Good Vibrations: HDD Industry Riding Out Recession Better Than Other Market Niches

12th Annual HDD Survey
By Robert Carpenter, Editor | June 2010 Vol. 65 No. 6

As the current recession begins to ebb, market stabilization in 2010 seems to be a viable goal for many contractors in the underground construction market, with many areas still struggling to survive another tough year.

While that scenario does apply for the horizontal directional drilling industry to some degree, it is also a market that is already seeing an upward surge in some parts of the country, according to results from the exclusive, 12th annual Underground Construction HDD Survey of the U.S. market.

“We have seen business pick up,” said a Midwest contractor whose company derives 60 percent of its business from HDD. “We have never been this busy in the winter and early spring.”

Diversification was one reason cited for an unexpected robust market in late 2009/first half of 2010. “We just got started in HDD to fill in due to bad times. But it has really taken off for geothermal and waterline installation,” stated this contractor.

Another survey respondent observed that “there is more and more drilling going on. I expect that to be how underground [construction] will be done when feasible.” A West Cost contractor expects their HDD work to increase annually at about 5 percent for the next several years.”

Conducted in April and early May, the survey queried United States contractors and utilities that own and actively operate HDD rigs and equipment. Survey participants were asked about industry trends, concerns and market status. All things considered, the HDD market appears to be surviving this latest economic challenge in much better condition than in the past.

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Several contractors predictably outlined how they were still struggling to survive, let alone yield a profit. But the strength of the positive economic comments – from contractors of all sizes and all areas of the country running rigs of every size – was surprising. “It’s expanding,” observed a Mid-Atlantic contractor. “Prices are steadily climbing and there are more uses for HDD,” reported a contractor from the Rocky Mountains. Even major rig manufacturers have reported stepped-up demand from their products.

Challenges ahead
But as good as many respondents feel about their market niches, there remain many challenges for 2010 and beyond. “Slow to moderate,” is how this upper Midwest contractor viewed the market, but cautioned “we’re seeing lots of small competitors.”