Businessmodel of Air Products

Customer Segments

Air Products manufactures and sells a broad portfolio of product that are utilised by commercial and industrial customers across multiple business sectors. The Company primarily serves customers in the following industries:

• Energy, including oil and gas companies, power generators, oil and gas refining, bioenergy, and natural gas companies;
• Electronics, including customers across the electronics assembly and packaging industry, notably printed circuit board assembly businesses and semiconductor manufacturers;
• Chemicals, including producers of petrochemicals and specialist chemicals;
• Metals, including metals processing and fabrication companies, iron and steel producers, and non-ferrous metals companies;
• Manufacturing, including manufacturers of paints, plastics, rubber, and other products; and
• Transportation, including shipbuilders, automotive and aviation companies, mass transit, and materials handling companies. Air Products also serves customers in the agriculture, pharmaceuticals, food and beverage, and graphic arts industries. No single customer accounted for more than 10% of the Company’s consolidated revenues in 2016.

Air Products’s largest market is its native US. The Company, however, also serves an extensive international customer base, including clients across Europe, the Middle East, Asia Pacific, Latin America, and Africa.

Value Propositions

Air Products provides value to its customers in the following ways:

• Its industry standing and reputation, with the Company established as a leading provider of atmospheric and process gases, having a track record for providing high-quality products and services;
• Its broad portfolio of products, with the Company providing a range of atmospheric and process gases – including oxygen, nitrogen, hydrogen, and helium – as well as related equipment products such as air separation units, which serve customers across a wide range of industries
• Its international reach, with the Company serving a large domestic customer base, as well as serving customers across markets in Latin America, Asia Pacific, Europe, Africa, and the Middle East;
• Its commitment to innovation, with the Company dedicating a substantial portion of its funds to the development of new and innovative processes and technologies that are utilised in the production of its various products;
• Its industry expertise and experience, with the Company employing specialist technical personal across its numerous operating segments, as well as a team of experienced industry executives. ### Channels

Air Products operates a website at www.airproducts.com, through which it provides information on its various products, target industries, and corporate activities. The Company does not operate an online sales channel. It does, however, operate an online customer portal, which enables customers to locate a nearby sales agent.

Air Products makes sales through an in-house direct sales force, which is organised geographically. The Company’s sales personnel operate out of the Company’s principal administrative offices located Trexlertown in Pennsylvania, Hersham in England, and Santiago in Chile. The Company also makes sales through a network of third party sales agents and distributors, particularly in jurisdiction that the Company is not itself well served.

Air Products operates its own network of hundreds of production facilities across the Americas, Asia Pacific, and Europe. It also operates its own distribution facilities – including pipeline infrastructure – through which it delivers products to clients. Air Products delivers its gases in liquid bulk form by tanker or tube trailer, as packaged gases in cylinders, or through on-site facilities.

Customer Relationships

While Air Products does not operate an online sales channel, it does provide some services and tools to customers on a self-service basis through its online customer portal. This includes the Company’s agent locator, which enables customers to find a local seller of the Company’s various products.

Air Products sells its products directly to customers, consulting with them over period of time to establish the exact details of each individual sales contract. Bulk gas sales often run between three and five years, with the Company seeking to establish long-term relationships and secure recurring business.

Air Products has a dedicated customer support team that is available to provide personalised assistance to its clients. Customers are able to contact support staff with queries and enquiries over the phone or via an online contact form. Air Products additionally offers a range of customer support resources through its website, including FAQs, ordering and delivery guides, and product documentation.

Customers are also able to follow Air Products’s operations through its social media accounts – including with Facebook, Twitter, LinkedIn, and YouTube – as well as interact with the Company directly.

Key Activities

Air Products is an industrial gases company. It aligns its operations into seven reportable business segments: Industrial Gases-Americas; Industrial Gases-Europe, Middle East, and Africa; Industrial Gases-Asia; Industrial Gases-Global; Materials Technologies; Energy-from-Waste; and Corporate and other.

The Company manufactures and distributes products in two lines of business: Industrial Gases and Materials Technologies. The Company’s core Industrial Gases business produces and sells atmospheric and process gases – including oxygen, nitrogen, and hydrogen – as well as related equipment products, such as air separation units and non-cryogenic generators.

Air Products serves a range of customers across manufacturing markets, including refining and petrochemical, metals, electronics, and food and beverage. The Company is also a supplier of liquefied natural gas process technology and equipment, and serves the semiconductor, polyurethanes, cleaning and coatings, and adhesives industries.

Key Partners

Air Products partners with a range of companies and organisations across its various operating segments. These partners can be organised into the following categories:

• Supplier and Procurement Partners, including suppliers of raw materials, equipment, and tools used in the Company’s production and distribution processes, as well as providers of services that are utilised across the Company’s operating segments more broadly;
• Channel and Distribution Partners, including the Company’s network of third party sales agents and distribution partners, who assist the Company in the marketing, selling, and delivery of its products to customers;
• Technology Partners, comprising various technology and manufacturing companies that help the Company to develop unique industrial gas generating systems, and authorize the Company to use certain technologies under licence agreements;
• Sustainability Partners, including various charitable organisations and non-profits, with which the Company collaborates on community and sustainability projects; and
• Joint Venture Partners, comprising various industrial and manufacturing companies with which the Company jointly produces and sells products through mutually owned entities. Air Products names a number of its preferred partners on its website. This includes companies such as Relevant, Bauer Compressors, Branick, CFM Air Equipment, Engineered Corrosion Solutions, and Fruit Control Equipment.

Key Resources

Air Products’s key resources are its technologies and intellectual properties, its supply chain, its manufacturing facilities, its sales and distribution infrastructure, its online portal, its IT and communications infrastructure, its partnerships, and its personnel.

Air Products owns a number of intellectual properties that are key to its operations. The Company owns approximately 970 US patents, approximately 3,900 foreign patents, and is a licensee under certain patents owned by third parties. Searches of records published by the US Patent and Trademark Office identified a number of patent applications filed in the name of Air Products, including applications entitled ‘Methods to prepare silicon-containing films’, ‘Process for the production of hydrogen’ and ‘Process for making trisilylamine’.

Air Products also owns and or leases a number of physical properties. This notably includes its extensive network of production and distribution facilities across its various operating regions.

Cost Structure

Air Products incurs costs in relation to the development of its technologies, the procurement of materials and services, the operation of its manufacturing and distribution facilities, the development of its online portal, the maintenance of its IT and communications infrastructure, the implementation of marketing campaigns, the management of its partnerships, and the retention of its personnel.

In 2016 Air Products recorded total cost of sales for the year in the amount of $6.40 billion, selling and administrative costs totalling $849.3 million, and research development costs totalling $132.0 million.

Revenue Streams

Air Products generates revenue through the sale of industrial gases, including atmospheric and process gases, as well as the sale of related equipment products, such as air separation units and non-cryogenic generators.

In 2016 Air Products generated annual sales to external customers in the amount of $9.52 billion, down on the $9.90 billion recorded by the Company in 2015. The Company’s largest revenue generator was its Industrial Gases – Americas segment which recorded sales of $3.34 billion. This was followed by its Materials Technologies segment with $2.01 billion.