Competition

Market 12 main companies in Sales Product

USA
Lincoln - 40 year old $385 million High volume low cost products
Company - 1984 sales - mostly direct - strongest mild steel stick
- vertical integration customers - mild wire solid wire steel
- low prices on - commodity items
electrodes
- vertical integration
of electrodes
- 200 sales person - Distributor margins only
- 48 self owned 5%
store - distributor influenced by
- 1000 distributors size and aggression of the
(250 shared by company
ALLOY)
- 60% sale to end
users
Hobart $120 million - 50% electrodes
- 100 sales person - 45% welding
- Company owned - 5% generator
stores - product development
- aggressive
- Inconsistent quality
- Inconsistent pricing
Airco 1984 situation - mostly - discontinued gas shield flux-
independent cored product
distributors - reduced electrodes
McKay Division of - $30 MILLION - Strongest stainless steel
TELEDYNE electrode
- low hydrogen
- gas shieled dlux-cored
electrodes
Tri-Mark - Founded in 1970 - $16 million - only sell flux-cored
- independent electrodes
distributors - proactive engineering
- small segment of
quality sensitive
Foreign - market open since - distributor were - FLUX CORED ELECTRODE
Comptn 1982 not very open to BY KOBE
- Japan, korea, west foreign –MAKE IN - 35 distributor in HOUSTON
europe USA
DISTRIBUTOR CHANNEL
Both end user & distributors
Independent sales increased
WELDING PROCESSES
Welding consumables – five basic products
- flux coated wire electrodes
-Low hydrogen coated stick
electrode
Stainless steel electrode
Mild steel coated stick (SMAW)
Mild steel solid wire electrode
Ftc ruling equipment and products
electrode cud not be sold - welding equipment
together - gases
- filler material
- Alloy sell only electrode
- miller sell only equipment
Distributor relationship thru
phases
Electric arc welding
Pass voltage-maintain
current
- $100 million sale in 1984
- 2/3rd glass shield wire
- avg price per .79 – price varied depending on diameter
- growth rate projected 2% in 1985
- for critical applications
- low hydrogen content
- manufactured and packaged to keep air low
- different electrode – mild or low-alloy steel
- avg $2.65 pe rpound
- avg sale $51 million
- Projected growth rate 2%
-
- $204 million in 1984
- avg price .46 per pound for stcks
- .55 for wire
- projected growth rate 1.0% in 1985
- Value added items difficult to achieve – product
 differentiation
- Industrial Trends
- recession 1982 and 1983 –in united states the sale drop by 30%
- Many companies moved business to foreign country
- advantage of welding with continuous wire elctrodes became better known
- people switched from coated stick electrode to flux-cored and mild steel solid wires.
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