposition Los Angeles, California fuelcellseminar.com November 16–18, 2015 Eastern Analytical Symposium Somerset, New Jersey eas.org

October 20–21, 2015 CGA Safety & Reliability of Industrial Gases, Equipment and Facilities Seminar Tampa, Florida cganet.com

December 7–9, 2015 gasworld Middle East and North African Conference Dubai gasworld.com

Trends for 2015/US Air Gases Market Report January 2015 Vol. 53, No. 1

Reporting on the business and technologies driving today’s industrial gas industry

FEATURE ARTICLES

Published twelve times a year by gasworld Publishing LLC

Topping the News Linde Expands in Oklahoma Scott-Gross, American Welding & Gas Joining Forces

Two magazines, one great offer!

What to Watch for in 2015 An Industrial Revolution, a Change Up in Energy, and Bluer Skies By Agnes H. Baker

The US Air Gases Market Report: Key Industries Keep Demand Growing By Maura D. Garvey

Bulk Equipment Update By T.J. Houpes

The 21st Century Supply Chain By Jonda Vance and Bob Werner

The Latest Development in Oxygen VPSA Technology: Adsorptech EcoGenTM A Special Equipment Report

Alleviating Tight Supply with Argon Recycling By Joseph Arencibia

Liquid CO2 or Liquid Gold? Maybe Both, as Aemetis Adds CO2 Liquefaction at Its Keyes Plant By Jim Lane

FABTECH 2014 A CryoGas International Show Review

2014 HHP Summit: Natural Gas for High Horsepower Applications A CryoGas International Report

1-19.indd 1

SGR

11/12/2014 09:18

Volume 17 No. 4 | Fourth Quarter 2014 www.specialtygasreport.com

SPECIALTY GAS REPORT The Magazine for Producers, Distributors, and Users of Specialty and Medical Gases

Tunable Diode Lasers

Subscribe to CryoGas International today and receive the Specialty Gas Report quarterly supplement

cryogas.com/subscribe

Core Technology for Gas Analysis Inside the Lab

Exceeding Expectations Through Automation

Inside...

End-of-Year Compliance The Power of Gas Chromatography Essential UHP Gas Generators SGR Reports from GAWDA 1-7_Cover-Contents .indd 1

24/11/2014 11:54

September 2015 – CryoGas International

There’s a new guide in town! North America Industrial Gas Buyer’s Guide 2016 Introducing the most comprehensive buyer’s guide for the supply of industrial gases, equipment and services to North America.

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Online promotional opportunities Help your company and your website to get noticed by more people than ever before by listing in our online buyer’s guide! By listing in the buyer’s guide you also have the opportunity to go global and feature in the most interactive and versatile global online directory of industrial gases that exists – gasworld’s Global Industrial Gas Directory. Join the 3,500 companies already listed! Take a featured listing and benefit from:

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Ad Index

A rt

Acme Cryogenics www.acmecryo.com

S elling

Art Waskey Will re-inspire you to sell during tough economic times

AMCS Corporation www.amcscorp.com

Applied Cryo Technologies www.appliedcryotech.com

B&R Compliance www.brcompliance.com

CAD-Cut www.cadcut.com

Chart, Inc. www.chartindustries.com

Inside Back Cover

Computers Unlimited www.cu.net

CP Industries www.cp-industries.com

Purchase his books: Art of Sales in a Month and Art of Sales in the Second month receive the Art of Selling columns every month by email for a low annual cost Annual Single Email Subscription (11 columns/year) for $25/year Annual Subscription & Redistribution Rights (11 columns/year) for $75/year

If you’d like to receive the Art of Selling sent directly to you go to: www.impactspeakingdynamics.com EdwardsGroup 2014_cgi 7/1/14 4:14 PM Page 1 KAIZEN/Continuous Improvement

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Cryofab www.cryofab.com

CryoStar www.cryostar.com

Cryovat www.cryovat.nl

Cyl-Tec www.cyl-tec.com

Edwards Group International www.edwardsgrp.com

Enmet www.enmet.com

FasTest www.fastestinc.com

FIBA Technologies www.fibatech.com

Gas Equipment Company Inc. www.gasequipment.com

Gas Innovations www.gasinnovations.com

gasworld www.gasworld.com

73, 77, 79

GAWDA www.gawda.org

Generant www.generant.com

43, 65

GENOX Transportation www.genoxtransportation.com

Hoffer Flow Controls www.hofferflow.com

IACX www.iacx.com

IG China www.igchina-expo.com

Impact Speaking Dynamics www.impactspeakingdynamics.com

INOXCVA www.inoxcva.com

Kornbluth Helium Consulting www.kornbluthheliumconsulting.com

Lydall Industrial Solutions www.lydallthermal.com

Mechanical Engineering Products www.mepco.net

Orange Research www.orangeresearch.com

SGS/SGD www.specialgassupplies.com

Sherwood Valve www.sherwoodvalve.com

Specialty Trailer Leasing www.specialtytrailerleasing.com

Tech Air www.techairfirststep.com

Technifab Products www.technifab.com

www.edwardsgrp.com Phone/Fax 740.527.2822 e-mail info@edwardsgrp.com

Tempshield www.cryogloves.com

Thermco Instruments www.thermco.com

TrackAbout www.stopprofitleakage.com

Veite Cryogenics www.veitecryogenic.com

Inside Front Cover

Weldcoa www.weldcoa.com

Back Cover

Weldship Corpopration www.weldship.com

Worthington Industries www.worthingtoncylinders.com

September 2015 – CryoGas International

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Distributor Advantages Facility of the Future: Equipped to Grow with Current Customers & Open Doors to New Ones. + Automated Cylinder Filling Systems

Automated Specialty Gas Filling Systems Remote Monitoring

New Facility – Vision Realized Since 2004, when Tom Elliott took the reins of the family business, A-OX Welding Supply Co., in Sioux Falls, SD, he’s made countless moves to ensure its success. With the help of his son Trent and daughters Terran and Tiffany, Tom set out to rebuild the independent distributorship. In 2013, Tom acquired a property with a 46,000-sq.-ft. building to accommodate his vision—store, warehouse, automated fill facilities, and more. It now serves as A-OX’s showcase facility. “Let’s talk productivity,” began Terran, describing the impact the automated island already has made. “We recently pumped 180 cylinders with one operator in just 2 hr. Before, that may have been an entire day’s production.”

Now Arriving: New Business The ability to make laser, calibration and ultra-high-purity gases has transformed the company. “We’re saving an enormous amount of money and time compared to outsourcing,” Terran said. “We’re better-able to service our current customers, and we’re picking up new business.”

“The new facility has transformed our company. We are incredibly productive, our service has reached new heights and we are poised for a successful future.” Tom Elliott, Owner, A-OX Welding Supply Co.

The new facility was designed and built with state-of-the-art Weldcoa equipment, including an automated pallet-filling island, liquid fill island with auto shutoff, analytical lab and sampling system, cascading helium system and booster pump and more.

“I anticipate that by the end of the year we’ll see a 20 percent increase in packaged-gas sales,” Tom added. Several major hospitals and healthcare companies realize A-OX can meet their growing needs. Similarly, the analytical lab and sampling system is gaining attention of nearby businesses.

Automation Rich with Benefits

Weldcoa on Watch

Filling automation was a top priority for A-OX because of the inherent productivity gain, and the recipe-based setup. “Our plant manager was scheduled to retire,” Tom said, “and we were very concerned about that knowledge base disappearing. With the gas-mix recipes programmed into the Weldcoa system, that concern was removed.” The system also provides verbal prompts throughout the fill process, allowing operators to leave the filling stations and perform other tasks, awaiting prompts from the fill system.

The A-OX management team is quick to credit Weldcoa. “Everything Weldcoa has done, from project planning to implementation, has exceeded our expectations,” Tom said. “Their team filled 800 cylinders to make sure everything worked, running every recipe through the system, over and over…tremendous.” “We know that Weldcoa is constantly watching over us,” said Mike. “Their remote monitoring and troubleshooting proves extremely valuable. They’ve called and alerted us to issues before we even knew about them. Now that’s good service.”

Get the rest of the story at Weldcoa.com. To learn how Weldcoa can help you, call 630.806.2000.