From cannon balls to military equipment and then onto hi-tech gas containers, Harsco Corporation (NYSE: SC) traces its roots to 1742 when Taylor-Wharton began producing crude ox shoes, steel wagon rims and small metal forgings along the south branch of the Raritan River near High Bridge, New Jersey in colonial America.
Modern day Harsco Corporation has evolved into a $2.5 billion international industrial services and products business. The Corporation has transformed from a predominantly domestic US manufacturer to an internationally focused company with 18,500 employees at over 400 facilities in 40 countries of operation. Part of the Corporationï¿½s global development has come from its gas containment business ï¿½ recently re-branded to Harsco GasServ. This month, gasworld has pleasure in interviewing the Harsco GasServ Global Governance Team.Harsco GasServ
The Harsco GasServ division of Harsco Corporation has moved from traditional manufacturing thought processes to total gas application and service offerings. The company's new focus is developing gas containment \\$quot;solutions\\$quot; using a broad range of new products, technologies and applications. Harsco GasServ comprises four complementary manufacturing and service businesses that, when combined, form a global network of technology, service and manufacturing for gas applications involving pressure vessels and precision valves.What is the general strategy or mission of Harsco GasServ?
Mr. Cline (VP and Head of Committee): \\$quot;As stated by Mr. Hathaway in our recent press release (dated 3 August 05), 'Harsco GasServ's management mission is to significantly enhance what we perceive to be a current opportunity to improve our customer relations performance.' Therefore, we are focusing more on relationship management with our customers through innovative technologies and service solutions.\\$quot;How important is Harsco GasServ to Harsco Corporation?
Mr. Cline: \\$quot;The turnover for the GasServ Division as reported in the 2004 Harsco Annual Report was $339.1 million (15%) and the division has been a contributor to the development of Harsco Corporation's global presence and its switch from pure manufacturing to the service sector.\\$quot;How important is the international presence to the company now and will the focus be on Europe or the Far East or both?
Mr. Cline: \\$quot;GasServ has a substantial presence internationally with operations in Germany, Slovakia, Malaysia, China, and Australia. The international demand for our products continues to expand significantly. Our strategy is to continue to expand our presence in those markets which we believe will offer the greatest opportunities for growth.\\$quot;
Mr. Miller (VP and GM of SCI): \\$quot;As heavy and light manufacturing continues to grow internationally, GasServ’s international presence and reputation will provide a stable platform to both facilitate and access this growth.\\$quot;
By moving some of your cryogenic products manufacturing to the Asia/Far East, you will gain from lower manufacturing costs but you are also entering a more competitive field with less rigorous standards. How can Harsco GasServ grow the business in such an environment?
Mr. Cline: \\$quot;Our Asian facilities manufacture products to various codes including ADM, ASME, and the CB150 Steel Pressure Vessel Code in China. Our experience is that lower quality products do not perform to the expectations of the major gas companies and are being replaced with higher quality products manufactured by GasServ. It is wise for companies to evaluate the total cost of ownership when they purchase rather than the initial cost of the purchase.\\$quot;
Mr. Boyd (VP Sales & Marketing - IGP): \\$quot;Remember, we have a century and more of experience in these sectors which enables us to offer our customers unparalleled knowledge and manufacturing expertise.\\$quot;Taylor-Wharton
Taylor-Wharton (T-W) produces a comprehensive range of bulk and portable cryogenic storage units and a complete line of high pressure compressed gas cylinders and asbestos-free acetylene cylinders. The company’s manufacturing facilities are located in the United States, Malaysia, China and the Slovak Republic.
The extensive T-W product range also includes Cryo Science Technologies, LNG (liquefied natural gas) fuelling station storage and vehicle fuel cylinders, and CNG (compressed natural gas) ground storage.High Pressure and Acetylene Cylinder BusinessThe industrial packaged gas business is growing at an average rate of 3-5% - the slowest growth sector in the gas business. How does this fit with your experience in cylinder manufacturing and output?
Mr. Boyd: \\$quot;In spite of the low growth rate, our factories are very busy satisfying customer demand for new high pressure and acetylene cylinders. Several cylinder manufacturers have closed factories and there are still many industrial gas applications that require new high pressure cylinders. Recent steel price increases have triggered additional business from the industry as customers try to beat the upward price trend. The international market has also been strong for Taylor-Wharton and more and more international customers are contacting us for cylinders.
Certainly, new applications, new product requirements and new regional markets have helped Taylor-Wharton to continue to grow. The Latin American, Asia/Far East regions have been very good for us.\\$quot;Gas companies are improving their asset utilisation, working the cylinders harder - which means that they have more cylinders to service their customers and therefore reduce their cylinder procurement. What impact has this had on your business?
Mr. Boyd: \\$quot;We don't see that. As I mentioned, our cylinder plants are very busy. I believe that many gas producers held back in the last year or two their capital purchases of new cylinders and retested their pool to offset new purchases. Now the demand has returned as new business is obtained and more cylinders are required. In spite of the industry consolidation that has occurred over the past two years the demand is still there.
One thing worth mentioning is that the European cylinder manufacturers have long lead times and a large backlog which does not help the gas companies – both in Europe and the US. Taylor-Wharton has a much shorter lead time, in general, and we see opportunities in the European market as well other export markets.\\$quot;
Mr. Boyd: \\$quot;The higher pressure cylinders have given our customers, and their end-user customers, the opportunity to provide more gas in the same cylinder footprint. We also provide specialty gas cylinders in a variety of internal cleanliness levels including nickel-lined and solid nickel for the highly corrosive specialty gases so we are very involved in special cylinder cleaning for these applications. Our SCI division of course is always on the cutting edge with their high tech composite cylinders for a variety of specialty applications and always investigating new uses for these special lightweight, high strength cylinders. Examples include a 30-year, lightweight carbon filament wrapped Self Contained Breathing Apparatus (SCBA) cylinder in North America and the only non-limited life SCBA cylinder with an aluminium liner in Europe.\\$quot;
High pressure and Acetylene cylinders,
the flagship products of Taylor-Wharton///What technological changes in cylinders have occurred over the past 10 years that T-W has benefited from? What changes do you foresee in the next 10 years?
Mr. Miller: \\$quot;We have also introduced lightweight, carbon filament wrapped pressure vessels in aerospace, fire fighting, and fuel storage and transport systems. These carbon filament vessels are as much as one third the weight of their traditional counterparts which increases payload efficiency, reduces envelope requirements, and extends range and operating cycles.\\$quot;
Mr. Boyd: \\$quot;We are providing cylinders to all of North and Latin America and now also into Asia. Europe presents a greater challenge as there are proportionally more cylinder companies in a very competitive environment. However, we are one of only a few companies in the world that still manufactures a billet pierced cylinder as opposed to a closed end tube. At present, there are major customers who prefer billet piercing for a variety of reasons. Our plants today are efficient and are producing at very high levels.\\$quot;The HP Cylinder manufacturing business is a competitive field both in North America, Europe and especially in Asia. What has T-W done to remain competitive?
Mr. Boyd: \\$quot;The only place I have seen aluminium take a commanding position is in the small medical cylinder market but due to weight and not price. Today the aluminium manufacturers have the major share of that business. Aluminium also plays a major role in the specialty gas business. However for the standard industrial gas type usage the steel cylinder is the product of choice with its ruggedness and higher pressure ratings. Steel prices started rising back in January 2004 and continued to rise through April of 2005. Quite frankly we are at the mercy of the steel producers in spite of our size and purchasing strength and our prices are a direct reflection of their pricing to us. All of the steels we purchase have specific manufacturing characteristics that make them different from the norm whether it be 9% nickel or 304 stainless steel or special billet steel for the high pressure cylinders. We do not have the luxury of buying off the shelf material.\\$quot;Clearly the rising cost of steel has impacted on cylinder prices around the world – have you seen any effect of these prices on business, have aluminium cylinder producers managed to penetrate the market as a result?
Mr. Boyd: \\$quot;Our customers demand the highest quality regardless of their global location. All of our industrial gas manufacturing plants are ISO certified. Additionally, our factories comply with customer specifications and global standards. Our factories also employ world class methods including Six Sigma. Several of our global competitors on a regional basis have been excluded from bidding by certain customers due to inconsistent quality.\\$quot;
How important are quality and standards in this business as there are still a number of companies competing which have lower quality and standards?
Mr. Boyd: \\$quot;More and more customers are adopting the higher pressure cylinders; however, it is a matter of capital expenditure to change over their plant operating and filling equipment to accommodate the higher pressures. Many larger welding distributor customers have made the switch but there is still a big opportunity for those cylinders in the future as we all figure out how to deliver more gas more efficiently. At present the average service pressure is 200 bar but 300 bar is being slowly introduced. Canada has moved over to 300 bar as a standard and with the increase in oil prices and the associated transportation costs, I am sure this will provide further thought for gas companies and distributors to move towards the 300 bar cylinder – even in the US.\\$quot;The European market is moving over to 300 bar cylinders – what are the trends in the US market and are they moving up in HP cylinder pressure standards?
Mr. Fitzsimmons (VP and GM Cryogenics): \\$quot;Growth in bulk liquid supply is the key driver for cryogenic tanks, and this varies significantly by region. Generally, the fastest growth is in the developing regions such as Asia and Eastern Europe. Consumption there is driven by both internal growth related to building infrastructure, as well as growth driven by exports. However, even in developed regions where overall growth is slower, we are well-positioned to benefit when gas consumers move from compressed gas to cryogenic storage. Further, the developed economies are experiencing growth in high-technology, medical, and R&D applications that use cryogenic liquids.\\$quot;
Cryogenic tank manufacturing in Kosice,
Slovakia///Cryogenic Tanks and Cryo Science Technologies
Mr. Fitzsimmons: \\$quot;The roots of our cryogenic business can be traced to the decision by Union Carbide to outsource their requirements. And, as you indicated, the other major gas companies have followed suit, almost without exception. The most significant change in the T-W business model has been the opportunity to bring some standardization to the design of our product offering. When the major gas companies each produced their own tanks, there was considerable variation in the design parameters. T-W has been able to work with those companies to achieve acceptance of a standardized bulk tank design, while maintaining the flexibility of several final piping options to meet specific needs of individual companies. In addition to better cost efficiency, standard designs allow customers to benefit from reduced lead times since we can manage our supply chain around standard materials.\\$quot;We estimate that the pool of cryogenic tanks around the world amounts to 150 000 (held by gas companies). With a replacement rate of every 25-30 years and a slowing in the growth in bulk liquid supply – what impact has this had on cryogenic tank business for T-W?
Mr. Fitzsimmons: \\$quot;There is definitely a trend toward the optimisation of bulk distribution resources, and we have seen an increasing demand for larger tanks. However, the advent of micro-bulk as an efficient distribution method has also driven demand for smaller tanks. The primary impact on our business is the displacement of our smaller bulk tanks (e.g. 2 000 litre and 3600 litre models) by micro-bulk tanks. Taken as a whole, overall demand is higher both on a unit basis and a volume basis.\\$quot;Clearly T-W has benefited from major gas companies outsourcing their liquid storage tank requirements over the past 10-15 years – what changes to T-W's business model have been necessary to meet the outsourcing requirements?
Mr. Fitzsimmons: \\$quot;Probably not. Ultra high pressure cylinders have been available for decades. Current designs are certainly lighter in weight than their predecessors and the increased availability of 'higher pressure' fill stations make the 300-bar cylinder attractive for certain processes. However, ongoing advances in the compression technology downstream of a liquid cylinder now provide flow rates and pressures suitable to specialized growth applications. Laser gas processes would be an example of an area of increased demand for liquid cylinders where high pressure cylinders were once considered the norm.\\$quot;We believe that there is a trend from the gas companies to optimise their liquid bulk distribution which is leading to the requirement for larger tanks – is this something you have detected and what impact does this have on the small tank business?
Mr. Fitzsimmons: \\$quot;We are seeing a growing demand for cryogenic products that are specifically designed for long-term storage in the so-called Cryo-Bio field. A number of recent developments are driving this growth. Two of the most prominent are the increased interest in tissue storage for long-term research, and the need to store an increasing number of vaccines to guard against the possibility of shortages in an epidemic.With the growth in the use of the 300 bar HP cylinders – is this likely to have an impact on liquid cylinder demand in the future?
A related trend is the growing need for special-purpose containers that are designed to allow the shipment of specimens at cryogenic temperatures. In these applications, consideration must be given not only to the requirements of the parties that are shipping the specimens, but also to the various regulations related to commercial carriers. In spite of the complexity, demand for these products is also increasing rapidly.\\$quot;We have been discussing products that are aimed primarily at the Industrial Gas market. What trends you are seeing in the market for your Cryogenic Refrigerators and Dewars?
Mr. Fitzsimmons: \\$quot;Beverage Carbonation is still a solid growth business for T-W both in the US and globally. The US market is only 60% penetrated and there are still several years of growth in this product line – just in the US alone. The 'fast food' companies are very effective at marketing and have seen very little drop-off in business due to the negative publicity of some of their food offering – opting for more healthy combinations. We still continue to see a switch from HP cylinder gas (CO2) to liquid cylinders due to health and safety measures.\\$quot;
This market requires extremely high storage capacity as well as excellent thermal performance. To respond to the needs of this market, T-W launched our LABS Series Freezers in 2003. With a storage capacity of up to 80000 2ml vials, and outstanding thermal performance to lower the cost of operation, this product line has exceeded our most optimistic estimates, In fact, we have increased our production capacity on two separate occasions to meet the demand.Have you seen a slackening on Beverage Carbonation product lines due to the negative publicity of fast food group chains and the food they serve?American Welding & Tank
Mr. Larsen (VP and GM of AWT): \\$quot;We have carefully selected the locations of our four plants based on being close to our customer base therefore being able to serve them better. All our domestic customers are maximum 24 hours driving distance from any of our plants. Our Jesup plant has the added capability to make small vertical tanks. Each plant is essentially a stand alone facility capable of producing a wide range of products. We have found this strategy to be very successful in meeting our customer’s tank delivery needs.\\$quot;
American Welding & Tank (AWT) has been a North America leader in the propane tank business since 1917. AWT's tanks are found in residential, commercial, industrial and agriculture applications. American Welding and Tank also provides a propane tank repair and refurbishing service. The company has 4 manufacturing sites in the US, located at West Jordan, Utah, Bloomfield, Iowa, Jesup Georgia and Fremont, Ohio.
Mr. Larsen: \\$quot;We are always looking for better ways of serving our customers and recently we launched our most significant new service product ever. In a nutshell we are helping our customers improve their utilization of their most important asset – TANKS – by completely refurbishing their old tanks to a near OEM condition. We are able to provide these tanks with a previously unheard high quality because the tanks are refurbished through our paint systems that are specifically design for tank production. For example we are using a de-scaling process that brings the tank substrate to a near white condition just prior to the paint application itself. Nobody else in the industry can perform this process as reliably as American Welding & Tank. We also maintain a fleet of trucks that have loading and unloading capability which allow us to collect tanks anywhere in U.S. and deliver them somewhere else which alleviates logistical issues and costs for our customers. We can even convert an above ground style tank to an underground configuration which again allow our customers to improve their asset utilization. We always aspire to grow the business and it does not stop at the U.S. border. International sales is currently a small percentage (Canada and some in the Far East), however, the weakened dollar has opened some doors that we are exploring with some success. I believe that we will grow our international presence long term.\\$quot;
Mr. Fabricy (VP Sales & Marketing Propane Products): \\$quot;We have also recently introduced an innovative 'pre-owned' tank program to help the propane dealer better manage inventory assets. We purchase tanks considered distressed inventory, refurbish the units and market the reconditioned tanks to propane dealers in other geographic locations. Our pre-owned program is a further manifestation of our mission to grow our service businesses and better serve our customers.\\$quot;How do these locations relate to the various propane tank product lines and do any of the factories concentrate on specialized products?
Mr. Fabricy: \\$quot;We are always looking for international opportunities to expand our business. However, we are not able to discuss them or go into any detail at this time. I am certain that you will understand that we would not reveal this type of information in a well read publication such as gasworld\\$quot;We have noticed a trend toward a service focus throughout the Harsco GasServ division. What service oriented products has AWT recently offered to the marketplace? Do you intend to market any of your service offerings on an international scale?
Mr. Larsen: \\$quot;American Welding & Tank is one of few US propane tank producers that is vertically integrated to the extent that all major tank components are produced in-house. This integration is paramount in providing the highest quality tank with predictable delivery schedules. All equipment and quality control systems are uniquely designed for tank head manufacturing. Many of our 'best practices' have been shared with the Taylor-Wharton head plant facility which is located adjacent to the propane head plant. The result is mutual quality benefits for both plants\\$quot;
Mr. Fabricy: \\$quot;AWT is the market leader in intermediate size propane tank production. There are only two major players in this area American Welding & Tank is a strategic core business for the GasServ Group and divesting AWT would be contrary to our strategy.\\$quot;
AWT recently launched a propane
tank refurbishing service///Do you have international expansion plans for the LPG business which you can discuss or talk about – would expansion involve acquisitions?How integrated are the AWT factories? Do you outsource any of the major components of a propane tank? For example, where do the tank heads come from and do you take advantage of any crossover technologies with the heads used on the cryogenic tanks Taylor-Wharton produces?With many players involved in this, is there a consideration to divest and if not why not?
Mr. Fitzsimmons: \\$quot;Actually, we have over 10 years of experience designing and building LNG tanks for both bulk applications and for vehicle fuel tanks. Our decision to raise our profile in this market was prompted by the success of our sister company, SCI, in serving the fast-growing market for compressed natural gas (CNG) vehicles. One of their major customers expressed an interest in LNG fuel tanks, and this led to a committed effort by Harsco GasServ to serve the entire alternative fuel technology (AFT) market. This has allowed GasServ to become the 'one-stop shop' for any potential user of alternate fuels. We are able to work with our customers toward the best solution for their specific application, with no bias toward either compressed gas or liquid storage. We are unique in this respect. This further emphasizes our commitment to assist our customers in their efforts to expand their markets\\$quot;Alternative Fuel Technologies (AFT)
Mr. Fitzsimmons: \\$quot;These markets currently use technologies that are less advanced than those that are used on natural gas vehicles in the United States. For example, most natural gas vehicles in Asia utilize heavy steel cylinders for CNG fuel storage. Taylor-Wharton and SCI are targeting these markets as they advance to lighter composite cylinders and LNG fuel storage. Our facilities in both Malaysia and China produce bulk tanks for their respective markets. While we currently produce LNG vehicle fuel tanks only in U.S., we have a great deal of experience in the global deployment of technology for designing and manufacturing cryogenic vessels. We are prepared to do this with vehicle fuel tanks in Asia as the market develops there.\\$quot;
Having decided to target new market sectors, Harsco GasServ formed AFT to focus on the growing market for alternative fuels containment – but supporting this initiative through its existing brand name resources, thereby utilising the technological and cost synergies within the Harsco GasServ Division.
Mr. Fitzsimmons: \\$quot;All indications are that this will be an important sector for us. Emerging markets such as China and India, as well as the North American West Coast are expected to drive strong LNG demand for the foreseeable future. By some accounts, demand is expected to double within 10 years. This is supported by a number of recent announcements of multi-billion dollar capital commitments for projects to liquefy natural gas at the well head.\\$quot;It is well publicized that the T-W Theodore, Alabama factory manufactures LNG storage tanks in a range 5,000 litres – 300,000 litres in size. We understand that T-W also introduced LNG vehicle fuel tanks. What prompted Taylor-Wharton to enter the LNG business?
Mr. Miller: \\$quot;The evidence is strong that high pressure cylinders will emerge as the clear choice for hydrogen delivery systems over the next ten to fifteen years. The number of car, truck, and bus platforms currently in-work that specify 35 and 70 MPa cylinders, as well as the early automotive market projections for growth in cylinder demand support our commitment to this technology. Other storage technologies can present greater risks and complications, high development and infrastructure costs, and longer times to market at a time when automotive manufacturers seem more focussed on public acceptance and on driving overall system costs down. Harsco GasServ via SCI already produce a 70 Mpa cylinder but the 'Holy Grail' in this technology is to produce one with the required envelop to satisfy the automotive industry – to which we continue to develop. The current drivers for the Hydrogen Economy are ones related to cost, safety, driving range and fuelling infrastructure and compressed Hydrogen containment appears to be more favourable and meet these drivers.\\$quot;Major markets for CNG and NGV exist in India, SE Asia and Far East – is Harsco GasServ there and if not, why not, as this is a booming business?
Mr. Fitzsimmons: \\$quot;We currently produce cryogenic tanks for the storage of liquid Hydrogen, so we are capable of producing tanks for garages. We are interested in the vehicle tanks, and have proven capability to develop this product. We are following the market closely, but the technology on the vehicle side has not yet evolved to the point where it is clear whether the Hydrogen would be stored on board as a liquid or a compressed gas. Either way, GasServ will be in position to supply this market.\\$quot;What sort of growth do you observe in the LNG tank business and is this an important sector for Harsco GasServ in the future as energy costs rise?In terms of the composite tanks – the hydrogen economy is a driver for the future but there are different technological paths to this – Harsco GasServ appears to be following the compressed H2 route (to 700 bar) where as others are going down the liquid H2 route. Is Harsco GasServ gambling or is the evidence that strong that you are focusing in the right direction?What about liquid H2 tanks (for cars and for garages) – is this something that Harsco GasServ produce or intend to produce?
Mr. Boyd: \\$quot;The global market for compressed gas cylinder valves, in my opinion, exceeds $400mm. It is growing at the rate of approximately 3%-5% annually contingent upon market segment. The major trend worldwide is toward residual check cylinder valves which prevent corrosion of the interior of the cylinder. This is an increasing demand and we have just recently introduced our new 'GV' global valve with this feature. This valve meets all worldwide codes and customer specifications and has achieved approvals by the major gas producers. Medical valves and regulators is another area that is growing. In North America the baby-boomer generation will require a tremendous amount of medical care due to longer life expectancy and oxygen systems of all varieties will be required. The specialty gas market segment is growing as well for electronics and the semi-conductor segments. We are introducing new high tech industry demanded products which could somewhat revolutionize the industry. These new products should be available by early 2006. These valves are primarily stainless steel, hastelloy and highly polished with low particulate rates for high purity applications.\\$quot;Sherwood Valves
Mr. Boyd: \\$quot;Our new GV-Series global valve meets the specifications of the major gas producers and is now shipped worldwide. We have made strides into Europe with sales of our new valve. Additionally, our new state-of-the-art equipment can produce a globally competitive valve to the highest quality standards. The residual check feature is also gaining momentum in certain market segments. We already have in place strategic relationships with Industry customers throughout Europe so they know the Taylor-Wharton Harsco GasServ advantage in product benefits and features and dealing with the same company for all of their gas requirements.\\$quot;
Sherwood produces valves for all segments of the compressed gas industry including industrial, chlorine, medical, welding, specialty, semiconductor, life support, LPG and refrigeration. Sherwood also supplies the valves for Harsco GasServ’s gas storage containers, giving customers a compete one-stop supply resource. Sherwood recently introduced Oxy-Gen 1, a compact unit that integrates the functions of both valve and regulator. Sherwood also introduced its innovative Global Valve (GV) series industrial valve that meets or exceeds most global specifications.What is the world-wide market for valves? How fast is it growing and how fast is Sherwood growing? What are the major sectors and how are they growing?You have recently produced a new global valve which meets the standards of gas markets across the world. Recent success in Europe is expected to gain momentum but this is a very competitive area so what are the major advantages or strengths that Sherwood offer?
Mr. Miller: \\$quot;SCI offers complimentary products to T-W for numerous applications. Additionally, certain technological developments by the engineering staff at each business is transferable to some of our other businesses.
A good example of the synergy of the SCI product line is the complimentary relation to some of our T-W products and applications in the AFT marketplace. We will continue to invest resources into the growth of the SCI brand.\\$quot;Structural Composites Industries (SCI)
Mr. Miller: \\$quot;The medical sector, particularly in the US, is most definitely an opportunity for SCI. Until now, demographics simply have not favored composite cylinders in this application. With the advance of the Boomers into retirement we see an opportunity for solid growth. The principle advantage that a light-weight, high pressure, composite cylinder offers to a respiratory patient is mobility, an important 'quality-of-life' benefit most seniors will appreciate and demand.
Right now, one of the most popular and fastest growing X (Extreme) Sports in the world is paintball. Paintball is, for the most part, an outdoor game of strategy and tactics that has broad demographic appeal. Paintball markers use either CO2 or compressed air as a propellant. SCI's carbon and glass composite cylinders offer significant weight and capacity advantages over the alternatives which reduces fatigue and extends playing time.\\$quot;
Structural Composites Industries (SCI) is a leading global producer of lightweight, filament-reinforced composite cylinders, pressure vessels and structures. The company was one of the principal contributors to NASA for the U.S. space program and today is a primary supplier to the aerospace, home oxygen therapy, CNG and hydrogen fuelled vehicle, and SCBA markets.
Mr. Miller: \\$quot;Structured composites provide opportunities to develop new applications and technologies in traditional markets and SCI is looking to develop markets and a number of different technologies – especially in the automotive industry where weight and strength are paramount in future vehicle manufacture.\\$quot;How important and what is the growth of the SCI sector for Harsco GasServ?The medical sector is seen as an opportunity with lightweight cylinders – especially of ambulatory oxygen care – doe you agree with this? What other traditional lightweight, composite application sectors offer Harsco GasServ high growth and business opportunities?
Mr. Cline: \\$quot;Definitely. We currently sell a wide range of products in several of our companies that can be used in various regions around the world. This has been specifically successful with our composites and cryogenic businesses.\\$quot;Are there any emerging markets for composite cylinders?
Mr. Cline: \\$quot;Over the last 10 years we have expanded our manufacturing presence in Malaysia, China, and Europe. We have also significantly expanded our US manufacturing capacity over this same time period. Initially one international expansion was done to service regional demand, but has evolved to include high quality products supporting the demand in North America. We believe there will be a balance of products that will continued to be manufactured in North America due to the high cost of transportation, technological innovation, and lower labour content.\\$quot;
Mr. Cline: \\$quot;GasServ's competition with Chart is limited to cryogenic products. GasServ provides the most extensive array of products and services to the global gas market and is the clear market leader in each of its served markets.\\$quot;
SCI compressed natural
gas cylinders used for
transport fuel for buses///General
Mr. Cline: \\$quot;Being part of a global corporation is a significant strength. It provides the required financial support for acquisitions and new facilities, allows management to focus on growing the business, and servicing our markets and customers rather than being distracted by the constant turmoil caused by changes in management, ownership, and cash constraints.\\$quot;The Sherwood valve innovation points to a strategy that Harsco GasServ wants to supply standardised but higher quality equipment that can be used universally across regions and companies. Can this and is this being applied to the other product ranges?
Mr. Boyd: \\$quot;Currently we are very active in the LNG/CNG business at both SCI and Taylor-Wharton and provide a variety of products to serve that market through our Alternative Fuels technology program. We are entering into the services business and have launched our cryogenic repair service program for customer on-site refurbishment of cryogenic tanks. We are re-evaluating our businesses and looking at programs where we can provide services to our customers in the future.\\$quot;
Mr. Cline: \\$quot;GasServ is constantly exploring strategic product line extensions, new services, and technological advances by which we can serve our markets more effectively. We are currently evaluating several significant extensions to our product offering and technological improvements. Unfortunately due to the sensitive nature of these opportunities, I am unable to elaborate on them further at this time.\\$quot;Do you see more swing to manufacturing outside of North America and if so where? Or do you believe you can maintain a high quality manufacturing business in the US and support worldwide markets through lower cost production elsewhere?Following the news of Chart's recent change of ownership (by a private equity fund) do you see this as an opportunity for Harsco GasServ to take the leadership in the industry?How important is Harsco Corp to Harsco GasServ and does the management see better opportunities as being part of a larger group or could what happened to Chart present the management with ideas or challenges?What about further expansion or even diversification in the gas containment business – are there any opportunities or shifts in technology that Harsco GasServ is interested in or would like to participate in?
gasworld would like to thank Harsco GasServ GGC for their comprehensive answers to our questions. For more details about Harsco GasServ, please visit: www.harscogasserv.com
or contact: JFarina@hasco.com