Welding & Gases Today - Q2 2018 by Welding & Gases Today

The Official Publication of the Gases and Welding Distributors Association

Why ESOPs Can Be Win-Win-Win

CONSULTANTS

Nitrous Oxide Handling Tips

Second Quarter 2018

MEMBER PROFILE

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co nt e n t s

Second Quarter • Spring 2018 • Volume 17, No. 2

DEPARTMENTS 08

PRESIDENT’S VIEW Assessing Events, Creating Changes

BY NED LANE

COVER STORIES

DIRECTOR’S DESK Getting the Most Value From Our Consultants BY JOHN OSPINA

EDITOR’S NOTE A Good Look at ESOPs

BY DIANE STIRLING

GAWDA CONSULTANTS 16

Special Cautions, Customer Steps For Handling Nitrous Oxide

BY THOMAS L. BADSTUBNER

Benefits Behind the Scenes: How GAWDA Consultants Work

BY MICHAEL DODD

Is Your Website Compliant With ADA Standards?

BY RICHARD P. SCHWEITZER, ESQ.

ITR ECONOMICS: A Still-Accelerating Economy Amid a Backdrop of Tariff Issues

BY ALAN BEAULIEU

MEMBER PROFILE 22

Mass. Middlesex Getting Big Boost From Biotech

BY AGNES H. BAKER

STAY CONNECTED

LEGACY, LOYALTY, OWNER MINDSET Employer Ownership Can Be Win-Win-Win As Succession-or-Sell Option

BY DIANE STIRLING

EIGHT GAWDA MEMBERS TELL WHY, HOW THEY BECAME ESOPS

ESOP INFORMATION Where It’s At

CHANGING WORK-BEHAVIOR CONNECTIONS TO MAXIMIZE THE ESOP ENVIRONMENT

BY JENNIFER BRIGGS

GUEST VIEWPOINTS 90

UMAN RESOURCES H Straight Talk and Strategies for Hiring Sales Superstars BY MIKE LORENCE, PH.D.

UMAN RESOURCES H Changing Workplace Dynamics and Their Impacts for Owners BY BRUCE TULGAN

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co nt e n t s

Second Quarter • Spring 2018 • Volume 17, No. 2

NEWS ROUNDUP

PAGE 68

112

WELCOME NEW MEMBERS!

114

INDUSTRY NEWS

116

IN MEMORIAM

121

MERGERS & ACQUISITIONS

123

NEW OFFERINGS

124

ADVERTISERS INDEX

THE TEAM EXECUTIVE EDITOR

John Ospina jospina@gawda.org PUBLISHER

Bill Brod billbrod@datakey.org EDITOR IN CHIEF

Diane Stirling dianes@datakey.org CONTRIBUTING EDITOR

Natasha Alexis nalexis@gawda.org CONTRIBUTING WRITER

Agnes H. Baker

FEATURES

CREATIVE SERVICES MANAGER

Robin Barnes robinb@datakey.org

VICE PRESIDENT, SALES

Tim Hudson timh@datakey.org RELATIONSHIP MANAGER

Hannah Gray hannahg@datakey.org

MORE REGIONALS ON THE DOCKET Six More Dates for June Through October

FEATURED EXHIBITORS A guide to the featured SMC Contact Booth exhibitors

WHAT’S ON TAP IN ST. LOUIS A Gateway View of SMC '18 Speakers and Events

Welding & Gases Today (USPS 22-975) is published quarterly: Winter, Spring, Summer and Fall, with additional publications in Spring and Summer. • Non-member subscription rate is $195 per year. • GAWDA members (key contacts and branch locations) receive the magazine as part of their dues. • GAWDA members can order additional yearly subscriptions (4 issues) for $40. • Welding & Gases Today is published by Data Key Holdings, LLC. on behalf of the Gases and Welding Distributors Association. • Periodicals postage paid at Ft. Lauderdale, FL, and at additional mailing offices (ISSN 1558-5344). • Editorial correspondence should be sent to Editors c/o editor@WeldingAnd GasesToday. org. • Advertising correspondence and materials should be sent to William Brod, Data Key Holdings, LLC., 1415 W. Genesee St., Syracuse, NY 13204; telephone (315) 445-2347, fax (315) 422-1721. • Postmaster: Send address changes to Welding & Gases Today, Gases and Welding Distributors Association, One Oakwood Blvd, Suite 195, Hollywood, FL 33020 • Welding & Gases Today is the official journal of the Gases and Welding Distributors Association (GAWDA) and carries news and announcements concerning GAWDA. • It is not responsible for contents or opinions other than association activities. • Contents are copyright ©2018 Data Key Holdings, LLC. • All rights reserved. • Nothing may be reproduced in whole or in part without written permission of the publisher. • Questions and comments can be sent via e-mail to Editors, c/o editor@WeldingAnd GasesToday.org. • Data Key Holdings, LLC. reserves the right to print portions of all or any correspondence mailed to the editors without liability on its part and no such correspondence will be returned. • Visit Welding & Gases Today Online at www.WeldingAndGasesToday.org.

6 • Spring 2018

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P RESIDENT’S VIEW

Reflections and Assessments are Leading to Some Changes in Association Processes by ned lane

G GAWDA’s 2017–2018 president, Ned Lane, serves as president of Cee Kay Supply Inc. in St. Louis, Mo. He’s worked in the welding and gases industry for 34 years on both the distributor and supplier sides. He can be reached at nedl@ceekay.com and 314-644-3500.

AWDA headquarters staff and GAWDA’s Executive Committee have spent considerable time and effort the past few months reflecting on our association and assessing what it offers its members in terms of real value provided for the cost of membership. As part of my “People, Process, Plan” focus this year, we have worked to create defined value statements for each type of in-person meeting GAWDA presents for members. The goal has been to better delineate the purpose, structure and outcomes of each of these. The idea is that when we do travel and come together, all who attend realize the utmost value for the time and resources expended. We recognize that these meetings need to provide tangible, in-the-moment value as well as lasting strategic worth. Here’s what we have developed:

REGIONAL MEETINGS

As more cost-effective and shorter timeframe meetings held all across the country, “Regionals” need to provide high GAWDA value on specific educational topics, as well as addressing core business content and the networking opportunities so desired by all.

SPRING MANAGEMENT CONFERENCE

This meeting targets the needs of management and operations decision-makers. It also serves as an ideal platform for process-oriented business education. Its offerings provide take-home, actionable solutions. As always, tactical networking is also a priority.

ANNUAL CONVENTION

Typically the largest yearly event, the “AC” is oriented toward business owners and top com8 • Spring 2018

pany decision-makers. Topics focus on the “big picture” in market opportunities, threats to the industry and emerging industry issues. Nationally known speakers are booked for the value of their messages and learning opportunities about top business performance. The AC also provides that ever-important level of strategic networking among the top-tier of supplier and distributor members and the industry’s executive-level leaders.

A CHANGE TO THE EXECUTIVE COMMITTEE

Working on site selection for these major meetings the past few years, our realization has deepened that a different structure is now needed for the Executive Committee. This is a change that will benefit the association by freeing us from unnecessary restrictions on booking these larger meetings. The event planning industry has become so busy and dense that the most desirable locations and dates are booked way ahead of time, even despite our two-year, advance-planning process. It’s become clear that adding one year to our search time would ease these difficulties considerably. Consequently, we plan a restructure of the Executive Committee so it now includes a second vice president (Mr./Ms./Mrs. X) chosen a year earlier. That step will allow the association to enjoy far better date- and location-planning and site-selection opportunities. We will announce this new step at the St. Louis SMC, and we will vote on this new Executive Committee member there, too. The Executive Committee will still consist of five members. While the second vice president will be added, the second past president will be phased out in the future.

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Another major objective for this year is based on continuing feedback from our supplier members. It’s on finding ways to attract smaller distributors who are not current members to join our association. In addition to creating more networking opportunities for suppliers, this goal helps strengthen our association through creating a more diverse and broader membership base. In terms of what GAWDA has to offer smaller distributors in particular, this initiative can bring them significant benefits, too. (Think: safety and compliance assistance and counsel.) The GAWDA staff and Executive Committee are working with our consultants to develop a presentation and messaging that makes it crystal-clear what a great value the investment in a GAWDA membership can be — for both existing members (retention) and potential members (recruitment). We will focus on the benefits of access to GAWDA consultants, CGA membership, GAWDA University and the information provided by GAWDA publications. Testimonials from current members about their positive experiences and specific benefits will be included. There’ll be more to come on that as the year progresses. Finally, I’d like to say, “Meet me in St. Louis!” I am excited about hosting the 2018 Spring Management Conference in what is my adopted hometown. We start the meeting on Sunday night with an exciting event and venue: a center-field view of one of baseball’s great rivalries, the St. Louis Cardinals versus the Chicago Cubs. The game that evening is one we can watch live, right off the balcony at Busch Brewhouse Restaurant at Ballpark Village or on a 40-foot TV. It’s a great event with excellent food and superb networking as a way to start the conference. (I hope you’ll come wearing your favorite team jersey — or anything red to represent the home-team Cardinals.) We have a great lineup of speakers this SMC who are offering hands-on experience working in our industry covering topics of “People, Process and Plan.” I believe it will be hard to leave the meeting without some actionable items that you heard about (and can’t wait to use when you get back home) in order to improve your own company. I look forward to seeing you in St. Louis soon!

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DIRECTOR’S DESK

Are You Getting the Most from Your Consultant Benefits? by john ospina

G John Ospina is GAWDA’s executive director. He can be reached at GAWDA Headquarters in Hollywood, Fla., via telephone at 844-2513219 or via email at jospina@gawda.org.

12 • Spring 2018

AWDA’s consultants provide a great deal of value, but many members don’t truly understand the many diverse ways they boost membership value. GAWDA’s five consultants are: Michael Dodd (DOT, security, OSHA, EPA), Tom Badstubner (FDA, medical and specialty gases), Rick Schweitzer (government affairs, human resources and legal), Alan Beaulieu (chief economist) and Brian McLaughlin (group life insurance). The first three are the most widely called on because they cover daily operational issues. All provide free, timely and accurate answers to member questions by phone and email. If research is required, they’ll do that and connect members with the appropriate outside sources, usually responding the same day. Michael Dodd has helped members respond to roadside inspections for improper citations and has gotten them dismissed or assured that the responses were correctly done. He has helped members with DOT compliance issues, sometimes getting penalties reduced or even dismissed. He and Rick Schweitzer have helped members with DOT interpretation letters and reversed writeups by working directly with DOT officials, saving members hundreds of thousands of dollars and many months’ time. Dodd has assisted in cases of positive employee drug and alcohol test results, driver-hiring and driver- qualification processes, employee accident investigations and corrective actions recommendations. He’s advised on proper disposal of unreturnable toxic gas cylinders by finding reputable disposal firms, and with EPA annual chemical inventory reporting, too. Tom Badstubner has provided over 1,500 member-firm employees with free “Current Good

Manufacturing Practice” (CGMP) training this year alone, including annual food/beverage gas compliance for pumpers/operators (795 pumpers), drug gas compliance for pumpers/operators (423 pumpers) and drug gas compliance for drivers (285 drivers). He’s created a free FDA compliance-training program on the Food Safety Modernization Act, Hazard Assessment and Risk-based Preventive Controls (HARPC). He has sample food/beverage gas procedures, HARPC templates and food safety plans. He does monthly food safety roundtables on basic CGMP training and provides free training on specialty gases and technical support on medical gases, FDA inspections and FDA violations. Rick Schweitzer has helped members respond to EPA violation notices and has negotiated lowered fines when possible. He has advised members when competitors have stolen or converted cylinders for their own use and then filled them illegally. He has advised on discipline and disqualification issues arising from failed drug or alcohol tests for CDL drivers and other employees. Schweitzer has reviewed personnel policies and has advised on handling progressive discipline and terminations. He regularly reviews members’ vendor and customer contract terms and provides advice on avoiding litigation. In cases of lawsuits brought for alleged injuries from welding fumes, he has connected members with our welding fumes litigation counsel. He has also obtained a federal court decision mandating insurer coverage. Our members never have to go it alone because GAWDA consultants are here to help. Call them anytime (https://www.gawda.org/join-us/consultants/) or visit the GAWDA booth at the SMC. Thank you for your continued membership and for your support of our association.

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Employee Owners, Sales Superstars, Workplace Shifts by diane stirling

I Diane Stirling is editor in chief of Welding & Gases Today. A career journalist, public relations practitioner, communications strategist and online content creator, she is part of the GAWDA Media team. Get in touch with her at dianes@datakey. org and 315-445-2347.

14 • Spring 2018

f there were a single means to address the critical human resource concerns today’s business owners face — employee recruitment, retention and engagement; having workers think more like owners; maximizing profits; managing tax loads— it just might be the structuring of their companies as Employee Stock Ownership Plans. This edition explores how that organizational form, known as an “ESOP,” can provide winwin-win solutions for owners who are transitioning or exiting, for company stockholders who seek maximum value and for employees who want good jobs and good work places. There’s a fourth “winning” component, too — the communities that depend on hometown companies as sources of employment and economic support. The heads of The National ESOP Association and the National Center for Employee Ownership bear out that theory in our main article. So do two noted Rutgers University professors, Drs. Joseph Blasi and Douglas Kruse, who have spent years researching ESOPs and collecting data on their performance. We also present the perspectives of eight GAWDA member companies who have become ESOPs. Their leaders convey what attracted them to the concept, how it suited their

interests and circumstances and how being an ESOP has brought positive results. This edition also offers a trio of articles on human resource issues. Jennifer Briggs, an innovative HR professional, talks about how ESOPs (and other companies) can create a work-behavior connection to maximize benefits to both the business and the workers. Bruce Tulgan, a nationally known presenter, writes about the changing dynamics of the workplace and the great generational shift. Dr. Mike Lorence, a prominent speaker on “topgrading” strategies, provides his unique guidelines for building and growing a high-performing sales force. As always, there are interesting new articles from GAWDA’s consultants, too. Since this is also the Spring Management Conference preview issue, several pages are dedicated to the speakers who are presenting there as well as the full schedule of events and activities. The GAWDA Media team will be in St. Louis covering those functions, and we’ll have our eyes and ears wide open. We want to speak with as many of you as we can. We want to hear your ideas for story topics and issues coverage you’d like to see in your GAWDA publications. We want to learn of any company news you’re ready to announce. We’ll see you there soon!

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CONSULTANTS FDA & MEDICAL GASES

Nitrous Oxide Handling Requires Special Security, Customer Qualifying Provisions by thomas l. badstubner

H GAWDA’s FDA and Medical Gases Consultant Thomas L. Badstubner is president of AsteRisk LLC in Lewisville, Texas. Members can reach him at 508-883-0927 and tom@asteriskllc.com.

16 • Spring 2018

andling and selling nitrous oxide presents some special challenges, over and above typical medical or specialty gases. Since it is a potential drug of abuse, we need to take precautions to assure the gas is used properly. There are some FDA requirements, CGA standards and good common-sense practices we should consider when establishing our own nitrous oxide handling procedures.

REGULATIONS

The FDA regulations and guidance have requirements which impact nitrous oxide: • 21 CFR 205.50(b)(1)(iii) — “Entry into areas where medical gases are held must be limited to authorized personnel.” • 2003 Draft Guidance — “We recommend areas where nitrous oxide is held be especially secure.” In addition, several states have enacted specific nitrous oxide regulations. These regulations are often modeled after the National Association of Boards of Pharmacy, Model Act: • Section 4(a) — “All facilities at which Medical Gases and/or related device equipment is received, stored, warehoused, handled, held, offered, marketed, displayed, or transported from shall … provide and maintain appropriate inventory controls in order to detect and document any theft of nitrous oxide.” • Section 5(c) — “All facilities shall be equipped with inventory management and control systems that protect against, detect, and document any instances of theft of nitrous oxide.” • Section 11(g) — “Medical Gas and Medical Gas Related Equipment Wholesale

Distributors shall establish, maintain, and adhere to written policies and procedures... for reporting criminal or suspected criminal activities involving the inventory of nitrous oxide to the Board, and applicable law enforcement agencies, within three (3) business days of becoming aware of the criminal or suspect criminal activity.” The key issues are establishing security, inventory systems and theft-reporting procedures for nitrous oxide. These requirements are much different than for other gases those in this industry handle. The Compressed Gas Association (CGA) has published several outstanding resources for us to define what are appropriate nitrous oxide security measures: • CGA P-50, Site Security Standard • CGA G-8.3, Safe Practices for Storage and Handling of Nitrous Oxide • CGA P-51, Transportation Security Standard for the Compressed Gas Industry • CGA P-52, Security Standard for Qualifying Customers Purchasing Compressed Gases We highly encourage you to download these publications for free by joining the CGA/GAWDA Safety Program. Here are some highlights of recommended nitrous oxide provisions: • Inventory control systems to detect theft or loss — A computerized inventory management system that can show the number of nitrous oxide cylinders in stock may be appropriate for some state regulations. However, more rigorous requirements are in place in many states. These are actually very low-tech and simple to implement. • Consider placing a running inventory sheet

on a clipboard at the nitrous oxide storage area. This inventory sheet would show the incoming cylinders, the shipments and the balance. The balance should match the number of cylinders in storage and can easily be verified by counting. Be sure to include the signature or initials of the person adding or subtracting from the inventory. Also, periodically do a physical count and document the reconciliation on the inventory record. • Theft reporting — If you detect a cylinder shortage, report the possible loss to your local police and to your state board of pharmacy. • Access controls — Assure that access is limited to the location where you store your nitrous oxide. This can be accomplished with a lock and controlled issuance of keys. • Property fencing — This can be your first level of security for all medical gases. • Secondary fencing for nitrous cylinders and bulk storage — The FDA’s “especially secure” requirement as well as the CGA specification can be accomplished by a fenced, gated and locked storage area for nitrous oxide. Nitrous oxide could also be stored in a separate, locked room. If you use a separate room for secondary security, assure the room is properly rated and ventilated for nitrous oxide storage. If you have a bulk nitrous oxide tank, assure you have secondary fencing, or equivalent, around the tank. • Lockout devices to secure valves on bulk storage — Assure you are using locking devices to secure the valves on the bulk tak. • Security systems, alarms, etc. — See CGA P-50, Table 2 for specific security systems. This would include “No Trespassing” signage, posted security advisories and perimeter lighting including the bulk tanks. Other optional security systems would include CCTV, sensors, alarms, etc. • Procedure to determine if a customer is legitimate — We occasionally hear stories of new walk-in customers wanting to buy nitrous oxide with cash. This type of transaction may be appropriate for some welding supplies, but it is clearly inappropriate for a potential drug of abuse. Even if the customer is asking for food grade or industrial grade nitrous oxide, you should have a formal qualification program in place before approving sales of nitrous oxide to new or existing customers. Consistent with the standards and guidance from the CGA publications, we have developed a one-page survey you can use to qualify your nitrous oxide customers. The survey asks the type of questions that can help identify legitimate customers. Contact tom@asteriskllc.com for a copy of the Nitrous Oxide and Other Chemicals of Concern - Customer Survey. Spring 2018 • 17

CONSULTANTS DOT, SECURITY, OSHA & EPA

GAWDA Consultants at Work Behind the Scenes Consultants Are Available Anytime and Have Your Back On Any Issues by michael dodd

H GAWDA DOT, Security, OSHA and EPA Consultant Michael Dodd is president of MLD Safety Associates in Poplar Bluff, Mo. Members can reach him at 573-7182887 and at MLDSafety@ hotmail.com.

18 • Spring 2018

ere is an example of how your GAWDA consultants work behind the scenes to help members. While most of you would never have known about this issue, it was a problem for many members and was an issue where consultant intervention saved those members thousands of dollars. In late December 2017, I was contacted by a member on Long Island, N.Y., concerning a roadside Department of Transportation inspection. One of the items written up was that the nonflammable gas labels on their cylinders had the written wording on two lines instead of one line. This was the first time this had ever been brought to my attention. At first, an issue like this is just hard to believe. But, trust me, I have had stranger things brought to my attention over the years. So, notified of the situation, I did a little research to find the chapter and verse. I have known for years that the written words are not required. That makes one ask, “Why can you get written up for something that is not even required to be there?” About a year earlier, one of the label suppliers had asked the DOT for a Letter of Interpretation on this very item. The Department of Transportation came back and said the words had to be on one line, because the picture shown in 172.415 shows one line. There are no other places in the CFR that talk about one line or two lines for labels. Now, just for kicks, when you look at the nonflammable gas placard in the CFR, it will show you two lines. Go figure! It turns out that New York enforcement personnel had a meeting and handed out the latest Letters of Interpretation, and this was one of them. In the next couple of weeks, we had tickets in Long Island and Rochester from roadside inspections.

I reached out to Rick Schweitzer, GAWDA’s legal counsel and government relations consultant, because he has personal contacts with the Department of Transportation. We wanted to see if we could do something about this situation, because, frankly, it was stupid. There was no difference in the safety message being presented. We have been doing both methods for many years with no concerns, and the words were not required. It just so happens that Schweitzer attends a monthly meeting where DOT officials have asked attendees to bring to their attention any regulations that don’t make any sense. Rick met with, and emailed back and forth with, the head of regulations for the Office of Hazardous Materials Safety. That person agreed that the issues cited didn’t make any sense and that it would be perfectly acceptable to have either version on our cylinder decals. It did not require changing the regulations, either; just a new way of interpreting the existing rules. The DOT official also contacted New York State enforcement personnel to have the roadside ticketing stopped. This saved many of our members from having to purchase new cylinder decals — and the time and effort needed to change out all the existing decals in the field. It was an issue that could have amounted to several thousand dollars for our smaller members, to as much as tens of thousands of dollars for our larger members. That’s hard cash that was able to be avoided as a cost of compliance. This also was a great example of how being made aware of a problem by a member, and our consultants researching it, knowing the right people and pursuing it until a solution was found, brings tangible value to your GAWDA membership.

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CONSULTANTS GOVERNMENT AFFAIRS & HUMAN RESOURCES

Is Your Company Website ADA Compliant?

Lawsuits Alleging ADA Violations Are Becoming Much More Common by richard p. schweitzer, esq.

A GAWDA’s Government Affairs and Human Resources Legal Consultant Rick Schweitzer is president of Richard P. Schweitzer, PLLC in Washington, D.C. He is also GAWDA’s general counsel. Members can reach him at 202-223-3040 and rpschweitzer@ rpslegal.com.

20 • Spring 2018

new form of class-action litigation is becoming much more common. It consists of lawsuits against companies that allege violation of the Americans with Disabilities Act (ADA), primarily for failing to have websites that are accessible to the blind or hearing impaired. According to one law firm’s analysis, thousands of lawsuits have been filed in federal and state courts in the past several years under ADA Title III (public accommodations). The number of suits and demand letters continues to grow, and at least one GAWDA distributor member has already been sued. The U.S. Department of Justice (DOJ) had published a supplemental notice of proposed rulemaking in May 2016 for state and local government websites under Title II of the ADA. That rulemaking was expected to establish the parameters for a similar rulemaking sometime in 2018 for websites in public accommodations, including business websites. But in July 2017, the Trump administration, as part of its regulatory reform agenda, placed the rulemakings for public accommodations and state and local governments on its “inactive list.” This means that there will be no regulations about public accommodation websites in the foreseeable future. But, if you click on ADA.gov, you will find links to many consent decrees where companies have settled with the Justice Department because their websites were not accessible to users who are blind, deaf or have other disabilities. The settlements typically include requirements for technical revisions to the company website, employee training and record keeping. Plaintiffs’ lawyers, moreover, are not waiting for any Justice Department rulemaking; they are

suing under the ADA statutory requirements themselves (which do not mention websites specifically). Meanwhile, even though the court decisions are split on whether a business website is a public accommodation under the ADA, the Justice Department has taken the position that all websites must be accessible to consumers with disabilities, even if they are not tied to a physical place of business that is open to the public. Thus, businesses are left to try to figure out how to avoid the possibility of future DOJ enforcement litigation and private sector lawsuits in this quickly evolving area. In the absence of DOJ regulations, many settlements approved by the DOJ and in civil litigation have implemented the World Wide Web Consortium’s Web Content Accessibility Guidelines 2.0 (WCAG) on how to make a website more accessible. These guidelines involve varying levels of accessibility, but the DOJ and counsel in civil litigation have signed off on settlements where a company agrees to make its website compliant with the WCAG 2.0 Level AA Guidelines. For example, the WCAG guidelines ensure their media is usable by all. They give recommendations on how to present content in alternative forms (like adding captions to videos) without losing the meaning or coherence of the content (if a user increases the font size on the page, the page structure stays intact). WCAG also recommends using contrast in images and text with them to ensure that content is readable. Additionally, images should contain a caption and alt text — unless those images are purely for decoration or spacing. (In that case, the images should be implemented so that they can be ignored by assistive technology.) Text alternatives for any

CONSULTANTS GOVERNMENT AFFAIRS & HUMAN RESOURCES non-text content might include large print, braille, speech, symbols or simpler language. Content might also be presented in different ways (such as a simpler layout) without losing information or structure or made easier for users to see and hear content (such as separating foreground from background). Further, the guidelines recommend: • Having a website that can be navigated with a keyboard • Making sure moving sections can be paused if a user needs more time • Ensuring pages and sections are clearly labeled so users can decipher where they are on the website • Making all functionality available from a keyboard • Providing users enough time to read and use content • Providing ways to help users navigate, find content and determine where they are. In short, a quick review and redesign of your company’s website can preclude claims for civil penalties or damages from enforcement actions and might make your company’s products and services more available to the general public.

WE HAVE A LOT TO CROW ABOUT.

The Justice Department has taken the position that all websites must be accessible to consumers with disabilities, even if they are not tied to a physical place of business that is open to the public ... on ADA.gov, you will find links to many consent decrees where companies have settled with the Justice Department because their websites were not accessible to users who are blind, deaf or have other disabilities. Text alternatives for any non-text content might include large print, braille, speech, symbols or simpler language.

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Spring 2018 • 21

MEMBER PROFILE

MIDDLESEX

GASES & TECHNOLOGIES Continuously Implementing Ways to Service New Customers by agnes h. baker

n the early 1990s, when many were pondering what the term “biotech” meant, the team at Middlesex Gases and Technologies saw an emerging market. As fabricators moved out of its New England territory, creating challenges for the welding and hardgoods business, Middlesex liked what it saw moving in. As Bo Martin, chief executive officer of Middlesex Gases and Technologies, explains, “In 1992, we changed our name from Middlesex Welding Supply to Middlesex Gases and Technologies Inc. Since then, we have invested heavily in the growing biotech and life sciences market.” Being able to spot the next best busi-

22 • Spring 2018

ness opportunity seems to be part of Middlesex’s DNA. In 1949, company founder Joe Martin Sr. left a major gas producer to create one of the first independent gas distributorships in New England. In the 1980s, Middlesex implemented cylinder tracking. In the 1990s, the company was one of the first in the Northeast to invest in microbulk.

BUILDING BIOTECH

With its company headquarters and largest fill station in Everett, Mass., Middlesex’s location — within 5 miles of the world’s preeminent biotech hub in Cambridge, Mass. — has worked well in its favor. Overall, the company services a

gases and hardgoods market that includes Massachusetts, New Hampshire and Rhode Island from six Massachusetts locations in Everett, Plainville, Lowell, Framingham, Haverhill and Wilmington. Last September, Middlesex was named the preferred gas supplier by the MassBio Council. According to Ron Perry, Middlesex’s director of sales and marketing, “MassBio is the buying group that provides services and support for one of the world’s leading life sciences superclusters. It represents more than 1,000 members, and of these approximately 750 use gases. We believe this is a win-win partnership for both the MassBio Council and Middlesex Gases.”

MEMBER PROFILE ALL IN THE TEAM

Microbulk supply has been key to building Middlesex’ Biotech business, and membership in the Gases and Welding Distributors Association (GAWDA) played a significant role in the company’s early adoption of that capacity. When Chart Industries first launched the Perma-Cyl into the market, Perry met Chart’s Bill Kelly and Tom Chromy at a GAWDA Contact Booth program. They introduced him to Chart’s Perma-Cyl MicroBulk Storage System. “Microbulk was new to me,” explains Perry. “I realized how valuable this technology would be in the emerging biotech market, and we became one of the first in our area to launch a microbulk program. It has transformed our business. The invention of the PermaCyl has enabled Middlesex to become a solutions provider to the life science marketplace.”

IT CAPABILITY IS CRUCIAL

Servicing large companies requires many levels of service, including a hefty investment in IT. Middlesex has been fortunate to have an experienced IT expert, Joe Kirmes, as part of its team for more than 30 years. He has led the company through the installation of its Computers Unlimited (CU) system and through the introduction of tracking technologies and e-commerce enabled websites. Kirmes says the relationships he has developed with CU through GAWDA networking events have greatly benefited the development of Middlesex’s IT program. Biotech customers often require some level of integration to their e-procurement software application, known as PunchOut. With this technology, the buyer leaves (punches out of) their own company’s system and taps into the seller’s web-based catalog (known as a PunchOut catalog) to locate and order

Pg. 22: Middlesex’s Plainville, Mass., plant is supplying the Western portion of Massachusetts as well as Rhode Island for both the life science and industrial markets. Right: Microbulk supply plays a key role in Middlesex’s biotech business.

products. Once items are selected for purchase, the buyer returns to their system with a request to place an order. When that request is processed, a purchase order is generated and sent to the seller. “My favorite reason for adopting new technologies is because we have to,” quips Kirmes. “Much like the need to develop our own barcoding system years ago, our customer’s requirement for PunchOut has proven to be a great benefit to us.”

A FAST RAMP-UP

From purchasing the right tanks and trailers to having the necessary IT capabilities, obtaining preferred supplier status for MassBio was very much a team effort and has already made a significant impact on Middlesex’s business. In the fourth quarter of 2017, the company picked up several new biotech accounts,

and, according to Perry, the company is on track to do the same in Q1 of 2018. That sort of growth spurt has led to a ramp up of all the company’s operations — from sales to delivery and everything in between. Increased demand at the specialty gas lab is particularly strong and is leading the company to construct new facilities. According to Bo Martin, “While our current lab is holding its own, and our branch locations in Plainville and Lowell are serving as backup, a new spec gas lab is now under construction, with the guidance and expertise of Weldcoa, to handle anticipated growth. This $750,000 investment allows us to double our lab space in Everett and create a worldclass lab and showroom for our Biotech customers.” In conjunction with adding new lab space within Middlesex’s existing headSpring 2018 • 23

MEMBER PROFILE Left: The Middlesex Life Sciences sales team includes (left to right): Tony Leo, Guy Sylvester, Ron Perry, Steve Powell, Fred Murphy and Chris Powell.

quarters location, the company is also carving out an added area for liquid product. This move will enable Middlesex to continue to support the heavy demand of the life science market for portable liquid dewars. Tom Martin, who as president heads up operations, says, “Being located deep in the heart of space-constrained metro-Boston, Middlesex had to be creative with its ‘expansion’ plans. The new lab is being built on the site of our former showroom and welding repair facility. Retail is now housed within the warehouse operation, and our welding repair is outsourced. Floor space for additional liquid containers is being opened up by relocating the existing spec gas lab and by moving some of our cylinders into storage facilities in the yard.” Increased business also has led to the expansion of Middlesex’s fleet. Since 2011, the company has added five bulk trucks, including a 6,000-gallon liquid nitrogen tanker. To accommodate the growing fleet, Middlesex now has a new transport depot facility in Wilmington to house three nitrogen microbulk trailers, 24 • Spring 2018

one CO2 microbulk truck, one microbulk argon trailer and the transport tanker. Tom Martin says GAWDA’s DOT and safety specialist, Mike Dodd, “has been invaluable in helping Middlesex relating to compliance issues in the trucking industry, including drug and alcohol testing, DOT audits, hazardous materials training for all employees and safety procedures in general. Dodd is very responsive, and we all sleep better knowing he is a phone call away.”

INCREASED CYLINDER INVENTORY

Life science sales have also led Middlesex to make a significant investment in both high pressure and liquid cylinders. The majority of liquid nitrogen and argon cylinders are being equipped with Cyltec’s newest digital gauge, the Level-Eye, which Cyltec says is accurate to within plus or minus 2 percent. Middlesex knows that in a market crowded with labs where experiments run 24/7, the accurate reading of gas supply is mission critical. According to Guy Sylvester, senior product engineer, “By combining the ability to provide

accurate levels with the Cyltec digital monitoring option, our customers have the ability to know, via text or email, that a cylinder is 100 percent full, 50 percent full or empty.” New software also has been added to help manage the growing business. Middlesex recently rolled out SalesForce, a powerful customer relationship management (CRM) program that can track every aspect of its sales efforts. Smartphone enabled, the CRM allows the Middlesex sales team to provide quotes quickly. That’s another service aspect that’s critical in the competitive and fast-paced world of biotech.

A NEW APPROACH TO SALES

SalesForce is just one piece of the new sales effort. “Selling to life science customers requires an entirely different approach to sales than selling to industrial clients,” says Perry. “Our representatives need to be polished, informed and computer savvy. Most importantly, they need to know how to network. Our customers are working on critical science applications in buildings with many levels of security. There is no such thing as cold calling.” The ever-resourceful Middlesex Gases recognized this early on and began a super-networking effort in all biotech corners, connecting with the chamber of commerce, building architects, equipment suppliers and EH&S professionals like Safety Partners — anyone part of the life sciences supply chain. Today, the eight-person Middlesex sales team has five members dedicated to biotech. The team comprises a combination of seasoned and junior professionals. Steve Powell, who manages the MassBio program, says, “Our success stems from our

Thank You for 50 Years weldcoa.com/50years

MEMBER PROFILE

team collectively belonging to several networking groups where we learn and collaborate about the latest projects and find introductions to buyers. Our partnership with MassBio further highlights Middlesex’s focus on the bio/life science market and Middlesex Gases recently upgraded its gas supply to a Rhode provides great Island testing lab with an 11,000-gallon nitrogen tank. lead generation.” The sales team Higher Education Consortium, a buying is largely home-based. Everyone sells group for state university accounts and within a range of geographies that include programs, which includes many labs. metro-Boston/Cambridge, the Worcester In 2015, Middlesex revamped its webarea (an emerging biotech spot), Rhode site and uses it as a major lead generator. Island and the university belt in western The new platform includes a special site Massachusetts. for biotech (www.Middlesexgases.com) Training is mostly on-the-job, with and one dedicated solely to welding and senior salesmen passing information industrial (www.mgtweldingsupply. to more recent hires. Michael Pulli, com). In the first 18 months of going Middlesex’s specialty gas lab manlive, traffic on both websites has tripled, ager, has been in the specialty gases according to Perry. department since 2009. He provides The company’s successful e-comassurance to the Middlesex sales team merce platform is the preferred transacthat the company’s specialty gases are tion method for life sciences customers. consistent with its quality manuals. On Given the 24-hour nature of that business, the equipment side, vendors continue the ability to place an order at any time to be important sources of education. is important. For its e-commerce cusMiddlesex also participates in the Mass 26 • Spring 2018

tomers, Middlesex guarantees nextday delivery if an order is placed by midnight.

THE BIG PICTURE

With an 80/20 ratio of gases to hardgoods, Middlesex is successfully tapping into the region’s gas-intensive markets. Equipment related to biotech sales, like freezers, regulators, manifolds, piping and shippers, keeps the hardgoods business healthy as well. Another strong product for Middlesex is CO2, a gas in high demand for incubator applications in life sciences, microbreweries and the emerging agriculture market. The company has a 6-ton CO2 truck to support these growing industries. Biotech has also been driving the demand for dry ice. Middlesex continues to take advantage of significant growth in this area. Middlesex has a solid reputation in the greater Boston area specialty gases market, which services research facilities and labs. To be sure it is FDA compliant, medical gases are handled separately. The company uses GAWDA’s gas consultant, Tom Badstubner, as a resource, and he

Since 2011, a business boom has required Middlesex to add five trucks to its fleet.

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is instrumental in helping Middlesex stay on task with FDA requirements and regulations, Tom Martin says. “Tom Badstubner has written our medical standard operating procedures and recently required food grade procedures, both of which fall under the U.S. FDA,” Tom Martin explains. “In addition, he worked with us to obtain our ISO 17025 accreditation, which gives our specialty gas lab a gold star both internally and to our customers. Without Badstubner, Middlesex Gases would not be where it is today with our specialty gas abilities.”

WHAT’S AHEAD

While remaining centered in one of the nation’s oldest commercial areas, Middlesex Gases and Technologies has moved from being a 20th-century welding and hardgoods distributor to the region’s premier supplier of gases and equipment to the very 21st-century life sciences market. On course for continued success, Middlesex anticipates sales growth in 2018 to be as good, if not better, than 2017. With its preferred supplier status at MassBio and its expanded specialty gas lab facility, the company expects to book much more biotech business, according to Bo Martin. Perry concludes, “Middlesex Gases and Technologies is an independent gas distributor that has found a successful product mix and is moving full speed ahead in all sales channels. With its method of continuously finding, learning and implementing ways to service new customers firmly in place, the company remains poised to take advantage of every next best business opportunity.”

Agnes H. Baker is a freelance writer with more than 15 years of experience covering the industrial, medical and specialty gas industry. Based in Massachusetts, she is at: agnes.h.baker@gmail.com.

carbo.com © Saint-Gobain April 2018.

Spring 2018 • 27

A great, big company We Are Family

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We Are Growing

Since 2011, we have completed 24 acquisitions. As our national footprint continues to expand, we grow in strength, attracting new ideas, opportunities, employees, customers and companies.

We Are Partners

Highly flexible in structuring transactions and far more entrepreneurial in our management style than large consolidators, sellers become true partners, sharing in our success.

Join our family Interested in learning more about joining our growing family? Contact our CEO Myles Dempsey, Jr. for a confidential, no-obligation business evaluation at (914) 490-7915 or Myles@TechAir.com.

www.TechAir.com

TECH AIR ACQUISITIONS DENVER BUSINESS NO LONGER GOING IT ALONE

n 1995, Jim O’Connor started Gases & Arc Supply Inc. in Denver with his business partner, Bob Backowies. Over the next 21 years, they built a successful company with a strong customer base and loyal employees. In 2016, Backowies decided to retire, which forced O’Connor to take a hard look at the future of the company. “I knew I wasn’t ready to retire,” said O’Connor, “but I didn’t want to go it alone either.” The ins-and-outs of running the business had changed. No longer was it just about selling welding supplies. Staying current on aspects of the business, like HR, compliance, safety and IT, had created a tremendous learning curve and was taking up too much time. O’Connor needed additional expertise to keep Gases & Arc Supply thriving. Although O’Connor considered several acquisition partners, he was quickly convinced that Tech Air was the answer after meeting with CEO Myles Dempsey. Tech Air, which has dozens of locations across the U.S., had recently started a multi-region growth strategy. It was a great fit — Dempsey was impressed with the company O’Connor and his partner had built; O’Connor and Backowies liked Tech Air’s way of doing business. Tech Air laid out the acquisition strategy to Gases & Arc Supply employees, who were understandably nervous about the change. However, no one was demoted or let go, and Tech Air used its resources plus additional tools, training and support to further employee growth within the company. Myles P. Dempsey, Jr. Chief Executive Officer Tech Air

“Myles was honest and did everything he said he was going to do. Other competing firms wanted to strip away parts of our company to make it work best for them, and I didn’t want that.” – Jim O’Connor

It was very important to O’Connor that his customers be unaffected by the change, too, and Tech Air had a track record for making that happen. “Myles knew that I understood my customers and my business best. “He was interested in forward-facing, customer interaction, and I wanted that, too,” Jim said. Gases & Arc Supply Inc. officially became Tech Air of Colorado in January 2017. Jim and Myles agree that the acquisition has been mutually beneficial. “We were fortunate to acquire Gases & Arc Supply, which fit nicely into Tech Air’s plan for growth and expansion, while allowing our expertise to make a great company even greater,” said Myles. “I sleep much better knowing that my people are well trained and in compliance with constantly changing regulations and requirements,” said Jim. “Our relationships with customers haven’t changed, but the methods of how we run our business have changed for the better. This has enabled me to concentrate on our core business. Thanks to Tech Air, I’m no longer going it alone.” 

or business owners with a succession gap or otherwise at a transitional crossroads, creating an Employee Stock Ownership Plan (ESOP) structure is a business option with work-culture appeal and operating advantages. Restructuring as an ESOP can create a win-win-win solution for the company as well as its stockholders and employees, ESOP advocates say. Owners who aren’t turning the keys over to a next generation, or selling to an outside buyer, discover that ESOPs may let them “pay it forward.” The format can be the means to continue the company legacy, maintain its culture, secure the jobs of loyal employees and maximize profitability. Instilling an owner mindset among new employee owners, added to the available, built-in tax advantages, are strategies that let owners extract equity while customizing their exit strategies. Creating an ESOP can present a more palatable way for an owner to exit or retire, rather than liquidating the company or selling to a competitor or an industry conglomerate. Because employee ownership models a participatory culture, it may also help businesses meet some of today’s most pressing human resource challenges — employee recruitment, retention and engagement. The improved company performance that ESOPs can create (boosting productivity, efficiency and revenues from instilling an owner mindset), along with the tax advantages offered, are the cherries on top, advocates say. 30 • Spring 2018

A MORE PALATABLE CHOICE An ESOP can create an attractive transition vehicle, according to Loren Rodgers, executive director of the National Center for Employee Ownership (NCEO). “The actual experience of people who sell to multinationals or private equity firms is that they are often not happy two to three years down the pike. They don’t like what happened to the company, the community that is affected by the sale and their employees and vendors,” he relates. While selling a company outright may be thought to maximize its price tag, ESOPs can provide high value of a different sort. That depends on what is most important to the selling owner, says Patrick Mirza, director of communications for The ESOP Association. “Typically, when someone sells to an outside interest, they sell the entire company and walk away. When you sell to an ESOP, you can sell piecemeal. You can sell whatever percentage you want. You can spread the sale over time. You can remain in your role for a time if you want. For someone who wants to get out gradually, there’s value in selling to an ESOP.”

DIFFERENT KINDS OF PAYBACK Owners consider many factors besides cash-in-hand, Mirza adds. “If someone has built something over the course of time and they have an attachment to it, and especially if others have helped them build that entity, there is a strong incentive

ESOPs

Legacy, Loyalty, Owner Mindset and More:

As a Succession-or-Sell Option, Employee Ownership Can Be a Win-Win-Win Solution. BY DIANE STIRLING

to keep that entity around, in particular where the company is an important source of employment in an area. Can you get a higher return one way or the other? That depends on what you value and what you get for the return,” he explains. It would have been easy to sell to an outside company, relates Dan Fallon, CEO at GAWDA member company McDantim Inc., which became an ESOP in late 2017. “A number of them would have paid a premium. But we felt the company would have been gone within a year to five years. The people who are with us now really helped build the company and it didn’t seem right to sell it out from under them. We really wanted to create something that protected the employees and rewarded them,” he says. Evan Smith, president and CEO at GAWDA member company Hypertherm Inc., put it this way: “For founders and family owners looking at choices, they can sell to a strategic buyer or to a financial buyer, or if they’re big enough, do a public offering. All of those involve significant disruption or cultural change. So maybe the biggest benefit to the company [of converting to an ESOP] is the continuity and the ability to maintain its independent long-term focus.” For Hypertherm, he says, “I think the ESOP reaffirms the values of the founders and owners. It seemed the way most critically to continue the culture everyone has known and really values.” At GAWDA member company Norco Inc., CEO and Chairman Jim Kissler agrees. “When I did what I call a par-

Meet the Experts

Loren Rodgers Executive Director National Center for Employee Ownership

J. MICHAEL KEELING President The ESOP Association

tial liquidation of Norco, that took away the incentive to pick up the phone and call an Air Liquide or a Praxair and sell my company in entirety. This way, I can liquidate the assets of Norco into my family, as well as provide for the continuity of the company.” He said the ESOP, which was undertaken in 2015, also “keeps the Larry Kissler [founder] legacy alive.” As structured, it also provides options for future generations, Jim Kissler explains. “My grandkids may want to participate, or they may not want to. If they don’t, there is a market for their Spring 2018 • 31

ESOPS

WHY THEY CAN BE WIN-WIN-WIN

shares. If they want to stay in the business, we’re talking 75 years out, there is a Kissler still in either a minority or majority ownership position.”

IMPROVED PERFORMANCE In practical terms, employee ownership generally results in a boost in business performance and improvements in worker outcomes, according to research by Director Joseph R. Blasi, Ed.D., and Associate Director Douglas L. Kruse, Ph.D., of The Rutgers Institute for the Study of Employee Ownership and Joseph R. Profit Sharing. Their research has shown Blasi, Ed.D. that those enhancements typically include a rise in productivity, a lowering of employee turnover, more stability for the company and more job security for workers. In a whitepaper developed for Third Way Next (“Having A Stake, Evidence and Implications for Broad-based Employee Stock Ownership and Profit Sharing”), written in Douglas L. concert with Richard B. Freeman, Kruse Kruse, Ph.D. and Blasi describe those tangible benefits. Their studies using data from the U.S. Government’s General Social Survey have shown results of: • Increased worker pay • Improved workplace performance and company productivity (because the environment incentivizes higher effort, cooperation, information sharing and innovation) • Protected jobs (through stabilizing employment and promoting company survival) • More harmonious workplaces (based on the ESOP culture of business reporting and employee involvement, thus greater corporate transparency and increased worker engagement in operations, job functions and decision-making). The earlier research by Kruse and Blasi of 1,100 companies between 1988 and 1994 quantified productivity increases specifically. They detailed performance-level differences of those firms after they became ESOPs, as opposed to their pre-ESOP performance levels, as follows: • 2.4 percent annual sales growth • 2.3 percent annual employment growth • 2.3 percent annual growth in sales per employee • 4.4 percent average increase in employee productivity. Kruse notes that while the averaged results take into account that some companies do well as ESOPs and others do not, the ESOP environment itself is conducive to success. 32 • Spring 2018

“We do find that employee ownership tends to work better in companies with certain cultures, where for employees there is high performance work, participation in decisions, lots of information sharing and good job security, as well as a good family feeling. Sometimes employee ownership can build that up, too, but that is the best environment for it.” The NCEO’s statistics add further data on how the ESOP environment is a boon to company productivity, while also generating additional wealth for employees, stockholders, the company and the communities where the businesses are located. Its site* reports these figures: • ESOP companies are 25 percent more likely to stay in business • Employees in ESOPs have 2.5 times greater retirement accounts • Employees at ESOPs receive 5 to 12 percent more in wages • Productivity improves by 4 to 5 percent on average at companies in the year the ESOP is adopted • Over a 10-year period, ESOP companies have 25 percent higher job growth than comparable companies without an ESOP • ESOP companies see average yearly post-ESOP improvement in return on assets of + 2.7 percent. • Employee owners were four times less likely to be laid off during the recent recession. (*www.esopinfo.org/infographics/economic-power-of-employee-ownership.php)

GOOD FOR AMERICA Not only is employee ownership linked to generally better company performance for the firms who adopt the format, the advantages of converting to an employee-ownership structure can be valuable to an area’s economy, particularly in stabilizing employment, wages and economic activity, according to Kruse. For instance, research data shows that companies that become ESOPs tend to have fewer layoffs in recessions and greater company stability overall. “We’re not entirely sure why, but it looks like if you’re trying to create an ownership culture, you don’t want to lay people off,” the economist adds. He points to a proposal now before the New Jersey legislature that could create added tax incentives as a way to prompt more companies to adopt employee ownership. On top of the federal capital gains tax initiatives that are in place, the legislation proposes eliminating state capital gains taxes as well for retiring owners who sell at least 30 percent of the company to an ESOP. “The idea is there is community stability, to make sure the companies continue, and there isn’t disruption to peoples’ lives

WHY THEY CAN BE WIN-WIN-WIN from shutting down or shifting resources elsewhere. For the retiring owner, thereâ&#x20AC;&#x2122;s a financial incentive, but thereâ&#x20AC;&#x2122;s also the idea of leaving a legacy and keeping the community stable. Those are some really important incentives,â&#x20AC;? Kruse adds. J. Michael Keeling, president of The ESOP Association and the Employee Ownership Foundation, echoes the belief that ESOPs are good for the American economy. While there certainly is no guarantee in the free enterprise system that every ESOP company is going to succeed, he says that in general, the macro data that shows ESOPs providing significant performance â&#x20AC;&#x153;is overwhelming.â&#x20AC;? Keeling cites studies showing that most well-managed employee-owned companies where average-pay employees have a voice, and where they are respected within the structure also make more profits, have more sales, last longer, are more productive and create more wealth for workers than non-employee-owned companies do. â&#x20AC;&#x153;Most ESOPs are formed by the existing shareholders in companies that are secure and that have a nice track record; theyâ&#x20AC;&#x2122;re not sick puppies, so you look at that factor, too,â&#x20AC;? he explains.

The National Center for Employee Ownershipâ&#x20AC;&#x2122;s website presents some interesting data about the numbers of employeeowned companies in the United States, where they are located and the number of employees participating in the plans at those companies. There are

6,669

ESOPsÂ in the United States *

TAX ADVANTAGES There are distinct tax advantages to forming an ESOP. When an owner sells the company to an ESOP and providing certain requirements (called a 1042 rollover) are met, paying capital gains taxes can be avoided for a number of years, says The ESOP Associationâ&#x20AC;&#x2122;s Mirza. â&#x20AC;&#x153;That has to be factored into the value the owner gets for the company. Itâ&#x20AC;&#x2122;s a key element; itâ&#x20AC;&#x2122;s a huge factor,â&#x20AC;? Mirza says. The NCEO lists these as significant tax advantages ESOPs can enjoy: â&#x20AC;˘ Contributions of stock are tax-deductible, providing companies a current cash flow advantage by issuing new shares or treasury shares to the ESOP. â&#x20AC;˘ A company can contribute cash on a discretionary basis year-to-year and take a tax deduction for it, whether the contribution is used to buy shares from current owners or to build up a cash reserve in the ESOP for future use. â&#x20AC;˘ Sellers in a C Corporation can get a tax deferral.Â In C Corporations, once the ESOP owns 30 percent of all the shares in the company, the seller can reinvest the proceeds of the sale in other securities and defer any tax on the gain. â&#x20AC;˘ In S Corporations, the percentage of ownership held by the ESOP is not subject to income tax at the federal level (and usually the state level as well).Â That means, for instance, that there is no income tax on 30 percent of the profits of an S Corporation with an ESOP holding 30 percent of the stock, and no income tax at all on the

ESOPS

Those companiesâ&#x20AC;&#x2122; total assets equal nearly

$1.3 TRILLION *Â WHERE THE ESOPS ARE: % %

REGION

NUMBER OF ESOPS

EMPLOYEE NUMBERS

Northeast

1,079

3,360,871

Midwest

2,115

3,321,514

South

1,966

5,902,363

West

1,507

1,846,738 (Source: www.neco.org) Spring 2018 â&#x20AC;˘ 33

ESOPS

WHY THEY CAN BE WIN-WIN-WIN

profits of an S Corporation wholly owned by its ESOP. (Note: the ESOP still must get a pro-rata share of any distributions the company makes to owners.) • Dividends are tax-deductible. Reasonable dividends used to repay an ESOP loan, passed through to employees, or reinvested by employees in company stock are tax-deductible. • Employees pay no tax on the contributions to the ESOP, only the distribution of their accounts. Employees can roll over their distributions in an IRA or other retirement plan or pay current tax on the distribution, with any gains accumulated over time taxed as capital gains. The income tax portion of the distributions, however, is subject to a 10 percent penalty if made before normal retirement age. (For a full explanation of the tax advantages ESOPs can offer, see The ESOP Association’s website at: www.esopassociation.org/, search “Tax Advantages.”)

ESOPS ARE ATTRACTIVE “At its very simplest, an ESOP is a retirement plan,” Mirza observes. “You can have just the retirement plan with an ESOP and stop there. But, you can offer extra elements that companies are trying to get people to do. You don’t have to, but you can. There’s only one requirement — once a year you have to get an evaluation of the stock, and you have to tell employees what that stock value is. Companies who take this step find that they end up spending a lot of time telling employees how the business runs, how things work. That

naturally leads to other things, including employees cutting costs and seeing how these things fit in.” The employee ownership aspect “is a huge part of our culture, a big part of who we are as a company,” says Ryan Diekow, president and CEO of GAWDA member company Oxygen Service Company. “I think our total compensation, total package, when you wrap in the ESOP and pay and bonuses, is very, very competitive. It’s certainly above average. I think from a turnover point of view, we have extremely low turnover because of the ESOP. It’s less than 10 percent. If we take retirees out, it is probably below 5 percent. It is a great employee retention tool, for sure.”

FOOD FOR THOUGHT FOR OWNERS NCEO’s Rodgers notes that there while there is “major money invested in advertising now to convince owners that the best way to transition out of their business ownership is to sell to a third party,” anyone thinking of converting to an ESOP should take time to research their options and allow sufficient time for a transition to take place if they are thinking of the ESOP route. It’s wise for owners to carefully consider all available options before taking any action as an exit strategy, The ESOP Association’s Keeling adds. He says owners should examine first whether there are family members to pass the company to, and second, if an interested group of trusted senior managers exists as a potential buyer.

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ESOPS

WHY THEY CAN BE WIN-WIN-WIN

“There are financial issues and psychological issues to satisfy,” he notes, and both sides of the coin deserve thorough consideration. “You clearly have to understand the tax consequences. ESOPs do have a set of special tax incentives and attributes that could perhaps be very attractive. Now to turn to the psychological. You have to ask whether your legacy, your contribution to your community and to the business community you’re in, and to the employees that made the company, is the ESOP going to satisfy those kinds of desires more than anything else you could do?” Professor Kruse agrees. “As people retire, they don’t want to just sell to an outside investor who may end up shutting the company down or shifting its resources elsewhere. A lot of retiring owners want to leave a legacy and see the people they’ve worked with continue to be employed with the company.” Keeling adds one point that owners who are considering selling to a private equity or a merger/acquisition interest, or letting a competitor buy them out, should be aware of: the history and motivations of potential buyers. “Over the years, I’ve observed that such options often lead to the layoff of employees, particularly those in the back-office operations. The acquiring company already has people doing those jobs. When you’re looking to acquire, you’re looking to get the profit line as high as possible. Generally the biggest place to increase profit is to get the compensation line lowered.” Keeling urges owners to keep in mind “what you and your partner or family

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feel comfortable with” as an outcome. “Chances are high that you’ll be involved in the same community in your retirement. Most people have connections, and they’ll be thinking about the repercussions, so think those through.”

TAKE TIME FOR RESEARCH, DUE DILIGENCE It’s also important to shop for quality service providers and to conduct due diligence to be sure those selected will properly guide the company’s transition, NCEO’s Rodgers says. In general, ESOP transitions “work out very well for the average ESOP company. But, it can go wrong. So, it’s good to take the time and put in the care to be sure to do it right,” he advises. As a source of information and a conduit to other ESOPs and owners, the NCEO is willing to connect owners with service firms as well as companies who have had satisfying experiences becoming ESOPs, Rodgers offers. He suggests other key steps for those considering becoming an ESOP: • First (and especially if there is more than one owner), search your heart to see what’s important as an outcome. Think about what you want to look back on and what kind of outcome you want. • Take sufficient time for the process — six months or so at minimum. • An even longer timeline provides more time for an orderly transition and the advantage of “being ready for the human side,” Rodgers says. That timeframe lets you “announce this to the workforce in a way that sets things up for success. It pays to be really thoughtful, not just about the transaction, but how to portray the transaction to the workforce initially.” • Owners should prepare for varied employee reactions (from thinking they’ll get rich quick, to being

WHY THEY CAN BE WIN-WIN-WIN

THERE ARE CONS, TOO As positive an option as employee ownership appears to be, some cons exist, according to Rutgers’ Kruse. They include the format being subject to “the free-rider problem,” where “rewards from individual effort are shared with other workers and the direct incentive to work hard may be weak.” Also a consideration is the fact that, “the effectiveness of employee ownership may depend on a complicated combination of supportive policies, such as employee involvement, job security and training.” A third reason for some doubt is that employees “can be exposed to excessive financial risk, especially when employee ownership is a large share of a worker’s wealth, and when it substitutes for other pay and benefits,” Kruse writes. Some of those issues may be offset by the employee-ownership environment itself, according to Craig Wood, CEO of GAWDA member company O.E. Meyer Co. “Being an ESOP has created a tremendous amount of stability and peer pressure at all levels of the company. If a guy isn’t doing his job and needs to pick it up, the other employees will tell him. They feel the value of that ownership,” he describes.

U.S. ESOPS BY BUSINESS TYPE

BREAKDOWN

scared that the founder is leaving altogether, to the belief that the company is going right out of business). Despite good planning and plenty of time, converting ownership to the employees can come with some unexpected results, Rodgers says. “The biggest surprise some companies face is there are two distinct phases in the life of an ESOP,” that of before and after, he explains. “Most of the surprises that people face are not inherent. They usually are the result of focusing too much on the transaction and not enough on the longer term.”

ESOPS

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ESOPS

WHY THEY CAN BE WIN-WIN-WIN

THE POTENTIAL FOR BROADENED WEALTH

While transitioning owners are certainly looking out for their own interests and for the future of their organization, the path to becoming an ESOP is one that can benefit more than just those with immediate connections to the new ESOP, according to Douglas Kruse. Those who advocate for employee ownership, or as it is sometimes referenced, shared capitalism, feel that the concept is good for the American economy and for any system of democracy, he says. “There really is a lot of positive potential in employee ownership, and a lot of people don’t realize that. The economy hasn’t given enough consideration to employees having direct stakes in the companies and in the success of the companies,” he adds.

The broad distribution of ownership is something that the founding fathers were keen on, and an idea with deep roots in American tradition, Kruse notes. He says that, as an economist, he is, “concerned about the growing inequality in our country of wealth and income, and this can be a good way to distribute the economic rewards of our system more broadly.” That premise is detailed in the book that he, Blasi and Freeman published in 2014, “The Citizen’s Share: Putting Ownership Back into Democracy.” “The [Founders] thought it was very important for democracy, and I think there’s a lot to that. It’s hard to have a functioning democracy if just a tiny bit of the people own everything. So, employee ownership can be part of a broadened ownership policy from a political perspective,” says Kruse.

AGE OF EXISTING U.S. ESOPS * Federal legislation introduced in 1974 and enacted in 1976 created the opportunity to form ESOPs after its passage. Most current ESOPs were created before 1997. Those plans also contain the greatest number of participants.

PLAN EFFECTIVE YEAR (YEAR CREATED)

NUMBER OF PLANS

% OF PLANS

TOTAL PARTICIPANTS

Before 1998

3,123

47%

12,584,122

1998 – 2007

2,091

31%

992,721

Since 2008

1,455

22%

473,502

NUMBERS OF S CORPS VS. C CORPS NCEO shows a majority of ESOPs are C Corporations, which are partially employee owned vs. S Corporations, which are 100 percent employee owned.

S CORPORATIONS VS. C CORPORATIONS IN THE U.S. * PLANS

EMPLOYER TOTAL PLAN TOTAL ACTIVE ASSETS PARTICIPANTS PARTICIPANTS SECURITIES (MILLIONS) (MILLIONS)

S Corporations

3,192

850,085

604,779

$69,654

$81,504

C Corporations

3,477

13,581,537

10,224,947

$194,687

$1,214,728

*Information source; www.NCEO.org 38 • Spring 2018

WHY THEY CAN BE WIN-WIN-WIN

ESOPS

What Is an ESOP? Employee stock ownership plans, or ESOPs, are a way to sell a business that benefits the company, employees, and the selling business owners. Business owners sell some or all of their shares to an ESOP trust, which owns those shares on behalf of employees.

The Benefits of Selling to an ESOP

ESOPs can be funded in many ways, but usually the transaction involves a loan. The company can take out a loan and then reloan the funds to the ESOP trust. The company makes contributions to the trust, which the trust uses to repay the loan. Sometimes the person selling the shares provides the loan. Almost all ESOPs are completely company-funded. Employees pay nothing.

An ESOP can use pretax future corporate earnings to buy shares from an owner. Sellers can defer taxation on the gain depending on the type of corporation. The business will also receive numerous tax benefits depending on the type of corporation. Sell the business at once or gradually in installments. Sellers can define their role in the company moving forward.

Protects jobs. Provides employees with a significant retirement benefit. Protects the integrity of the business by assuring that it will not be dismantled.

Financial Benefits

Flexibility

Rewarding Employees

As the loan is repaid, shares become available to allocate to employee accounts. The allocations must be made on a non-discriminatory basis, like payscale or a more level formula. With limited exceptions, all employees participate in the plan.

The company administers the plan in accordance with federal laws and regulations that govern issues such as contribution and allocation limits, vesting, benefit distributions, diversification, and more.

ESOP companies often have ownership cultures that encourage employees to “think and act like owners.” Research shows such companies are more productive, faster growing, more profitable, have less turnover, and generate more wealth.

The National Center for Employee Ownership • web: www.nceo.org and www.esopinfo.org • email: outreach@nceo.org

Spring 2018 • 39

Eight Varied Decisions; Eight Different Experiences.

How GAWDA Members Became ESOP Companies

mong Americaâ&#x20AC;&#x2122;s Employee Stock Ownership Plans are a number of GAWDA member companies. Their leaders are proud of what the businesses have accomplished, pleased with how their companies have transitioned to employee ownership, enthusiastic about the benefits the organizational structure affords their businesses and their loyal employees, and happy with the outcomes for the owners, the businesses and the employees. Here are eight case studies looking at how the ESOP concept, formation, transition and administration has occurred for several GAWDA members. Each is a bit different, but they all showcase the opportunities that exist and the benefits that can be put in place from a decision to restructure a company in this way.

40 â&#x20AC;˘ Spring 2018

WHY THEY CAN BE WIN-WIN-WIN

ESOPS

ESOP PROFILE

O . E . M E Y E R C O M PAN Y

he foresight, innovation and generosity of second-generation owner O.E. Meyer Jr. in the 1980s has carried the company through a family-owned to employee-owned transition. Today, it celebrates 100 successful years in business as a 100 percent employee-owned firm.

COMPANY ORIGINS

O.E. Meyer Company began in 1918 when Omar E. Meyer Sr., who had been a lake captain, joined his brother in the operation of a welding shop. The company now operates eight locations in Ohio and has headquarters in Sandusky.

THE DECISION

In mid-1982, as Omar Jr. got up in age, he pondered what to do with the company. Meyer had three options: sell to big company Airco, sell to the highest bidder or sell to the employees.

O.E. Meyer has successfully changed with the times, including the late-2017 sale of its home health care division. The firm's ESOP valuation was taken into account in timing that move.

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ESOPS

Craig Wood CEO and Chairman of the Board

WHY THEY CAN BE WIN-WIN-WIN

The decision to permit employee ownership came about because “he felt the company employees had helped him build the company to what it was,” says Craig Wood, now chairman and CEO.

FORMULATION

All 57 employees embraced the decision. They didn’t have much working capital, Wood recalls, and the banks were a bit hesitant at the time. They requested that the company create another issue of stock. As a C-Corp then, the business was

Owner Mindset “Being an ESOP has created a tremendous amount of stability and peer pressure at all levels of the company. If a guy isn’t doing his job and needs to pick it up, the other employees will tell him. They feel the value of that ownership.”

Craig Wood

CEO and Chairman of the Board O.E. Meyer Company

able to do that. Everyone in the company bought at least one share. The action generated several hundred thousand dollars in working capital, says Wood. The purchase of shares was structured so that even entry level employees could take part, and there was a ceiling so that no one employee could get a corner on the market. A personal loan from founder Meyer, who “was interested in us succeeding and for the name of the company to continue as we are today,” helped out, according to Wood. Rod Belden, who succeeded Meyer as CEO, guided much of the transition at Meyer’s side, helping him gauge options and take the needed steps. Meyer’s loan was paid back promptly with interest, Wood says, and no outside money ever was needed to keep the company moving forward.

Loyalty “Omar Jr. got up in age and realized he had three options. He could sell the company to Airco, he could sell to the highest bidder or he could sell to the employees. He felt the company’s employees helped him build the company to what it was. He was interested in us succeeding, and for the name of the company to continue, as we are today.”

42 • Spring 2018

Craig Wood

CEO and Chairman of the Board O.E. Meyer Company

WHY THEY CAN BE WIN-WIN-WIN

INFORMATION ON ESOPS Here are several sources of information

On Jan. 1, 1989, the company transitioned to a 100 percent employee-owned ESOP, maintaining the same system and management. It included all the employee benefits Meyer generously had put in place and previously paid for out of profits.

on Employee Stock Ownership Plans, including data, articles, publications, chapters, training and seminars. National Center for Employee Ownership | www.nceo.org The ESOP Association | www.esopassociation.org

ADMINISTRATION AND COMMUNICATION

Annual meetings are conducted each April and treated like stockholder meetings, complete with a catered dinner. Reports on financials, sales performance from the past year and year-ahead forecasting are detailed. Nearly two-thirds of the company’s 150 employees typically attend those sessions.

ESOPS

The Rutgers Institute for the Study of Employee Ownership and Profit Sharing www.smlr.rutgers.edu/content/ institute-study-employee-ownership-and-profit-sharing “The Citizen's Share: Putting Ownership Back into Democracy” — edited by Douglas L. Kruse, Richard B. Freeman and Joseph R. Blasi “Shared Capitalism at Work: Employee Ownership, Profit and Gain Sharing, and Broad-Based Stock Options” (National Bureau of Economic Research Conference Report) — May 1, 2011

BENEFITS AND OBSERVATIONS

The financial outcome of the company’s success “has been a godsend for everybody who was in it in the beginning and who might be giving consideration to retirement now,” Wood says. “They’re going to retire with an ESOP account [of a size] that they never could have saved that kind of money in their wildest dreams. It will make for a very comfortable retirement. It’s just paid huge dividends for everyone.”

ADVICE TO OTHERS

Today’s ESOP participants at O.E. Meyer are happy to discuss all aspects of the arrangement with anyone who is interested, according to Wood. “We’ve had people call us. We’ve had discussions to help others understand how it works. Is it for everybody? No. We know it’s worked well for us, and we’re always eager to share the story with anyone who calls.”

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ESOPS

WHY THEY CAN BE WIN-WIN-WIN The General Air ESOP Committee has included Brad Armstrong, current president, at far right; and l – r: Brad’s brother-in-law Mark Gregory, current VP of Operations; Gary Armstrong, company president from 1986 to 2016; and Brad’s grandfather, founder Gene Armstrong (who passed away in 2013). The company became a partial ESOP in 2007.

ESOP PROFILE

GENERAL AIR SERVICE & SUPPLY

ince a modest start in 1969, this third-generation welding supply and gas distributorship has grown to become the largest independently owned welding supply company in the state of Colorado. The company became a partial ESOP in 2007, a benefit that is “part of our secret sauce for recruiting and retaining the best in our industry,” says its president.

Competitive Edge “The company has grown tremendously, and the value of the stock has literally more than doubled. This isn’t cake for us; it’s the icing on the cake.”

Brad Armstrong

President General Air Service & Supply 44 • Spring 2018

COMPANY ORIGINS

Gene Armstrong began the company in a retrofitted gas station in 1969. In 1970, his son Gary joined him. Today the 200-person, 10-location firm is still managed by a third-generation Armstrong, in the form of a partial ESOP.

THE DECISION

Gary Armstrong had been president since the mid-1980s when he wanted to transition management to his son, Brad. Gary considered an ESOP as a means to do three things, son Brad says: reward

employees that had been with him for a long time, encourage employees to stay with the company during a second- to third-generation leadership transfer and give the company a recruiting tool for the future to attract and retain employees. Gary Armstrong saw the ESOP mechanism as an appealing way to transfer a portion of his estate for the greater good of the company, his son adds. “One of my dad’s greatest gifts has always been generosity, so that strategy aligned very well with some of his long-term objectives and core values,” says Brad Armstrong.

Brad Armstrong

President General Air Service & Supply

FORMULATION

ADMINISTRATION AND COMMUNICATION

The company has hosted an annual employee-and-spouse meeting for the last six years to report on the ESOP valuation. Done off site and usually on a weekend, the meetings draw about 130 of the company’s 200 employees. Quarterly, the company also conducts open-books discussions with employees on company financials and performance. A team of three set up the ESOP plan: a specialized ESOP consultant and an ESOP attorney, along with the company’s certified public accountant.

“The benefit is the company has grown tremendously, and the value of the stock has literally more than doubled,” Brad Armstrong reports. The company’s success permits a monthly profit-sharing program where 10 percent of the profit is shared with employees, as long as certain revenue goals are achieved. Community outreach initiatives, such as helping to feed hundreds in the community at Thanksgiving, plus various fundraisers are part of the “we’re in this together” company culture. Employee tenure anniversaries are met with big celebrations and awards, including a generous, escalating time-off plan.

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ADVICE TO OTHERS

“There are not all pros to ESOPs, there are some cons. ESOPs are expensive to administer,” Brad Armstrong cautions. “The annual valuation is very expensive, as is the third-party audit; it’s about $25,000 annually. It’s worth it, but any company should have their eyes wide open and know what they’re getting into so they’re not surprised.” As for the ESOP being an employee retention tool, Armstrong says it’s hard to get employees, especially newer ones, to see the value when they only accrue it over the long term. “Like anything, you have to communicate repeatedly to penetrate the heart and psyche of employees, so they recognize the gift they were given and can appreciate it. It’s a complicated topic, so you have to be intentional in the dialogue.”

Longer Lengths

Brad and his two sisters own the majority of the company. A 15.5 percent valuation share is held by the employee owners.

BENEFITS AND OBSERVATIONS

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“Dad was looking for a way to do three things: reward the employees that had been with him for a long period of time, encourage employees to stay while we were doing a second-to thirdgeneration leadership transfer and give us a recruiting tool for future new employees.”

A trustee administers the plan, and that is a person within the same group that does the company’s 401(k) plan. Taxes are paid on a quarterly basis and the money is put into a trust account, taxed only when employees cash in the value of their stock and sell it back to the trust.

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ESOPS

WHY THEY CAN BE WIN-WIN-WIN The Ownership Communication Team at Hypertherm, shown at an outing in Killington, Vt., consists of: Jane Moss, Lisa Tudd, Melanie Matulonis, David Hook and Kori Joyce.

ESOP PROFILE

H Y P E R TH E R M I N C .

Loyalty “The ESOP … seemed the way most critically to continue the culture everyone has known and really values, the egalitarian culture at Hypertherm.”

Evan Smith

President and CEO Hypertherm Inc.

46 • Spring 2018

COMPANY ORIGINS

In 1968, Richard “Dick” Couch Jr. and Bob Dean formed the company after they invented a water-injected plasma-arc cutting technology. Headquartered in Hanover, N.H., Hypertherm now has 1,400 associates, business partners in 93 countries and is known for its active social responsibility program.

THE DECISION

In 2001, anticipating their retirement was still a decade or more out, Dick and his wife, Barbara, undertook what was “partly an experiment” to see how ESOPs worked and to learn about them, says Evan Smith, current president and CEO. “They didn’t need to sell the controlling interest of the company at that time; they had time to see how to make it work and how to make it sustainable.”

FORMULATION

The company took the first step in 2001 with a 30 percent Employee Stock Ownership plan. That was expanded to a 100 percent associate stock-ownership plan in 2013.

ADMINISTRATION AND COMMUNICATION

When the ESOP was first announced in 2001, the company held classes to teach associates the ESOP basics, including structure, rights, governance and obligations. When Hypertherm transitioned to 100 percent associate ownership, that big step merited a bigger effort. The firm engaged a communications consultant who designed interactive, two-hour training sessions making illustrative transactions using “monopoly money” to show employees exactly how the ESOP worked.

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ESOPS

WHY THEY CAN BE WIN-WIN-WIN

The firm now has an ownership communications team in place to keep all associates abreast of ESOP issues, teach new hires the fundamentals and make sure those nearing retirement have all the proper information. Team members plan activities, including October “ownership month” events and participate in ESOP Association events like Congressional visits. In addition, there is a technical advisory committee of associates who advise the ESOP trustee and provide counsel on key design decisions and other issues.

BENEFITS AND OBSERVATIONS

The ESOP not only “reaffirms the values of the founders and owners,” it reinforces the egalitarian culture at Hypertherm, Smith says. “Financially, of course, in an era when companies have

Richard and BARBARA Couch Hypertherm Inc. largely abandoned pension programs, this is in effect a pension program,” he adds. “Associates are retiring with much more retirement security than they might have experienced with a non-ESOP company.” The ability to maintain an independent, long-term focus is beneficial for

the company, Smith says. That not only includes the federal tax shield, “which obviously improves cash flow to reinvest for long-term success,” but it positions Hypertherm as “a preferred employer.” While there is a general challenge for most companies in skilled workforce attraction and retention, Smith says, “That has not been a problem for us. Low turnover generally equates to higher average tenures. That, plus our no-layoff philosophy means we’re retaining knowledge and skills and accumulating them throughout our workforce.” Importantly, the ESOP is a means for what Dick and Barbara Couch had wanted: A way to more closely align the interests of employees with those of the customer, producing “a winning philosophy that produced benefits for all stakeholders.”

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At the company since 1992 and seeing both iterations of the ESOP, Smith suggests that addressing the complexities of the ESOP structure “can draw a lot of management’s attention.” In addition, the management team “needs to recognize that this is the implementation of a key cultural decision, so they really need to explore the questions of, ‘What do you want out of associate ownership?’ and ‘How do you want that exercised within the company?’” “We already had a lot of associate engagement; nevertheless, with the announcement of the ESOP comes expectations … how are we [associates] affecting decisions, what do we have the right to know, what does ownership really mean, how do associates have an active voice,” Smith adds. “You don’t suddenly turn the company upside down; you still have the board and senior leadership making capital allocation and business strategy decisions. But you need to be much more conscious of how you implement and communicate decisions about where the business is going.”

ESOPS

WHY THEY CAN BE WIN-WIN-WIN

ESOP PROFILE

NORCO

COMPANY ORIGINS

Norco Inc. began in Boise, Id., in 1948 as the welding supply division of the Nordling Auto Parts Company. Larry Kissler, formerly Union Carbide Linde division general manager in charge of 11 eastern states, bought the company in 1968 and moved his wife, Fran, and four children to Idaho. With 15 employees and two locations, Larry and Dan Steele, general manager and eventually company president, started acquiring distributorships throughout the intermountain region. In 1985 Kissler’s son, Jim, bought the firm and led expansion efforts of nearly15 percent annually. A specialty gas division was started in 1990, and in 2002 the company built its first (of two) air separation plants. Subsequent acquisitions grew Norco into the largest privately owned welding supply and gases distributor in the U.S., with 800 employees working in 75 locations across Idaho, Oregon, Washington, Montana, Nevada, Utah and Wyoming. The original Norco building in Boise.

THE DECISION

The idea of an employee-owned company was one Jim Kissler had considered 20 or 25 years ago. “I think I had written something in my will that if there was a way for employees to own the company, it should be looked at prior to getting an evaluation from the majors,” he says. He first researched ESOP options by spending two to three years attending national ESOP association meetings and talking to other owners who had converted their firms. A reduction in the federal income tax rate at the time was an incentive, as was the tightening labor pool, Kissler says.

FORMULATION

Norco’s is a partial ESOP. CEO and Chairman Kissler took out a percentage of the company’s equity value through a 17-year note and receives annual 50 • Spring 2018

payments on the note. The employees collectively own 35 percent of the company and earn their shares individually as the note is paid down. If the company’s value goes up, the shares’ value appreciates, too. Each year the company is valued and employees receive statements showing the number of shares they own and the price of the stock.

ADMINISTRATION AND COMMUNICATION

When the ESOP was first formed, Norco’s leaders “took a road trip,” bringing the information to and fielding questions from employees face-to-face in as many locations as they could, Jim Kissler says. Norco also has an ESOP Communications Committee composed of six to eight workers from various departments and geographies. Members include drivers, fillers and mid-managers, as opposed to mem-

bers of management. Third-generation family member and employee Nicole Kissler also serves on the committee. Its tasks include developing a monthly ESOP communication message for all employees regarding ESOP news, valuation reports and benefits of the structure. The group plans the annual Employee Ownership Month celebrations that take place company-wide in all 75 locations.

BENEFITS AND OBSERVATIONS

Being an ESOP “is almost kind of a brotherhood, it’s almost like a fraternity,” notes Norco Director Ned Pontious. He says at least two customers who are ESOP companies gravitated to Norco because of the like structure. “When you meet other ESOPs, they recognize like values and want to do business with you for that reason.”

WHY THEY CAN BE WIN-WIN-WIN Pontious says the benefits of employee ownership extend well beyond the shareholder benefits workers earn and accrue back to the way they do their jobs. Jim Kissler “You’ll get employCEO and ees to start thinking Chairman and acting like they’re owners. As they see their shares of stock accruing every year, they begin to think and act like the owner does. They’ll say, Nicole Kissler ‘Why do we need six Vice President trucks if we can do it of Medical with five; put one back Revenue in the vehicle pool,’” he illustrates. “I really do believe that at all of our locations, our people are thinking like that.” In addition, he says, one of the biggest Ned Pontious benefits has been in Director improved employee engagement. Kissler adds that reducing the employee turnover rate is another key factor. “That was really appealing to us, to be able to keep our people longer, because obviously the cost of turnover becomes larger the larger a company you become.” The appeal of the ESOP culture and share value is extended in recruiting and in hiring letters, and every employee’s business card is emblazoned with the notation that each is an employee owner. Potential employees also recognize the type of culture employee ownership signals. “The majors look at head count and see profitability in reducing numbers. When someone sees a company that is running as an ESOP, it reassures them that the owners are selling to another

owner that will take care of employees,” Kissler suggests.

ADVICE TO OTHERS

Nicole Kissler, the third-generation of the family members to work in Norco, notes that while ESOPs have become more of a trend, employee owned companies are still rare. “It’s been good for Norco and I’m glad we did it,” she observes. “I think it’s the best direction for the company. There has been a lot of blood, sweat and tears put in by all the people in Norco over the past 70 years. We have numerous leaders here and they’ve always acted as owners, and we’ve taken this extra step and actually made them owners. It’s certainly a great option for your company and your employees.”

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ESOPS Legacy

“This keeps the Larry Kissler [founder] legacy alive. My daughter works here, my son-in-law works here, my grandkids are shareholders of Norco. My grandkids may want to participate, or they may not want to. If they don’t, there is a market for their shares.”

Jim Kissler

CEO and Chairman Norco Inc.

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Spring 2018 • 51

ESOPS

WHY THEY CAN BE WIN-WIN-WIN OSC’s ESOP Committee members, are l - r: Dan Yochum, delivery driver; Julie White, customer service manager; Kris Scott, outside sales; Nicole Hoverson, director of HR and management liaison to the committee; Chris Buss, outside sales; Daun Brown, IT; Lyman McPherson, service technician; and Jen Lange, accounts payable.

ESOP PROFILE

OX Y G E N S E R V I C E C O .

he company marks its silver anniversary as an employee-owned company this year. With three Minnesota locations, the firm can service the majority of that state plus customers in western Wisconsin and the eastern Dakotas. OSC has an active ESOP Committee and advocates for ESOP ownership regularly. Company leaders attend and speak at regional and national ESOP events and conferences and make advocacy visits to Capitol Hill.

COMPANY ORIGINS

Bill Huber and Bill Lund (always known as “Bill and Bill”) started the company in 1959. They owned and operated it together for 34 years.

than sell out to the conglomerates, says Ryan Diekow, the company’s current president and CEO.

FORMULATION

THE DECISION

Reaching retirement age and without family members to carry on their business, Bill and Bill turned to their employees to continue the company legacy. They chose to transition to a 100 percent employee-owned structure rather 52 • Spring 2018

Ryan Diekow President and CEO

Starting out as a C-Corp in 1993, the company remained so until tax law changes in 1998 created the opportunity to become a subchapter S Corporation. With that, “the company

went to subchapter S status in 2000.” It has remained that way, saving all federal taxes since then, says Diekow. Taxes on earnings are deferred, so instead of being collected at the time the value is earned, taxes are postponed until individuals retire and get paid out for their stock value.

ADMINISTRATION AND COMMUNICATION

The company hosts an annual shareholders event each year in April. The stock value is announced and a party

WHY THEY CAN BE WIN-WIN-WIN ensues. In October, the firm celebrates ESOP ownership month with company-wide activities. Its ESOP committee actively leads events and functions that contribute to the company culture. The committee’s seven members are rank-and-file employees who are elected by other employees, joined by a management liaison. “We don’t dictate what they do,” Diekow notes. “Their heart is in the right place, and we trust them and give them the authority to make decisions. We like to be kept in the loop, but we certainly do not dictate what they do.”

BENEFITS AND OBSERVATIONS

The employee ownership aspect “is a huge part of our culture, a big part of who we are as a company,” Diekow adds. “There’s a competitive advantage,

Workplace Culture “The culture has a tremendous influence on what we do and how we do things. It’s one of the things we focus on as a company. It’s a customerfocused mentality, and we try to empower our people to do the right thing. We call them owners because they are.”

Ryan Diekow

President, CEO and Chairman of the Board Oxygen Service Company

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ESOPS

even when it comes to dealing with the customer. We feel that every person a customer talks to treats them better than the competition because they’re an owner, they have a vested interest. It’s a customer-focused mentality.”

ADVICE TO OTHERS

Diekow’s recommendation: “Get good advice. The advisors you work with and choose can make the journey go much more smoothly.” Having a great group of advisors, external trustee and an attorney who specializes in ESOPs was essential, Diekow adds. “Our valuation company is a great partner. Those are the key relationships you need to have. You need to talk to other ESOPs to find out what works and doesn’t work and belong to an ESOP association.”

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Spring 2018 • 53

ESOPS

WHY THEY CAN BE WIN-WIN-WIN

ESOP PROFILE

C ATA L I N A C Y L I N D E R S

COMPANY ORIGINS

In 1965, Philip Keeler founded Aluminum Precision Products (APP). In 1992, APP acquired Catalina Cylinders. Keeler and two of his sons, Gregory and Roark, managed APP and Catalina as family-owned businesses for the next 17 years.

THE DECISION

Richard Hill President & CEO

Philip Keeler passed away in 2009. It had been the Keeler family’s philosophy that the company should transition to the employees versus selling to a competitor or private equity firm, so the company immediately began tran-

sitioning to an ESOP. In 2015, to better align the business with the interests of the employees (90 in California and 160 in Virginia), Catalina Ward Dekker split off as its own Vice President & entity, and the APP General Manager and Catalina ESOP Catalina East plans were separated by company.

autonomously, their ESOP valuations are done separately, which dictates both the ESOP value and the plan retirement value.

FORMULATION

David Silva Vice President of Sales & Marketing Catalina Cylinders & Catalina Composites

Approximately one-third of the business is in the ESOP trust, owned on behalf of the employees. The balance is owned through the Keeler Family Trust headed by the second-generation Keeler brothers. Because the two businesses run

ADMINISTRATION AND COMMUNICATION

The Catalina ESOP is managed by the company’s board of directors and its ESOP Committee. The Committee consists of David Silva (vice president, sales and marketing), Richard Hill (president and CEO) and Ward Dekker (vice president and general manager).

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WHY THEY CAN BE WIN-WIN-WIN Committee meetings are held quarterly, and the Committee communicates with the board of directors monthly. Catalina is in the process of establishing a communications committee composed of key employees from several operational areas. The idea is to have them available to their peers to provide information, answer questions and create a feedback funnel. The company’s human resources department is heavily involved in employee communication. The company HR department and the ESOP administrator’s call-in service respond to employee calls regarding statements. More resources are being dedicated to communicating about the plan and its value these days, Silva says. “Employees are becoming more aware of the plan, and as we show them personally what it means, that helps morale and it helps productivity. You need to show how the ESOP value is determined by the value of the company and how employee performance can make a difference. We look at this as an investment in our employees. To get the best return on that investment, communication is key.”

BENEFITS AND OBSERVATIONS

The company has experienced boosts in revenues, productivity and positive attitude about the ESOP the past several years, Silva says. “It’s hard to say that the ESOP is directly responsible; it might be a stretch to put all the credit on it. However, we have seen productivity gains and a positive attitude around the ESOP. The employees have an ownership stake in the business and what they put in, they get out.”

ADVICE TO OTHERS

For companies considering becoming an ESOP, it pays to do your research when putting the professionals in place who will support the plan, Silva emphasizes. He suggests “doing your due diligence” when picking a third-party administrator, trustee, attorney and certified public accountant. This due diligence “can make all the difference; it’s important to find people who will go the extra mile to ensure the plan works and is compliant. A lot of ESOP seminars will tell you that it’s not a question of if the Department of Labor will come in and audit you, but when. So, you need to be ready for that.”

ESOPS

Owner Mindset “ESOPs are really an investment in your employees. You’re using the company profits to buy out the interest from the original owners and transition this ownership to the employees. So, to get the best return on this investment it’s important to communicate to employees that their personal performance contributes to the ESOP value, which directly impacts their retirement accounts.”

David Silva

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ESOPS

WHY THEY CAN BE WIN-WIN-WIN The team of the Owership Culture Committee at Toll Company is composed of six workers. They are, l – r: Mike Warren, equipment service and rental manager; Steve Frank, rental department technician; Steve Cooper, information service manager; Karen Rodning, gas technology support staff member; Theresa Ferret, human resource manager; and LouCinda Pearson, sales support manager.

ESOP PROFILE

T O L L C O M PAN Y

oll Company was an early adopter. Started in St. Paul, Minn., in 1945, the company established its ESOP in 1975 as a retirement program for its employees only a year after federal legislation that permitted the formation of Employee Stock Ownership Plans.

COMPANY ORIGINS

Founder H.R. Toll wanted to establish a retirement plan for the employees, which led to the formation of the ESOP in 1975. Shortly after the ESOP was established, he died in a car accident in 1979. As the years transpired, the company became 100 percent employee owned. That designation is one of the company’s primary branding messages today.

THE DECISION

Toll’s family continued to run the business, but in 1984 was considering selling 56 • Spring 2018

it to Union Carbide Corporation. Upon hearing that the company might be sold to Union Carbide, a management team (led by former President Tom McGrath) brought an offer to the family to buy the company through the existing employee stock ownership plan. They put together a simple and concise offer, in contrast to the complex and lengthy offer from Union Carbide. Even though the financial offers were similar, the simpler offer and the employee loyalty won the family over. The family sold to the employee group, which numbered about 45 then.

FORMULATION

Toll started out as a C Corporation and converted to an S Corporation when the company became a 100 percent employee-owned company in 1990. Today, there are 61 employees.

ADMINISTRATION AND COMMUNICATION

The company has an “open book, open-door” style of management, company President James Quicksell says. A work culture is cultivated so employees feel comfortable offering suggestions

WHY THEY CAN BE WIN-WIN-WIN

Workplace Culture “Because of our open-book management philosophy, employees aren’t shy about dropping by my door and letting me know what they think. Our culture is one where employees feel comfortable sitting down with management to offer suggestions and bring forward creative ideas for the business. I can truly say I enjoy the collaborative culture we have built. Our people have exceptional ideas that make our company better.”

companies. Toll also is an active participant in local, regional and national ESOP organizations.

BENEFITS AND OBSERVATIONS

Some 38 percent of employees have more than 15 years of service with the company, so longevity has been a benefit, Quicksell says. The company has seen strong growth over the last 10 years. Jobs there pay well and the company offers generous healthcare benefits. Its success allows the company to pay for employee education, covering 75 percent of approved degree-program

ESOPS

costs for employees who go back to school to further their career-related studies. Because the firm is able to retain, educate and grow its ranks, the next generation of workers is not something the company worries about, Quicksell says, since “they are already in place.” That’s a fact that’s likely to help Toll continue for a third generation. “I truly believe this is the way to go,” he adds. “We’re finding a way to help employees grow the business, and that may keep distributors around. We are a dwindling breed, but I know this will help keep Toll around.”

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and asking questions. Toll has created employee-owner communication programs and fostered a strong tradition of company-wide activities, community involvement and active listening by management. The ESOP is administered by a local accounting firm and consults with a respected legal firm specializing in ESOPs. The ESOP is valued annually by a third-party valuation firm with extensive experience in employee-owned

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ESOPS

WHY THEY CAN BE WIN-WIN-WIN Almost everyone in McDantim Inc.’s 23-member workforce is shown in this group photo. The Helena, Mont., gas blending technologies company just converted to an employee-ownership format last fall.

ESOP PROFILE

M C DAN T I M I N C .

ewest of the GAWDA ESOPs, McDantim Inc. changed its organizational structure at the end of 2017. The successful company of 23 employees is located in Helena, Mont.

COMPANY ORIGINS

Started by Mert Fallon in 1988, McDantim specializes in on-site gas blending technologies.

THE DECISION

Mert’s children, Michelle, Dan and Tim, each owned a third of the company, but hadn’t been involved in its operation. When the founder-father died in 1991 Dan decided to take over the company rather than shut it down. There were just three other employees then. The logic of the decision to convert to an ESOP “was pretty simple,” Fallon, the 58 • Spring 2018

current CEO, explains. “I had been around a number of companies that had been sold, and generally things don’t go very well for the remaining employDan Fallon ees. The people who CEO are with us now really McDantim Inc. helped build the company. It didn’t seem right to sell it out from under them.”

FORMULATION

As an S Corp from the get-go,

Loyalty “This seemed like the only way to transition out of the business that was balanced and fair for the employees and still gave the family a chance to sell the company and get a return on it.”

Dan Fallon

CEO McDantim Inc.

WHY THEY CAN BE WIN-WIN-WIN McDantim is a 100 percent employee-owned company. Fallon researched options for about a year and attended ESOP group seminars. He hired an ESOP specialist for the set-up work, which took another year. He decided to involve the company’s employees right away. Midway through the process in 2016, he purposefully stepped back from day-to-day operations and named employees Justin Trafton as president and Lenette Egan as chief financial officer, respectively.

ADMINISTRATION AND COMMUNICATION

“During the process, we were still approached by a fair number [of firms] who were interested in purchasing us. Talking to all the employees about doing this was a way of committing to it and letting them know what was coming. To be honest, I wanted the employees to be fully committed to it,” Fallon recounts. Things are going pretty smoothly, Fallon says. ESOP Communication meetings are held monthly, and company progress updates are included. “There are things to address as people come to understand we’re not all the president of the company. We have a good group of people and everyones’ attitudes have been pretty outstanding. As people become owners, I think that’s something you have to work on all the time,” he adds.

BENEFITS AND OBSERVATIONS

The move to an ESOP achieved what the family initially wanted, Fallon says. “We got a fair price for the company. My brother and sister are very happy.” Fallon wants to stay with the company a few more years as CEO to work on special development and educational projects,

and this format of operation frees his time to do that, he says. The company and the employees have benefitted from the non-tax status, too, according to Fallon. “Previously, my brother and sister and I paid taxes out of the company. If you’re a 100-percent ESOP, you don’t pay taxes. Now, the employees have a 30 to 35 percent tax advantage [on company earnings].”

ADVICE TO OTHERS

“Don’t go to your company attorney and ask him to set this up for you. There are a lot of things that have to be done correctly, or they’ll be a nightmare. ESOPs are complicated. The valuation of the company has to be done by someone who’s an expert in ESOP valuations.”

ESOPS

Owner Mindset “Do your homework so you know what you’re getting into. You can decide what kind of ESOP you want to be to maximize what you want to accomplish. It’s important that anyone knows what they want to accomplish through this.”

Dan Fallon

CEO McDantim Inc.

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ESOPS

WHY THEY CAN BE WIN-WIN-WIN

THINKING OF AN ESOP?

Here Are Steps to Follow

Are you thinking of creating an Employee Stock Ownership Plan at your company? These key steps, taken in this order, will help you get started. They are recommended by the National Center for Employee Ownership. (See more details at www.nceo.org.)

ASSESS YOUR READINESS.

Whether an ESOP is undertaken by the employees or by the owners, it’s important to assure that the parent firm/ principals are amenable to the idea. You must make sure the owners really are willing to sell before proceeding.

DO A FEASIBILITY STUDY.

This can be conducted by your in-house staff if done carefully and thoroughly, or an outside consultant or specialist can be brought in. Things to look at include how much extra cash flow the company can devote to the ESOP; if the company has adequate payroll for ESOP participants to make the contributions deductible; and estimates of repurchase liability and how that will be managed by the company.

CONDUCT A VALUATION.

Performing a full or partial valuation is a crucial step. A valuation consultant can examine cash flow, profits, market conditions, assets, company values, goodwill and overall economic factors.

HIRE AN ESOP ATTORNEY.

A specialized attorney can draft your ESOP plan for submission to the Internal Revenue Service. The plan should be based on your instructions after carefully weighing all the options for forming your ESOP.

OBTAIN FUNDING.

Funds can come from bank loans, private parties, sellers, the bond market, benefit plans and employee contributions.

E STABLISH A PLAN TO MANAGE THE ESOP.

This includes naming a trustee to administer and oversee the plan, either someone inside the firm or a private company.

D EVELOP AN EMPLOYEE COMMUNICATIONS PLAN AND PROCESS.

As the employees turn into owners, the company must actively and ongoingly explain how the plan works and how it creates value. As an ongoing measure, the company needs to continually engage employees in the plan’s operations, focused activities, ongoing valuation reports and ways to have them think like owners.

(*via National Center for Employee Ownership) 60 • Spring 2018

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ESOPS

WHY THEY CAN BE WIN-WIN-WIN

Why Deeper Thinking About Being an ESOP Can Solidify the Work-Behavior Connection BY JENNIFER BRIGGS

W Jennifer Briggs is an associate with the Beyster Institute at the University of California, San Diego and an independent advisor for businesses seeking to build cultures focused on leading with purpose and employee ownership. She is the former head of human resources for employee-owned craft brewer New Belgium Brewing, winner of many “best of workplace” awards. Follow her on: aLifeInMosaic.com, LinkedIn, Twitter at @jkbriggs and reach her at: jb@alifeinmosiac.com.

62 • Spring 2018

hen a company sells to an Employee Stock Ownership Plan (ESOP) or a group starts a co-op, a common question is, how will this new organization be different for the employees as owners? There is the obvious and critical starting point that the employees need to understand their benefit and recognize how an ESOP or co-op works from their own financial/beneficial perspective. But, then what? A big win with employee ownership is the shared profit motive. No longer is it a single owner, small group or set of anonymous shareholders who benefit. Now, it is the trust/employees who do. Since people are still doing their jobs just like they did before, what does this “different” look like for them now? I believe the crux of building the awareness among employees is doing deeper thinking, along with conducting some specific tactical actions and meaningful discussions. Often people create celebrations and parties to build community around the ESOP, and that’s great. We also must focus on how we can change the work-behavior connection so that employees and companies really get the most from each other in ESOP environments. Some starting points include the following tactics and approaches. These can help managers enhance how employees view their roles, as well as the contributions they are making, for the good of the company and themselves by adopting a bit of a deeper mindset.

MANAGEMENT

If managers have not been digging deep on their own broad-business acumen, they need to do so now. Managers are the critical connectors between the day-to-day and the broader business plan. They serve the role in connecting the work of each person on their team to the company plan. They help serve the business by ensuring that daily actions of the employees ensure real value to the business.

GOAL SETTING

Having a great goal-setting discussion that includes the “why” behind individual goals is imperative. How does this or that goal connect to what the company needs? That’s an important understanding. Don’t let goal-setting become a mechanical exercise. Managers can help it become a motivational exercise that connects individual effort to company impact.

PARTICIPATIVE TACTICS Managers can open their budgets and actuals and explain why they are over or under budget or revenue, as well as get employees involved in explaining gaps. Then, they can take this discussion to

WHY THEY CAN BE WIN-WIN-WIN the next level and have employees anticipate the future and reforecast the numbers based on their increased knowledge. Another option is that managers can create problem-solving and opportunity-finding groups. They should do this using cross-functional agile methods of project management, with a focus of always keeping the consumer in mind. Be careful not to let budgets build silos. The employee-shareholder/ stakeholder-consumer connection is critical.

LEADERSHIP

Leadership sets the model for organizational temperament, so a driven, open, humble approach is great. Employee ownership doesn’t mean leaders lead less. In actuality, they need to lead more since they are acutely aware of the talent inside the company and don’t want any of it to go to waste.

INFLUENCER MEETINGS

Town halls, all-hands or all-staff meetings are quite common in these scenarios. That’s when you can take the discussion to another level. It’s not just reporting the state of the business, it’s picking critical business issues and asking employees for their thoughts. These discussions should not be set up as brainstorming meetings. Leaders are asking for contributions to help everyone in the company challenge current perceptions, see the challenges of the marketplace and contribute ideas. Such talks typically are structured around leveraging the company’s employees as a source of business intelligence. You have a bank of wisdom among them, and the idea is, why not use it?

ESOPS

Employee ownership doesn’t mean leaders lead less. In actuality, they lead more.

DECISION SHIFTS

For all leaders, it is important that people understand how decisions are made. It’s important for you to help people understand situational attributes that lead to certain decision approaches. You can help employees understand the data and other business intelligence that lead to decisions. Build value and respect for specialization while also creating room for grassroots decisions. Decide where to shift decisions, cut red tape and empower teams. Decide between deciding and recommending. If you are really into it, design a decision chart to help build understanding, and then use this as a discussion tool to determine when a shift in control is appropriate.

ECONOMIC INSIGHTS

Share broader economic insights. The marketplace is always competitive. Help the employees understand competitive forces. Business isn’t all about rewards; there are risks. Entrepreneurship is tough. The marketplace changes, and it can happen fast. Help everyone understand so they are well prepared to adapt their own jobs if it becomes necessary. Create the collective force to build a world-class business.

Spring 2018 • 63

ESOPS

WHY THEY CAN BE WIN-WIN-WIN

CONTRIBUTORS

Each employee contributes value to the company, but how does this change with employee ownership? Employee owners know that the collective future wealth is built on the integrated impact. The importance of our work is aligned with the needs of the business and our behaviors unified to the values/ purpose supports the success of the company.

OWNING INDIVIDUAL PERFORMANCE

Performance management is critical to making sure individual plans and contribution levels align with what the company needs. It’s this way in any company, but in employee-owned companies there is often the privilege of more transparency, better management and the idea that if the company succeeds, everyone succeeds. Owners don’t need managers. They need leaders who are guiding, supporting, teaching and coaching. The manager helps align work with the company plan and helps up the ante on work contributions employees make to ensure the work adds value. This is the opposite of laissez-faire management because it is active, involved (in a good way) and helpful. Each person can be reviewing performance, getting advice on how to improve and proposing a self-review and a work plan for the future. Managers are partners who help people contribute the best work.

CONVERTING VALUES TO NORMS

Most companies have a list of values, but each employee can work to unify how the values are lived. For example, maybe the company has a value of working like an owner. What does that mean? What does that look like in the daily work context for our work? Employees can get together and make agreements on what normal behaviors and actions will be. More tenured employees can help teach new coworkers and everyone can hold themselves accountable to the agreements. In some workplaces, people wait for leadership and management to define what being a good employee means, but employee owners can take it a step above and develop themselves and their co-workers as great organizational citizens. Employee owners can help design the aspirational culture and achieve it. Moving to employee ownership isn’t like turning on a light switch. Most companies will be at different starting points, so how each one begins to fold in different aspects of employee ownership should be different. The key is having an understanding that now, employees don’t merely rent their labor to the company, they also own the outcomes of great work. The switch starts with intention. Regardless of where it starts, it will be positively powerful.

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HQ & PROGRAM NEWS

GAWDA Regional Meetings – Three Down, Half a Dozen to Go See What GAWDA is All About – In a Convenient, Quick Getaway

egional Meeting season is well underway for GAWDA members! An association Regional Meeting is much like a mini session of a GAWDA annual conference. The leadership is there. The consultants are there. The member networking still takes place on a grand scale (even if it happens for fewer days). And the same level of GAWDA camaraderie abounds.

Join your fellow suppliers and distributors at a GAWDA Regional Meeting this year. There are six more to go; that means plenty of places and dates to choose. If you’ve got someone you want to introduce to GAWDA, bring them along! Guests are welcome, too. More information is available on the GAWDA site, and updates will appear regularly in the GAWDA Connection newsletter through October.

2018 REGIONAL MEETINGS

66 • Spring 2018

DATE

LOCATION

REGIONAL CHAIR INFORMATION

JUNE 18–20

Seven Springs, Pa.

Abydee Butler Moore; abutler@butlergas.com Bob Ranc; Robert@weldcoa.com

JULY 11–12

Maumee Bay, Ohio

JULY 18–20

Cle Elum, Wash.

Jim Wright; jwright@oxarc.com

AUGUST 6–7

Tulsa, Okla.

David Hanchette; dhanchette@ceekay.com

AUGUST 13–14

N. Stonington, Conn.

Jay Kapur; jkapur@aimtek.com

OCTOBER 3–5

Hershey, Pa.

Bryan Keen; bkeen@keengas.com

Eric Wood; ewood@oemeyer.com

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IT’S HERE, IT’S NOW,

It’s St. Louis … AND…

It’s the 2018 GAWDA Spring Management Conference

GATEWAY TO PROGRESS: PEOPLE, PROCESS, PLAN Saturday, May 5 12:00 pm - 6:00 pm

Early Badge Pickup

LOCATION Midway Prefunction Area

Coming to St. Louis a Day Early? Enjoy These Attractions 12:00 pm - 4:00 pm Gateway Arch Tour The Arch is the nation’s tallest monument. It commemorates the gateway to the west for thousands of 19th century pioneers. You can take a tram ride to the top of the 630-foot stainless steel architectural wonder and get a unique bird’s-eye view of the city.

Sunday, May 6 7:00 am - 6:00 pm

Registration

Midway Prefunction Area

8:00 am - 9:00 am

Executive Committee Meeting

Frisco/Burlington

9:00 am - 12:00 pm

Board of Frisco/Burlington Directors Meeting

1:00 pm - 2:00 pm

Regional Chairs Meeting

St. Louis Union Station Hotel

2:00 pm - 3:30 pm

Committee Meetings (for Committee Members only)

St. Louis Union Station Hotel

2:00 pm - 5:00 pm

Exhibitor Set-up (Contact Booth Exhibitors only)

Midway

5:00 pm - 6:00 pm

First-Timers Reception

Off site – Ballpark Village

Cost: $48.00 per person, including tour guide and transportation to and from the St. Louis Union Station Hotel.

12:00 pm - 4:00 pm

Anheuser-Busch Brewery Tour

Tour the historic Anheuser-Busch Brewery, learn about the rich history of the Budweiser Clydesdales and sample premium beer brands. After the brewery tour, enjoy a sweet treat at Ted Drewes Frozen Custard (a St. Louis tradition since 1929).

LOCATION

12:00 pm - 4:00 pm

“Meet Me in St. Louis” – Zoo and Art Museum Tours

Take a walk on the wild side and explore the 90-acre St. Louis Zoo. Then, enjoy a visit to the Missouri History Museum to explore the city’s history. Lastly, visit the St. Louis Art Museum, where there is art to appeal to everyone. Cost: $30.00 per person including tour guide and transportation to and from St. Louis Union Station.

68 • Spring 2018

Photo: Explore St. Louis

Cost: $45.00 per person, including tour guide, tour at Anheuser-Busch, Ted Drewes treat and transportation to and from the St. Louis Union Station.

PRESIDENT’S WELCOME RECEPTION AND DINNER 6:00 pm - 9:00 pm at Ballpark Village 9:00 pm

Industry Hospitalities

Invitation Only

Monday, May 7

LOCATION

7:00 am - 5:00 pm

Registration

St. Louis Union Station Hotel

7:00 am - 8:00 am

Networking Breakfast

Grand Ballroom DEF

7:00 am - 1:00 pm

Exhibitor Set-up (Contact Booth Exhibitors only)

Midway

General Business Session and Speakers

Regency Room

8:00 am - 12:00 pm

FIRST-TIMERS RECEPTION*

Dr. Mitch Millstein, Ph.D.

Associate director, Center for Business and Industrial Studies University of Missouri – St. Louis “On Process: Let the Data Lead the Way”

INDUSTRY SPEAKER Andy Stawski

Commercial market manager Miller Electric “Getting the Most from Your Welding Retail Opportunity: An Integrated Endeavor” Group Lunch

12:00 pm- 1:00 pm

Women of Gases & Welding Luncheon

At Ballpark Village Dress casually and come with your handshake at the ready! You’ll meet GAWDA leadership and many other members, as well as other first-time conference attendees. The event is designed to be your personal welcome to the association and these conference events.

OPENING SPEAKER

12:00 pm - 1:00 pm

2017 AC First Timers Reception

Grand Ballroom DEF Grand Ballroom ABC

KEYNOTE SPEAKER Marie Ffolkes

President, Industrial Gases, Americas Air Products and Chemicals, Inc.

1:00 pm - 4:30 pm

Contact Midway Area Booth Program*

4:30 pm

Industry Hospitalities

Invitation Only

*Prize Program – Be present to win – 4:10 - 4:30 pm

(*Be sure you check off “first-time attendee” on your Attendee Registration form.)

PRESIDENT’S WELCOME RECEPTION AND DINNER At Ballpark Village – Budweiser Brewhouse Restaurant GAWDA President Ned Lane welcomes all attendees to the Ballpark Village to enjoy a fun sports venue with great views of Busch Stadium. Plan to watch the super-rivalry game between the St. Louis Cardinals and The Chicago Cubs right from the restaurant balcony, or on a 40-foot TV. Wear your favorite sports jersey (or anything red for the home-team Cardinals) and come for drinks, networking and dinner. A full dinner will be served and there will be plenty of time for connecting with colleagues and friends. Transportation will be provided from the hotel to Ballpark Village for the event and back.

WGW COMMITTEE LUNCHEON The Women of Gases and Welding Committee is again hosting its spring conference luncheon, and one of the industry’s own leaders is keynoting the event. Marie Ffolkes, president of Industrial Gases, Americas for Air Products, is addressing the group. Ffolkes joined Air Products in 2015 and heads business and profitability strategies for the company’s largest and currently most-profitable business, with full profit and loss responsibility for both its North America and South America operations. She is charged with driving profitable growth for the company through management of an array of segments: customer relationships, safety, integrity, plant operations, distribution, supply chain, procurement, innovation, sales, marketing and regional operations. Ffolkes heads a team of 5,100 employees located at 271 plants and terminals. There is no charge to attend the luncheon, but delegates who want to participate are asked to be sure to register their plans within the event registration on the GAWDA website or the GAWDA Events App.

Spring 2018 • 69

2018 SMC: Gateway to Progress: People, Process, Plan

Tuesday, May 8 7:00 am - 12:00 pm Registration

7:00 am - 8:00 am

Networking Breakfast

General Business 8:00 am - 11:30 am Session and Speakers

LOCATION Midway Prefunction Area Grand Ballroom A-D

Regency Room

CONTACT BOOTH PROGRAM Union Station Hotel - Midway Area

OPENING SPEAKER Jeanet Wade

Check in at the GAWDA Booth for live updates when prizes are drawn and watch your email for update notifications.

Certified EOS implementer and business consultant Business Alchemist, St. Louis “Hitting the Ceiling; How to Scale and Stabilize Your Business”

GOAL: 100% Distributor Attendance and Engagement

CLOSING PANEL

Jim E. Del Carmen

Partner, Collaborative Strategies, St. Louis Discussion facilitator, “Finding and Recruiting Talent” Del Carmen leads a panel of GAWDA company representatives sharing their actionable ideas and best practices for building great teams.

1:00 pm - 3:00 pm

Tour of Cee Kay Supply (optional)

Off site – Cee Kay Supply (transportation courtesy Cee Kay Supply)

If you plan to attend, please indicate this on your registration form. Also note if you need transportation from the hotel, as this event takes place offsite.

YOUNG PROFESSIONALS FOCUS GROUP GAWDA’s focus group for Young Professionals is designed to answer two strategic questions: What do Young Professionals want from GAWDA? What does GAWDA want from the Young Professionals?

EXHIBITOR SET-UP

Sunday, May 6 Monday, May 7

2:00 pm – 5:00 pm 7:00 am – 1:00 pm

SHOW HOURS

Monday, May 7 Prize drawings

1:00 pm – 4:30 pm 4:10 pm – 4:30 pm

(Note: you must be present to win)

DISTRIBUTORS Take utmost advantage of this concentrated block of time at the SMC by using it to focus on business and to network with suppliers and manufacturers at the Contact Booth Program.

Abydee Butler Moore, GAWDA’s first vice president, is facilitating the session. The goal is to get feedback about the association and its activities from the up-and-coming generation of members.

Our supplier members are important GAWDA partners. GAWDA greatly appreciates their event support, their sponsorship and participation. Distributor attention and attendance is the way to support them right back! At the same time, it’s an investment in your own success. By spending time gathering information, learning about the newest products and services and seeing what new things you can do for your business, it’s time well invested in yourself and your company.

Contact Moore (at abutlermoore@butlergas.com) for more information, and watch your GAWDA Event App and the GAWDA website for updates on the meeting location.

So come, stay the whole time, visit with suppliers, gather information and ideas and remember to sign up to win great prizes! Prize drawings begin at 4:10 pm, and you must be present to win.

70 • Spring 2018

Welcome our speakers!

REGISTRATION AND BADGE PICKUP* Midway Prefunction Area – St. Louis Union Station Hotel Saturday 12:00 pm – 6:00 pm Sunday 7:00 am – 6:00 pm Monday 7:00 am – 5:00 pm Tuesday 7:00 am – 12:00 pm

2018’s SMC speakers will discuss topics that target the needs of management and operations decisionmakers and serve as an idea platform for tactical networking, process-oriented business education and actionable, take-home solutions.

Monday, May 7 Speaker MITCH MILLSTEIN, PH.D.

*Each full delegate will receive a free GAWDA St. Louis commemorative shirt

DRESS AND WEATHER The average high temperature in May is in the upper 70s and lows are in the middle 50s. Attire for all meetings and events during the Spring Management Conference is business casual. There’s special attire for the President’s Welcome Reception and Dinner — wear your favorite team jersey and show your team spirit! He’ll include information from case studies on:

“On Process: Let the Data Lead the Way” Dr. Millstein is associate director of the Center for Business and Industrial Studies at the University of Missouri – St. Louis’s College of Business. He also serves as a faculty member in the college’s Supply Chain Management Department. Millstein will present on the real application of lean process improvement and supply chain management challenges faced by distribution companies, reviewing data as a key step.

• Performance scorecards to set direction and sustain improvements • Streamlining everyday processes such as customer returns • Laying out your warehouse for maximum labor productivity • Reducing mileage in delivery operations while improving customer service • Balancing inventory investment and customer fill rate through inventory optimization.

Trumix® On-Site Gas Blending Our Trumix® Blender Adds Value to Your Gas Management System: • Wide Variety of Blends & Flow Rates • Short Lead Times • Custom Built to Order • Accurate Blend • Automatic Shut Off • No Electricity • No Storage Tanks • Wall Mount or Floor Stand Option

Equally Suitable for Small Mom & Pop Shops or Large Manufacturing Companies Shielding Gas • Food Packaging • Beer Dispense

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Spring 2018 • 71

2018 SMC: Gateway to Progress: People, Process, Plan

Monday, May 7 Speaker

Tuesday, May 8 Speaker

ANDY STAWSKI

JEANET WADE

“Getting the Most from Your Welding Retail Opportunity: An Integrated Endeavor”

“Hitting the Ceiling: How to Scale and Stabilize Your Business”

As the commercial market manager for Miller Electric, Andy Stawski brings his experiences from Walmart corporate, Kimberly-Clark, Dow Chemical and the advertising agency world to this talk. He’ll share key points from his 10 years in commercial welding and from in-field observations of welding distributors’ retail operations. Highlights include shopper insights from 400plus firsthand store visits across North America and six months of in-store shopper interactions, as well as industry best practices and shopper research. Stawski will also speak about understanding how to leverage trends and data to provide welding shoppers with an omni-channel experience, targeting customers where they are to get them into your store and exceeding customer expectations to convert needs and desires into purchases.

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72 • Spring 2018

Certified EOS implementer and co-owner of the St. Louis firm Business Alchemist, Jeanet Wade is a business consultant who helps companies simplify the way they operate their businesses and prompt growth through the use of five leadership abilities. She’ll discuss common frustrations of business leaders, do a high-level review of the five leadership abilities, present actionable tools and summarize how leaders and owners can get a grip on their companies. Through the Entrepreneurial Operating System, she will illustrate a set of timeless business principles and real-world tools to help leadership teams of growth-oriented companies systematically and permanently improve. Wade has helped small and medium-sized businesses across the U.S. and has been part of management and leadership teams at large corporations and small familyowned businesses. She uses her varied experiences to help organizations achieve their visions, get traction and improve team health.

Tuesday, May 8 Speaker JIM E. DEL CARMEN “Finding and Recruiting Talent” Jim Del Carmen will lead a discussion featuring several GAWDA member representatives as panelists. They will share actionable ideas and best practices applications related to building great teams. A partner in the St. Louis consulting firm Collaborative Strategies, Del Carmen has been leading strategic planning efforts since 1997 across multiple industries including professional services, construction, distribution, financial services, manufacturing, technology and notfor-profit organizations. He has a proven track record assisting clients with plans for achieving profitable and sustainable growth. He also leverages expertise in organizational design, recruiting and talent development, family business dynamics and succession planning for the realization of measurable results. Prior to his time at Collaborative Strategies, Del Carmen worked as a consultant for Andersen and as a senior consultant for Ernst & Young.

MUST-SEE HOTEL FEATURES GRAND HALL

With 65-foot ceilings and archways that reach to the sky, the Grand Hall will surround you with frescoes, gold leaf detailing and mosaics. Be sure to see the Allegorical Window, a handmade stained-glass window with hand-cut Tiffany glass features.

3D LIGHT SHOW

A dazzling 3D, projected-light show is held daily, every hour on the hour, from 5:00 pm to 11:00 pm.

FIRE AND LIGHT SHOW

This multi-million dollar musical show takes place at the lake each day at 7:00 pm with breathtaking fire, water and light features. These include a 100-foot-long waterfall and 50 nozzles spraying water 40 feet to the lake. Lights turn the water into a variety of glowing colors accented by icicle lights in nearby trees.

Spring 2018 • 73

2018 SMC: Featured Exhibitors Guide

Guide to

featured

Contact Booth Exhibitors S

MONDAY, MAY 7 1:00 – 4:30 PM

LOCATION: MIDWAY AREA

pring, St. Louis and the SMC. All three are finally here! There’s business information on the docket…and lots of business to be done. There’s no better place for face-to-face information exchange and business dealings than the Contact Booth Program.

So, come for the entire program — and stay through to the end. Distributors connecting with over a hundred suppliers is the name of the game. And the icing on the cake: prizes! There are dozens to win! So, make your rounds, see what suppliers have to offer and stay to the end, because the prize drawings take place between 4:10 - 4:30 p.m., and you must be present to win.

WELDCOA WOLF PACK 2-IN-1 SERIES Aurora, IL — The Wolf Pack 2-in1 Series is designed to be utilized as a dual asset, quickly changing from a gas pack with wheels to a stand pad skid unit within seconds. Sturdy exterior frame comes with double clamps making this gas pack a long-lasting investment. Compliant with DOT guidelines and Shell Off-Shore OPS0055 Standards. https:// www.weldcoa.com/lowpro-wolfpack-2-in-1 See us at booth 313. 74 • Spring 2018

CAVAGNA OFFERS ALLIN-ONE PRODUCT VALVE Somerset, NJ — Cavagna Group’s I-VIPR is an integrated valve and residual pressure valve. Its ergonomic design provides the user with easy access to all primary functions from one side of the cylinder. IVPR is suitable for various welding gases, including oxygen, acetylene and AR/C02 mixtures. www. cavagnagroup.com See us at T101.

ATTC – AMERICAN TORCH TIP MADE IN THE USA Bradenton, FL — American Torch Tip (ATTC) has manufactured quality, American-made products for the welding, cutting and metal fabrication industries, including welding and cutting torches, consumables, parts and accessories. ATTC’s manufacturing facility in Bradenton, Fla., sources and builds products spanning six technology platforms, including Plasma, MIG, Tig, Oxy-Fuel, Laser Optics and Thermal Spray. In addition to its own product lines, ATTC features 16,000+ replacement products for over 100 brands. ATTC has proudly produced American-made goods since 1940. www. americantorchtip.com See us at booth 227.

ROTAREX GAS HANDLING PROCESS Hackettstown, NJ — Serving the industry since 1922, manufacturer of valves, fittings and regulators for compressed gases. Source-to-process solutions for the handling of gas including specialty, semiconductor, corrosive, industrial and medical. Innovator for cylinder valves, line valves, integrated valve-regulators, regulators and fittings in materials such as brass, ASB stainless steel, nickel and Hastelloy. www.rotarex.com See us at T303.

MERCER INDUSTRIES — SOLUTIONS. START TO FINISH R o n k o n k o m a , N Y — Mercer Industries supplies a full line of technologically advanced, superior quality, long-lasting bonded and coated abrasives and diamond blades, as well as industrial files. The Mercer commitment to serving its customers and providing quality products spans over 50 years. Quality, performance, delivery, service and value are the focal points for this third-generation family business. www.mercerindustries.com See us at booth 211. Spring 2018 • 75

2018 SMC: Featured Exhibitors Guide BTIC AMERICA OFFERING INDUSTRIAL AND BEVERAGE CRYOGENIC CYLINDERS

PFERD POLIFAN-STRONG FLAP DISCS Milwaukee, WI — Thanks to its patented and unique flap design, POLIFAN-STRONG flap discs achieve an excellent stock removal rate and an astonishingly longer tool life than conventional flap discs. The POLIFAN-STRONG is available in two different abrasive materials in 36 and 50 grit versions with 7/8” arbor hole or 5/8”-11 threaded options. www.pferd.com See us at booth 404.

Houston, TX — BTIC America Corporation (BAC) is a subsidiary of Beijing Tianhai Industry Co., Ltd., which is one of the best and largest cylinder manufacturers in the world. BAC provides cylinder sales and services. Products include high pressure gas cylinders (DOT/TC and UNISO), acetylene cylinders, cryogenic cylinders, fire-fighting cylinders and SCBA cylinders. www.btic-america.com See us at booth 328.

ACME CRYOGENICS FINAL LINE MANIFOLDS Allentown, PA — Acme Cryogenics is a leading designer and manufacturer of final line pressure control manifolds. Their time-proven brazing, cleaning and testing procedures provide superior results that cannot be matched by any other manufacturer’s process. Let Acme show you the difference! www.acmecryo.com See us at booth 232

Work with Confidence PFERD SOLUTIONS FOR METALWORKING n n n n

Grinding and cut-off wheels POLIFAN® flap discs Power and maintenance brushes Coated and non-woven abrasives

n n n n

Mounted points Files Power tools Carbide burs

TRUST BLUE PFERD INC., 9201 W. Heather Ave., Milwaukee, WI 53224 Phone: (262) 255-3200 n Toll-Free: (800) 342-9015 n Email: sales@pferdusa.com

76 • Spring 2018

DATAONLINE INTRODUCES ENHANCED SYSTEMS New Providence, NJ — DataOnline, serving the industry for nearly 30 years, currently manages over 200,000 remote assets in 65 countries. This year DataOnline proudly introduces newly enhanced and more economical systems for Bulk, MicroBulk, and Beverage CO2 tanks. These redesigned units deliver reliable monitoring without sacrificing our standard of quality and repeatability. See us at Booth 119.

3M—AN UNBEATABLE COMBINATION OF PERFORMANCE AND VALUE St. Paul, MN — The newest faces in metal grinding and cutting are the 3M Silver Cut-Off Wheel and Depressed Center Grinding Wheel. They give you the long life and fast cut of 3M Precision Shaped Grain at an unbeatable value. Also, check out newest 3M Speedglas ™ Welding Helmets, 3M Adflo Purifying Respirator and 3M Silver products. www.3m.com/speedglas See us at booth 310.

WESTERN ENTERPRISES SETS THE STANDARD Westlake, OH — Western Enterprises sets the standard in quality and safety for welding and gas distribution applications. With quality, reliable, made-in-USA gas fittings, quick connects, flash arrestors, regulators, pigtails and manifolds. Western offers a full line of products for every gas management and control application! www.westernenterpries.com See us at booth 216.

To Meet or Exceed the Most Rigorous Global Standards,

The Gas World Turns to

Weldship

Experience • Knowledge • Performance Tube Trailers, ISO-Containers, CO2 Transports, Ground Storage Modules For superior product quality and performance, call on Weldship! We have met virtually every global standard or code, and have the engineering, technical and manufacturing experience to assure you the right size and configuration for your gas product transports and containers. Weldship is now ISO 9001 Certified. All of our products are available for lease or purchase. In addition, we provide a complete testing service for required w w w. w e l d s h i p . c o m container certification. Contact us today to keep your product safe, your fleet 225 West Second Street • Bethlehem, PA 18015 • P–610 861 7330 moving… and your profits rolling! 75 East Main Street • Westboro, MA 01581 • P–508 898 0100 1310 Highway 82 West • Gainesville, TX 76240 • P–940 668 1777

ISO 9001 CERTIFIED Spring 2018 • 77

2018 SMC: Featured Exhibitors Guide SUPERIOR PRODUCTS

EXECUTIVE FILLER METALS Buffalo, NY — For over 20 years Exocor has focused on providing high performance welding filler metals to distributors in North America. The Executive brand of stainless steel, aluminum, nickel, mild steel and low alloy filler metals are complemented by industry leading technical knowledge, service and support. New distributor partners wanted in key geographies. www.exocor.com See us at booth 238.

Cleveland, OH — Superior Products will showcase an expanded product offering of Semi-Automatic Manifolds and manifold systems, new quick connects for welding equipment, an all-purpose propane torch, test gauges with bleeder valves and more! Spend time with us to learn why more distributors are switching to the Superior brand of products. www.superiorprod.com See us at booth 319.

NEW CHART ORCA C02 MICROBULK DELIVERY SYSTEMS Ball Ground, GA — For years, Chart has provided the finest MicroBulk delivery units for atmospheric gases and is now offering the Orca system in CO2 service with similar features. Designed to fill the Carbo-Mizer® and Carbo-Max® Bulk CO2 Systems and the Perma-Max™ MicroBulk CO2 Storage System, the Orca CO2 unit will provide you with a safe, efficient and reliable delivery unit for years to come. www.chartindustries.com See us at booth 105.

The Executive brand of Filler Metals Stainless Steel - Carbon Steel Nickel Alloys - Aluminum

Doing the common uncommonly well Providing high quality filler metals in North America since 1997.

BUFFALO, NY

78 • Spring 2018

888.317.2209

EXOCOR.COM

PRECISION SPECIALTY GAS PRODUCTS: ONE STOP SHOP

SHERWOOD VALVE EXPANDS PRODUCT OFFERINGS Washington, PA — Sherwood continues new product development of valves for medical gases, calibration gases and specialty gas applications to be released in 2018. Stop by the Sherwood booth to learn more about our current products and find out about our custom design capabilities. Sherwood provides American-made quality products and service you can trust. www.sherwoodvalve.com See us at booth 406.

Aurora, IL — Precision Specialty Gas Products, a subsidiary of Weldcoa, can help you prepare a budget, design a facility, manufacture the equipment, install the fill systems, train your people and support your business long term with proper documentation and validation of your equipment. www. weldcoa.com/specialty-gas-equipment-and-automation See us at booth 315.

ORS NASCO - EXPERIENCE THE VALUE OF WHOLESALE Muskogee, OK — ORS Nasco is a single-source wholesale provider with access to more than 200,000 premium branded products from over 600 manufacturers in the industrial, welding, safety, energy, electrical, construction, janitorial, HVAC, MRO, plumbing and rental markets. www.orsnasco.com See us at booth 346.

Spring 2018 • 79

2018 SMC: Featured Exhibitors Guide FLEXOVIT USA, INC. FEATURES HIGH PRODUCTIVITY ABRASIVES FOR POWER TOOLS Angola, NY — Flexovit USA, Inc. is a U.S.-based manufacturer of high productivity abrasives for portable power tools. Flexovit operates a 100,000 sq. ft. ISO certified factory, four sales and distribution centers and deploys a team of technical sales representatives to provide support to abrasive users through a selective network of authorized distributors in the U.S., Canada and Mexico. www.flexovit.com See us at booth 330.

GULLCO – 300 SERIES KAT Cleveland, OH — The Gullco 300 Series KAT is small and light yet robust with many features which include: tool-less setup adjustment and operation, “click-click” self-aligning wheels for simple and quick installation, dynamic dovetail racking for versatile torch positioning, ingress protection including conformal coating of circuit boards, energy efficient with low electricity consumption and an “OSHA Safety Orange” paintjob. See us at booth 402.

AMWINS HAS DELIVERED FOR OVER 25 YEARS Charlotte, NC — Distributors have entrusted their insurance investment to AmWINS Program Underwriters for over 25 years. With specialized coverages, competitive pricing, INSURANCE PROGRAM loss control, strong claims management and now cyber liability, you cannot afford not to ask your agent about AmWINS. Contact us today to learn how your business can benefit from AmWINS Program Underwriters. www.amwins.com. See us at booth 212.

INSURANCE PROGRAM

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Have your agent or broker contact us today for: Property, Casualty, Auto, Excess, Fumes Coverage and more!

Ashley Morrow 704.749.2721

Competitive rates and pay plan options! 80 • Spring 2018

Now offering Cyber Liability coverage in package!

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KAPLAN INDUSTRIES PROVIDES TOTAL SOLUTIONS Harrison, OH — More than just an industrial cylinder supplier, Kaplan Industries offers a w i d e p o r t f olio of services. Executives will discuss all our cylinder products and services including our new Hydrocarbon offering for the medical cannabis industry, cradle manifold systems, liquid and propane offerings, medical and beverage options including cylinder reconditioning and both hydro and UT testing. No one inventories a more complete line of cylinders and valves for compressed gases, offering both new and refurbished cylinders. www.kaplanindustries.com See us at booth 205.

CONTROLLED EFFICIENCIES, LLC – TECHNOLOGY MAKES THE DIFFERENCE Goodlettsville, TN — Controlled Efficiencies, LLC (CE) offers innovative solutions that simplify the intricacies of compliance, designed for government-regulated industries. Our Electronic Records and Electronic Signature CERES Program is used for FDA production documentation and tracking for medical gases — oxygen, nitrogen and nitrous oxide with more gases to come. Contact 615-206-8765 or www.CESimplify.com. See us at booth 106.

CGW INTRODUCES E3 GREEN GRINDING WHEELS Niles, IL — CGW’s E3 Green Grinding Wheels have high performance grains for superior metal removal while providing a smooth/easy operator experience. E3 wheels are excellent for blending/contouring and tig welds. www.cgwcamel.com See us at booth 206.

Reduce your daily grind. FREE CNC Plasma Troubleshooting Guide 4 10 Common CNC Plasma Cutting Problems 4 39 Real Solutions

Lessen HighSpeed Dross (page 3)

Visit ATTC.us/plasma-troubleshooting-7 or scan the QR code for your free download.

Spring 2018 • 81

2018 SMC: Featured Exhibitors Guide

GAS INNOVATIONS – NEW OFFERINGS TO DISTRIBUTORS LaPorte, TX — Gas Innovations offers its High-Pressure Tube Modules “Our Competitive Advantage” to distributors. Distributors may rent, lease or buy for supplying air, argon, carbon monoxide, ethane, ethylene, helium, hydrogen, methane and nitrogen. Gas Innovations will help distributors identify opportunities for short-term projects, temporary supply, pipeline interruption, etc. www.gasinnovations.com See us at booth 338.

PRISM VISUAL SOFTWARE SERVING GAS DISTRIBUTION FOR OVER 20 YEARS Port Washington, NY — Prism Visual Software sells back office, CRM, mobile Android delivery and customer web shopping software to support a welding supply distributor’s end-toend technology needs. Prism Route Management Dispatch Suite sells with a fully integrated Accounting ERP or integrates with QuickBooks, Microsoft Dynamics and SAGE. Supports fill tank, cylinder exchange workflow with scanning, gas and hard goods inventory control, rental billing, mobile invoice for delivery and equipment service, electronic survey and DOTs, and more. www.prismvs.com See us at booth 218. 82 • Spring 2018

SELECT-ARC SETS THE STANDARD OF EXCELLENCE IN TUBULAR WELDING ELECTRODES Fort Loramie, OH — Select-Arc, Inc. manufactures a complete line of premium quality flux-cored and metal-cored welding electrodes: carbon steel, low alloy, stainless steel, nickel alloy and hard surfacing. The company backs its exceptional welding wire products with outstanding service and the best value-added in the industry. Select-Arc sets the standard of excellence in tubular welding electrodes. www.select-arc.com See us at booth 509.

MCDANTIM—TRUMIX® GAS BLENDERS Helena, MT — McDantim Trumix® Gas Blenders are a unique approach to accurate, on-site gas blending. Using laminar gas flow properties, they maintain industry standard accuracies over a wide range of flow rates without buffer tanks or electricity. Two or three-component blends available at flow rates ranging from 1 SCFH to over 4,000 SCFH. www.mcdantim.com See us at booth 215.

TOMCO2 SYSTEMS – WORLD LEADER IN CO2 PRODUCTS AND SERVICES Loganville, GA — TOMCO2 Systems has established itself as the world leader in the CO2 industry. Packed by extensive experience in Storage Vessels, Transport Vessels, Special Applications, Parts and Services, while designing, fabricating, servicing, installing and inspecting turn-key solutions to fit any CO2 application need. Technicians are available 24/7 to ensure equipment delivers maximum efficiency, allowing Industrial Gas Distributors to provide additional value to their customers while minimizing expenses. See us at booth 327.

CYL-TEC IS YOUR ONE RESOURCE FOR THE COMPRESSED GAS INDUSTRY Aurora, IL — One resource, zero headaches. Cyl-Tec is the one-stop solution for compressed gas cylinders, liquid cylinders, small bulk, bulk and accessories. Stop by our booth to learn how we can assist your business through our extensive inventory of in-stock items. www. cyl-tec.com See us at booth 348.

FIBA EXECUTIVES TO HIGHLIGHT PRODUCT LINE Littleton, MA — FIBA serves industrial and specialty gas distributors and manufacturers. FIBA manufactures and repairs transport, storage and filling equipment, including DOT, ISO and ASME pressure vessels, tube trailers, ISO modules, ASME and DOT receivers, bulk transporters and tanks, oil field equipment and vaporizers. FIBA provides ultrasonic, acoustic emission and hydrostatic requalification of pressure vessels. www.fibatech.com. See us at booth 213.

WORTHINGTON INDUSTRIES LEADING WITH EXPERTISE Columbus, OH — Worthington Industries is the leading manufacturer of pressure cylinders and related products for industrial, alternative fuels, oil and gas, and consumer products markets. Our steel, aluminum and composite cylinders, cryogenic vessels, storage tanks and specialty components serve more than 4,000 customers in 70 countries. www.worthingtonindustries.com/igas. See us at booth 344.

SAFTCART EXECS DISCUSS LATEST OFFERINGS Clarksdale, MS — SafTCart, a “Made In The USA” manufacturer, will discuss their latest innovations including the Aluminomics Trailer for efficient cylinder delivery. They will further be on hand to discuss the warehouse-friendly box cart line and employee-friendly cylinder delivery systems. www.saftcart.com. See us at booth 209.

A RECOGNIZED LEADER IN

TECHNOLOGY, INNOVATION & EXPERIENCE

FIBA Technologies, Inc., a family owned business, has provided the finest quality gas containment equipment and services to our global customers for three generations. That’s because we have an established set of credentials and capabilities that make us uniquely qualified.

Our Quality is Recognized Worldwide!

FIBA Technologies, Inc. | 53 Ayer Road, Littleton, MA 01460 Phone: 508.887.7100 | Fax: 978.742.4908 | www.fibatech.com FIBA = SAFETY, QUALITY & INTEGRITY Spring 2018 • 83

2018 SMC: Featured Exhibitors Guide SUMIG— USA FAMILY OWNED AND OPERATED LEADING MANUFACTURER

METAL MAN WORK GEAR CO. INTRODUCES INNOVATIVE WELDING CABINET/CART

Orlando, FL — Specializing in welding guns, torches, equipment and welding robotic systems, SUMIG’s customer-centric approach is what leads them to the top. Their knowledgeable sales team and dedicated agents work directly with distribution to fit the right products to the right applications. Quality, technology, support and trust: through these concepts SUMIG will continue to help their customers grow and succeed. www.sumigusa.com See us at booth 333.

Appleton, WI — Well known for innovative ideas for welding accessories, Metal Man Work Gear Co. has recently introduced a new welding cabinet/cart. The Metal Man TTWC3 Welding Cart/ Cabinet is designed to accept most brands of small light industrial welders. It has an on-board cylinder rack designed to hold shielding gas cylinders up to 7 ½ -inch in diameter. It incorporates a locking cabinet door to help secure valuable accessories, such as an auto darkening welding helmet. www.metalmangear.com See us at booth 124.

ARCOS SHOWCASES LINE Mt. Carmel, PA — Arcos Industries, LLC manufactures a comprehensive line of superior quality bare wire, covered and tubular welding electrode products. Our wide range of consumables includes high alloy, stainless steel and nickel alloy electrodes. Arcos electrodes meet or exceed demanding military and nuclear application specifications such as: ASME Nuclear Certificate #QSC448; ISO 9001: Certified; Mil-I 45208A Inspection; and Navy QPL. www.arcos.us See us at booth 507.

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PHOENIX INTERNATIONAL SHOWCASES NEW PRODUCT FROM THEIR SAFETUBE PRODUCT LINE Milwaukee, WI — Phoenix International is best known for its durable Dryrod ovens. Current products include electrode ovens, flux ovens and Safetubes. The Milwaukee-based company is marking its 125th anniversary in 2017. They are proud to announce a new product in their Safetube product line. This new rack will hold three 14” or 18” Safetubes. www.phoenixcompany.com See us at booth 223.

ONE OF MANY WELDING / TRAINING SCHOOLS WORLDWIDE THAT RELY ON

ANTHONY CARTS.

WEH TECHNOLOGIES OFFERS SOLUTIONS Katy, TX — The original, previously private labeled WEH Quick connectors are German made, certified, well proven, highest quality tool and now serviced in Texas. Improve safety, reliability and quality of your compressed gases filling plants with this long-lasting tool. A worldwide operating, privately owned, family company dedicated to eliminating all repetitive thread connections. www.weh.us See us at booth T405.

NEW WELDSHIP SUPER MAX JUMBO HYDROGEN TUBE TRAILER Bethlehem, PA — Weldship announces production of the Super Max Jumbo Hydrogen Tube Trailer fitted with nine 42-ft. UN/USA ISO11120, 178 bar (2580 psig) seamless steel tubes for embrittling gas service. This trailer will transport the largest hydrogen payload of any seamless steel tube trailer that meets U.S. DOT weight regulations. Carries a 10-year retest period. www.weldship.com See us at T409.

anthonycarts.com 877.721.7211 Spring 2018 • 85

2018 SMC: Featured Exhibitors Guide VEITE CRYOGENIC North Ridgeville, OH —Veite Cryogenic Equipment and Service (VCE) manufactures, installs and maintains custom, high-pressure cryogenic gas delivery systems and turnkey compressed gas distributor fill plants for industrial gases. Veite also offers a complete line of quality tested cryogenic hardware and equipment, including transfer pumps, available for same day shipment. www.veitecryogenic.com. See us at booth 109.

ABRASIVE SOLUTIONS POWERED BY NORTON, INSPIRED BY YOU Worcester, MA — Norton knows that you run a complete operation, and you expect complete solutions. Whether you are preparing materials for welding, grinding after the weld or blending the work piece to achieve the finished your customers demand, Norton offers the products you need to make it happen. Abrasive solutions powered by Norton, inspired by you. www.nortonabrasives.com See us at booth 122.

CRYOWORKS SPECIALIZES IN COMPLEX SYSTEM DESIGN Jurupa Valley, CA — From a simple flex hose to an entire complex piping system, CryoWorks provides a wide range of new and used products for the storage, distribution and transfer of cryogenic fluids. They specialize in “complex” system design, engineering services, project management, repairs, service and turnkey installations. www.cryoworks.net See us at booth T411.

TAYLOR-WHARTON – LEADER IN HIGH-QUALITY LIQUID CYLINDER PRODUCTS

ORSNA SCO.COM | 800.678 .6577

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Taylor-Wharton produces a comprehensive range of cryogenic storage equipment for Industrial Gas, Life Science and LNG applications. Products include Atmospheric Bulk Tanks, MicroBulk Vessels, Liquid Cylinders, Beverage Carbonation, VJ C02 Tanks, Hydrogen Vessels and Mobile Delivery Units. Tracing its roots to 1742, TW celebrated its 275th Anniversary in 2017. www. twcryo.com See us at booth 327.

THE HARRIS PRODUCTS GROUP OFFERS SPECIALTY GAS EQUIPMENT

LINCOLN ELECTRIC CO. WILL NETWORK WITH DISTRIBUTOR PARTNERS Cleveland, OH — With more than 200 technical representatives and field sales support personnel, Lincoln Electric strives to assist distributor partners as they meet end-user needs with application expertise, quality products and outstanding customer service. www.lincolnelectric.com See us at booth 322.

Mason, OH — The Harris Products Group offers a full line of specialty gas equipment. We manufacture high purity bar stock regulators available in stainless steel, brass and chrome plated. In addition to regulators, Harris offers complete gas management products for flow control, gas purification and cylinder storage. www. harrisproductsgroup.com See us at booth 320.

ASM - AMERICAN STANDARD MANUFACTURING – PROVIDING OVER 27 YEARS OF EXCELLENCE Central Bridge, NY — ASM has provided over 27 years of excellent customer service and outstanding product quality. They continue to manufacture high-pressure and propane cylinder storage and merchandising cabinets for both industrial and commercial use, along with a variety of ergonomic cylinder-handling devices. www.amrstd.com See us at booth 340.

RATERMANN OFFERS NEW CRYOGENIC PRODUCTS, LABELS, AND MORE Livermore, California — Ratermann Manufacturing is excited to announce our new Cryogenic Catalog that includes our new Worcester product line, along with showcasing our TW industrial liquid cylinders, our Arctic Fox Cryogenic Tanks 1500L-6000L, our label division offerings, and more. Ultimately, Ratermann Manufacturing believes that we are 100 percent accountable for each customer order. Because of that commitment, we care for and manage every order, from beginning to end. www.rmimfg. com. See us at booth 300. Spring 2018 • 87

2018 SMC: Featured Exhibitors Guide ANTHONY WELDED PRODUCTS LOADN-ROLL SERIES CARTS

CTR INC. SHINES SPOTLIGHT ON THEIR LIQUID CYLINDER POLISHER Rock Hill, South Carolina — CTR of the Carolinas Inc. has released their latest version of their Liquid Cylinder Polisher. It removes debris, scratches, and scuffs returning the cylinder back to like-new condition. It accommodates most standard cylinders. CTR Inc. has been a premier cryogenic provider for over 20 years. www.ctrinc.com See us at booth T129.

88 • Spring 2018

Delano, California — Anthony is excited to attend another GAWDA conference with a couple of cutting-edge products to show, one of which is the new patented Load-N-Roll cart line. This four-wheel design revolutionizes the way cylinders are handled. Scan the QR code above for a quick video about the LoadN-Roll series carts. www. anthonycarts.com See us at booth 225.

AMERICAN CAP COMPANY PROVIDES CUSTOMERS WITH HIGH QUALITY FOR 30 YEARS! Wheatland, Pennsylvania — American Cap Company is celebrating 30 years of providing customers with high quality cylinder caps, valve guards, neck rings, and other cylinder related components. Our products are designed to meet CGA, CSA, DOT, ISO and EN standards. ACC is API-5CT, API-Q1 and ISO 9001:2008 certified. www. americap-mfg.com. See us at booth 214.

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HUMAN RESOURCES

How To Hire Superstar Sales Reps — Without Fail — Each and Every Time by mike lorence, ph.d.

ou’re about to digest a very meaty article with a ton of actionable strategies regarding the hiring of superstar sales reps, but this information is not for the faint of heart. Let’s start by asking these questions: Are you motivated to hire superstar Dr. Mike Lorence is a world thought leader in hiring and managing sales people. He’s also a professional speaker, author and general partner of Magnolia Buyout Partners, a boutique private equity firm focused on acquisitions of privately held businesses in the micro market. You can reach him at: Path for Growth, mike@pathforgrowth. com.

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salespeople in your gas business? Are you the main ‘rainmaker’ for your business? Have you hired salespeople in the past that turned out to be duds? Do you want to extract yourself from the day-to-day selling activities in your business? If your answer is yes, read on … but first, let me introduce myself. I’m Dr. Mike Lorence. I’m regarded as the nation’s foremost expert on building and growing a high-performing sales force from scratch. I published the most widely read doctoral dissertation on this topic, and that research has been used in 27 countries. I speak about it some 40 times a year to a range of business groups. I’m not an “HR Guy” or a consultant. Like you, I’m a practitioner and business owner. I also understand that none of that is important to you unless I can teach you something to drive bottom-line profitability in your business. That’s my goal here. My methodologies were learned in the trenches, and I use them in my own portfolio companies. I estimate conservatively that I’ve invested well over $3 million in a learning curve creating them, so I can say that they work. But, they’ll only work if you actually implement them.

BITTEN BY THE BUG OF MEDIOCRITY

Chances are that if you’ve ever hired any salespeople in your business, you’ve been bitten by the bug of mediocrity. Many business owners have tried to hire salespeople and have failed; some have failed miserably. Some entrepreneurs are so scared from such an experience they never hire another salesperson again. Resolute in their “no one can sell like I can” mentality, some owners dump hundreds of thousands of dollars in cash right down the toilet with this kind of stinky thinking. My strategies are designed to inoculate you from such a fate. First, you need to know just how bad the current state of the art is regarding the hiring of sales reps. (And yep, it’s bad). First is this statistic: 18 percent. That’s the average success rate for hiring successful salespeople. So for every 100 salespeople hired in a small business, only 18 percent of them actually meet quota in their first year on the job … and the other 82 percent fail. That’s miserable.

THE INCONVENIENT TRUTH OF 7X

Then there’s the inconvenient truth of 7X. I say that 7X is the average cost of mis-hiring a salesperson. It means that if you hire a dud salesperson, you’re actually suffering a financial impact of seven times the first-year quota of that dud. If you hire a new salesperson whose first-year quota (i.e. the amount of revenue he must sell) is $150,000, but he doesn’t meet that quota, you’ve just blown seven times that amount — $1,050,000. That includes lost opportunity cost, training a replacement, lost productivity, leads that go cold, leads he should have already converted and a host of other ill effects.

So how the heck do you hire the best? How do you land a 23-year-old Zig Ziglar? Is it art or science? Is there a secret formula?

before you even conduct the first interview. You’ve got to put together a Super Star Game Plan that will include a compensation plan and what I call the One-Page Job Scoreboard.

ART OR SCIENCE?

THE SECRET SAUCE

The research is pretty clear: It’s science, and a lot of it. I’ve distilled that information into my own process for hiring superstar sales reps. Here it is: 1. Document the Super Star Game Plan 2. Turn On Direct Response Recruiting 3. Reject the Candidate (do it with a straight face) 4. Make Candidate Jump Through (Many) Hoops 5. Pick the Superstar and Onboard

BEFORE THE FIRST APPLICANT EVEN APPLIES

As a 20-year-old second lieutenant in the Marine Corps, I was introduced to the Principle of Bloody Preparation. My company commander believed that it’s far easier, cheaper and less painful to sweat in peace than it is to bleed in war. In fact, the more blood, sweat and tears we shed in peace, the more we make our enemies shed their blood in war, he taught. At the time, I thought he was a wacko. He had us working 5 a.m. to 11 p.m., six days a week and running in full “boots and utes,” and not on roads, but underground in the sewer drains. He was meticulous in his preparation — even brutal in his approach — and he illustrated a great lesson about hiring salespeople. It’s that the majority of heavy lifting is done well

How do you attract the right person who will actually perform at a high level? You need a great compensation plan as the backbone of your Super Star Game Plan. But I find that most small -business owners suffer from a crippling disease that prevents them from installing an effective compensation plan in their business: BMBID. It stands for: “But, My Business Is Different.” My goal is to get you over your bias about that, because no, your business is not different. Here is the secret sauce for compensation plans that drive results (I call it “Dr. Lorence’s 5 Commandments of Compensation Plans”): 1. Thou shalt have a very sexy comp plan 2. Thou shalt pay based upon results 3. Thou shalt use the right pay drivers 4. Thou shalt pay based upon activities 5. Thou shalt use your comp plan in your recruiting Your comp plan must scream “big opportunity” with high earning potential. That’s sexy. Your recruiting ad must reach out to that prospective salesperson, grab them by the throat and compel them to read your ad. Better yet, it should make sales candidates salivate (not yawn). (There’s a sexy recruiting ad later in this article.) Spring 2018 • 91

HUMAN RESOURCES PAYING ON WRONG RESULTS

I find that most business owners pay salespeople on the wrong results. The most common comp plan pays on percent of revenue or gross margin. (For example, Sally Salesperson sells a $5,000 widget. She gets paid 25 percent of gross margin — $1,500 x 25 percent = $375.) That’s OK; you can do that, but it’s only half of the story. You need to keep Sally on track and focused day-to-day so she actually meets quota. That’s why you could set her comp plan to also pay her a fixed bonus for every meeting conducted with a decision maker. That’s an important leading indicator for revenue. Or, pay her based upon outbound call volume (called activity-based pay). Activity-based pay helps align the day-today activities of the salesperson with revenue production. That helps monetize the sales rep’s talent in the most efficient way. Using the right pay drivers keeps the salesperson motivated in both the short and long term. And the shorter your sales cycle, the more incentive comp (i.e. commission) and the less base salary your sales rep should get paid. Assuming you’ve got decent predictable lead flow, if your sales cycle is fewer than 30 days, I’m in favor of 50 percent commission, 50 percent base salary as a general rule. If your sales cycles are more than six months, your salesperson may starve at 50 percent

commission/50 percent base. You’d need to ratchet down the commission and increase the base. Alternatively, you could pay a lot more incentive comp for activities (which I prefer). Be sure to use your compensation plan in your recruiting process — after the candidate has jumped through a few hoops in your hiring process (more about hoops in the next article).

ULTIMATE WEAPON: SCOREKEEPING

Once the comp plan is set, you need to clearly define expectations. My One-Page Job Scoreboard shows, with great specificity, the results we expect. It essentially brings the compensation plan to life by showing how we keep score every day. This tool is exceptionally effective for the small-business owner because it removes all the bellyaching over performance reviews with salespeople (and everyone hates those). Its elegance lies in its power to change behavior. The sales rep conducts his/her own performance review using the One-Page Job Scoreboard. A rep actually comes into the performance review meeting (I recommend them to be done monthly, minimally quarterly) with the One-Page Job Scoreboard already filled out. You, the business owner (or your sales manager), do no prep for that meeting; all the onus is on the salesperson.

THE SCOREBOARD EXPLAINED This scoreboard breaks down the quantitative metrics that define success. It has three parts: financial metrics, activity metrics and recruiting metrics. This table shows examples. TYPE OF DRIVER

DIRECTIONAL INDICATOR

COMPENSATION DRIVER

HOW SALESPERSON IS PAID

Financial

Lagging

Gross margin

25 percent of gross margin dollars sold

Financial

Lagging

Gross revenue

5 percent of revenue dollars sold

Activity

Leading

Phone dials

$500/month bonus when average daily outbound phone calls exceed 30

Activity

Leading

Appointments booked with decision maker

$15/booked appointment

Activity

Leading

Presentations made

$50/completed presentation

Activity

Leading

Data acquisition

$2/completed record entered into the CRM system (name, email, direct phone and business address)

Activity

Leading

Recruiting

$2,500/every sales rep you refer to us, who gets hired and who meets first-year performance expectations

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HUMAN RESOURCES By the way, that $2,500 recruiting bonus is way too low, but I typically get gasps from people when I suggest they do this. I pay a $10,000 bonus to my salespeople for every person they refer us. It’s a no-brainer, cashflow-positive investment — because I don’t pay the bonus unless the referred, newly hired salesperson meets their first-year, One-Page Job Scoreboard metrics. And if a sales rep does that, he or she is worth well more than $100,000 to me. Plus, the referral bonus turns my staff into full-time headhunters for me, and it lowers talent acquisition costs. The research is very clear: superstars attract superstars; duds attract duds.

METRICS BREAKDOWN

Financial metrics are generally revenue production metrics; examples are revenue sold, gross margin dollars sold, etc. Those are lagging indicators of performance. Lagging indicators don’t tell you anything about the future health of your sales pipeline or what your revenues may be next month, or next quarter. You need leading indicators for that. Activity metrics are leading indicators. Examples include outbound call volume, appointment setting, presentations made, salespeople referred and closing rate.

My One-Page Job Scoreboard shows, with great specificity, the results we expect. It essentially brings the compensation plan to life by showing how we keep score every day. The compensation plan and the One-Page Job Scoreboard comprise the Super Star Game Plan and are the foundation for building a sales team. Now, we can turn to a recruiting system. (Don’t fall into the trap of just turning on the Zip Recruiter ads, hoping and praying to get good salespeople.)

WHAT IS DIRECT RESPONSE RECRUITING?

I’m a student of direct response marketing, the science of getting people to respond to your advertisements and then measuring them. This measurement allows you to split-test headlines, offers and pricing. It’s the only way to scientifically prove which marketing works and which doesn’t. Years ago, I started applying direct response principle to

Spring 2018 • 93

HUMAN RESOURCES recruiting salespeople, because recruiting is fundamentally a scientific marketing activity. It turned out to be a major breakthrough. It requires that you have compelling “bait” to attract a superstar sales rep and that you measure the responses. Here are some best practices for writing recruiting ads for salespeople. The ad must: • Include a compelling headline (use headline formula) • Repel the wrong candidates and attract the superstars • State the earnings potential in the first three sentences • Give a clear call to action, get a candidate to opt in (i.e., give you their name and email). As an example, the headline of my best-performing ad says something like: For Sales Superstars Only, Do Not Apply For This Opportunity Unless You Have What It Takes To Be A Top Producer. Then: Warning: We don’t hire resumes. We hire results. Average salespeople earn $38,000; superstars can earn $167,000. But we’re not going to hire you unless you can prove to us you have the work ethic, drive and determination to be a top producer. Young or old, if you’ve got the stuff of greatness, we’ll know. Send an

Want to ask email to salesstars@ Dr. Mike a question yourdomain.com or about anything you visit www.wehireread? Submit your onlysuperstars.com questions at: to take the first step. bit.ly/2HPMvOF Let’s decon(part of a survey struct that ad for on salesforce building) critical take-aways. 1. Rejection. I reject the candidate right in the ad copy to help screen out those who won’t work hard. I want good-quality leads, not duds. 2. Federal compliance. The ad complies with federal EEOC regulation per age discrimination. Headhunters for salespeople hire salespeople who are young. Especially in the tech world, hiring young, technology-savvy salespeople is vogue. However, Uncle Sam wants you to give a fair shot to applicants of all ages. (I found that when I added the phrase “young or old, if you’ve got the stuff or greatness, we’ll know,” it

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94 • Spring 2018

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HUMAN RESOURCES

of production (point to it on the comp plan), which means actually increased the ad response rate. So, not only you’ll actually earn more than $167,000. I’ll be straight up does it insulate us from an age-discrimination suit, with you. It’s not going to be easy. If it was, everyone would it makes my ad perform better. Score!) earn $167,000. So, you’ll have to work hard. So, are you the 3. Sexy opportunity. The $167,000 number screams type of top producer who is actually going to put the work in, out to top performers. (And yes, this is a completeor are you going to be the negative naysayer who complains ly legitimate number. We model several different every step of the way and doesn’t make quota? compensation scenarios and we prove to candidates what they need to do to earn that kind of money per 4. Call To Action. There’s a clear call to action in the ad, year.) Notice that the earnings range discloses what and the candidate is given two ways to respond: via average sales reps make AND what superstar sales email or by going to a website. Providing than 106-8212 1/4 pg. 4C _3.375 x 4.375_Welding & Gasesmore Today_Jan. 2017 reps make. My experience tells me that you must one response mechanism tends to increase the response state a top-end earnings potential; still, you’re not rate, which drives the cost per candidate down. guaranteeing they earn it. We’re completely aboveWith candidates’ names and emails, we turn on an autoboard with all of this. mated email sequence and drip on that candidate over time, During the interview, the hiring manager puts the Onewhich drives them into our recruiting funnel. Page Job Scoreboard and the comp plan in writing and In the next issue of this magazine, I’ll cover the last two reviews it with the candidate, using this script: steps of this recruiting system: 5. Make Candidate Jump Through (Many) Hoops Here’s how it works. If you engage in these activities, 6. Pick the Super Star and Onboard. make this many phone calls, set this many meetings, use the scripts we’ve provided and master the objection-handling I look forward to the next issue and to describing how the system we’ve developed, you’ll achieve roughly this level rest of this system works.

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HUMAN RESOURCES

Changing Workplace Dynamics and The Great Generational Shift Employers Face A Whole New World of Emerging Employment Trends by bruce tulgan

E Bruce Tulgan is an adviser to business leaders all over the world and a sought-after keynote speaker and seminar leader. He is the founder and CEO of RainmakerThinking Inc., a management research and training firm. He is the best-selling author of numerous books, including Not Everyone Gets a Trophy and It’s Okay to be the Boss. You can follow him on Twitter @BruceTulgan, or visit his website, www. rainmakerthinking.com.

mployers in 2018 are scrambling to adjust to a new normal of change and uncertainty driven by an environment of regular, yet unpredictable and often wild, market fluctuations. Indeed, that scramble has been picking up steam every year since 1993, when we at RainmakerThinking began tracking the current generational shift. The changes we’ve been tracking are coming to fruition, maturing everywhere we look. The worldwide business environment of perpetually high risk, constrained resources and fierce competition puts constant pressure on employers to remain lean, flexible and high performing. Despite the pressures constraining employer resources, employers are struggling to attract, motivate and retain the best young talent –– even as they watch their oldest, most-experienced employees ride off into the sunset. This leaves business leaders asking how they can possibly square their business needs with the increasing widespread workforce expectations and demands for greater flexibility in work conditions and career paths.

“ONE SIZE” IS GONE The workplace of the past was based on onesize-fits-all, long-term, hierarchical employment relationships in which employees worked exclusively for one employer in exchange for job security and long-term vesting rewards, such as pensions. Nowadays, the workplace revolves around short-term, transactional employment relationships, and there is no going back. Because organizations will need to continually increase productivity, quality and cost-effectiveness, employment relationships will become increasingly 96 • Spring 2018

short-term, transactional and highly variable. The traditional employer-employee relationship will finally fade away.

HERE’S THE FUTURE What does the workplace of the future look like? It is lean, high-performing and incredibly flexible. Any work that can be streamlined is streamlined. That’s done through highly efficient labor production: part-timers, short-termers, consultants and vendors. These positions can be staffed-up quickly and staffed-down just as quickly. There are many fewer long-term, traditional employee roles. There are many more people who flow in and out of the organization in highly variable roles and arrangements. It is true that some people do come to work whenever they feel like it and bring along their dogs. But those people are given that flexibility in exchange for doing great work –– delivering on-time, high-quality results with few errors (or whatever the particular performance benchmarks may be). Flexibility and accountability go handin-hand where those superstars are making their valuable contributions every day. And when they fail to deliver, they don’t get rewarded in return. They don’t get to keep coming to work whenever they feel like it (and must leave their dogs home) until their next big demonstrable success.

CORE TALENT GROUPS In the future workplace, the most effective employers build and maintain small, powerful core groups of key talent. They also manage fluid talent pools in order to maintain long-term, flexible employment relationships. Flexible work conditions, learning and knowl-

Nowadays, the workplace revolves around short-term, transactional employment relationships, and there is no going back. edge-management, pay-for-performance and coaching-style leadership are the keys to being an “employer of choice” for in-demand talent. The ability to get people on board, up-to-speed and delivering results quickly is the key to most staffing challenges. Strict accountability is directly tied to providing rewards for employees — with opportunities to earn more money and work flexibility going to employees who are willing and able to bend over backward and jump through hoops for employers. The workplace of the future is characterized by many other trends, as well as corresponding impacts for employers. They include:

BABY BOOMER EXITS When they leave an employer, Boomers take with them a great deal of skill, knowledge, wisdom, institutional memory, relationships and the last vestiges of the old-fashioned work ethic. Organizations with significant “age bubbles” must plan to dedicate substantial resources to support knowledge transfer and wisdom transfer processes, as well as developing flexible retention, succession planning and leadership development initiatives.

RISING YOUTH TIDE Around the globe, organizations that rely disproportionately upon young workers will face the challenges of an increasingly high-maintenance workforce. This is one in which employees will not hesitate to make suggestions, special requests and demands — particularly as related to rewards and flexible work conditions. This trend will require employers to dedicate substantial resources to their staffing strategy and to their attraction, selection, onboarding,

training, performance management, accountability, differential rewards and retention efforts.

PERPETUAL STAFFING SHORTAGES The pressure to get more and more work out of fewer and fewer people means staying lean staffed, always. At the same time, the rising demand for highskilled labor — especially in the science and technology fields — promises ongoing staffing shortages and technical skill gaps. Employers in every industry will be struggling to attract, motivate and retain the best talent.

The Advantage Advanced Manufacturing

DEVELOPMENT INVESTMENT PARADOX Employers must invest in developing their new young employees. However, the more an employer invests, the more negotiating power the new young employee has in a short-term transactional labor market. With the employer’s development investment in hand, the new young employee becomes more valuable — and can leverage the employer’s development investment by selling it to another employer or by negotiating for increased rewards.

YOUNG EMPLOYEES: MORE POWER What appears among young employees as a high-maintenance characteristic is actually this new power to ask for more. Opportunities to earn more money and flexibility will go to the employees who most consistently deliver the most value. Employers will be forced to pay high premiums with lush benefits, lavish work conditions and lots of flexibility for in-demand talent. It’s what we call “dream jobs for superstars.”

flexovitabrasives.com 1-800-689-3539 Corporate Offices & Manufacturing Facility

1305 Eden Evans Center Rd Angola, NY 14006 Spring 2018 • 97

THE GAWDA INDUSTRY ANALYSIS REPORT Provided by ITR Economics™

ITR Second-Quarter Outlook: While Tariff Issues Form A Backdrop, the Macroeconomy is Expanding the Consumer Sector is Strong and the Overall Economy is Still Accelerating

CORE ECONOMY AT A GLANCE

◼◼ Nondefense

◼◼ The

macroeconomy is expanding

◼◼ The

consumer sector is particularly strong

◼◼ Rising

Capital Goods New Orders will grow at an accel-

erating pace into mid-2018

This content is exclusivewholesale to GAWDA Members. trade of nondurable goods will persist into the latter ◼◼ Accelerating

employment and increasing wages are supporting a rise in U.S. total retail sales

growth in wholesale trade of durable goods and

half of this year.

For more information on GAWDA Plan for the economy to transition to the back side of the business and association membership, cycle in the latter halfcontact: of this year. Activity will rise at a slowing pace ◼◼ The manufacturing, mining and utilities segments of the industrial or contract in 2019, depending on in which segment(s) of the economy Stephen Hill, GAWDA Membership Services Manager economy are all expanding your business is involved. Ensure that you have the cash to invest ◼◼ Business-to-business activity 954-367-7728 is also rising x 220during / this shill@gawda.org time to better position your company to grow in 2020. ◼◼ U.S.

industrial production is growing at an accelerating pace, in part, to meet increasing demand for retail goods

12/12

12MMT/A CURRENT 2018 2019 2020

HIGHLIGHTS

U.S. TOTAL INDUSTRIAL PRODUCTION

2.2

1.1

-1.2

3.3

Increasing consumer activity is helping to lift Production.

U.S. NONDEFENSE CAPITAL GOODS NEW ORDERS

5.8

1.3

-0.6

6.3

Accelerating growth will persist into the middle of this year.

U.S. PRIVATE SECTOR EMPLOYMENT

1.8

2.0

1.6

1.3

Employment will transition to an accelerating growth trend by the middle of this year.

U.S. TOTAL RETAIL SALES

4.2

4.0

1.4

3.7

Rising Employment and Disposable Income are supporting growth in the retail sector.

U.S. WHOLESALE TRADE OF DURABLE GOODS

8.1

8.3

3.8

6.2

Wholesale Trade will grow at an accelerating rate into the second half of 2018.

U.S. WHOLESALE TRADE OF NONDURABLE GOODS

7.2

8.4

3.5

8.4

The pace of growth for Wholesale Trade will increase into the latter half of this year.

Note: Forecast color represents what phase the market will be in at the end of the year. 98 • Spring 2018

ITR FOR GAWDA EXECUTIVE SUMMARY Tariffs and Unintended Consequences — Impacts Now Facing American Companies For us, the tariff issue comes down to the benefits of free trade and the dangers of unintended consequences. We agree that certain countries were cheating the system and not abiding by agreements already made. We get that those countries should be punished or at least made to conduct business by the agreed-upon rules. But, rather than a narrowly defined tariff that singles out the particularly egregious cases, the president’s administration has imposed a very broad-brush approach. Now, it’s necessary to consider what is best for the economy as a whole. The inflationary potential of protectionism and the high probability of unintended consequences from these tariffs could place the U.S. economy’s business cycle rising trend at risk. President Trump made a difficult and contentious decision to impose tariffs on steel and aluminum. National security issues were cited. The national security angle seems to have been a means to accomplish the desired end, however, since the Secretary of Defense and the Secretary of State both disagreed with that assessment. The probable reasoning for going this route is because there is a provision at the World Trade Organization (WTO) that makes it VERY difficult for them to rule against a provision due to a national security claim. The WTO really has no option except to not stand in the way if other countries choose to retaliate. U.S. Economic Advisor Gary Cohn resigned over the issue. The Defense Department says excluding Europe and Canada from the tariff would ensure there would be no national security issues. This is probably mostly true. However, it seems that China is likely using Canada as a conduit to bring steel into the U.S., since the amount of steel Canada produces is

disproportionate to the amount brought into the U.S. from Canada. Carving out our allies, like Canada and Mexico, and still accomplishing the “anti-dumping goal” would require that the origin of the material is specified and certified. This makes the plan less simple and therefore less desirable to some folks; however, it strikes us as potentially a great way to utilize blockchain technology. Be wary of straight-up comparisons to the Bush administration imposition of steel tariffs. The current tariffs are different from 2002 in that President Bush specifically carved out exceptions, including for Canada and Europe, for specific types of steel. Additionally, the 2002 tariffs were expected to have a limited life span of three years with a mandated review after 18 months; they were lifted within 18 months. There is no announced timeline associated with the tariffs proposed by President Trump other than imposing them beginning March 23.

SOME CONTEXT Raw Steel Production in this country has faced intense international pressure for decades. (See the chart below.) Globalization shifted the production emphasis to other countries, in many cases because of cheap labor and lax environmental standards. Bringing it back by decree is essentially impossible because of infrastructure and capital requirements. It is very tough to turn back the hands of time in this situation. Given that, the protectionist tendency seems to be about stopping the erosion of this industry or enhancing its profits.

This content is exclusive to GAWDA Members.

ITR Economics favors freeon trade policies versus protectionism. For more information GAWDA We favor open borders because they: and association membership, contact: 1. Keep inflation at bay and, therefore, keep interest rates relatively low 2. Force efficiencies on producers Stephen Hill, GAWDA Membership Services Manager 3. Force industrial specialization based on competencies 4. Ultimately lead to/efficiencies and prices that increase the standard of living for the 954-367-7728 x 220 shill@gawda.org greatest number of people.

U.S. Raw Steel Production

Production

150

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Spring 2018 • 99

THE GAWDA INDUSTRY ANALYSIS REPORT Provided by ITR Economics™

That is not to say we are oblivious to the increasing level of steel imports coming into this country (as shown in the chart at the upper right of this page). There was a large surge in imports in 2004–2006. However, the level of imports since then has mainly kept pace with consumption. Right now, the weakened U.S. dollar is certainly making foreign steel more attractive to U.S. buyers/consumers. This is in addition to the types of steel that can be best provided by offshore sources. Lowerpriced alternatives can keep inflation at bay and result in interest rates being lower than they otherwise would be. We understand why steel producers would not like an “open” market as it now stands, but from our perspective, that is not a sufficient reason to run inflationary risks and distort the marketplace.

U.S. Iron and Steel Imports to U.S. Steel Apparent Consumption

Imports

Consumption ption

20 US Steel Imports - Billions of $ 10

Leading Indicator - Raw Data

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U.S. Steel Mill Employment Rate-Of-Change

Monthly Moving Average

10 5

The next chart (at right) suggests that the tariffs are misguided if the aim is to restore jobs to the steel industry. At a time when labor in many sectors is in short supply, steel mill employment is the highest since 1992, and finding additional workers in this space would be very difficult. Beyond the 169,200 steel mill jobs, we are equally concerned about the 182,900 jobs (and declining) in manufacturing light-duty vehicles in the U.S. That is but one example of the potential negative impact on jobs in downstream industries. Keep in mind that it is unlikely that “all else being equal” applies here. People will source finished goods from abroad, find other means of avoiding the tariff or pass the cost along to the consumer.

240 220

2.2% 2.2%

200

-5

180

This content is exclusive to GAWDA Members.

STEEL INDUSTRY JOBS ISSUE

'22

169.2

-10

Employment - 3/12 Employment - 12/12

-15

For more information on GAWDA -20 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20 '22 and association membership, contact: Stephen Hill, GAWDA National Membership Services Manager Construction Inflationary Pressures Construction Material Price Index Trend 954-367-7728 x 220 / shill@gawda.org

Employment 3MMA Employment 12MMA

Index

250

160 140 120

250

239.3 Producer Price Index Raw Data

230

210

190

170

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ITR ECONOMICS FOR GAWDA | Q2 REPORT 2018 | WELDING & GASES TODAY ITR ECONOMICS | P: 603-796-2500 | www.itreconomics.com

100 • Spring 2018

ITR FOR GAWDA The supply chain may become rigid in the new paradigm (away from U.S. manufacturing) if the tariffs are left in place too long. Our clients associated with the construction industry should keep in mind that their industry is a major consumer of steel. Note the charts at bottom left, Page 96 and top right, Page 97, showing the PPI for construction materials. Successfully implementing the steel and aluminum tariffs will give further rise to construction costs (an example of the inflationary pressure cited above). Steel scrap prices rose 7.7 percent in the first two days of March. Be prepared and have a strategy for passing along cost increases.

MOVING FORWARD All businesses should be mapping out a plan as to how they will contend with higher

National Construction Inflationary Pressures Construction Material Price Index Trend

Index

15 10 5

Index 15 10 5

3.5

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-10 -15

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steel and aluminum prices — specifically, to what extent those added costs can be passed along to the consumer. To not pass along those costs is to invite an erosion of profit margin. A broadbased erosion in profits would be a negative shift regarding the underpinning of the stock market and would likely result in stock market decline. Such an occurrence is a negative Checking Point, and it is the opposite of what needs to occur to ensure solid fundamentals are supporting stock price rise.

This content is exclusive to U.S. GAWDA IndustrialMembers. Production vs.

LEADING INDICATORS

ITR Consumer Activity Leading Indicator

ITR Consumer Activity Leading Indicator Slowing Growth in Consumer Activity By the Second Half of 2018

For more information on GAWDA Production Rates-of-Change 15.0 and association membership, contact: The ITR Consumer Activity Leading TITLE Stephen Hill, GAWDA 10.0 Membership Services Manager Indicator reading in February was even with the prior month. However, the gen954-367-7728 x 220 / shill@gawda.org eral declining trend from the mid-2017 high persists. The Indicator’s downward movement suggests slowing growth in consumer activity will take hold by the second half of 2018. The ITR Consumer Activity Leading Indicator leads the U.S. Industrial Production 12/12 by six to 16 months (majority range).

RECOVERY

Leading Indicator

15 10

4.0

5.0

2.2

0.0 -5.0

0 -5

US Industrial Production - 12/12

-10.0 -15.0

-10

Leading Indicator - Monthly

'09

ACCELERATING GROWTH

'10

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SLOWER GROWTH

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RECESSION

Spring 2018 • 101

THE GAWDA INDUSTRY ANALYSIS REPORT Provided by ITR Economics™

U.S. Industrial Production vs. U.S. Total Capacity Utilization Rate Rates-of-Change

U.S. TOTAL INDUSTRY CAPACITY UTILIZATION RATE Accelerating Growth for Industrial Production Will Persist Into the Middle of 2018 The U.S. Total Industry Capacity Utilization Rate 1/12 rose in January. This indicator supports our expectation that industrial activity will expand at an accelerating pace into the middle of 2018, given its typical lead time to U.S. Industrial Production. This expectation for Production is consistent with the evidence provided by our collection of leading indicators. The U.S. Total Industry Capacity Utilization Rate leads the U.S. Industrial Production 12/12 by three to eight months (majority range).

Production

Rate

15.0

10.0

5.0

2.2

0.0 -5.0

0 -7

US Industrial Production - 12/12

-10.0 -15.0

5.4

-14

US Total Capacity Utilization Rate - 1/12

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This content is exclusive to GAWDA Members. For more information on GAWDA and association membership, contact: Hill, GAWDA U.S. Membership Services Manager U.S. CONFERENCE Stephen BOARD LEADING Conference Board Leading Indicator INDICATOR 954-367-7728 x 220 / shill@gawda.org Leading Indicator Production Indicator Signals Rise in U.S. Industrial Economy Through At Least the First Half of 2018 The U.S. Conference Board Leading Indicator 1/12 rose in January. The Indicator’s accelerating rise since mid2016 suggests that the accelerating growth trend in the U.S. Industrial Production 12/12 will likely persist through at least the first half of 2018. The Conference Board Leading Indicator leads the U.S. Industrial Production 12/12 by five to eight months (majority range).

15.0

10.0

5.0 2.2

0.0 -5.0

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-10 -20

US Leading Indicator - 1/12 '09

10 0

US Industrial Production - 12/12

-10.0 -15.0

102 • Spring 2018

6.2

'19

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ALUMINOMICS

THE GAWDA INDUSTRY ANALYSIS REPORT Provided by ITR Economics™

U.S. ISM’S PURCHASING MANAGERS INDEX

Production

The PMI 1/12 Suggests U.S. Industrial Production 12/12 Decline By the Middle of 2018 The PMI 1/12 declined in February. This marks the sixth month of consecutive 1/12 decline. The PMI 1/12 declining trend indicates that U.S. Industrial Production will likely slow in its pace of growth by mid-2018. The Purchasing Managers Index leads the U.S. Industrial Production 12/12 by nine to 15 months (majority range).

15.0

U.S. Industrial Production vs. ISM’s U.S. Purchasing Managers Index Rates-of-Change

Index

75 50

10.0 5.0

2.2 9.2

0.0

0 -25

-5.0 US Industrial Production - 12/12

-10.0 -15.0

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GAWDA EXECUTIVE SUMMARY/DASHBOARD:

This content is exclusive to GAWDA Members. GAWDA-SPECIFIC INDICATORS

For more information on GAWDA CURRENT GROWTH INDICATORS HIGHLIGHTS and association membership, contact: RATE (12/12) Industrial Production will accelerate upward through mid-2018. Focus on Stephen U.S. INDUSTRIAL PRODUCTION INDEX Hill, GAWDA Membership Services Manager 2.2% worker training and retention to increase productivity. 954-367-7728 x 220 / shill@gawda.org

PHASE

Prices are accelerating at the fastest pace in five years. GAWDA members will need to pass along price increases or find cost savings in order to maintain profitability.

4.7%

Prices will hover around the $60 range through 2018. Expect transportation costs to remain relatively low this year.

12.0%

U.S. NONDEFENSE CAPITAL GOODS NEW ORDERS WITHOUT AIRCRAFT

B2B activity, as measured by New Orders, is rising. Position your company to be cash rich in 2019 to take advantage of relatively lower prices.

5.8%

U.S. ELECTRICAL EQUIPMENT NEW ORDERS

New Orders are contracting but will transition to a recovery trend by mid-2018. Plan for growth to be mild into mid-2019.

-6.7%

U.S. FABRICATED METAL PRODUCTS NEW ORDERS

Annual New Orders are at an all-time high. Ensure you have adequate inventory on hand to fulfill demand.

9.7%

U.S. DURABLE GOODS NEW ORDERS WITHOUT AIRCRAFT

New Orders will rise into early 2019. Examine your production or distribution network and eliminate bottlenecks.

5.5%

2.5 (Monthly)

U.S. PROCESSED GOODS FOR INTERMEDIATE DEMAND PRODUCER PRICE INDEX U.S. CRUDE OIL FUTURES PRICES

ITR LEADING INDICATOR (MONTHLY)

104 • Spring 2018

The Indicator is rising and signals business-cycle rise for the economy into the second half of 2018. Conduct a stress test to ensure you can meet demand without sacrificing quality.

ITR FOR GAWDA The majority of GAWDA indicators are in Phase B, Accelerating Growth. B2B activity, as measured by U.S. Nondefense Capital Goods New Orders (excluding aircraft), is expanding at the fastest pace in more than five years in response to the favorable economic environment. Activity is returning to the oil patch in response to higher oil prices, which averaged $62.26 per barrel in the most recent three months. At this price point, extraction is profitable, and U.S. crude oil production (up 6.4 percent year over year, including up 12 percent in

the most recent three months compared to one year ago) is surging. However, the monthly rates-of-change for the ISM’s U.S. Purchasing Managers Index and the OECD’s U.S. Leading Indicator are declining. These trends suggest slowing growth is likely to take hold in U.S. Industrial Production in the second half of the year. Management Note: Avoid linear budgeting and begin preparations for a mild recession in Production during 2019.

U.S. Industrial Production Index Data Trend U.S. INDUSTRIAL PRODUCTION

- Accelerating Growth 2018 1.1% 106.5* 2019 -1.2% 105.3* 2020 3.3% 108.7* * Index based to 2012 = 100. HIGHLIGHTS ◼◼ Production was up 2.2 percent from one year ago

Index

120

12MMA Forecast 12MMA 3MMA

110

105.3

This content is exclusive to GAWDA Members. 100

100

◼◼ This

industrial sector is benefiting from rising retail sales

For more information on GAWDA andinto association membership, contact: ◼◼ Accelerating growth will persist 90 90 mid-2018 before the pace of growth '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 Stephen Hill, GAWDA Membership Services Manager slows through the remainder of this year 954-367-7728 U.S. x 220 / shill@gawda.org Industrial Production Index Rate-of-Change U.S. Industrial Production during the 12 months ending in January was 2.2 percent above the same period one year ago. The accelerating growth trend will persist into the middle of this year. Activity will expand in the second half of 2018 but at a slowing rate. Production will contract throughout 2019 before subsequently expanding in 2020. Rising employment and wages are helping to improve consumer strength, lifting retail activity. U.S. Total Retail Sales are growing at an accelerating pace, up 4.2 percent from one year ago. Industrial Production is expanding, in part, to meet this increasing demand for retail goods. However, we expect the rate of growth for Retail Sales to slow later this year and through 2019. Plan for the Production 12/12 to decline during this time.

2.2

0 -5 -10 -15

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12/12 Forecast Range

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Management Note: Communicate your competitive advantages to capture market share as the economy expands and to maintain or grow share in 2019 as the economy weakens. Spring 2018 • 105

THE GAWDA INDUSTRY ANALYSIS REPORT Provided by ITR Economics™

U.S. Nondefense Capital Goods New Orders (excluding aircraft) Data Trend

U.S. NONDEFENSE CAPITAL GOODS NEW ORDERS (EXCLUDING AIRCRAFT)

B - Accelerating Growth 2018 1.3% $782.0 billion 2019 -0.6% $777.4 billion 2020 6.3% $826.3 billion

HIGHLIGHTS ◼◼ Nondefense Capital Goods New Orders were up 5.8 percent from one year ago ◼◼ New

Orders will rise at an accelerating rate into the middle of 2018

◼◼ A

recent slowing growth trend in the Small Business Optimism Index portends a slowing pace of growth for Capital Goods New Orders

Bils of $

300

1200

12MMT Forecast 12MMT 3MMT

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This content is exclusive to GAWDA Members.

Nondefense Capital Goods New Orders (excluding aircraft) in the 12 months through January were up 5.8 percent from one year ago. New Orders will rise at an accelerating pace into the middle of 2018. Expect New Orders to then transition to a slowing growth trend which will persist into early 2019. New Orders will contract by the middle of 2019 through the remainder of the year. The rise will resume in 2020. The Small Business Optimism Index is a seven-month leading indicator and is coming off a November 2017 cyclical peak. This indicates that small businesses are planning to reduce capital acquisitions and upgrades. This trend is consistent with our expectation that Nondefense Capital Goods will grow at an accelerating pace into the middle of 2018 followed by diminishing rise in the second half of this year.

U.S. Nondefense Capital Goods For more information on GAWDA New Orders (excluding aircraft) Rate-of-Change and association membership, contact: Stephen Hill, GAWDA Membership Services Manager 20 20 954-367-7728 x 220 / shill@gawda.org

Management Note: Early indications are that the tax law changes will not alter the forecasted trajectory for New Orders.

106 • Spring 2018

5.8

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ITR FOR GAWDA

U.S. Oil Futures Commodity Prices Data Trend

OIL PRICES: U.S. OIL FUTURES COMMODITY PRICES B − Accelerating Growth March 2018 June 2018 Sept. 2018 Dec. 2018

$60.41 per barrel $64.23 per barrel $59.84 per barrel $58.66 per barrel

HIGHLIGHTS ◼◼ The Prices 3MMA was up 16.4 percent from one year ago ◼◼ Increasing

demand from the industrial sector will lift Prices into the middle of 2018

◼◼ Prices

will plateau near $60 per barrel for much of this year

U.S. Crude Oil Futures Prices in the three months ending in February averaged $62.26 per barrel, up 16.4 percent from the same period one year ago. The Prices 3MMA will rise into the middle of 2018, reaching the mid-$60 per barrel range. Prices will then stabilize near $60 per barrel during the remainder of this year. Rising demand for commodities from the industrial sector is helping to lift oil prices. We expect U.S. Industrial Production to grow at an accelerating pace into the middle of this year, which will contribute to the increase in Prices during this time. Subsequent slowing in the pace of rise for Production and increasing oil production will place downward pressure on Prices in the latter half of 2018.

$/bbl.

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3MMA Forecast 3MMA Actual

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This content is exclusive to GAWDA Members. For more information on GAWDA U.S. Oil Futures Commodity Prices Rate-of-Change and association membership, contact: 80 80 Stephen Hill, GAWDA Membership Services Manager 12/12 Forecast Range 954-367-7728 x 22012/12 / shill@gawda.org

Management Note: Ensure that you have the right price escalator to gradually pass on increasing input costs to your customers.

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Spring 2018 • 107

THE GAWDA INDUSTRY ANALYSIS REPORT Provided by ITR Economics™

U.S. Steel Scrap Futures Commodity Prices Data Trend

STEEL PRICES: U.S. STEEL SCRAP FUTURES COMMODITY PRICES C - Slowing Growth

March 2018 June 2018 Sept. 2018 Dec. 2018

$482.74 per gross ton $481.51 per gross ton $486.74 per gross ton $446.07 per gross ton

HIGHLIGHTS ◼◼ The Index 3MMA rose 18.1 percent compared to one year ago

$/GT

$/GT 3MMA Forecast 3MMA Actual

700

451.4

500

◼◼ Prices will rise at a slower rate through-

out 2018

300

◼◼ Utilization Rates suggest downside move-

ment for prices The January U.S. Steel Scrap Producer Price Index 3MMA rose 18.1 percent compared to the same three months one year ago. The Index 3MMA is in an overall rising trend but has had some dips along the way. Expect the 3MMA to generally rise into the third quarter of this year, albeit at a slowing pace. The Iron and Steel Products Capacity Utilization Rate 1/12 reached a tentative peak in October 2017. Plan for diminishing rise in demand for steel products to place downside pressure on prices later this year. However, one upside risk to the decelerating steel capacity trend, and to prices as well, is the tariffs on steel and aluminum. Tariffs might spur U.S. suppliers to bring added production online, typically as the result of higher Prices.

100

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This content is exclusive to GAWDA Members. U.S. Steel Scrap Futures Commodity For more information on GAWDA Prices Rate-of-Change and association membership, contact: 100 12/12 Forecast Range Stephen Hill, GAWDA Membership Services Manager 12/12 954-367-7728 x 220 / shill@gawda.org 50

Management Note: Rising prices will increase the cost of doing business; ensure you have relayed expected price increases to your customers.

108 • Spring 2018

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ITR FOR GAWDA

U.S. FABRICATED METAL PRODUCTS NEW ORDERS B − Accelerating Growth 2018 4.2% 2019 0.0% 2020 5.6%

$405.4 billion $405.4 billion $428.1 billion

HIGHLIGHTS ◼◼ New Orders are growing at the fastest pace (12/12) in over five years ◼◼ Expect

New Orders to transition to a slowing pace of rise imminently

◼◼ Nascent

decline in U.S. Nondefense Capital Goods New Orders signals slowing growth through 2018

U.S. Fabricated Metal Products New Orders during the 12 months through January totaled $393.1 billion and were 9.7 percent above the year-ago level. New Orders will rise through 2018, though the pace of rise will be milder than in 2017. New Orders will decline mildly in 2019 before then rising through at least year-end 2020. Expect New Orders to closely track B2B activity, as measured by U.S. Nondefense Capital Goods New Orders (excluding aircraft), into a mild-2019 recession. The downturn in commodity price rates-ofchange suggests that the 12/12 peak could occur earlier than our overall outlook suggests. However, the rising macroeconomic leading indicators such as the ITR Leading Indicator suggest a later 2018 12/12 peak is possible and present an upside risk to our forecast.

U.S. Fabricated Metal Products New Orders Data Trend

Bils of $ 150

Bils of $ 600

12MMT Forecast 12MMT 3MMT

120

480 393.1

360

240

120

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This content is exclusive to GAWDA Members. U.S. Fabricated Metal Products informationNew on Orders GAWDA Rate-of-Change

For more 15 and association membership, contact: 9.7 Stephen Hill, GAWDA Membership Services Manager 10 954-367-7728 x 220 / shill@gawda.org 5

15 10 5 0

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12/12 Forecast Range

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Management Note: Try to use a backlog of orders to keep your production going in 2019 as New Orders decline.

Spring 2018 • 109

THE GAWDA INDUSTRY ANALYSIS REPORT Provided by ITR Economics™

U.S. AGRICULTURAL IMPLEMENT PRODUCTION B − Accelerating Growth HIGHLIGHTS ◼◼ Production was 13.8 percent above the year-ago level will likely grow at a slowing pace through the latter half of 2018

U.S. Agricultural Implement Production Data Trend

Index 120

12MMA

120

3MMA 105

105

◼◼ Production

Deere stock prices are rising and may place upward pressure on Production into the second half of the year

Index

90.3

◼◼ John

U.S. Agricultural Implement Production during the 12 months through January was up 13.8 percent from one year ago. Production is accelerating upward on a year-over-year basis. The ITR Checking Points system indicates accelerating growth will extend through the near term. U.S. Agriculture, Construction and Mining Machinery Production and U.S. Farm Machinery Shipments are expected to transition to a slowing growth trend by the second half of 2018. This indicates that U.S. Agricultural Implement Production will transition to a decelerating pace of rise in mid-2018. John Deere stock prices, a five-month leading indicator to U.S. Agricultural Implement Production, is accelerating upward. This indicator suggests that accelerating growth in U.S. Agricultural Implement Production could extend into the second half of 2018.

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U.S. Agricultural Implement Production Rate-of-Change

This content is exclusive to GAWDA Members. 30

30 For more information on GAWDA 20 and association membership, contact: 13.8 Stephen Hill, GAWDA Membership Services Manager 10 954-367-7728 x 220 / shill@gawda.org

Management Note: Mitigate your risks for next year by determining now which segments are likely to show the most pronounced weakness in 2019.

10 0

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ITR Economics Alan Beaulieu, principal 77 Sundial Ave #510 West, Manchester, NH 03103 GAWDA chief economist | 603-796-2500 110 • Spring 2018

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he following businesses recently joined the Gases and Welding Distributors Association. For more information about the benefits and services available to members, please contact the Association at 844-251-3219 and Stephen Hill, member services manager, or visit www. gawda.org.

DISTRIBUTOR MEMBERS ATLANTIC STATES SPECIALTY GASES INC. P.O. Box 275 Middlesex, N.J. 08846 973-271-5351 FAX 908-654-7957 www.atlspecgas.com Richard Long, president rlong@atlspecgas.com James Madison, treasurer jmadison@atlspecgas.com

The company represents manufacturers Matheson Tri-Gas and is a distributor of research, laboratory and specialty gases and equipment.

CENTRAL WELDING SUPPLY INC. 3625 FM 2403 Rd. Alvin, Texas 77511-9288 www.centralweldinginc.com Randy Eubanks, director randy@centralweldinginc.com Jody Adkins, owner/president jody@centralweldinginc.com Todd Winters, sales sales@centralweldinginc.com

Central Welding Supply Inc. has been providing service in and around Houston and the surrounding area for more than 15 years. The firm delivers industrial gases and offers welding, safety and industrial supplies from locations in Alvin and Santa Fe and prides itself on same-day or next-day delivery.

112 • Spring 2018

MESA SPECIALTY GAS & EQUIPMENT

2427 S. Anne St. Santa Ana, Cal. 92704 714-434-7102 FAX 714-434-8006 www.mesagas.com Mark Tyssee, CEO mtysee@mesagas.com

Mesa Specialty Gas & Equipment is a manufacturer of calibration gas standards used in a wide variety of instrument applications in the laboratory, energy, petrochemical and refinery industries. Additional products include instrument grade support gases, calibration gas in small disposable cylinders and gas handling equipment.

SUPPLIER MEMBERS ABILITY ENGINEERING TECHNOLOGY INC.

16140 S. Vincennes Ave. South Holland, Ill. 60473 708-331-0025 FAX 708-331-5090 www.abilityengineering.com Eugene Botsoe, president eugenebotsoe@abilityengineering.com Eric Purkey, general manager eric@abilityengineering.com M ike Maurisak, technical sales director michaelmaurisak@abilityengineering.com Michael Morgan, chief engineer mmorgan@abilityengineering.com

Ability Engineering Technology Inc. designs and fabricates equipment used in the storage, transportation, distribution, liquefaction and purification of cryogenic gases as well as liquefied natural gas. Products designed and manufactured include: high and low pressure gas purification and

recovery systems (helium, hydrogen, oxygen, argon, etc.); vacuum-jacketed (insulated) piping; dewars; cryogenic valves; cryogenic couplers (bayonets); pumpouts; and pumpout operators.

A-GAS

1100 Haskins Rd. Bowling Green, Ohio 43402 419-867-8990 www.agas.com Mike Armstrong, president and COO mike.armstrong@agas.com Robert Henessy, chief commercial officer robert.henessy@agas.com

A‑Gas offers a variety of services in the fire protection and refrigerant industries, including recovery, reclamation, separation, destruction, technical data and laboratory testing. The firm also offers a wide selection of fire protection products to industries around the world. These include halons and clean agent alternatives, refrigerants and blowing agents.

COSEN SAWS INTERNATIONAL

4527 Dwight Evans Rd. Charlotte, N.C. 28217-0902 704-943-1030 www.cosensaws.com Peng Huang, president peng@cosensaws.com Kent Hughes, director of sales khughes@cosensaws.com Yu-Hsien Ho, inside sales and marketing manager yho@cosensaws.com

Since its establishment in 1976, Cosen has continued its growth to become one of the world’s largest professional band saw manufacturers. Cosen manufactures more than 100 models, including manual, semi-automatic, automatic, NC and CNC sawing systems in types and from 200mm (8”) to 2000mm (80”) in capacities. With a record of more than 82,000

SUPPLIER MEMBERS (CONTINUED) DYNABRADE INC.

band saws sold across five continents (plus Germany and Japan), Cosen’s markets expand internationally to more than 80 countries through authorized distributors for the metal cutting industry.

DIVERSCO SUPPLY INC.

6161 Atlantic Blvd. Norcross, Ga. 30071-1306 800-774-4447 FAX 678-240-4433 www.diverscosupply.com Tim Huddle, senior vice president thuddle@diverscosupply.com Jay Skop, general manager jskop@diverscosupply.com Jerry Blake, compressed gas sales jblake@diverscosupply.com

Diversco Supply Inc. represents the following manufacturers: Rego Cryoflow, Western, Superior Products, Unisource, Saint Gobain, Sherwood Valves, ESP Gauges, MPT Products and Sterling Products.

8989 Sheridan Drive Clarence, N.Y. 14031-1419 716-631-0100; 800-828-7333 toll free www.dynabrade.com Mike Saraf, key account manager mike.saraf@dynabrade.com Shane Davis, eastern regional manager shane.davis@dynabrade.com Fred Deer, central regional manager fred.deer@dynabrade.com Ken Zahlis, western regional manager ken.zahlis@dynabrade.com

Founded in 1969, Dynabrade designs and manufactures innovative and unique portable abrasive power tools and related accessories. With more than 800 highquality tools in its product line, the company can meet the specific needs of industrial and automotive markets for products and accessories. That includes those used in grinding, deburring, filing, sanding and polishing applications on materials such as metal, wood, plastic, glass, rubber,

stone and composites. Products are supplied through a worldwide network of professional distributors/jobbers.

MALBEK

29 Julie Court Somerset, N.J. 08873 732-213-8027 www.malbek.io David Adams, director of business development david@malbek.io Matt Patel, chief operating officer and co-founder matt@malbek.io

Malbek is a cutting-edge software solution that helps your organization maximize profitability and manage your product supply agreements with effective contract management. Sales and contracting teams have the ability to gauge profitability based on offer terms, negotiate legal and business terms with the customer, execute agreements and measure effectiveness of your active contracts.

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INDUSTRY NEWS Lincoln Electric Celebrates Welding Tech & Training Center Opening

Lincoln Electric Holdings Inc. held an open house and ribbon cutting March 21 to mark the opening of its new Welding Technology & Training Center in Cleveland, Ohio. The event put a spotlight on Lincoln’s expanded educational offerings as well as commemorated the centennial of the company’s welding school, which Lincoln says is the longest-running welding school in the world. The Center focuses on training welding educators, engineers and industrial professionals who are advancing welding in schools and industry globally. It is also designed to offer advanced technical welding training for professionals, as well as a comprehensive portfolio of turnkey educational solutions that can be used to launch welding training at customers’ own facilities. “Our new Center is a strategic investment to help our customers and educational partners grow using leading solutions,” states Christopher L. Mapes, chairman, president and chief executive officer of Lincoln Electric. “Our educational offering and leadership in automation solutions provide meaningful solutions to address the skills gap and capacity constraints facing customers in our industry.” Jason Scales, business manager for education at Lincoln, adds, “We are committed to providing students and customers with the relevant skills and knowledge needed to support career and technical schools, advanced manufacturing and infrastructure growth. Our education model will shape the next generation of welders, managers and industry leaders.” Lincoln’s education portfolio includes an extensive educational curriculum, virtual reality and technology-assisted training tools, industry-leading welding and cutting solutions and robotic cells. The new 130,000 sq. ft. facility represents a $30 million investment. It is a state-of-the-art facility having 166 welding and cutting booths, a virtual reality training lab with 10

Miller Joins T-W to Lead Sales for Americas

Tim Miller has joined the Taylor-Wharton team to lead sales for the Americas, reporting to Taylor-Wharton’s Chairman and CEO Eric Rottier. Miller succeeds Luke Bradshaw in that role at TaylorWharton. Based in Houston, Miller brings 25 years of industry experience to his position, including serving as vice president and president of Cryogenic Vessel Alternatives (CVA). Rottier states, “I am thrilled to have Tim join our team. Tim has exceptional breadth of experience and industry connections. With Tim coming on board, we expect a smooth transition and continued exemplary customer support.” 114 • Spring 2018

Top: Guests at the Center’s grand opening got to tour facilities and try out some of its technologies and equipment. Bottom: Lincoln Electric officials, along with guests, cut a Lincoln-red red ribbon to officially open the company’s $30 million, 130,000 sq. ft. technology and training center at its headquarters in Cleveland.

VRTEX virtual reality welding simulators, extensive seminar and welding school classroom space and a 100-seat auditorium. The Center is on track to become an American Welding Society accredited testing facility later this year. More information is available at the company’s Education Solutions website.

New Practice Leader, Succession Plan for Horton

The Horton Group has announced that Tony Hopkins will replace Ken Tidwell as the company’s welding and gas distributors practice leader. Hopkins is now responsible for providing innovative strategy and solutions to new and existing welding and gas clients. He oversees a team of welding and gas insurance and safety specialists dedicated to driving down cost, work and risks, the company says. “This is a well-planned succession that has been in the works since Tony was brought to work in the industry over the past 10 years,” Tidwell says. “I couldn’t be more proud of

INDUSTRY NEWS

Tony Hopkins

Ken Tidwell

his development, industry involvement and the value he brings to our clients. There isn’t a better person to take over the reins.” Ken and Margaret Tidwell have no immediate retirement plans at this time, and Ken will remain active with the Horton Group, the company reports. Hopkins is an active member of the GAWDA Safety Committee. He began with Horton as an intern before holding positions as sales executive, sales leader, vice president and shareholder. He received his B.A. in business administration/risk management and insurance with a certificate in international business from the University of Wisconsin-Madison.

AWG Opens New Branch AWG (American Welding & Gas Inc.) opened a new branch at 602 North Fifth Ave. in Chambersburg, Pa., in December 2017. Positioned on a heavily traveled road and through positive word of mouth, Chambersburg developed a loyal repeat customer base within days of opening, says Paul Scott, senior vice present/COO -South Division. Scott says AWG assembled a branch team with more than 60 years of local industry experience to operate the location.

Left: Texas Trailer’s unique new 5,000 sq. ft. office building. Below: The new shot blast and paint booth structure at Texas Trailer Corp.

to add space to improve overall production capabilities, says Mike Arcieri, Weldship Corp. sales manager. The project included purchase of 15 acres of surrounding land to bolster an already extensive footprint, plus construction of a new 5,000 sq. ft. office building. The office building provided added space for Texas Trailer’s expanded management team, including personnel from the sales, operations, engineering, safety and quality departments, Arcieri says. The firm also installed a new state-of-the-art shot blast and paint booth building to increase production standards and output. That 4,125 sq. ft. addition permits further improvements in manufacturing and tube trailer retest and rehab capabilities, thus faster turnaround time for equipment needing refurbishment. Texas Trailer Corporation specializes in manufacturing and servicing of CO2 trailers, N2O trailers, ISO containers, tube trailers, specialty chemical trailers and ground storage equipment. Products are offered for sale or lease to industrial gas and specialty chemical industries around the world. Information is available at www.weldship.com.

Abicor Binzel Hires Territory Sales Manager AWG’s new Chambersburg, Pa., location.

Texas Trailer Corp. Expansion Completed Texas Trailer Corporation, a division of Weldship Corporation, has completed a major expansion to its Gainesville, Texas, operation. The $1.5 million-dollar investment began in 2016 in order

Abicor Binzel has named Philip Montez to its territory covering Texas, New Mexico, Oklahoma, Northern Louisiana and the Texarkana area. Based in Houston, Montez comes to Binzel from Professional Welding Supply, where he spent nearly four years as an outside sales representative. Prior to that, he was an account development manager for Test, Train, Place Company, where he performed weld testing on major welding processes with prospective employees. Spring 2018 • 115

INDUSTRY NEWS

In Memoriam CLARENCE HALL Clarence Hall, longtime industry member, passed away Feb. 21 after a long battle with a debilitating neurodegenerative disease. Hall began his career in the gas industry with the former Enron Corp., where he traded ethylene and propylene. His career spanned several decades, and he later became president of BTU Gases. He left the industry to pursue his real estate goals in the Chicago market for a short period but returned to the industry working with Gas Innovations for the past 14 years. A true “foodie,” Hall was known for his love of food and wine and creating memories with friends. Friends and family will remember Hall for his “most gentlemanly manner.” Hall leaves behind his wife, Lisa, and daughter, Wendy, as well as many friends and relatives. Memorial donations may be made on Hall’s behalf to support research for neurodegeneration online at www.psp. org or at: Cure PSP, 1206 York Road, Suite 1-4, Lutherville, Md., 21903.

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“Philip fits well with our culture of a customer-centric focus, and we are very happy to have him as a key element of our team,” says Larry Cassesa, Binzel USA director of sales and marketing. “I look forward to his success in growing our business in the Houston market and surrounding areas.”

Lincoln Expands Education Offerings

Lincoln Electric has initiated a new, multi-tiered educational program that supports welding instructors at every level, from junior high school to technical college and beyond. Called the Lincoln Electric Education Partner Schools (LEEPS) program, it permits participating instructors to obtain Lincoln Electric qualifications and other benefits by meeting specific program requirements. Schools that meet key requirements also may become Lincoln-authorized training facilities, allowed to run Lincoln Electric seminars. Divided into multiple segments, Track 1 is for welding instructors whose students are primarily in the exploratory phase of learning how to weld, Track 2 goes into career development and advancement and Track 3 continues with career development and focuses on advanced manufacturing and processes. It is typically tailored to the needs of community colleges and technical colleges. LEEPS keeps instructors current and relevant within the welding industry by integrating a professional development system into the program, an element that provides value to both instructors and administrators at participating schools, says Jason Scales, Lincoln Electric’s business manager of education.

IWDC Makes Staff Appointments

MICHAEL JAY NELSON Michael Jay “Mike” Nelson, a dedicated employee of Oxygen Service Company, of St. Paul, Minn., passed away in December 2017 due to glioblastoma. He worked for the company for 16 years as a sales representative and most recently as vice president of sales and marketing. He is survived by his wife, Natalie Ann; three sons, Gavin Michael from birth and Sabatino (“Sam”) and Giovanni (“Jack”) from the moment he met them; his mother, Sharon Larsen Nelson; and siblings Bill, Steve, Sheryl and Jim. He also leaves many loving nieces, nephews and cousins, in-laws, friends and his second family at Oxygen Service Company. 116 • Spring 2018

T h e I n d e p e n d e n t We l d i n g D i s t r i b u t o r s Cooperative (IWDC) has announced several organizational changes and staff appointments. Keith Werkley has assumed new responsibilities as director of sales and vendor management. His area includes regional sales management, Weldmark hardgoods product management and vendor program support. Werkley continues to lead IWDC’s Purchasing Committee, which is chaired by Buz Edwards of Arc3 Gases. Erica Jones has assumed new responsibilities as director of marketing. She retains her current responsibilities for IWDC’s PurityPlus specialty gas program and adds oversight of graphics and website support, digital marketing and meeting and event planning. She also leads IWDC’s Marketing

INDUSTRY NEWS Committee and the IWDC Next Generation Group (INGG) Committee. They are chaired by Troy Elmer, Mississippi Welders Supply, and Rodney Huber, Huber Supply Company Inc., respectively. Tina Estes, previously director of information systems, has been named chief information officer, aligning her management of outsourced information technology vendors and IWDC’s growing internal development and focus on business analytics. Eric Schwamberger, as IWDC’s distribution center operations manager, has added responsibilities for supporting growth through the expansion of the IWDC customer service representatives staff.

Weldcoa Celebrates 50th with 50/50 Fundraisers Weldcoa is celebrating its 50th business anniversary this year, and as part of its celebration, the company is hosting special 50/50 fundraisers at GAWDA Regional Meeting events. The fundraising events “are designed to give back to the industry that made our success possible,” according to Marketing Manager Melissa Heard. She notes how the fundraisers work: “During the GAWDA Regional Meetings the 50/50 raffle winner will win the entire pot (not half) and Weldcoa will match the pot total (up to $1,000) and donate that money to GAWDA Gives Back.” In addition, Heard says, “If we sell more than our fundraising goal of $1,000, the overflow will also go to GAWDA Gives Back. If enough tickets are sold to reach the fundraising goal of $1,000, not only will one winner receive the entire 50/50 pot, we will also pull a second ticket. That lucky winner will win a prize provided by Weldcoa. During the GAWDA Annual Meeting in Seattle, we will announce how much in total was raised for the GAWDA Gives Back charity.”

ILMO Welcomes New District Sales Manager ILMO Products Company welcomes Amber Tomlinson to the company’s sales team. She serves as district sales manager (Peoria) for the Jacksonville, Ill.-based company. Tomlinson brings more than 10 years of experience in logistics, administrative and manufacturing operations. She works closely with ILMO’s industrial, medical, specialty and bulk gas consumers, including niche markets. ILMO’s Vice President of Sales Tim Atchley adds, “We are very excited about adding an additional sales position to

In Memoriam

THOMAS L. DYAL JR. Thomas L. Dyal Jr., retired owner of Cryo Weld Corp., of Poughkeepsie, N.Y., passed away in December 2017. “Tommy,” as he was known to all, was passionately involved in the industrial, specialty and medical gas and equipment business for more than 47 years. Dyal started his career at the age of 15 working at CryoDyne Corp., where his father, Tom Dyal Sr., was a partner. Tommy and his wife, Deborah (Debbie), started Cryo Weld Corp. in 1993. A pick-up truck and Tommy’s vast experience in all facets of the industry were all that was required at the start to drive Cryo Weld Corp.’s growth and success for the next 24 years. Under Tommy’s management, Cryo Weld received recognition from industry organizations and vendors. BOC recognized Cryo Weld Corp. with the President’s Award plaque in 2006 in the $200K–$500K category. That recognition ranked Cryo Weld in the Top 10 distributors in North America. In 2013, Cryo Weld also received the CGA and GAWDA Annual Distributor Safety Award in the category of “100,000 or Fewer Employee Exposure Hours” for safety improvement. Tommy was a firm believer in the independent distributor, as well as making their business success a legacy for the next generation. That goal was achieved, and Cryo Weld Corp., an active member of the IWDC buying group, is now under the management his of daughter, Michele, and son-in-law, Nick Centorani. Over the years, Tommy forged hundreds of industry relationships with vendors, customers and fellow distributors who will miss his professionalism and friendship. Tommy is survived by his wife of 42 years, Debbie; their daughters, Rebecca and Michelle; and three granddaughters. Tommy was predeceased by his son, Tommy III, in 2013. Tommy also is missed by his parents, Tom and Jane Dyal Sr. and seven siblings: Lisa, Gary, Sandra, Catherine, David, Christopher and Andrew. Spring 2018 • 117

INDUSTRY NEWS

In Memoriam

JOSEPH F. MAMMARELLI SR. Joseph F. Mammarelli Sr., of Pittsburgh, passed away in December 2017 at the age of 83. He was the founder and served as chairman of the board of Alloy Oxygen & Welding Supply Company. Proud of his Italian heritage, he also founded and chaired the board of the Pittsburgh Italian Scholarship Fund since 1985. He is fondly remembered by family and friends for many things, including a devotion to SS. Simon and Jude School and Parish, a love of golf, coaching basketball, fondness for all Pittsburgh sports teams and his beloved cigars. Mammarelli offered loyal and fun-loving friendship, a joviality and generosity of spirit and an unyielding devotion and love for his family. He was a veteran of the U.S. Army during the Korean Conflict. His survivors include his wife, Joanne; children Joseph (Martha) Mammarelli Jr., Mimi (Domenic) DiPaolo and Angela Mammarelli; grandchildren Charles, Victor and Eva Simone and Joseph III and Anthony Mammarelli; and a brother, Harry Mammarelli. Memorial donations are being accepted to the Pittsburgh Italian Scholarship Fund, P.O. Box 3038, Munhall, Pa., 15120. 118 • Spring 2018

ILMO’s Peoria region. Amber comes to us with a great deal of industry knowledge and a willingness to provide the support our customers Amber Tomlinson need. Her strong organizational and relationship-building ability will allow for exemplary customer service while building long lasting customer-based rapport.”

BUG-O Systems Names Director of Sales and Marketing

BUG-O Systems, a division of Weld Tooling Corporation, of Canonsburg, Pa., has named Scott Thayer as director of sales and marketing, according to Matthew W. Cable, company president. Thayer has almost 30 years of experience in the welding industry and a strong Scott Thayer knowledge of the BUG-O products. Accompanying his sales experience, Thayer is a Certified Welding Inspector and Certified Welding Educator.

Kaplan Industries Announces Two Position Moves Kaplan Industries, of Maple Shade, N.J., has announced the addition of Jarrod Jones as the Southern sales manager. Jones is based in Tampa, Fla., and is responsible for account management

across 10 states. He previously worked at Matheson Tri-Gas and GTS Welco/ Praxair. “Jarrod is a monumental addition to our team,” Jarrod Jones says Beau Papania, director of sales for Kaplan Industries. “His high character and successful sales experience are key components to further developing our brand in the Beau Papania Southeastern region.” Papania was recently promoted to his role in the company and changed locations. He was Northeast regional sales manager in Chicago, Ill., and now works from the Harrison, Ohio, production facility. He is responsible for the day-to-day sales and international business development.

Select Arc Inc. Appoints Joe Krall VP of Sales Select Arc Inc., of Fort Loramie, Ohio, has named Joe Krall as vice president of sales. Krall, a welding industry veteran with more than 40 years of experience, is now responsible for the sales operations at Select Arc Inc. and Joe Krall sister company Arcos Industries, LLC. Previously with the American Welding Society for 14 years, most recently as

INDUSTRY NEWS managing director of North American sales, Krall also served as national sales manager for Tri-Mark and vice president of sales for Hobart Brothers. He worked in the field for Chemetron, Hobart Brothers and Miller Electric at the beginning of his career. He began in the industry in 1974 with National Welder’s Supply in North Carolina as a delivery person. Krall is a lifetime member of The American Welding Society and has a bachelor’s degree from Bloomsburg University in Pennsylvania.

Welding Supply Acquires Hansen & Miller Service Center

Central Welding Supply, of Marysville, Wash., has acquired Hansen & Miller Service Center, located in Seattle’s Ballard/Fremont area, and is adding it to the company’s operations as a satellite division specializing in gas apparatus repair. Dale Wilton, Central Welding’s CEO, says Hansen & Miller has a well-established, long-term reputation for excellence in service to the Greater Seattle area since 1972. “There are few gas apparatus repair facilities anywhere in the Western United States with the same experience, capabilities and talents as the Hansen & Miller operation,” Wilton adds. “We’re fortunate to be able to bring this group into Central Welding Supply.” Previous owners-operators Harold and Beth Heia and the existing staff members of Hansen & Miller are all joining the Central Welding Supply team. The repair division is maintaining its current address as: Hansen & Miller Service Center, Central Welding Supply Gas Apparatus Repair Division, 4101 Leary Way NW, Seattle, Wash. 98107. The new division expands Central Welding Supply’s existing repair division for welders and related welding equipment. Both divisions are serving as

authorized repair and maintenance centers for name brand equipment, and both are being supported by Central Welding Supply’s relationship as an OEM parts distributor, Wilton says. The new Gas Apparatus Repair Division specializes in oxy-acetylene, oxy-fuel or propane welding equipment, cutting torches and more and it offers authorized repair for all major brands, including Victor, Harris, ESAB, Concoa and Flame Tech.

Two Added to Horton Group’s Welding and Gas Team The Horton Group has announced the addition of Jon Cappel and Will Cray to Horton’s welding and gas team. Cappel and Cray join industry veterans Ken Tidwell and Tony Hopkins, with all four responsible for providing welding and gas clients with comprehensive, cost-effective and innovative solutions Jon Cappel for their most complex, risk-related challenges. “We’re so happy to add the energy and experience that Jon and Will bring to the table,” Hopkins, practice leader, says. “The Will Cray energy level within our Welding and Gas Practice has never been higher, and there’s a very bright future.” Cappel has been a part of the Horton team for four years and has experience in the welding and gas industry. “When any customer becomes a partner with Horton, they are going to receive industry-specific

In Memoriam

DAG NORDBY Dag Nordby, a hugely popular and influential figure at Chart Inc. and within the wider gas community, passed away recently in his native Oslo following a short illness. A graduate of Syracuse University, Dag was an engineer by trade but a salesman to his core. He was employed by MVE at the time they were acquired by Chart, and he quickly became a key member of the team. He held international postings across the U.S. and Europe, particularly at Chart Ferox in the Czech Republic. Dag retired twice officially, but of course, he never really did. He was often heard humming or whistling his favorite tune, “My Way.” His family has asked that a passage from his eulogy be shared to honor him: “Please help us celebrate Dag’s life by simply talking with a stranger, singing a tune, being happy and living life to the fullest.” To submit In Memoriam remembrances or other industry news, contact: editor@ weldingandgasestoday.org or call 315-445-2347.

Spring 2018 • 119

INDUSTRY NEWS service of the highest quality, which goes beyond providing basic insurance. I am proud to be a part of Horton’s distinguished reputation, especially in the welding and gas sector,” Cappel says. Cray is a newly hired property and casualty agent who brings to his new role four years of insurance experience from Federated Insurance. The duo will expand new business development efforts as well as maintain client relationship responsibilities, the company says.

the group conducted a discussion about issues that encompass women in a male-dominated industry and the progression of successful women in the trades. As a leading supplier of compressed gases and welding equipment in the New York tristate area, AWISCO is always proud to support and celebrate women in the trades, says Lloyd Robinson, AWISCO president. He says the company enjoys showing that support especially during Women’s History month. “I am very proud that women make up over 20 percent of the AWISCO team. I am also very proud that women at AWISCO have held almost every role,” Robinson adds.

Hiab USA Inc. Names New Director of Sales

The women who work at AWISCO were feted by the company at its annual Women’s History Month luncheon.

AWISCO Luncheon Celebrates Women in Industry

AWISCO NY Corp., of Maspeth, N.Y., held a luncheon in March to celebrate the achievement of women within the company and within the wider scope of the welding and gases distribution industry. Guest speaker was Monica Pfarr, executive director of the American Welding Society Foundation. Following her talk,

Hiab USA Inc., the world’s leading provider of on-road load handling equipment and connected solutions, has named Michael J. DiLallo as its director of sales, North America. In that role, he has responsibility to develop and execute Hiab’s business development and sales strategy across all end markets, including Michael J. DiLallo industrial gas and LPG. Prior to joining Hiab USA, DiLallo worked for 11 years at Columbus McKinnon in a range of sales leadership positions. He most recently served as director of industrial sales - East, vertical markets, and inside sales. He has an MBA from the Rochester Institute of Technology and a bachelor’s degree in business administration and organizational communications from the State University of New York at Brockport in New York.

Know Someone Who Ought To Join GAWDA? Membership application forms are available online for completion here: gawda.org/join-us/membership-categories. Anyone interested in additional information about membership may get in touch with GAWDA’s membership services manager Stephen Hill. Phone: 954-367-7728 ext. 220 Toll free: 844-251-3219 Email: shill@gawda.org 120 • Spring 2018

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INDUSTRY NEWS

M&A SCORECARD Weldstar and Depke Gases Merge Weldstar Company, of Aurora, Ill., and Depke Gases and Welding Supplies have completed a merger, the companies announce. The merger combines Weldstar’s four locations with Depke’s three locations. Depke continues its operations as a subsidiary of the Weldstar Company, with Curt Towne continuing as Depke president. Towne oversees Depke’s three central Illinois locations and serves on the management team and board of directors of Weldstar. “The merger with our good friend Curt Towne brings together two like-minded companies and allows us to add members of a talented staff at Depke, most notably Curt, to our team,” says Joseph “J.B.” Winkle of Weldstar. Towne adds, “The possibilities that come with a Weldstar-Depke merger are extremely exciting. The combined personnel, geography and capabilities make us a formidable regional player. My family and I couldn’t be more thrilled to join forces with the Winkle family in their highly respected and successful company.” Depke was established in 1928 and Weldstar in 1936. Depke, with headquarters in Danville, Ill., serves

the central Illinois market. Weldstar, with headquarters in Aurora, Ill., serves the northern Illinois, northern Indiana and southern Wisconsin markets. Both companies now continue to serve the welding supply, gas and specialty gas markets. Winkle says Weldstar and Depke also continue to look for growth opportunities where it makes sense.

TOMCO2 SYSTEMS Acquired by Air Water Inc. TOMCO2 Systems Company, based in Loganville, Ga., a leading manufacturer of carbon dioxide–related equipment, has been acquired by Air Water Inc. The company continues operations under the TOMCO2 brand in its existing facility. Accordingly, the firm has announced several personnel appointments. Industry veteran Eric Rottier is assuming the position of chief executive officer for TOMCO2 while maintaining his role as CEO and chairman of Taylor-Wharton. Roland Wright is serving as chief operating officer for both organizations. Luke Bradshaw, who has been serving as Taylor-Wharton’s vice president of business development, has

become TOMCO2’s president. “We have a mandate to grow all aspects of Air Water’s Engineering Group’s product offerings in North America, which encompasses a full range of cryogenic equipment, and acquiring TOMCO2 is a significant first step that establishes a solid manufacturing and sales base in the U.S.,” Rottier says. Longtime TOMCO2 executive Dan Templeton adds, “On behalf of The TOMCO2 family, we look forward to the opportunity of merging into a new and dynamic organization. TOMCO2 has a great group of employees who proudly represent the best in quality and service, making it a brand name that is known throughout the CO 2 industry. The future looks bright with the new ownership to advance our product lines and capabilities.” Bradshaw states, “From the beginning, one aspect of TOMCO2’s value stood out in particular — the quality of people. Having a team with unparalleled experience, focused expertise on end-user applications and an ongoing drive to exceed customer expectations provides a unique platform to expand our efforts to transform to an applications-focused solutions provider rather than a traditional equipment manufacturer.”

SHARE YOUR NEWS! If you’ve hired new people, moved your facility, acquired a company, added a product line, have new offerings or anything else newsworthy is happening at your business, please let us know. We’d like to share those updates with your fellow GAWDA members. GAWDA publishes a twice-monthly e-newsletter (The GAWDA Connection) and a quarterly magazine for its membership audience. Simply forward your information to GAWDA Media at: editor@datakey.org; or dianes@datakey.org, or call us at 315-445-2347 x 120. Spring 2018 • 121

INDIVIDUAL

MANUFACTURERâ&#x20AC;&#x2122;S REPRESENTATIVE

SUPPLIER

DISTRIBUTOR

Member Benefit Chart PROFESSIONAL CONSULTANT SUPPORT FDA and Medical Gases (Thomas Badstubner) DOT, Security, OSHA & EPA (Michael Dodd) Government Affairs & Human Resources (Richard P. Schweitzer) Economic Analysis and Forecast (Dr. Alan Beaulieu)

EVENTS AND MEETINGS GAWDA Annual Convention & Spring Management Conference (AC/SMC) Contact Booths at AC/SMC Hospitality Opportunities at AC/SMC GAWDA Regionals Sponsorship Opportunities at AC/SMC/Regionals Education Offerings

RESOURCES Copy of Buyers Guide Listing in Buyers Guide Copy of Member Directory SOP, Safety & Reference Materials Online Career Center CGA Safety Documents GAWDA Scholarships Discount Business Services

KNOWLEDGEABLE COMMUNICATIONS Quarterly Welding & Gases Today Subscription

Twice-Monthly GAWDA Connection Monthly Safety Bulletin Advertising in GAWDA Publications * (one copy)

To learn more about other benefits of joining the Gases and Welding Distributors Association call Membership Services Manager Stephen Hill at 954-367-7728 x220.

NEW OFFERINGS

PRODUCTS | SERVICES | TECHNOLOGIES 1

1. Morse Unveils Diamond-Edge Cut-Off Wheels The M. K. Morse Company has introduced an innovative, vacuum-brazed technology in its new Morse Metal Devil Diamond Edge cut-off wheels for metal cutting. The product blade allows for diamond particles to adhere to the surface of the steel core, allowing heat to dissipate fast, resulting in long life and faster metal cutting, the company says. The technology results in blades that are a safer, longer-lasting alternative to traditional bonded abrasives, and a product that results in cleaner work environments and improvement in cost per cut, according to M.K. Morse. The company says the blades also offer a cost-effective option for cutting through a broad range of difficult metals, including metal studs, structural steel, stainless tubing, rebar and cast iron. The blades come in 4.5-, 6-, 7-, 12- and 14-inch sizes for use on high RPM saws, such as angle grinders, circular saws, gas powered saws and abrasive chop saws.

2. Responsive Respiratory Adds Cardboard Cylinder Rack

Responsive Respiratory, of St. Louis, Mo., has introduced an economical alternative to a metal or plastic rack for the storage of cylinders in the patient’s home. Called Store ‘N Stay, the cylinder rack is made of heavy-duty, moisture-resistant cardboard. It features a simple set up with a pop-open, lock-in-place design for ease of use and durability.

President Tom Bannon explains, “The new Store ‘N Stay rack was designed to meet the needs of our customers who are currently purchasing our corrugated Tote ‘N Go carriers and prefer the simplicity and affordability that cardboard cylinder storage provides. It stores and transports to the customer’s home flat, significantly reducing the transit space required for each patient’s oxygen set-up equipment. This translates into more patient runs per outing, reducing costs and increasing efficiencies.” The new rack joins RRI’s offering of heavy-duty cardboard carriers as a part of the company’s full line of oxygen delivery, storage and transport solutions. All products are stocked and ready for immediate shipment from the central U.S. warehouse.

3. West Chester Announces New Glove

West Chester Protective Gear is offering an innovative new Ironcat Metal Tamer TIG welding glove. The company says the glove, which it calls the the first of its kind, features a knitted shell for flexibility and breathability with a dotted silicone palm for outstanding dexterity and feel for the wire. The gloves are lightweight and cut-resistant and wearable all day for everything from welding to moving metals. The company says the gloves last four times longer than traditional leather TIG welding gloves. Spring 2018 • 123

ADVERTISERS INDEX 3M Company.............................................................3

Mercer Abrasives.......................................................7

Acme Cryogenics.....................................................75

Metal Man Work Gear...............................................34

American Cap Company...........................................88

Norlab.....................................................................59

American Torch Tip...................................................81

Norton Abrasives......................................................10

AmWINS Program Underwriters.................................80 Anthony Welded Products.........................................85 Arcos Industries......................................................IBC ASM- American Standard Manufacturing...................21 ASTARAS.................................................................13

ORS Nasco..............................................................86 PFERD.....................................................................76 Phoenix International................................................87 Postle Industries, Inc................................................36

Black Stallion – Revco Industries...............................17

Prism Visual Software...............................................93

BTIC America Corporation.........................................73

Ratermann Manufacturing........................................47

Bug-O Systems........................................................57

Reelcraft Industries..................................................45

California Cylinder....................................................53

RegO Cryo-Flow Products.........................................61

Carborundum Abrasives...........................................27

Rotarex North America..............................................94

Catalina Cylinders....................................................54

SafTCart................................................................103

Cavagna North America............................................64

Select-Arc, Inc........................................................ BC

CGW – Camel Grinding Wheels.................................67 Chart Industries.......................................................89 Controlled Efficiencies..............................................19 Cryoworks...............................................................78 CTR..........................................................................5

Sherwood Valve.....................................................111 SUMIG.....................................................................51 Superior Products....................................................61 Taylor Wharton.........................................................47

Cyl-Tec....................................................................15

Tech Air.............................................................28, 29

DataOnline..............................................................49

Thermacut...............................................................55

Exocor.....................................................................78

Thermco Instrument Corp.........................................79

FIBA Technologies....................................................83

Tier 5 Labs..............................................................37

Flexovit Abrasives.....................................................97

TOMCO2 Systems....................................................35

Gas Innovations/WWS..............................................53

Veite Cryogenic Equipment & Service Corp..................1

Generant Company..................................................93

Watson Coatings, Inc................................................43

Gullco International..................................................84 H & H Sales Company..............................................95 The Harris Products Group ......................................IFC Hobart Institute of Welding Technology.......................95 Industrial Pro, A Division of Forney Industries Inc........48

WEH Technologies..................................................113 Weiler Corporation...................................................72 Weldcoa..................................................................25 Weldship Corporation...............................................77

Kaplan Industries.....................................................11

Westchester Protective Gear.....................................42

knowGas, a division of Ratermann MFG.....................65

Western Enterprises.................................................41

The Lincoln Electric Company.....................................9

Winton Products Co.................................................88

McDantim................................................................71

Worthington Industries............................................... 2

124 • Spring 2018

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