14th Annual Horizontal Directional Drilling Survey: Telecom, Energy Drive Market, But Is It Sustainable?

Riding The Wave
By Robert Carpenter, Editor | June 2012, Vol. 67 No. 6

Depending upon where you are located and what niche drives your business, the horizontal directional drilling market for 2012 is a mix of strong, mediocre and stagnant. But where business is good, it is very, very good.

This information and much more is detailed in the 14th Annual Underground Construction 2012 HDD Survey of the U.S. market. This exclusive industry research was conducted during March and April. Surveys were sent via both U.S. Postal Service and email to more than 5,800 contractors or organizations who had indicated they actively own and operate HDD drilling units. The number of completed surveys allowed for an accurate statistical portrayal of the market.

For those contractors whose niches have hit the market “sweet spot,” they are understandably optimistic about their industry.

“I believe the HDD market for gas distribution will be expanding exponentially over the next decade, based on the turnaround in the engineering departments at the gas companies and the knowledge of the quality of work available using HDD,” said this Northeastern contractor.

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One respondent went so far as to speculate that “the trencher will be a thing of the past.” A New York contractor added that “in the long term, I believe that directional drilling will more than double.”

But those strong HDD market areas are not without challenges. “There is a good amount of work, but not much profit margin,” observed this Maryland contractor. “We’re busy, but with a lot of competition,” agreed a Florida respondent. “I see the work picking up, but it seems the price per foot is still challenged,” said another contractor. A Texas contractor “work is good if we can keep the low-ballers out.”

An Iowa contractor cautioned that while “the near-term looks bright, there is a tremendous amount of money going into the telecom and gas markets. This should keep up for three to four more years. However, I believe there will be another big shake-out of HDD after that.”

A Virginia contractor also voiced an increasingly common complaint: “It is becoming more difficult in the Northern Virginia area due to over-crowded, existing systems already in place.” In New Jersey, this respondent indicated that while HDD work is growing, “longer and more technical drills are becoming common.”

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Concerns
Of course, there are still many areas of the country where HDD took a nosedive with the economy and there is a dearth of stronger market niches to pull their work out of the doldrums. “It is slow to rebuild in Arizona,” pointed out this contractor.