“Build it and they will come.” We all remember “Field of Dreams.” Beware the operative word here — dreams. This assumption has no home in the real world of high end specialty gas production technology. Even if “they” do come, they will not come fast enough to satisfy your return on investment expectations, regardless of the promises the equipment salesman made.
The specialty gases segment is one of the few markets that has been resilient in times of recession and represents an excellent growth path for the independent gas distributor. As specialty gas sales grow, senior management invariably is confronted with the decision to either locally produce the products sold or continue to buy these products for re-sale. The answer is not as simple as it may appear.
Capital investment decisions are certainly sales driven but you must ask, do the desired sales offer sufficient margin to justify the investment in technology, human resources, and equipment? I founded my consulting business in 1993. Our primary purpose was to educate the independent distributor on how to navigate the decision process to determine the viability of local production of products routinely purchased for re-sale. Studies at that time, based on work with distributors who have chosen to embrace specialty gas sales and production, point to a generally valid indicator: a distributor who is purchasing $200,000 per year of specialty gases for re-sale, and is already filling cylinders with industrial and medical gases, should seriously consider the local production of a basic line of specialty gases.
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