A Comprehensive Introduction to the Business Model of the Industrial Gas Industry
Nearest Gas Station to me: For upon |Industrial gases are specially manufactured for various types of factory operations and are also gaseous at room temperature. These are a special group of chemicals that may or may not be elemental gases but usually have low molecular weights. The use of these gases is not limited to a specific industry as these have some sort of application in almost every industry. Despite being amazingly useful, these gases may be flammable and cause other harm if used without caution. Nearest Gas Station to me.
An Overview of the Industrial Gas Market
Hydrogen (H2), Oxygen (O2), Acetylene (C2H2), and Methane (CH4) are the gases widely used in the majority of industries including aerosol cans, toys (air guns), automotive, cryogenics, welding/cutting, environment protection, firefighting, food processing, packaging, laboratory, instrumentation, healthcare, home appliances, aerospace, rubber, plastic, paint, semiconductors, water treatment, etc. Applications in such a wide range of industries clearly show the penetration and industrial gas market share. The industry is growing at a rapid pace at a Compound Annual Growth Rate (CAGR) of 7-8 percent until 2022. Such tremendous growth is due to the revival of large global economies including the U.S. and China. Nearest Gas Station to me.
In addition, lowered energy prices and operating costs are prominent reasons for such growth in the market. This is because the cost of energy production consists of almost 60 percent of the total cost of generation and the cost of production also varies accordingly. However, unique factors that exist in specific geographical locations are also responsible for price differences. Nearest Gas Station to me.
Industrial Gas Business Model:
The industrial gas market is similar to a service industry that thrives on good pricing and reliability. The consumers or end-user industries usually do not change their suppliers as long as they do not face supply issues. A few pointers can be derived by studying the business model of major players in the industry. Nearest Gas Station to me.
- Division of Gases: An industrial gas company should offer a variety of gases and it can also choose to deal with specific chemicals. Nearest Gas Station to me.
- Delivery Methods and Industries: The company also needs to partner up with businesses from other industries to establish their client base, allocating activities to specific product areas such as onsite, healthcare, cylinder gases, and liquefied gases. Industries that require larger supplies should be provided with onsite production plants and an uninterrupted supply whereas clients with limited or occasional requirements should be supplied with tankers or cylinders. Nearest Gas Station to me.
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- Management of Operations: Managing operations in this industry requires administration on multiple fronts. Broadly, responsibilities are given on a regional basis and Regional Business Units (RBU) is in charge of business operations. On the central level, a Centre of Excellence (CoE) should be there to establish best practices and ensure that all the processes and standards are followed. Nearest Gas Station to me.
- Products and Services: The business should be able to promptly offer its products and services that also include production and processing services. This division should be responsible for providing aid to the operations and production division. Nearest Gas Station to me.
Industrial Gas Market Growth Drivers:
Only half a dozen companies including Air Liquide, Air Product, TNSC, Yingde Gas, Linde, and Praxair dominate the industrial gas market with approximately 80 percent market share in total. The market is expected to grow even more due to emerging economies such as India and China and stabilize prices of oil and natural gas across the globe. Nearest Gas Station to me.
Market growth in this industry is particularly driven by prices and demand. The price drivers in this industry are purity, product customization, the volume of the product, and delivery location. The delivery of industrial gas is accomplished through a variety of mediums that include onsite processing and/or production, pipelines, bulk deliveries, and small packaging such as cylinders. Here, gas suppliers play an important role as they assist companies by tracking shipments for better stock management and safety. This ultimately enhances supply-chain efficiency. Nearest Gas Station to me.
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Each aspect of the industrial gas industry has its own variables and those are also contributing factors in the overall growth. Onsite production/processing is a widely opted phenomenon that caters to a large number of industries. For instance, Praxair witnessed decent growth in its revenue share which went up from 34 percent to 35 percent in 2016. On the other hand, Linde obtained an improved share in the onsite business in 2017 with new plants in Germany, Northern Europe, the Middle East, and Eastern Europe. In addition, Air Liquide also supplies its bulk and cylinders around its onside and/or pipeline business. Nearest Gas Station to me.
Despite the fact that industrial gases seem like a niche product, these are used in everyday operations. From healthcare services to manufacturing operations such as welding or cutting, all of these require industrial gases to complete or even start the process. Therefore, with the increasing industrial environment and emerging economies across the globe, the sector is looking more promising and is sure to cover a larger market share than before. Nearest Gas Station to me.
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