Maine Oxy expands its gas business into new markets
PHOTo / Amber Waterman
Dan Guerin, president and CEO, left, and Carl Paine, development manager, stand in Maine Oxy's Auburn headquarters where they are applying new technologies to grow their business.
It's not the rough grinding disks, strong hand tools or welding helmets that stand out in Maine Oxy's company store at its Auburn headquarters. It's the Elvis memorabilia at the cashier's desk, where the display showcases miniature pink Cadillacs, a copy of Elvis's driver's license, an Elvis clock and various tin boxes emblazoned with “The King's” image. The collectibles belong to the person manning the counter, who turns out to be a huge Elvis fan.
The Elvis gear also illustrates the company's personality. Employee-owned since 2004, the industrial, medical and specialty gas company encourages its workers to make decisions on the spot rather than running everything past management. The result is a company where workers stay 20 or more years — one person worked there 42 years before retiring two years ago. Today, the company has expanded its stores to 15 locations throughout New England and plans to fan out even farther, south of New Hampshire, where it is seeing growing demand for its wide range of gas products. The gases are used in everything from welding to calibration to medicine and even in food and beverages, where nitrogen helps keep bagged salad fresh and carbon dioxide produces bubbles in beer and soft drinks.
“The company is progressive on how we approach the market. It's fun to work here, and employees are empowered to deal with a problem right there [at its source],” says Carl Paine, business development manager at Maine Oxy, himself a 26-year veteran. Indeed, a sign on the factory floor reads, “Work like an owner, think like a customer.”
In October 2012 employee Dan Guerin, who is president and CEO, bought 51% of the company, vowing to keep it independent. Maine Oxy still is sorting through what that means in terms of continued employee ownership, that is, whether the ownership percentages will stay the same or the employee owners will sell back some of their position in the company, Paine explains.
“I saw an opportunity to become majority owner of a great company and grow it. And keep us independent,” Guerin told Mainebiz during a recent interview at company headquarters. “We think being independent is a must. We empower all of our employees to make decisions, to move quickly. Larger companies have a lot of red tape.”
He adds that if a customer runs out of a product, Maine Oxy can get it there quickly rather than having a long and involved ordering process.
Customers gas up
While the company did see a slowdown during the recent recession, with some portions of industry slowing and others picking up, it has nonetheless grown rapidly, adding five new store outlets in New Hampshire, Vermont and Connecticut in the last six years and bringing the total in those three states plus Maine and Massachusetts to 15. Revenue is about $38 million, and is expected to top $40 million next year. Paine says the company is “very profitable,” but declined to give specifics. Its employee count also has risen to 157 from about 140 in 2007.
Demand from wholesale customers, such as industrial, medical and veterinary laboratories and businesses, also is strong as a whole. In Maine the market has leveled off, but Guerin expects to tap markets south of New Hampshire, where demand is growing and warmer overall weather means year-round sales. That can offset the slowdown in certain market segments, such as construction, that befalls the company once frost sets in.
“Winter is a struggle for us. Construction companies slow down. The ground freezes,” says Guerin. “Construction uses a lot of our product. January and February are slower for us, but in the spring it is crazy busy.”
Other markets, like aerospace/aeronautics, are steady year-round. The company has expanded by acquisition as well, buying existing stores in Naugatuck, Conn., and Rutland, Vt.
The company both sells gases and installs piping in new or rebuilt labs and facilities. Its affiliated welding school is a nonprofit 501(c)(3) venture. The company's core sales are industrial and specialty gases. Maine Oxy sells dozens of different types of gases, including specialty gases and calibration gases, in 20 countries. Overseas markets are an opportunity for the company, Paine says, but it isn't seeing huge growth in them yet, has no stores overseas and thus remains focused on the United States. The company's factory is International Standards Organization 17025 certified for specialty gases. Competition includes Praxair, Airgas and Matheson Tri Gas.
The $2.9 billion specialty gas industry has been expanding 3.5% annually over the past five years, according to the Freedonia Group. The Cleveland, Ohio, market research company also predicts that global demand in the $35.7 billion industrial gas market will rise 8% through 2014. Manufacturing will remain the largest market for specialty gases, with health care growing the fastest. Freedonia notes that analytical gases will outpace other applications because of the increasing need to monitor pollutants, maximize production efficiency and monitor product quality.
Training welders
The company runs the nonprofit New England School of Metalwork to train welders, who are in short supply and aging out of the business. The school is for displaced workers or those who want additional job training. Maine Oxy also runs a Mobile Weld Training Center that visits high schools. While MaineOxy doesn't employ the welders, the payoff is in helping supply work force to customers, some of whom use acetylene for welding.
“Welding could be a lucrative career,” says Paine. “But today, kids want to go with computers. They don't like getting their hands dirty.” The average welder is about 56 years old, and when he or she retires, young people aren't moving in to fill the spot, he says.
That's why the company takes its mobile center to high schools, where welding classes used to be taught but no longer are. Paine says welders can get anywhere from $12 to $30 per hour, even higher. And it's a way to see the world, Guerin adds. “One of our former employees traveled all over the country working [welding] on wind farms,” he says.
The lack of welders also is costing Maine business, Guerin explains.
“One local business shipped its product to be made in Canada [because it couldn't get welding here]. A lot of other businesses suffer from that, too. There's a trickle-down effect,” he says. “This is a national problem, not just in Maine.”
Paine adds that welding was considered a dirty trade 30 years ago, but with today's fume extraction and ergonomics, the profession is now cleaner.
Along with that trend, the demand for acetylene gas for welding is being supplanted by other processes and alternative fuels like propane and propylene-based products. And newer devices like plasma cutters are powered by electronics versus fuel gas.
Specialty gases
The company latched onto the growing demand for specialty gases in 1993, when it established the Spec-Air Gases and Technologies division. It also is carving a niche within that market by selling the recyclable Enviro-Cyl gas cylinder, which it hopes will replace some of the disposable cylinders now dominating the market. The recyclable cylinder can be refilled. Initially it costs more to buy the cylinder, but over time the customer is only paying for the gas. Cylinders are tested every five years to see if they can still hold adequate pressure.
Maine Oxy continues to look at appropriate cost controls and procedural improvements, especially considering safety, Paine says. One recent improvement is electronic cylinder tracking, by which each cylinder contains a bar code and a stamped-on serial number so it can be tracked for location, whether it is filled or empty, or even whether it is stolen or loaned to someone else.
The company keeps a float of 100,000 cylinders of all sizes at its factory. They are made of steel, and can weigh up to 120 pounds. The recyclable ones are made of aluminum.
“Cylinders are our biggest assets, other than people,” Paine says. “They're expensive to purchase, and they last a long time.”
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