The Changing Face of the South African Industrial Gases Market
The Industrial Gases market in South Africa has changed significantly over the last fifteen years, which was previously characterised by a dominant market player. Traditionally, the key market players are USA and French global companies. The latter has the highest local market share. Today, the market is much more fragmented with reduced market dominance. The changes over the last decade continues and appears to be accelerating as the South African marketplace normalises.
2. The main market drivers and its impact
The main market drivers over the past fifteen years are:
- Shift in the on-site market and impact on the cost and availability of bulk gases
- Competition review of long-term gas supply contracts, which enabled customers to change gas suppliers after shorter contract periods.
- Growth of independent gas distributors
- Transformation and the rise of black-owned and black managed industrial gases and welding distributors
Whilst the impact of the above resulted in more competition and greater choice for customers, the impact of the new black-owned and black managed distributors will most likely speed up the marketplace normalisation.
Traditionally, the white-owned industrial gas distributors served the small-to-medium customers with cylinder gases due to their ability to respond better to the demands of this market segment and their solid customer relationships. Their lack of scale and ability to serve the larger corporate customers limited their ability to play in the large customer segment. Most of these distributors operated in a specific geographic location which meant they could not serve customers that required a national footprint.
3. A seismic shift in the Industrial Gases market
Towards the end of 2017, a little publicised event occurred that would significantly change the industrial gases market landscape. Black investors acquired a share of Weldamax (Pty) Ltd which effectively meant that this company became black owned with a significant black women shareholding. More importantly, the company is black managed by a CEO with almost 30 years of experience in the industrial gases and welding industry at executive level, including nearly ten years at global level. Weldamax is the holding company for:
- Unique Welding Alloys, national supplier of gas and welding equipment with 14 branches nationwide.
- Selrod, a specialist supplier of welding consumables to the sugar industry, and
- Maxweld & Braze, a wholesaler of welding consumables with a fifty-year history and a household name in South Africa
In less than a year, the new Weldamax was able to:
- Leverage the product and industry knowledge of the new CEO and improve the product range, introducing market leading new products
- Hire highly experienced staff to uplift the competency level
- Introduce a key account capability that would enable it to service large national customers
- Leverage its 14 branches nationally to provide both a superior local and national footprint, upgrading some of the branches.
- Gain the industrial cylinder gases business at large corporate customers, including the supply of gases to a large multi-site national customer worth in excess of R10m in sales per annum.
- Install the new technology mini-bulk gas solution for a laser cutting customer
- Complete 18 industrial gases and LPG bulk and mini bulk installations.
For the first time in South Africa, small and large customers are able to source their industrial gases (and welding products) from a black-owned and black-managed gas supplier without any fear that their supply will be compromised. Unique Welding Alloys (UWA) distributes Air Products gases and is its largest distributor and most effective route to market for cylinder gases. The technical skills present in UWA enables the company to assist customers with the correct selection of gases and -most importantly – assist customers to optimise their MIG and TIG welding processes by supplying an integrated welding solution. In addition to its own technical skills, it is able to leverage the technical skills of Air Products and its global suppliers of welding consumables and machines.
The advent of this sizeable, national and competent black-owned and black managed industrial gases player has sent seismic waves through the industry.
4. Expanding the black-owned network
The Unique Welding Alloys CEO is passionate about transformation and is working with other black entrepreneurial businesses to raise the overall competency level in the industry and broaden its impact. It partnered with other black women owned welding distributors, whereby these new emerging players are able to leverage the Unique Welding Alloys extensive supply chain infrastructure to service their customers.
In summary, the transformation of Unique Welding Alloys has already impacted the industrial gases market and will undoubtedly accelerate the changes as customers begin to experience the benefits of face-to-face customer service and the solution-orientated approach to reducing the cost of MIG and TIG welding.