Family Timing

By Business Observer Staff
| 6:00 p.m. May 21, 2007

Entrepreneurs

Family Timing

COMPANIES by Janet Leiser | Senior Editor

With the help of an investor on the other side of the Atlantic, Tom Hanway started a business that his two sons now help run. A cash infusion from a brother helped the company turn the corner.

There wasn't enough room at Gasco Affiliates LLC's Sarasota headquarters to store all the cylinders of gas needed to fill orders. It took the company as long as 10 days to complete requests.

"We had to improve our turnaround time," says Thomas D. Hanway, who founded the company in 1996 with the help of Trevor Smith, a colleague and friend in England.

It was time for a move.

The 12-employee company bought a 24,000-square-foot facility in Oldsmar, a growing town in the northern part of Pinellas County that borders Hillsborough. The company uses about half the building and leases the rest to another company.

Hanway is striving to cut the turnaround time for orders from 10 days to two days. Since the move last August, the company has halved that time. The goal now is to shave off another three days.

With increased warehouse space, the business can now keep two or three times as many one-foot high metal canisters in stock. That will help the company reach its goal of doubling production and sales within five years.

Service and quality are the two differentiating factors, Hanway says, that separate Gasco Affiliates from about six competitors, including Air Liquide, a French company with a Connecticut facility that claims about 90% of about $75 million global market for precision calibration gas, equipment and accessories.

"You have to work a lot harder (than your competitors)," he adds.

The company has the longest warranty in the industry, he says. It produces and sells to about 200 industrial safety distributors, which in turn sell to end-users such as Exxon Mobil and Georgia Pacific. The company makes customized mixtures of gas, from ammonia and chlorine to sulfur dioxide, along with canisters and equipment, used to regularly check the accuracy and safety of pipes used for industrial purposes, from water treatment plants to propane and petrochemical manufacturers.

Unusual niche

"It is a unique industry," Hanway, 55, says. "People say how in the world did you get into an industry like that? But it's one of those industries that once you get in, you usually stay in."

Hanway has sold analytical instruments his entire career. Prior to creating Gasco Affiliates, he worked for a similar company in Clearwater.

He started Gasco Affiliates at the urging of Smith, who shared proprietary technology from his British-based company, Bedfont Scientific Ltd., that enabled Hanway to get going.

For the first several years, it was tough.

Hanway invested all his life savings into the company, which had an office at Whitfield Industrial Park in Sarasota prior to the move to Oldsmar. And the company was barely surviving.

"I wondered if I'd be able to pull it off," Hanway says.

In 1999, his brother, Ken Hanway, provided a cash infusion that helped the company turn the corner, he says, adding, "It was a lifesaver. It really helped us get over the top."

Ken Hanway remains a minority partner along with Smith and Hanway's two oldest sons, Brad, 28, and Chris, 37. His youngest son, Ken, a college student, works part-time at the company.

Gasco Affiliates moved to Oldsmar last year because Brad and Chris Hanway, who do much of the hands-on management work, live in the area, as do other employees.

For about six years, employees made the daily 100-mile roundtrip hike to and from Sarasota, Hanway says. And the company reimbursed them for it.

Managed growth

Hanway declined to release specific revenue figures, but he says the company has annual sales of several million dollars. In 2006, Gasco Affiliates revenue grew 42% from the previous year.

Sales growth has averaged about 30% annually over the past five or so years, Hanway says.

Not that he expects that growth to continue at such a fast clip, he says, adding: "If we grow any faster, we'd be asking for trouble. Safety is so important in this industry."

A faulty canister that fails to detect a leak could result in the loss of a worker's life in the field, he says.

Hanway works from his home office in Sarasota part of the time, other days he's in Oldsmar or visiting customers.

One of the company's biggest challenges, he says, is increased competition.

"We are super loyal to our distribution network," Hanway says. "Keeping that loyalty coming in the other direction is important."

In addition, the company wants to become a leader, rather than a follower of the large companies, he says, adding, "The tendency is when you have a company that has 80% to 90% of the market, the smaller guys have followed."

He plans to push sales of a cylinder that customers can return to the company for refills. Most cylinders are now thrown away after one usage because U.S. Department of Transportation rules that don't allow used containers to be transported on common carriers, such as FedEx or UPS.

The refillable cylinders, which can be transported, are advantageous to the customer because they cut long-term costs in half, he says. Plus, they're better for the environment since they cut down on landfill usage.

"People are becoming more and more green-minded," Hanway says. "We think it's good timing. This is just another alternative for customers who want to take the time. There's a little bit of paperwork involved."

Building Business

If you want to keep your customers and employees happy, you should be loyal to them, says Thomas Hanway, managing partner of Gasco Affiliates LLC.

That's why the Gulf Coast company has one of the longest product warranties in the industry and it's also why Hanway plans to start an employee stock ownership program later this year.

Hanway recalls lessons learned from his mentors, including Bryan Truex at Sensidyne, where he worked prior to starting Gasco Affiliates in 1996.

Honesty and integrity are important, he says, adding, "Be true to your word and to your customers regardless of how much it may hurt and never forget who is truly paying your salary."

When it comes to workers, he says, "Hire good employees and treat them like gold."

Gasco Affiliates pays its employees well and provides generous benefits, Hanway says, adding: "We have a great work place, a great work environment. Nobody ever wants to leave."

Employee benefits include profit sharing, paid health care for the employees and their family members and a matching 401(K).

Hanway says he's not sure what kind of ESOP the company will have or how expensive it will be. He has talked to a pension consultant and knows it has to be organized properly or it can be a drain on a company.

But it's important for employees to have an ownership stake in the company, he says. "I know how important that ownership is to me," he adds.

Although Hanway doesn't plan to sell, he realizes the right offer could sway him.

If so, employees will also reap the rewards.

Tips for New

Entrepreneurs

DON'T PLAN on getting much sleep or having a social life. Running a startup takes countless hours.

MAINTAIN a never-say-die attitude and hope for a little luck.

KNOW THE marketplace, your competition and customers, inside and out.

DEVELOP a sound market strategy and don't waiver.

NEVER grow complacent.

REVIEW SUMMARY

Who. Tom Hanway