Demand stays strong, prices remain stable

By By Jianfeng Pei -- Purchasing, 10/5/2000

The market for health and safety equipment is very strong this year because of the booming manufacturing and construction activities. Prices are expected to remain stable in spite of soaring fuel costs.

"The market has been strong for several years and this year it is even stronger," says Nevin Speisher, vice president of marketing, Airgas Inc, a leading distributor based in Radnor, Pa. "We expect demand for safety equipment to grow 7%-10% this year."

The strong economy is the major factor driving up demand. With the unemployment rate keeping at nearly record low levels, more people are joining the labor market and requiring more health and safety products.

"Manufacturing and construction industries, which are major markets for safety equipment, are very busy this year," says Brian Sok, sales and marketing specialist, Vallen Safety Supply, based in Houston, Texas. "Demand for personal protection equipment will grow more than 5% this year."

U.S. personal protection equipment market generated $1.1 billion in revenues last year. The market is expected to reach $1.38 billion in 2005, according to research by Frost & Sullivan, a market research and consulting firm based in Mountain View, Calif.

The market is traditionally driven by new regulations. Although most segments of the market have not faced new regulations in several years, suppliers are continuing to develop new products in a bid to attract more customers.

Prices for health and safety equipment are very stable. "We don't expect major price changes this year, but suppliers will face the pressure of rising fuel costs," says Sok of Vallen Safety Supply.

Ron Herring, director of marketing at Mine Safety Appliance, based in Pittsburgh, Pa., expects prices to increase about 2% to 3% this year because more new products are coming to the market. "The actual costs of end users are going down with these new products because they are better in quality and offer better protections."

Supply is not a problem in the industry. "But the shortage of electronic components may put constraints in some segments of the market," says Herring. "There will not be significant disruptions."

Consolidation continues in the industry. The rising demand for one-stop shopping has caused numerous mergers and acquisitions in recent years. As competition keeps heating up, the market will be controlled by a handful of companies, says Frost & Sullivan.

Shopping online

E-commerce is a trend for purchasing health and safety equipment. Most of such products are supplied by distributors who are making efforts to provide customers with e-commerce solutions.

Airgas has about 80 registered customers using its Web site for online transactions and 600 more ordering through EDI. Revenues from these electronic channels reached $900,000 in March. It plans to introduce its new e-commerce site in September.

"The number of customers being added to our e-commerce system is growing at a rapid pace," says Peter McCausland, chairman and chief executive officer at Airgas. "Our enhanced e-commerce capability should further solidify our strategic accounts program and provide our sales force with a powerful selling tool."

Airgas is working with Andersen Consulting and A2i to upgrade its Web site. Andersen Consulting is helping Airgas assess technology, electronic marketplaces, third-party portals and other critical aspects of its e-commerce strategy. A2i, a software company based in Los Angeles, Calif., helps Airgas with electronic catalogs and directories.

Large distributors have their own Web sites which offers product information and e-commerce solutions. Many distributors also join B2B marketplaces to have low-cost access of online transactions and reach more customers.

In August, Vallen Safety Supply joined the Supplyforce.com, a B2B marketplace with more than 300 independent distributors. More than 50 of these distributors are offering a wide range of health and safety products through the marketplace.

Supplyforce.com, based in King of Prussia, Pa., is a network of independent distributors dedicated to providing national account and integrated supply solutions. The marketplace combines the efficiency of B2B e-commerce with the strength of traditional distribution. It has a network of more than 2,500 distributor locations in North America with over $2 billion in inventory.

Safety Online (www.safetyonline. com) is an e-commerce site for safety professionals. It provides regulatory, program management, technical, association and product and services information for both buyers and suppliers.

The site was bought by VerticalNet, based in Horsham, Pa., early this year and was relaunched in April. "Online transactions are growing each month," says Jessica Cassady, spokesperson for the site. "We have 400 suppliers so far and each month between 50,000 and 60,000 users visit the site."

Market at a glance