Extending the Platform
Peter McCausland of Airgas and Jim Turner of National Welders celebrated their joint venture in June 1996.
In 1996, Airgas entered into a joint venture with National Welders Supply, the largest privately owned distributor of industrial, medical and specialty gases at the time. A major shareholder in Airgas, National Welders had 45 locations in five southern states, three air-separation units and $120 million in annual sales. In the deal, Airgas obtained a controlling interest in National Welders. This investment pushed Airgas over the $1 billion sales mark.
Expanding into Adjacencies
Airgas’ core business was always, and still is, industrial gases and welding hardgoods. In the mid-1990s, however, the company made bold moves into related businesses in order to diversify its product portfolio. These adjacencies included safety supplies, dry ice and CO2, and welder rentals.
Airgas was selling safety supplies to its customers on an as-needed basis, purchasing those supplies from specialty vendors. In 1992, the company began its own fledgling safety division. The 1996 purchase of IPCO Safety, a $55-million safety supplier, and of Lyons Safety a year later, solidified Airgas as a major supplier of items from safety glasses and personal protective equipment to custom safety signs and area protection. Today, Airgas offers more than 30,000 safety products, and books more than $400 million in safety sales annually.
Dry ice and CO2
Airgas acquired dry ice companies throughout the 1990s. This endeavor culminated in the 1997 purchase of the Jackson DomeCO2 reserves from the Shell Oil Company, as well as the acquisition of two major suppliers of dry ice and CO2, American Dry Ice and Carbonic Industries. Today, Airgas Carbonic is the largest manufacturer and distributor of liquid carbon dioxide in the Southeast, and Airgas Dry Ice, with its Penguin Brand, is the largest wholesale dry ice distributor to grocery stores.
Airgas entered the welder rental business in 1995 with the acquisition of Red-D-Arc, a well-known name in renting and leasing heavy-duty welding machines. The business included just two U.S. branches and four in Canada. Today, more than 50 Red-D-Arc branches dot the map, including locations in Mexico and Dubai and additional locations in Europe as part of the Red-D-Arc subsidiary A & N Plant.
"Airgas sees the big picture and never sits and watches the world go by. When market forces present an opportunity, Airgas acts, moving into adjacencies like safety and Red-D-Arc. You don’t find Airgas playing catch up. Instead, it takes the rest of the industry a while to catch up with us—and by then it’s too late."
Strategic Accounts Manager
Medical and specialty gases
Medical and specialty gases, part of the product mix since the beginning, became a steadily increasing focus throughout the 1980s and 1990s. These markets were small but offered faster growth than industrial gases. And the welcome diversity in Airgas’ product line offered a cushion against the economic ups and downs of manufacturing and construction.
In 1989, when the average distributor had 42 percent of sales tied to metal fabrication, Airgas had only 24 percent, with 14 percent to medical customers. In 1994, Airgas saw a dramatic 35-percent increase in its continuing specialty gas sales, compared to an industry average of 15 percent. By 1997, the company had the largest network of specialty gas labs in the nation.
"I remember thinking that if we can do this—create a robust hardgoods infrastructure—we will have a tremendous competitive advantage over everybody in the industry. We could all feel it. And you know what? We were right."
Mike Molinini, Executive VP and COO
Forging a Hardgoods Strategy
In the mid-1990s Airgas sought to become its customers’ sole source of welding gases and related hardgoods. The National Welders joint venture in 1996 boosted Airgas’ hardgoods portfolio, as did the major expansion into safety supplies. A system for managing the supply chain of these products became an increasingly urgent necessity. Airgas Direct Industrial (ADI) was formed in 1997 to create a hardgoods distribution infrastructure and bring discipline to the supply chain. The acquisitions of IPCO Safety and Rutland Tool & Supply were key to the formation of ADI. IPCO sold safety equipment through telemarketing, while Rutland offered metalworking products via direct mail and catalogs. Airgas was especially eager to incorporate the technology underlying Rutland Tool’s electronic catalog to facilitate its e-commerce aspirations.
ADI enabled Airgas to shrink its roster of hardgoods suppliers and to focus on the best brands. To ensure that its stores and customers could get what they needed, when needed, the company started building distribution centers strategically located around the country. Today, Airgas operates six distribution centers and three centralized buying centers.
ADI not only became one of the largest and most profitable hardgoods and safety distributors in the country, but also set the stage for Airgas to transform itself into a true operating company, with a nationwide infrastructure for sales and distribution.
"When the first Radnor products came out, in the first month of the first product, we sold $3,000 worth. Today, Radnor brand sales are about $250 million a year."
Mike Molinini, Executive VP and COO
Creating the Radnor Brand
Part of the hardgoods strategy was creating Airgas’ own brand—the Radnor brand. Radnor enabled Airgas to negotiate discounts with suppliers. The Radnor label, which debuted in 1998, now has excellent brand recognition and is offered nationwide through Airgas’ vast distribution platform.