TerraVest: Asia Manufacturing Threat

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Is there a reason Manchester didn't manufacture the larger storage tanks where TerraVest started? I know they moved into domestic tanks, but is it because you need different equipment, the industry is saturated, or is there another significant difference?

The equipment is the biggest constraint and it's capital equipment that's fairly expensive. The type of equipment and the footprint of your facility are significant factors. When I came into the business, Manchester was celebrating its almost 75th anniversary. They had an established footprint of what they had been doing. Before entering a new product segment or taking on additional capital investments, you typically try to maximize the equipment you have. The production equipment is completely different for large tanks versus small, high-volume tanks. That's why the big companies don't go into the small stuff, and the small companies with existing manufacturing capabilities don't go into the big stuff. They usually do it through acquisition or merger because the market is probably saturated enough from a capacity standpoint.

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For propane, were there any family businesses with one facility and 10 to 100 employees still operating, or had the smaller businesses exited?

It's a scale business, which makes it tough for small manufacturers to compete. There are some refurbishers that do regional, small refurb work. They can pull up the valve and do basic refurbishment, but they are not major players in the new cylinder market.

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