Editor's Log: City Courage

By Robert Carpenter, Editor | May 2010 Vol. 65 No. 5

Does all this sound somewhat familiar? Could this be a similar scenario being played out in your hometown, large or small? City governments must continue to muster the courage and insight necessary to make the tough decisions to secure the health of their communities.

Ripple effect
When the Charles Machine Works (Ditch Witch) pulled a market coup with the acquisition of Earth Tool Corporation (Hammerhead), it essentially severed a long-term symbiotic relationship between Hammerhead and Vermeer Manufacturing.

Hammerhead was owned and operated as an independent company, having a marketing agreement with Vermeer and supplying product to Vermeer dealers. But with Ditch Witch, Hammerhead becomes a wholly owned subsidiary.

The immediate impact is that Ditch Witch suddenly moves from barely a blip on rehabilitation market radar screens to a major player in the pipebursting industry. Further, they are now a strong number two supplier in the piercing tool market, and Hammerhead will also provide Ditch Witch with a presence in the pipe ramming market. Hammerhead has also been making HDD tooling/drill bits for Vermeer rigs, but Ditch Witch has its own line of tooling so it is unclear how they will utilize the Hammerhead tools.

Apparently, Hammerhead is still obligated to meet supply and support needs for Vermeer dealers for some time. But Ditch Witch dealers will also start selling Hammerhead product immediately. Of course, such an arrangement is untenable for Vermeer, and the company will move away from that arrangement as soon as possible, if not immediately.

How Ditch Witch capitalizes on their expanded market capabilities remains to be seen. But they have placed themselves in an excellent position to grow their presence immediately in new and existing markets while charting a course for robust growth.

Vermeer is now struggling to minimize market impacts and regain the trust of irritated dealers. The good news for Vermeer is that there are market options available to reestablish their strengths. How they facilitate this new market dynamic will define the company for the next generation.

Of course, the winner in all this could be TT Technologies, the number one producer of pipebursting equipment and piercing tools for the U.S. market. They have the opportunity to solidify their leadership position.

The ultimate question remains: Who will seize the day?