Contractors Discuss Concerns, Challenges and Express Optimism at UCT HDD Roundtable

An experienced panel of horizontal directional drilling (HDD) experts with several prominent underground construction companies shared challenges, concerns, frustrations and optimism during a roundtable discussion held in conjunction with the Underground Construction Technology International Conference & Exhibition (UCT) in January at the George R. Brown Convention Center in Houston.

Josh Tucker with Online Directional Drilling, South Houston, TX, Jim Lagios, vice president with Oz Directional Drilling, Scottsdale, AZ, and Dale Hart, Southern Diversified Technology, Brookhaven, MS. participated in the lively, insightful and often frank conversation, moderated by Underground Construction magazine Editor-In-Chief Robert Carpenter and co-moderated by Ron Halderman, HDD director for the Mears Group, Rosebush, MI.

Workforce woes

Carpenter kicked the program off by introducing panel members and providing a brief overview of the informal discussion format. HDD panelists were then asked to provide a summary of their background, experience and respective company’s HDD business focus, during which, opening remarks offered by Tucker served as the ideal segue to the first topic.

“Online Directional Drilling has been doing business here in the Houston area for more than 20 years and our recent focus has been mostly with telecom installations,” Tucker said. “We’ve been really fortunate. Our business has been consistent and steady, which is good. The biggest concern we have, and I’d say our biggest challenge, has been finding good help. There is a real shortage of qualified workers to fill the many jobs available for individuals with HDD experience. The lack of skilled workers has actually kept us from expanding our business. You can’t take on additional work if you don’t have the workforce needed to complete more jobs in a timely and efficient manner.”

Tucker was not alone, as workforce woes proved to be among the top challenges faced by the collective panel. “The industry needs to join together to develop more unified outreach programs that encourage young people to pursue a rewarding and lucrative career position in HDD,” said Hart. “The jobs are there, and so is the potential to earn really decent wages, but there simply just aren’t enough qualified candidates. It’s easy to find general laborers that don’t know much about HDD. But finding qualified drill operators and locators is next to impossible.”

“In addition to the labor shortage, contractors also face a fair amount of risk to invest time and training expense so drill operators can become more proficient, only to have them leave for a better paying job with a competitor,” said Halderman. “Hanging on to experienced drill operators and locators is always a concern, especially when a competing contractor has resources to up the ante. It’s one of the many intangibles of operating an HDD business that is often overlooked. Employee retention is always a challenge, but even more so during good economic times. The loss of a skilled drill operator has a direct impact on productivity, which also affects the bottom line.”

“The younger kids actually want a job, but many of them thing they are entitled to top wage,” says Lagios. “Unfortunately, they don’t produce top dollar. It’s an ongoing thing and there’s not a lot we can do about that predisposition of theirs at this point. We just keep rolling over them, until by chance, we happen to stumble on the right one. One out of five you may keep. We’ve got to do a better job attracting them to the industry, and then providing them with the education and experience we need when they enter the workforce.”

Mud disposal frustrations

The discussion then shifted to mud disposal as the panel shared mutual frustrations with the limited number of disposal options available to them, due in large part to unfounded predispositions and opinions held by regulatory bodies responsible for writing the current mud disposal requirements.

“It’s frustrating because the requirements are based largely on opinion and not fact,” Hart said. “There are a lot of misconceptions by regulators about the environmental impact of mud disposal that for the most part, is not based on science. For those of us who are forthright in complying with the requirements, we’ve been forced to incur additional expense that represents a significant competitive disadvantage, especially for contractors who don’t own disposal equipment required to dispose of discarded mud in accordance with the regulations. It can be the difference between winning and losing a bid.”

“It also becomes a liability issue,” Tucker said. “Nobody wants to take on the liability because the enforcement pockets of the regulatory agencies are much deeper than the contractors. I think the industry needs to unite in dedicating more financial resources to fund credible third party research so we can start building a case. If we can start accumulating credible empirical data related to the impact of mud disposal on soil and the environment I think we would be in a better position to lobby for amending many of the unnecessary regulatory requirements that adversely affect contractors’ productivity and profits.”

Carpenter provided a ray of hope on the research front, sharing an ongoing mud disposal research project currently underway at Oklahoma State University (OSU). Funded by Ditch Witch and implemented under the direction of Dr. Kelvin Self, research and development project manager with the Charles Machine Works, a division of Ditch Witch. Lab results from the dozens of soil samples taken from several research field trial sites around the country has thus far yielded encouraging results with consistency. (See related article in the January 2015 edition of Underground Construction and in the proceedings from UCT 2015.)

“The findings so far have shown that applying drilling fluid mixtures to different soil types, many intended for crop production and pasture, are not harmed which indicates the applied mud is virtually inert,” Carpenter said.

“It would be to everyone’s advantage,” Hart said. “Credible, independent third party research will help document scientific facts about mud disposal that haven’t been available, or largely ignored, when writing mud disposal guidelines. We have to have this type of evidence in order to convince regulators that contractors would not purposely do something to harm the environment just to make money.”

Challenges from within

The panel of HDD experts also cited frustration from within as some of their less reputable competitors have resorted to undercutting and unrealistic bidding practices that hold little hope of achieving any profit margin, resulting in a black mark on the industry overall.

“The practice of undercutting other contractors by preparing and submitting unrealistic bids just to get work puts the whole industry in jeopardy,” Tucker said. “We simply can’t compete with some of the smaller contractors, especially those who are non-union. It’s not as bad as it was during the economic downtown and recession of 2008-9, when there was no work and more contractors felt forced to undercut just to get a few jobs. But what ends up happening is the quality of the job is subpar, and it’s not long before there is a failure. Then the complaints come in and the whole industry gets a black eye. There are still contractors who feel they need to do it to get work. It is what it is, I guess.”

“I’ve always said there has to be a line that we are willing to go to, and that’s as far as I can go,” Hart said. “After that, I’d rather see the equipment sit on the yard than go up and see it used on the job site wasting money. If there is little potential or hope to make money on a job, then I’ll let the equipment sit. It’s important for us to be flexible and adjust to the pricing tolerances of the current state of the economy. You have to adjust to what the market will bear, as difficult as it may be to complete a job and still realize at least some margin. We all have to have our ear to the ground and be flexible. Times change, and so must we.”

Lagios pointed out that “you can drive around the 610 Loop here in this town and likely see at least a dozen smaller rigs on a trailer behind some pickup truck and you know right away what’s going on. They don’t have CDLs, and certainly not water meters to buy water … they usually don’t have much of anything. They just go steal water and fly by the seat of their pants.

“Anyone can go to an auction and buy a used drill, grab a couple of laborers from somewhere and submit a ridiculously low bid, and it’s disturbing to me that they are actually getting the work,” “They’re bidding jobs at like three to four dollars a foot when it should be going for $10 a foot, and get the job only they may make a mess of it, end of losing the project. Then we have to come in and fix it. It’s a practice that puts a black eye on the face of the whole industry. It’s frustrating to think we sometimes have to give away work, but it’s just something we have to try and make the most of,” Lagios added.

Tucker also cited the increasingly crowded infrastructure as another concern, as the underground has grown increasingly infiltrated with more and more utilities. “I’ve only been involved in HDD now for six years and just in that relatively short amount of time, the right-of-way has gotten more infested with utilities,” Tucker said. “The first few jobs I worked on, we’d pothole maybe one or two utilities. Now we’re looking at eight to 10. Our biggest challenge with the crowded infrastructure is locating companies. They just can’t keep up, and it’s really not their fault. Again, it’s a workforce issue. Locators just don’t have enough people to handle all the locating needs in a timely manner. We have to wait on them to mark the existing utilities and it’s a challenge. A five-day job ends up taking seven or eight days, and I don’t have to tell you what that delay does to productivity.”

“We’ve found that we just have to adjust for the backlog and delays,” Hart adds. “We start planning ahead to try to minimize and account for the delays. And there’s simply no way you can proceed without knowing what you may possibly be encountering. Again, it’s a liability issue. And even if the locating is completed, you have to proceed with caution because if you do run into something, regardless of what the circumstances are, it’s going to fall back on the liability shoulders of the contractor. So even if the locating has been done, the best advice is always to proceed with caution.”

Lagios expressed another concern regarding productivity. “One of our biggest challenges, especially with oil and gas pipeline work, is the engineering projects. There is still considerable lag time for permitting and a lot of the details are overlooked when preparing a drill plan. Most engineers know open cut and really don’t fully understand HDD so many of considerations we take into account are overlooked. We had one instance in the Marcellus Shale where the drill was set up and permitted for a 400-foot bore but there was also a 400-foot elevation change that wasn’t taken into account.

“Sometimes it feels like engineering is going backward somewhat,” Lagios continued. But the biggest issue is that there’s so many projects going on that the engineering firms don’t have enough people to meet the demand. That’s also true with locators. There’s a definite workforce shortage there and it has really affected our productivity on many jobs.”

Optimism

Despite the many several concerns and ongoing challenges, the panel also has a great deal of optimism given an improving economy, growing adoption of HDD and increasing commitment to addressing the dire condition of the nation’s aging and crumbling infrastructure.

“There’s good reason to be optimistic,” Hart says. “We’ve got our challenges for sure, but working together I think we can make some headway. It’s going to take some commitment, dedication, perseverance and patience. But the work is there, and there’s reason to believe demand is going to continue for some time. It’s in our interest to believe that. I think the recent lower prices at the pump should be construed as very encouraging to all of us in the business. Things are cyclical, but generally, they have an average line that is sloping upward. So it goes up, it goes down, but as a whole, things are trending up.”

“We’ve done pretty well, especially in the past five years,” Lagios says. “We’ve gone from one drill to nine. I’ll admit that the times are good and the money’s pretty good right now. But it’s just like anything else though. Things can change in hurry and everything we’ve ramped up for by making a significant investment in more equipment and trying to find workers in one year can be gone in the next, just like that. What people need to keep in mind about our business is that the financial reward also comes with a lot of risk. We are liable for so many variables, including an increasingly crowded infrastructure. And our pockets aren’t as deep as the regulators. But I believe, right now, the reward has finally gotten greater than the risk.”

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