Editor’s Note: This is the extended version of our annual Editorial Roundtable, with more perspective offered by our panel of experts.
To gauge the pulse of the industry, Trenchless Technology annually hosts an annual gathering of industry leaders to discuss the trends and issues facing the market, as well as the future outlook. This year, we brought in a range of experts representing contractors, owners, engineers, research and manufacturing to discuss the state of the trenchless technology market. No longer in its embryonic stage, the trenchless market is evolving and growing. We asked the panel their views on the current state of the market, how it can grow and what challenges exist. We explore what is driving innovation, what market sectors are flourishing and impact of investment in the trenchless marketplace.
We gathered the panel during the No-Dig Show March 17 in Denver, Colorado. The panel consisted of:
Jeff Maier, C&L Water Solutions
John Matthews, Battelle Memorial Institute
George Ragula, Public Service Electric & Gas
Chris Bahler, TT Technologies
Peter Kraft, Denver Water
Don Del Nero, Stantec
Jim Rush, Trenchless Technology – Moderator
In the early days of trenchless technology the focus was about education and acceptance. How do view the market today? Is trenchless a mature market? What areas still need development?
Maier: Education and acceptance are still key goals that we need to have as trenchless professionals. Trenchless is growing into a mature market, and while there is still maturing to do, many of the technologies that we use today have been proven. Within the overall trenchless market, there are a lot of areas that are seeing growth. In the rehab sector, for example, water line rehabilitation is a growth area. There is a lot of interesting development going on there. It is certainly an exciting time to be involved in the trenchless industry.
Matthews: Education and acceptance is still important, not only for engineers and contractors, but also at the higher levels within municipalities and the people making decisions. That is where we can strive for greater outreach. As far as growth of the market, the pressure side has seen a lot of growth recently – particularly related to condition assessment and rehabilitation– and I expect that to continue.
Ragula: From my perspective there is no question that the market has matured from the old days, but there is still a need to focus on education and training. There are still too many people, unfortunately, who are unaware of many of the trenchless technologies available. There are options and tools in the toolbox that people, particularly engineers and operations people, need to be aware of because they are involved with the unique and challenging problems that require innovative solutions. From a technology perspective, HDD certainly is a very mature marketplace and is very routine in the oil and gas pipeline business. The use of CIP liners has grown as well. But there is still room for growth and that can be achieved by people getting more involved in and learning about trenchless. From a development perspective, if you look on the horizon with the way restoration costs and restoration specifications are driving the cost of work upward, there is no question that we should be looking 20 to 30 years down the road for inspection, maintenance and repair capabilities from inside the pipe. Without those capabilities, costs will get out of hand.
Brahler: Education and training are so crucial to gaining acceptance. A lot of that has to do with focusing on using the right tool in the toolbox for the project. There is a vast lack of information out there in the industry about where pipe bursting should be used or where directional drilling should be used, for example. Some people know and understand, but other people try to use technologies in areas where it doesn’t fit. So, education remains a big part of our business. Even though there are numerous centers of trenchless expertise and training available around the country, there are a lot of regions where trenchless still hasn’t reached the proper levels. As a result, we have a big job ahead of us. And that is our job: to educate and grow the market. In general, the equipment and methods are pretty much mature. There are some areas that are new – small diameter pipe bursting, for example – but directional drills and pipe bursting machines, as well as the lining equipment, are basically proven and mature.
These technologies are effective and save money vs. traditional methods when used in the right way. But a lot of people haven’t taken advantage of this yet, so continued education in necessary to convert these people and make them aware of the benefits out there to be had.
Kraft: I see three indicators of the maturity and growth of the market. One is the media’s continuing emphasis on failing infrastructure. That story is in the news. Whether it is in Los Angeles or here is Denver where we had a Rockies game cancelled because of a water main break, the story that we need to spend more on infrastructure keeps popping up. At a very high level, that is pushing us toward more advanced tools and better decision support to maintain our infrastructure. Second, there has been a maturing of analysis and modeling tools that leverage enterprise asset data. Within our institution and similar utilities, this begins to drive the questions that are more focused. Specifically, how best do we spend our money? That is the question that you need to be asking because that is what drives the business – making better decisions with the money you have. Third, I am beginning to see utilities move past the phase of study and testing. I am seeing utilities starting to incorporate large expenditures into the repair and replacement program. That is a step forward. A few years ago there were areas where people were reluctant to pull the trigger on spending larger amounts of money in their replacement programs.
Del Nero: The market maturation process is not yet fully developed for several reasons, 1) academia has come a long way with several Canadian and U.S. universities having trenchless programs, but there is still a need for university program initiation and expansion as a vacuum exists caused by too few trenchless and tunnel engineers (demand outweighs supply), 2) certain public agencies and private clients are still coming up to speed on trenchless technologies and their vast benefits, 3) there is still limited awareness of how trenchless technologies are “greener” and have a much lower environmental footprint than open-cut construction, for instance, 4) new technology awareness is constantly a challenge because of data saturation in our modern times although there is aggressive interest with many, especially, urban owners, and 5) there are still consultants who are not aware that the capital costs of trenchless methods can be as equitable as open-cut construction for pipelines as shallow as 20 ft deep. There are a few areas that are in need of growth, including an understanding of the upfront costs associated with adequate subsurface investigations to support trenchless design and means and methods. There are a host of parties that still view the trenchless industry as a simple specification section in construction documents with little trenchless specific subsurface investigation and little engineering analysis regarding technology selection. The main reason for the hesitation on the subsurface investigation side is the higher cost when compared to subsurface investigations for open-cut construction. Relative to means and methods, owners struggle with the concept of an engineer specifying the means and methods of trenchless construction. This is rooted in the historical philosophy that an owner and engineer should stay of out the traditional domain – means and methods – of a contractor for liability reasons. The reality is that an owner and engineer often spend from 12 months to several years studying the ground during preliminary design and final design and a contractor only spends 6 to 8 weeks during a bid period reviewing ground conditions. That discrepancy means owners and engineers do often have a more knowledgeable perspective on which trenchless technology is the most appropriate. It is important NASTT continue the education process to foster an understanding of how important it is to invest more money during planning and design of subsurface investigation programs (compared to open-cut construction) and who should be responsible for technology selection. In short, open-cut construction can get away with much fewer borings and far less geotechnical laboratory testing. Having been called-in by many owners and contractors to provide expert witness testimony, it is abundantly clear the industry can be litigious. Often, upon root cause analysis it is determined that too little geotechnical investigation was conducted and with insufficient testing conducted that relates to the trenchless technology that was selected.
How does the gas market compare to the municipal water and sewer market with regards to maturity and acceptance of trenchless technologies?
Ragula: From a general construction perspective, the gas market is ahead because there is a lot more money available. There is a lot of money being spent on resiliency, storm repair and storm-hardening facilities. We experienced quite a bit of storm activity in the Northeast that took its toll from a facility perspective. That has helped us mature. Also, from a research and development perspective, we have been able to take equipment concepts on the sewer and water side and modify and adapt them to gas applications. One of the simplest ones is CCTV inspection tools, which have served as a launching point for sophisticated untethered systems and robotic systems that we use to non-destructively inspect unpiggable transmission mains. That is just the beginning.
Del Nero: For both markets there has been a steep learning curve with continued aggressive interest in new technologies. The gas market has shown a little more interest in the benefits of trenchless from a carbon footprint standpoint but not far behind is the water and sewer market. Some segments of the water and sewer market have really grasped the socio-economic benefits of trenchless but not all. The gas market seems to have a little more awareness of the use of HDD in hard-rock but on the other-hand both markets have shown strong interest in new technologies like Direct Pipe. Lastly, both markets have shown aggressive interest in pipeline inspection technologies because of the aging infrastructure in both markets.
What are the market drivers for trenchless technology? What are the inhibitors?
Maier: Economics certainly is a key driver for trenchless technology. Social cost is another. Value-driven solutions help promote trenchless, and reduced impact to the public is part of that. Continued educational opportunities for municipalities and engineers will be important to help make them aware of the technologies that are available and recognize the numerous benefits of trenchless.
Matthews: Another big driver is aging infrastructure. We are dealing with more breaks on the pressure side. On the sewer side, sometimes the drivers are a little different, such as dealing with overflows. That hasn’t changed a lot in the last few years. But as the pressure systems continue to age, we are starting to see that as a major driver because it is increasingly in the news and on social media when there is a break. The word gets out there and it lights a fire.
Ragula: Economics is still a driving factor. As the costs come down for trenchless techniques, they will be used more frequently. The champions in the industry are also important drivers. We need a lot more champions in the industry to continue to promote the use of trenchless, and educate and train people in its proper application. As far as inhibitors, trenchless creates more work from a planning, coordinating and scheduling perspective. It may sound strange, but with a trenchless project you have to go through the process of disconnecting the gas, tying in services, and doing the re-connects all within a certain timeframe, which can make it more involved for the field staff that is already dealing with manpower issues.
Brahler: From our viewpoint, the market drivers are the demand for fewer disturbances by public utilities, cities and counties. Typically, engineers, owners and contractors are interested in saving money, saving public impact and reducing environmental impact. This includes not only less disruption, but also fewer pavement cuts, less noise and less cost. With trenchless, the public agencies see the potential for cost savings and less disturbance. Contractors are thinking ahead and realize the benefits of trenchless and see where they need to be for the future, but that requires investment by the contractor in trenchless equipment. Inhibitors include a lack of understanding of the trenchless processes by owners and specifiers, and thus a lack of commitment to the specialty equipment by the contractors. It is kind of a vicious cycle. We continue to see occasionally poor plans and specs and there is unwillingness of owners, specifiers and engineers to stick to their specs – in many cases a contract will end up being built in a different way. So trenchless can be really good from an environmental and community impact perspective, but we need to get the specifiers to really understand what they are doing – not pick something that is the wrong tool in the toolbox.
Kraft: I would say one of the drivers is that many utilities in the water industry still have a pretty reactive approach. It takes a massive blowout of some kind to trigger the need for a more robust and proactive program monitoring system. That has been the case for Denver Water in our transmission lines.
One of the inhibitors I see is figuring out how to incorporate the technology into a larger program as opposed to on the project level. You need to ensure that that you are creating value in both your immediate and long-term replacement planning budgets. That is a pretty dynamic problem to solve when you consider the different pipe materials, location and condition, and optimally deciding the best tools to use for which pipes. Right now, we have to go to different vendors and try different types of products and figure out ourselves how best to incorporate that into our business plan for main replacement. Another simple inhibitor is that we do about 30 percent of CML for 12 in. and smaller across the city, which is about 30,000 ft a year. In the process we have hit pockets of the city where the pipes were in the worst condition and we were able to line them in an economical way. As our system ages our ability to aggregate larger rehab jobs within a localized area becomes more challenging. Having to stretch smaller projects out across the city is less optimal and less cost-effective.
Ragula: One of the biggest market drivers is cost, and the costs of doing business are rising all the time. These costs are due to restoration requirements and specifications that are significant and severe. Other cost factors come from the environmental side. When you open-cut, you have spoil to dispose of, you have dumping fees, and there are a limited number of dump sites. Everyone talks about how much carbon we are emitting, and that is going to be a factor in the long haul. Then you have to bring in virgin material to use as fill. These are all important considerations, and trenchless minimizes those aspects.
Del Nero: By far the two greatest drivers from my “window” into the industry is urbanization from population growth and aging infrastructure. Also significant is the growth in developing countries with major marketing efforts by strong equipment manufacturers like Vermeer and TT Technologies reaching out to the underdeveloped markets. This is important because the equipment manufacturers don’t just sell the equipment but also play a massive role in educating those individuals in underdeveloped markets. The most significant market inhibitor is funding for infrastructure renewal and development. The drop in oil prices has halted many projects on the oil and gas side and many public agencies are facing austerity budgets. The United States is especially behind based on the 2014 ASCE Infrastructure Report Card. Canada has a better fiscal condition than most parts of the United States so its infrastructure development and renewal programs seem to be growing at a faster rate. With the soon promulgation of the National Tunnel Inspection Standards there will be an invigorated investment in inspection of not just tunnels but large diameter pipelines that are reaching their design-life.
Which specific disciplines or technologies are driving the market now? Rehab? HDD?
Maier: In rehab, CIPP is the predominant technology used for gravity pipeline rehabilitation applications. CIPP is a mature technology that is very reliable at this point. There are some outstanding developments with the glass-reinforced, UV-cured liners, and I think we will continue to see more of that used in the North American market in the years to come. There are also advances in potable waterline rehab using CIPP methods due to improvements in pressure lining technologies. Because of increased focus on water conservation and the growing demand for viable potable and raw water rehab methods, I think we will see a lot of development and growth in that area for the foreseeable future.
Matthews: On the rehab side for sewers, we have definitely seen the innovations come from overseas with the UV-cure and different reinforcements to get thinner liners. We are starting to see a lot of CIPP used on water mains. We are also starting to see some use of the spray-on liners and rehabilitation techniques. The biggest growth area I see is in condition assessment for pressure systems. We are seeing new technologies all the time – they are changing monthly almost in what they can provide – the quality of data, the ease of use and the ability to interpret the data without being a scientist – that is a lot more valuable to the end-user. That is a big market driver at this point.
Ragula: The long-term driver is probably going to be rehab. HDD is going to continue to improve as equipment gets better and technology improves. I think we will see longer drills and larger diameter pipe. We have seen that the last 20 to 25 years and that is going to continue. There may even be some breakthrough technology that brings some major changes to that process. But most of the money is in rehab because most of us have lines that have been in the ground for many, many years and they are in areas that were perhaps easy to install 30, 40, 50 years ago. Now those areas are wall-to-wall paving. They are in congested areas with a lot of traffic. So rehab is something that should be focused over the long haul. The big ticket item from our perspective is inspection, maintenance and repair from the inside. We have got to have that as a long-term goal in order to help us solve some of the problems and issues out there.
Brahler: The trenchless market is not one thing. It has evolved into a number of different techniques and technologies working in very diverse applications. Rehab is fertile ground for a lot of R&D in pipe bursting and pipe lining. HDD has been growing by leaps and bounds and is commonly used for new installations in cross-country and urban settings. And tunneling and tunneling processes – ramming, microtunneling and auger boring – are all unique processes used in urban and cross-country applications. We are seeing DOTs looking at repairing corrugated culverts with trenchless methods. There is such a variety of problems and issues to tackle as an industry. It is a lot for even us to keep up with. It is very challenging and there are a lot of areas where strides will be made. The industry is striving for better economics because ultimately the end-users have less money to spend to get the same amount or more work done.
Kraft: At Denver Water, HDD is something that we have used on a few projects but it is not something that we are using readily. It is tool that is used in certain conditions where it makes the most sense, though we often are inhibited by services. Regarding rehab, we have mainly used cement mortar lining. Most of the work has been driven by flow or water quality issues. From a price standpoint, trenchless is appealing because we are able to rehab at a much lower cost. With thick cast iron, usually the integrity of the pipe is not an issue. But as the system continues to age and we have to prioritize pockets of the city, there is less opportunity to address large areas of unlined cast iron for rehab projects.
Maier: I think we’ll continue to see movement toward a more holistic approach to the rehab of water and wastewater assets, from condition assessment all the way through rehabilitation of the pipes and manholes and appurtenances in a particular zone, taking advantage of the economic and logistical efficiencies of addressing entire areas of a system as a whole, rather than through a less efficient and often times more costly piece-meal approach. This way you do not have the remobilization costs and the split up nature of some of the rehab projects. Reduced economic costs and social costs are realized. Improved asset management strategies are certainly a part of this.
Del Nero: There is little doubt from my perspective that pipeline rehabilitation is a stronger driver than new installation technologies. Again, the aging infrastructure is the root cause of this trend. Several clients have approached our firm to develop standard specifications for pipeline rehabilitation to avoid each consultant “inventing the wheel” on each project. That trend supports agencies getting much more aggressive with infrastructure rehabilitation. As to specific technologies there is as much interest in structural pipeline repairs as there is in non-structural repairs. The rehabilitation of culverts is a major driver for the intense interest in structural repair technologies.
What is the percentage of work being done trenchless vs. open cut? How does this compare to years past?
Maier: As a contractor, C&L Water Solutions performs both trenchless and open-cut work, so we often times have a direct comparison of the two. We are well positioned to be able to work within the sweet spot of the trenchless services we offer, because if a particular application is better suited for open cut, we can offer that option to our client. Again we go back to using the right tool in the toolbox. As we see the trenchless toolbox expand and become more cost effective and versatile, more projects will become trenchless projects due to the benefits of a no-dig approach. Right now about two-thirds of our work is trenchless and that is driving the company revenues at this point. Beginning in about 2008, we started to see trenchless really beginning to grow and have had steady growth each year since then. The outlook for the next year looks really good as well. I think we’ll see continued growth in the trenchless sector for the foreseeable future.
Matthews: From a research perspective, the surveys I have seen have been on the order of 50-50 trenchless vs. open-cut. But I have talked to some utilities where it is much higher, and I am sure others are lower.
Ragula: If you take sliplining into account, the trenchless market is about 30 percent. However, there is a greater volume of work now that we are doing. So years ago maybe we were doing 30 percent of a 50-mile replacement program with trenchless, but now we’re doing 150 miles. So while the trenchless component is still 30 percent, it is growing in volume. The other aspect is that a lot of the easier jobs tend to get cherry picked first in the replacement, repair, renewal cycle because they are the most cost-effective ones to do. What you are left with is more difficult work, the more expensive work and the work that really requires unique solutions, so then you’re talking about lining technologies or HDD for new and replacement work.
Brahler: The amount of trenchless is hard for us to pin down because we see so many different regions – in some areas it is maybe 50 to 60 percent, in other areas it may be 2 percent. We can see that the pipe ramming market, the pipe bursting market and the directional drilling market have been on a nice growth curve. Pipe bursting today is double what it was 10 years ago, and it is just getting started for small diameter gas mains. But there will always be open-cut and there are still areas where they say, “This is not the way we do it.” The growth in pipe bursting can be attributed in many respects to the contractors. For example, there are contractors in Houston that regularly put in a half a million feet per year. Those guys are very low cost, they do the cleanup and restoration work very efficiently and they really know what they are doing. Lining is still a larger percentage, but if an owner needs capacity, they start looking at pipe bursting.
Kraft: We have about 2,600 miles of small distribution lines – mostly 12 in. and smaller. We have a replacement program that addresses between 0.3 and 0.4 percent of the system and we are actively growing that right now. Over the next four to five years we are aiming to double that. We have been at about 35,000 to 40,000 ft a year of open-cut replacement a year, and we are looking to double that to 80,000 ft. On top of that, we are doing about one-third of CML. So, about one-third of our program is being designated toward a trenchless method. We still rely heavily on open-cut, and partly it is a cultural behavior that has been done for many years so that is what is known. If we were contracting out our replacement work that may shift the emphasis, but as long as the utility is managing it, one-third is trenchless. One thing I do see opening up is the concept of condition assessment and how to start putting that as a pre-step to doing any type of lining or open-cut work. There is a huge market for that. We are starting to look at the idea of running a condition assessment of some kind before doing any type of replacement. Right now it is fairly cost prohibitive. In the future I see that becoming a standard practice.
Brahler: Interestingly, one area we have seen growth is in piercing tools. Ten years ago, we would have thought that they would be in decline and the market gone away because of the growth in directional drilling. And, if piercing tools are not used correctly, they get a poor reputation. But we have actually seen the market double for piercing tools in the last 10 years instead of decline because of the economics. Utilities and small contractors find it is economic to use a piercing tool powered by an air compressor vs. going out and buying a drill rig.
Kraft: There is an opportunity for trenchless for larger water transmission mains. We built cities on top of a lot of these large pipelines and it is becoming much more cost prohibitive to deal with in an open-cut situation. That is a reality with the highways and light rails that are now running over a lot of the infrastructure we have in place. That is something that we will need to take into consideration in the future.
Del Nero: This question is a perennial one, but one that is hard to get our arms around. Mining of construction data and reporting of trenchless components of a larger project are often lost in the weeds. As a result, it is likely that trenchless billings are understated by anywhere from 10 to 20 percent in my estimation. The best perspective is likely the increase in engineering fee billings over the past few years as noted in the December 2014 issue of Trenchless Technology magazine. The 2013 market size for engineering fees related to the trenchless market is approximately $7.6 billion; that same market assessment showed major increases in annual billings. My calculus tells me a major part of that growth is the usurping of open-cut construction by trenchless technologies.
How is innovation shaping the market? What barriers exist to innovation products and technologies? What do you see as the next big thing in trenchless?
Maier: The innovation part of the industry is the fun part. It is exciting because there is a lot going on. I think there are going to be some major advancements, including on the large-scale water main and pressure lining front, in the coming years. Advanced pipeline condition assessment is going to be improving and becoming more and more prominent. I think that advanced pipeline condition assessment it going to follow the development path of computers and cell phones; that is, we’ll start seeing lower cost and more systems available that will be faster, more compact, higher quality and more readily available.. These advancements are exciting prospects for our industry. As far as barriers that exist to innovation … it’s really the acceptance of owners. Coming from a municipal background, I have seen how it often takes a long time for a new technology to be accepted. It is going to take more education and repeated outreach efforts to gain acceptance, and then you will see some momentum start to build as some of the new technologies and systems begin to be used on a more wide scale basis.
Matthews: Pressure pipe management is also where I see a lot of innovation taking place –specifically being able to identify the condition at the front end of the project. We have seen advancements for pressure pipe condition assessment on distribution and transmission pipes. There is research to quantify and define what the defects are, and determine risks for pipeline management and failure management. On the sewer side, we’ve had the Pipeline Assessment Certification Program (PACP) that has helped owners and engineers consistently define the condition of pipelines, and that is something on the horizon on the pressure side. Having that information will help lead to the right repair decisions going forward. In terms of barriers, testing and evaluation of new products is a challenge. We need to ensure that products are capable of doing what they are supposed to, as opposed to marketing claims. This has always been an important aspect in this industry. With new things coming along all the time, we don’t want to put bad products in the ground.
Ragula: The gas industry is unique in this area because we dedicate time and money in research through consortiums with a number of other utilities. In that way we can leverage our money and avoid duplication of effort in a common path toward finding a solution for a particular problem or issue. Some of things we are developing include line locating plastic facilities using sondes, and performing internal repair of cast-iron joints. We are also able to CCTV live gas mains without interruption of service to customers, and at the same time if we find pockets of water in low pressure mains, which can stop the flow of gas, we are able to pump it out remotely instead of making an additional opening. Those types of things are going to continue. I think we are going to see a lot more in robotics, specifically related to unpiggable transmission platforms to inspect them from a safety and reliability perspective. When you talk about barriers, it is always an interesting conversation because of the “RC” factor – resistance to change. Manufacturers that get into development and commercialization also have the chicken and the egg syndrome – how do you determine a price point when you don’t know how many are going to be bought or how many you are going to manufacture? It’s been mentioned before but we need champions to promote new products from cradle to grave.
Brahler: Innovation in the marketplace is basically what all the equipment manufacturers are trying to achieve on a regular basis. The true innovation, however, comes from the customer, whether the customer is a contractor or owner. Sometimes they have specific needs that require manufacturers to push the limits of the application, and that’s what drives the innovation. The barriers are numerous. Cost is a real problem for a lot of people, as well as funding for new technology development. For example, if owners have a specific need, they may need to prototype some piece of equipment. Well, the contractor is not going to fund it, and the equipment manufacturer can’t front the full cost either, so that may be a lost opportunity. It needs to be a partnership. But all the barriers can be overcome. I look at it as every barrier is an opportunity to do better and have our industry do better, and I think it will.
Kraft: From the utility standpoint, one thing we are moving toward is looking at repair and replacement as part of the bigger picture – not just a specific program or project. Enterprise technology is forcing utilities to start thinking more holistically and looking at decision-making through not just a reactive, short-term timeframe, but a longer term approach. So when we start defining what our service level is, that directly equates to how much pipe we’re actually doing. We need to consider factors like replacement rate, main break rate and the related costs. For me, a technology that can detect the issue and do the maintenance work, all in a seamless process that is hands off, is the biggest need. People don’t realize how resource-intensive it is to deal with maintenance issues and deal with replacement issues while trying to figure out how to address an aging infrastructure. On the condition assessment, there are instances where we’ll do a test, and then we have to wait three weeks for the processing of the data. As technology gets better, we’ll have the connectivity to detect leaks during the condition assessment notify customers in real-time, and bring optimal crews out to do the repair work. I see that efficiency being developed at some point in the future. Right now the lack of real-time data and access to good information is a big pain point for utilities.
Maier: Integration and automation will definitely help utilities in managing their assets and making good decisions to get the best value for their rehab programs.
Matthews: I agree. Getting the data faster is important. We are seeing more real-time pipeline management on various condition systems and active leak detection systems and that makes it easier for utilities to manage their systems when they know immediate and accurate information.
Kraft: The gas industry’s model of a consortium is straight-forward and seems to be an effective way to pool resources and work collaboratively. I think the water utility industry could benefit from a more robust model similar to the gas industry. It addresses an important barrier, which is that utilities don’t allow for enough development and testing from a cultural standpoint. Typically utilities just don’t push for R&D. Maybe we’ll run a test, and if it doesn’t provide the results we want, then all of a sudden that product didn’t work and it’s off the drawing board. That can push technology back years.
Del Nero: Innovation has always been a significant driver in our market from the first technologies developed out of necessity in many cases. Well noted is the industry innovation by suppliers and manufacturers. As part of the Innovation Awards committee at a few pervious No-Dig Shows, I see tremendous innovation every year – in fact every month. The industry does need to continue to support innovation funding at the academic level. That is an area where many more new technologies can be developed in addition to validated and improved; yet this area suffers from a lack of funding. Another driver for innovation is the increase in general awareness of the trenchless industry. As technologies are applied to varying ground conditions, it necessitates the need to modify existing technologies. For example, the new NASTT Chapter in Texas will increase awareness and in turn likely cause more innovation on the academic side and the construction side because of the varying ground conditions in that state. The next big surge in trenchless will be the addition of many new contractors to the marketplace. As the funding starts to increase for pipeline rehabilitation there will be a massive need for trenchless contractors and that alone will be a major catalyst for innovation.
Matthews: Manufacturers have typically been the ones driving the innovation and funding their own R&D, but the universities that have been able to garner funding have also been able to contribute a lot too. However, we don’t see a lot of universities successfully getting research funding in trenchless, but the ones that have had made an impact. As an industry we should look to increase our support at the university level.
Is there increased investor interest in trenchless technology? What impact is that having?
Maier: As the trenchless industry continues to mature and grow, I think you will see increased interest from private equity and venture capital investors. Large investment firms will play a role in this too as the value of water resources continues to increase and focus on fixing our infrastructure becomes a higher priority. As a result, I think we’ll start to see a more integrated marketplace between Europe, Asia and North America with a more unified approach in terms of production, methodologies and adopting of technologies that are successful in those particular regions, as we see in other industries. We are dealing in a global marketplace and trenchless is certainly a part of that.
Matthews: There is definitely an interest in investment. People are starting to realize there is a market here. Our aging infrastructure is becoming more visible, and that’s OK because that generates funding. People are seeing the growth potential and that there are returns to be had, and I think that investment is going to continue to increase in pipelines and trenchless technology.
Ragula: Since the gas industry does research on a consortium basis to leverage dollars, in a sense we are the investors. What I have been seeing from an R&D portfolio perspective is there has been a lot more focus on trenchless technologies. For example, we are currently researching concepts to locate leaks without making an excavation, we are looking at service line replacement – size for size or upsizing – and we are looking at non-destructive testing for PE fusion joints from inside the pipe.
Brahler: Here at the No-Dig Show, I have seen private equity investors learning more about the industry, figuring out perhaps who they want to buy. We have already seen private equity firms getting involved in trenchless by buying manufacturing and contracting companies. Sometimes the acquisition goes well and sometimes it doesn’t. But if they are smart and grow it correctly there are some good opportunities, and I think we are seeing a higher quality of some of these private equity firms getting involved.
Del Nero: There is a major thrust in international markets to develop trenchless technologies. The catalyst, in part, is the shipping cost to send trenchless equipment overseas. That trend will increase investor possibilities in international markets. In general, this is a strong positive but one of my concerns is the copying of North American innovation by some international entities. If this trend becomes a real problem then it could impact investment and related return on investment. If investors see that technologies are being copied, then that hurts their investment in the long term; and maybe even in the short term. Patent infringement in international circles is no easy issue to resolve so there is the potential for dumbing down of investment. That issue is an impediment to the industry.
How does the international market compare to the United States? What opportunities exist outside of the United States for U.S. companies?
Ragula: I think the United States is both an importer and an exporter. But there is a challenge to being an exporter. From a global perspective, there are a lot of different cultures, policies, practices and procedures in the world and it gets to be very difficult to come up with a unified approach to address all those markets. That said, new technologies will always cross borders, but they will involve some adaptation or modification because of these differences in operating practices.
Brahler: A lot of the solutions that have been developed by the trenchless market are related to addressing aging infrastructure, and naturally they are coming from area’s with the oldest infrastructure, typically Europe. But when we look for new solutions, we don’t typically look for a final product. We look for the concept first. When they are brought over, they need to be Americanized, which typically means low-cost, high-reliability equipment. This is a result of the intense competition that drives development here. For TT Technologies, we actually export more equipment than we import because people around the world like Americanized products.
Del Nero: There appears to be a little more innovation in North America on the smaller diameter side, while on the larger diameter side, there appears to be a little more innovation in Germany and Asia; although these are gross observations. AKkerman, Robbins and TT Technologies, just to name a few, in the United States are fierce developers and have forged a great reputation for innovation. Their footprints already cross international boundaries and have not gone unnoticed by international manufacturers. Overseas, the innovation in Germany and Japan includes building some of the world’s largest and more sophisticated TBMs, Direct Pipe, concrete box jacked machines, and dual-mode TBMs. For small-diameter technologies, like horizontal directional drilling, pipe bursting and pipeline rehabilitation, the North American manufacturing industry clearly has a “corner on the market.” What is a certainty is that innovation will be a prominent part of the industry in both North American and international markets.