All the Right Moves: Charles Machine Works Expands Its Trenchless Market

The Charles Machine Works (CMW) has been around for more than 60 years and is a pioneer of the modern-day trenchless underground construction industry — Its founder, Ed Malzahn, is an HDD industry icon.

CMW’s success originated with the innovative and outside-the-box vision of Malzahn, whose leadership resonates today. His granddaughter, Tiffany Sewell-Howard, took over as chief executive officer in 2004 after working at CMW since 2000, and is priming the company for its long-term success by broadening its vision beyond its respected Ditch Witch brand.

There’s a lot of good news coming out of Perry, Okla., these days, and with that comes much excitement when company officials discuss the direction of this mainstay of the underground construction market.

Over its storied history, CMW has mostly grown and prospered from its headquarters in Perry, Okla. But in recent years the company’s growth plans have evolved beyond its Perry facility. One of the keys to CMW’s future plans has been the acquisitions of select companies that expand its underground construction product reach while at the same time strengthening its position within the trenchless technology market, specifically in horizontal directional drilling (HDD) with regard to drills used for pipeline projects.

Since 2008, CMW has acquired four U.S.-based underground construction companies and partnered with a Chinese HDD manufacturer in a joint venture. Companies and brands now under the CMW umbrella are: HammerHead (purchased in April 2010), Radius Tools for HDD Professionals (purchased in January 2011), American Augers and Trencor (purchased in November 2012), and the DW/TXS joint venture (begun in December 2008), in addition to the Ditch Witch and Subsite brands

With this family of companies, CMW now has market presence in areas such as pipe bursting, pipe ramming, auger boring, aftermarket HDD tooling and large pipeline drills and fluid mixing systems, as well as a more expanded trencher footprint. Each company retained its identity and brand names in the transitions.

“All of these companies fit into our overall vision of being the authority in the underground construction market,” Sewell-Howard says. “There’s no doubt that when you go from being two brands to seven there is more complexity, but there is also new energy and excitement because the employees and customers see growth, see opportunity and see us taking risks that maybe we wouldn’t have taken in the past. Now that we have made these acquisitions we are transitioning to the vision we have for how this family of companies will work together.”

A Different Route
After the HDD/fiber-optic bust of the late 1990s and early 2000s, CMW took a step back to evaluate its status and explore potential growth opportunities, asking the question that many companies ask during turbulent economic times: Where do we go from here? For CMW, it was to focus on what it does well and on finding ways to broaden and diversify its place in the market.

“The reality is that what we are really good at is underground construction. What we are really good at is digging in the dirt,” Sewell-Howard says. “We began to look at the market landscape and how we wanted to grow as a company. We evaluated a lot of different businesses and directions because everyone at that time was asking, ‘How do we stabilize and make sure we have sustainable growth going forward?’ It’s really important as a private company, as a family-owned company and as an employee-owned company that we have a plan that can support growth and position us for a long and healthy future. We want to make sure that we grow the company in a responsible way.”

The moves CMW has made reflect careful deliberation of how these acquired companies complement the Ditch Witch brand, yet provide products in areas not addressed by it. For example, HammerHead has a strong presence in the water and sewer markets through its pipe bursting and pipe ramming product lines. Radius serves as a conduit to the aftermarket tooling for HDD. The most recent addition, American Augers, arms CMW with larger and more powerful directional drills and auger boring equipment to make it a force in the pipeline market.

Sewell-Howard is excited about the American Augers acquisition and how it elevates CMW’s position in the underground construction market. “American Augers is a very impressive company, and they have very good people and a great facility. We are so impressed with them and their operation, and we see tremendous benefit for the CMW family of companies and the shareholders.”

The Ditch Witch brand is known for its JetTrac series of drills, including the All-Terrain machines, ranging in pullback from 5,000 to 100,000 lbs. With the American Augers deal, CMW adds seven drill models, ranging in pullback from 60,000 to 1.1 million lbs, plus mud handling units and auger boring rigs. “This product line breadth was one of the things that was so appealing to us about American Augers,” Sewell-Howard says. “With this addition, we feel like we have flushed out a complete market offering with all the companies under the CMW umbrella.”

Sewell-Howard sees the strongest potential for the trenchless market right now outside of North America, especially in emerging markets, and believes CMW can capitalize on that potential with its family of companies. “Although the North American market remains strong, there is significant opportunity in the international markets. American Augers and DW/TXS offer us ways to enter markets we never had before.”

Drills under the DW/TXS joint venture are manufactured and primarily sold in China and other emerging markets. Sewell-Howard says before the joint venture CMW, like other U.S. manufacturers, struggled to make a dent in the Chinese market. Today, that is not the case due to the DW/TXS partnership. “The customers in that market desired a different, simpler drill than what we were producing under the Ditch Witch brand,” Sewell-Howard says. “That market is growing to be one of the largest HDD market in the world, and we had been pretty much shut out of it. Our joint venture provides the right solution for that market, and we are now one of the market leaders in China with DW/TXS, offering rigs from 20,000 lb. to 1.3 million lbs.”

Future Plans
Right now, the plan for CMW is to transition all these companies into one unifying vision and work to grow each brand. “It’s fair to say that we are very excited about the prospects of what can happen now that we have made these acquisitions,” Sewell-Howard says. “We have a good portfolio of companies and solutions that will address this market. Now, we need to focus on growing these companies and leveraging our synergies.”

Sharon M. Bueno is managing editor of Trenchless Technology.