Maine Oxy expands gas business into new markets

Posted Dec. 26, 2013, at 3:51 p.m.
Last modified Dec. 27, 2013, at 12:52 p.m.

AUBURN, Maine — Despite a recession-related slowdown, Maine Oxy nonetheless has grown rapidly.

Today, the industrial, medical and specialty gas company has expanded its stores to 15 locations, 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. 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.

Maine Oxy President and CEO Dan Guerin in mid-December took full ownership of the Auburn-based company, according to Carl Paine, the company’s business development manager.

The firm had been employee-owned since 2004. Guerin first took a 51 percent stake in October 2012.

Guerin told Mainebiz in early November 2013 that when he purchased the company, he vowed to keep it independent. But that left continued employee ownership in question.

The terms of the most recent sale were not disclosed.

“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.”

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 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,” Guerin says. “Construction uses a lot of our product. January and February are slower for us, but in the spring it is crazy busy.”

Other markets, such as 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 sells gases and installs piping in new and 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 percent 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 percent 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 Maine Oxy doesn’t employ the welders, the payoff is in helping supply workforce 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 earn from $12 to more than $30 per hour. 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 such as propane and propylene-based products. And newer devices like plasma cutters are powered by electronics versus fuel gas.

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