In a transaction that surprised most of the underground construction industry, the Earth Tool Co. and its HammerHead product line was acquired by The Charles Machine Works Inc., manufacturer of Ditch Witch equipment.
Earth Tool and the HammerHead brand have been closely tied to Vermeer Corp. for years with HammerHead tools sold and serviced through the Vermeer dealer organization. Vermeer has actively advertised and promoted HammerHead products. Typically, HammerHead’s presence at trade shows has been incorporated into Vermeer’s exhibits. Vermeer and HammerHead exhibited together at the 2010 UCT show in January in Tampa.
Reports of the acquisition surfaced the week of April 12, with Ditch Witch and Vermeer communicating the news to their dealers on April 13 and 14. Ditch Witch confirmed the acquisition late Friday, April 16, with a brief, e-mail press release.
The press statement said that ‘The Charles Machine Works Inc. . . . has acquired 100 percent ownership of HammerHead Trenchless Equipment, manufactured by Earth Tool Company LLC (ETC) of Oconomowoc, WI. This acquisition makes ETC a wholly owned subsidiary of CMW.
“’Our decision to acquire HammerHead/ETC was based on our long-term, strategic commitment to grow our core business,’ says Tiffany Sewell-Howard, CEO of CMW.”We plan to fully leverage HammerHead’s products and expertise to strengthen our position in the water and sewer rehabilitation markets globally.
“HammerHead/ETC and the Ditch Witch organization both expressed excitement and confidence that the acquisition will ensure long-term sustainability and market leadership.
“Both companies have spent years developing customer confidence in our brands,” says Brian Metcalf, CEO of ETC. ‘Joining together reaffirms a commitment customers can depend on,” the press statement concluded.
The announcement leaves many unanswered questions regarding the structure and market impacts:
- What immediate effect will the acquisition have on the sale of HammerHead products?
- For the present, will Vermeer dealers continue to sell and service HammerHead products?
- How will Ditch Witch dealers be involved?
- Longer term, will Vermeer distribution be phased out?
- Will current Earth Tool staff remain?
- Will HammerHead offices and manufacturing stay in Wisconsin?
However, at press time, Ditch Witch and ETC were not prepared to answer any specific questions.
A Ditch Witch spokesperson referred to the April 16 press release, declined to comment further, but added answers to these and other questions would be forthcoming “soon.”
Earth Tool CEO Metcalf also declined to discuss plans, but did say offices and manufacturing of Earth Tool products would remain in Wisconsin and that current Earth Tool employees would be retained.
News of HammerHead’s purchase by a major competitor came as surprise to Vermeer and its dealers.
“Despite the dynamic of knowing Earth Tool was owned by a venture capital firm for the last several years, the timing of the Ditch Witch acquisition was not expected,” said Doug Hundt, Vermeer vice president of industrial solutions.
“Although there have been no immediate changes to date, we do anticipate changes in the future,” he continued. “When that time comes our primary goal will be to continue providing our customers with the same level of support they’ve grown to expect from Vermeer.
“I believe it’s too soon to speculate on the market impact; however, Vermeer continues to be firmly committed to providing our customers with a full line of underground installation options,” Hundt stressed.
HammerHead products include the design and manufacture of piercing tools, pipebursting systems, pneumatic hammers and horizontal directional drill tooling.
Addition of the HammerHead line of pipebursting equipment and an established customer base in the market should help Ditch Witch efforts to capture a share of the pipe bursting market. HammerHead is also the second largest manufacturer of piercing tools which should also bolster Ditch Witch’s presence in that market niche.
Ditch Witch and Vermeer are major suppliers of equipment for underground construction, including horizontal directional drilling equipment, trenchers, vibratory plows, compact excavators and skid-steer loaders, vacuum excavators, and support equipment and accessories for these products.