HDD An Industry Staple

June 2014, Vol. 69, No. 6

Often, detailed industry insights are hard to mine from the limited data sources generally available.

But for the horizontal directional drilling market, Underground Construction has the rare opportunity to discover market specifics with our annual in-depth research into the market. Yes, it’s expensive and very time-consuming, but reader feedback confirms the importance and significance of this exclusive project.

Our16th Annual HDD Survey (page XX) reveals a market that in some aspects is treading water. But that’s not necessarily a bad thing and a far cry from stagnant or even negative market conditions during the first few years of the new century.

The energy market, which has been a mega-driver for mid-to-large/jumbo rigs for many years, is projected to essentially be “catching up” with rapid growth of the past several years. Subsequently, HDD is experiencing the same type of minor slow-down before charging forward at breakneck speeds again. Most industry experts anticipate that while there will still be a strong market for the next couple of years, it will be in 2016-17 when the industry catches fire again. Estimates on how long the strong market/booms can last range from 10 to 25 years. Bottom line, for the foreseeable future, energy remains hot.

Consequently, for HDD contractors concentrating in the energy field, 2014-15 is a time to finally work through backlogs, expand and train staffs and position themselves to ride out the next wave – all while staying reasonably busy.

The survey also revealed that another market niche that has been a staple for small rig work remains viable but profit margins are down. The telecommunications market is no longer the attractive money-maker it once was. A plethora of contractors rushed to the telecom industry because of the heavy fiber build-out programs and an already competitive market has almost gotten out of hand. That competition has resulted in downward price pressures and emboldened owners to seek further cost reductions and shift risks back to contractors. Frequently, telecom contractors are feeling a “squeeze” by owners to obtain cut-rate prices.

Predictably, many telecom contractors are searching for other markets as telecom profits stall. Prime niches include the vibrant and potentially lucrative electric grid build-out, or even the gas distribution industry which by all accounts is ready to boom.

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