Serving virtually every industrial sector in the global economy with its wide range of productions and applications, 2019 has been a year of transformation for the industrial gases market.
Characterised by the changing of the guard at the Tier One table and the resulting mergers and acquisitions that have trickled down through the industry in the wake of the Praxair-Linde merger, 2019 has seen Taiyo Nippon Sanso make its first significant entry into Europe by purchasing most of Praxair’s European business; Messer acquiring a large part of Linde’s American business, representing its return to the region; and Air Water purchase regional parts of both Linde and Praxair’s companies in India.
2019 brought readjustment to strained supply chains, with the CO2 business continuing to walk that tightrope of supply-demand imbalance and Helium Shortage 3.0 starting the year arguably at its peak and continuing to be a focal point of discussion as the months rolled by.
We’ve also seen continued investment in the hydrogen energy value chain in the last 12 months with momentum growing for the much-awaited ‘Hydrogen Economy’.
So many are the stories from 2019 that gasworld has reached out to various industrial gas and equipment players for a series of exclusive interviews to be published daily throughout December reviewing the last 12 months.
First up is Messer who this year announced it would construct a new 450 tonnes-per-day carbon dioxide plant in California (March); reported 2018 was the best financial year in the company’s history to date (May); and commissioned a new production plant for air gases in Vietnam, which Messer said is now one of its largest production sites, producing a total of 400,000 cubic metres of process air (August).
But Messer’s return to the American markets was undoubtedly the biggest highlight of the year for the company, as Ernst Bode, Chief Operating Officer at Messer, tells us more about below.
Gasworld (GW): What’s been the most exciting application or growth driver for industrial gases this year?
Ernst Bode (EB): Generally, food applications such as freezing and cooling were ging very well. Our most interesting application development in 2019 is an answer to the needs of the growing home delivery food market. It is about to be implemented at a customer in France.
However, the biggest growth driver was pricing. We believe this will continue in 2020 especially given the continuing shortage of some products such as helium.
GW: 2019 saw Messer return to the American markets. Is this the biggest highlight of the year for the company?
EB: It is without a doubt. Having left the Americas in 2004 it is a great joy to return like this through the main entrance.
I believe it is not only the biggest highlight of the year, it is the biggest highlight of the decade for us.
Something like this does not happen very often. Judged on our scale, it is as when Linde acquired BOC. We have doubled in size and become global again.
GW: Tell us about some other 2019 highlights for Messer?
EB: Well, the company and the Messer family won a number of prizes and were recognised for their success and their management style in the business community across the countries in which we operate.
However, more concretely, we started to focus intensively on efficiency improvements in the operational areas of production and logistics.
I believe we had been lagging behind our competitors in a number of fields, but we are beginning to close the gap.
The same is valid for our commercial activities. In the end our drive for greater efficiency will go to the core of all functional areas, including Selling, General and Administrative Expenses (SG&A).
GW: What have been the hot topics this year?
EB: The hottest topic certainly was the return to the Americas and the task to organise the collaboration and cooperation with our joint venture partner and new colleagues in the newly formed investment vehicle, in which we hold a 58% participation.
The transition period of the next couple of years – until we will be able to take over the remaining 42% and integrate the newly acquired businesses into the Messer Group – will be a challenging and very interesting time.
On the more basic level, we had to cope with a sharp rise of electricity prices and a tight labour market that also led to significant cost increases in many economies.
Consequently, efficiency and end-customer pricing are major subjects. The development of bulk prices in China will be very imporant.
GW: Looking ahead to 2020, what does Messer have planned?
EB: I guess the subjects of 2019 will keep us busy in 2020 too. Certainly, we plan to lay the groundwork for our target to acquire 100% of the investment vehicle formed for the acquisition of the businesses in the Americas.
The success of a number of investments that have been started in China and the realisation of our budget plan will be crucial, as will further operational and commercial improvements.
GW: Finally, if you had one thing on your bucket list for the gases industry, what would it be and why?
EB: Just as in any other industry, global trends will influence the way we are doing business. Our ability to recognise them on time and to adapt will determine how successful we will be.
Our industry should focus on its undoubted ability to support human progress by solving operational issues in our customer sectors.
Some of the biggest issues today are the aging population, the costs of health care, urbanisation and the need to reduce the use of fossil fuels also for economic reasons.
The gases industry will play a role in addressing these issues.
The 2019 in Review Series continues tomorrow with Stefano Marani, CEO of Renergen.