InformationWeek

Praxair, a leading supplier of welding gases and equipment to metal fabricators, has established a separate company called MetFabCity Inc. that will run a Web portal of the same name. With a beta test scheduled for June and a full-scale launch later this year, MetFabCity.com will target 35,000 midsize metal fabricators with online buying and selling capabilities, hiring leads for skilled welders, and other key business services.

Praxair isn't just trying to sell more products to its customers--it's entering the new business of helping those customers run their businesses better. The company will take a cut of sales transactions, charge fees for building and hosting Web storefronts, and collect subscription and advertising fees. The MetFabCity target audience is Praxair's traditional customer base, but it's in a very different business from selling welding gases, gloves, and safety glasses.

"Any traditional brick-and-mortar company that's looking to start a totally separate business has to ask what business it's really in," says MetFabCity CEO John Clerico, who had been Praxair's CFO since 1992. "It all starts with the customer--then you look for new ways to grow your business based on those customer relationships."

And Praxair needs the growth. Although the company is profitable, with net income of $441 million last year, revenue actually dropped to $4.6 billion from $4.8 billion in 1998. "Industries that use a lot of metal fabrication, like manufacturers of auto bodies, farm equipment, and prefab housing, all grow at typical single-digit, gross-domestic-product rates," says Clerico. "So without a lot of natural unit-volume growth, we had to look for other ways to expand our capabilities."

With assistance from consultant Diamond Technology Partners, Praxair turned to the Web. It established MetFabCity as a separate business entity that will move from Praxair's Danbury, Conn., headquarters to Chicago in August. Says Clerico, "We're serving an industry that Praxair knows very well, but MetFabCity needs independence and autonomy to move at Internet speed."