VALLEY NATIONAL GASES (VLG)

 

The distribution of most packaged gases is most economically performed within approximately a 30-mile radius of the product packaging or inventory location due primarily to costs associated with delivery of cylinders. Therefore, the estimated national market of $9 billion consists of hundreds of regional markets. We solicit and maintain business primarily through a direct selling effort using an experienced sales force of approximately 83 account and area managers. Account managers receive ongoing training so that they are knowledgeable about gas and product performance characteristics and current application technology. On average, our account managers have more than 10 years of industry experience. Account managers are paid a base salary and commissions based upon account profit margin. Efforts are focused on accounts generating sales of high margin products. Occasionally, account managers make joint sales calls with our suppliers to address difficult or innovative application requirements. We have been testing both telemarketing and catalog solicitation at selected locations to attract new accounts. We believe that electronic commerce conducted through the internet, or e-commerce, may become an important method in attracting and maintaining some customers in the future. We plan to continue developments in this area.

 

In addition to delivering packaged gases to our customers, we also serve “walk-in” customers from our branches, where gases and hard goods may be picked up. Each branch location contains a showroom to allow customers access to equipment and supplies. Branch locations are chosen on the basis of local market distribution logistics. Our advertising efforts are limited as we do not consider advertising to be a significant factor in generating sales.