Welding equipment distributors are concerned with many of the same problems — and opportunities — as their counterparts in other distribution markets.

They see shrinking margins, market share threats from large consolidators, and a worsening economy affecting growth in 2001. There are bright spots, however, and distributors are concentrating on supplying those products.

James Madison, president of Prest-O-Sales and Service, Inc. in Long Island City, N.Y., said that sales were over budget for the first quarter, but he expects worse results as sales soften for the rest of the year. He expects all market sectors — abrasive, gases, and tools — to soften, with none getting a devastating hit.

"We're fairly diversified ... and have enhanced ways of doing business. We're implementing e-commerce for existing customers to lower transaction costs and make it easier for customers to do business with us," Madison said.

Costs are escalating rapidly, he noted, due primarily to the high cost of fuel and other energy products. One product area holding its own in sales, according to Madison, is safety.

Fume removal and other respiratory protection equipment is selling better than other items.

At nexAIR, LLC in Memphis, which operates 18 branches in six states around Tennessee, sales are down 10 to 15 percent in same-store figures from a year ago on most products, according to Chip Valentine, vice chairman. The one exception is fine plasma cutting, a new product area that has held its own in the last 12 months.

"All the rest are weaker. We began slowing last July, especially in a segment of over-the-road trailer manufacturers. We sell to a lot of them, and they are down about 50 percent from a year ago," Valentine said.

"Realistically we think we may have hit bottom, looking at about six more months at this pace," he said. He predicted better sales growth in 2002.

Like the abrasives and safety lines that Prest-O-Sales carries, sales are down about 10 percent at nexAIR, as well. The overall market in peripheral products is best described as "remaining constant," Valentine said.

Madison sees the same cautious trends in consolidation of the industry.

"The big acquirers have to show their investors they can make money running welding supply distributors," he said. "More activity seems to be in medium size distributors merging or acquiring competitors."

Nasco, Inc. of St. Paul, Minn., is a national wholesaler of welding, safety and industrial equipment. According to President Craig Loos, the sagging economy is affecting all regions of the country in welding supply, but some products continue to be strong with his customers. Like Prest-O-Sales and nexAIR, he said safety and particularly respiratory protection product sales are growing in spite of the economy.

"Power tools and chemicals are still strong in the industry, also. Safety is strong because the products are necessary regardless of the amount of welding work that is done. Eyewear is strong, particularly auto-darkening welding helmets," he said.

Abrasives also remain strong for Nasco, and that market is actually growing through the downturn, according to Loos.

"Most every market has been hit by the economy — automotive and steel are hard hit — but for various reasons like innovation, safety is selling well," Loos said.