Demand and Supply — Fusible Pipe and Equipment Expands HD Supply Waterworks’ Trenchless Offering

So often in the specialty market of trenchless construction we look for perspective. We ask questions about the state of the industry. Is it growing? How are trenchless methods advancing? Is owner acceptance evolving? How do we convince legislators that underground infrastructure is critical and projects need funding?

Of course, owners, engineers, contractors and manufacturers each have their own way of answering these questions. It’s sometimes easy to forget about the distributors — the middlemen between the manufacturers and the owners or contractors who buy equipment and materials — who also have a unique perspective on the construction business.

In the case of HD Supply Waterworks, the water business of North American distributor HD Supply, recent company initiatives highlight some key trends in the trenchless market today. HD Supply Waterworks prides itself on being more than an equipment distributor, offering expertise in not only product knowledge but customized service to professionals in its core markets in the water and sewer industries. In trenchless technology, the company has increased its focus on fusible piping and offers targeted resources for its customers that fit the needs of the industry.
Company leaders say it’s relationships with those customers and development of qualified employees that has helped HD Supply Waterworks maintain its position as a market leader.

“We use the tagline ‘Local Service, Nationwide,’” says Steve LeClair, president and CEO of HD Supply Waterworks. “It’s really important with our customer base that the folks in our business are tied in with the community. Being a big company with 2,800 employees and 240 branches, we’ve never lost that local feel. We’ve made the business as big as it is and it still feels like the biggest small business you’ve ever been a part of.”

The Waterworks Business

HD Supply consists of three primary businesses — Facilities Maintenance, Construction and Industrial, and Waterworks. Of those businesses, HD Supply Waterworks, headquartered in St. Louis, is the second-largest with more than $2.5 billion in annual sales. The company is a distributor of water, sewer, stormwater, fusible piping and fire protection infrastructure products. The Waterworks business works directly with both contractors and municipalities in those fields and operates 240 branches in the United States, the Caribbean and international markets.

On the trenchless side, the company distributes practically every type of pipe material to the industry, including PVC, ductile iron and HDPE, as well as related products and services to the water, sewer and associated trenchless markets.

HD Supply Waterworks has always provided products and services for the trenchless industry. In the mid- to late-1990s in the southeast United States, the company recognized that HDPE pipe was being heavily specified on water and sewer projects. After working closely with local suppliers and engineers to accommodate the HDPE push, the Waterworks business decided to focus its efforts on the fusible HDPE market in trenchless.

LeClair says it’s been important for the company to recognize broader industry challenges and maneuver accordingly in order to stay competitive and provide customers with the best products available.

“I think the biggest challenge that faces the waterworks industry and municipalities is the fact that the infrastructure that’s gone in the ground, in many cases, is 40 to 50 years old or older and it’s in dire need of replacement,” says LeClair, who joined HD Supply 10 years ago in its Lumber and Building Materials division and has served as president and CEO of the Waterworks business for the past four years. “Many of the pipes and valves and fittings are well beyond their useful life. The funding availability to be able to replace those things is somewhat limited, so [cities] are very prudent about the repair and replacement they do.”

Fusible Products

In recent years, HD Supply Waterworks has boosted its focus on fusible piping. In 2011, it began adding additional branches nationwide to support its fusible products and expanded its HDPE offering to non-participating branches by 2012. The company has also made a push to add more talented personnel and offer rental equipment to service jobs across the country.

Today, its nationwide presence includes 11 fusible service centers along with an additional 21 fusible stocking locations. The Waterworks business offers fusible piping solutions and has a team of specialists to serve this initiative including McElroy-certified fusion technicians, McElroy-certified trainers and experienced fusible sales reps. The company has also begun selling fusible products in markets outside of water, such as mining, energy, landfill, gas, irrigation and industrial, specifically for use in trenchless applications.

“The other challenge is that since a lot of this went in the ground, there’s been a lot of building that’s gone over top of it,” says LeClair. “It’s very intrusive to be able to do replacement and do it open trench. It’s disruptive to local business and everything else. Fusible HDPE becomes much more of a viable alternative for [owners] and a much better solution in some cases for certain applications. It’s been something that we’ve seen as one of the fastest growing segments within our business.”

In order to solidify its position in the trenchless market, and in particular with its fusible product offering, HD Supply Waterworks has established relationships with virtually every fusible pipe supplier, according to Paul Dreher, senior product manager for fusible pipe, noting the advantages of its added service centers and stocking locations.
“With this emphasis and push toward rehabilitation of infrastructure, a lot of that rehabilitation and new installation is done using trenchless,” says Dreher. “With HDPE being one of the materials of choice for those trenchless applications, we looked at it as an area where we can further fulfill our customers’ needs to be able to provide a complete package.”

Dreher adds that many municipalities and contractors the company works with are intrigued by the capabilities of the products. He notes that customers are asking questions about the strength of fusible pipe, what it can withstand during installation, how it handles surge and pressure, and about the best ways of maintaining it if it’s never been used in the system before.

“I think it takes a combination of things for these trenchless projects to really grow,” says Dreher. “Between trenchless technologies, the installation methods and the products, it’s just a natural fit for us to be able to offer a complete turnkey solution to the waterworks industry. Where our customers were used to getting PVC, ductile iron, gate valves, hydrants and everything else, they can now have us supply them with all the trenchless [equipment and materials] that go into a job. We’re seeing more and more jobs come out with at least some trenchless and fusible pipe in them. So this gives us an opportunity to provide them a one-stop-shop for everything they need.”

Market Drivers

In addition to aging infrastructure, the challenges in the drinking water sector have also had a noticeable impact on how HD Supply Waterworks has positioned its product line, notes Tim Hanes, vice president of strategic business development and integration.

“Conservation of water is becoming more and more critical, especially out west,” says Hanes. “You have a lot of irrigation districts that have stopped transporting water through open channels and they want to put it through large pipes to minimize evaporation and infiltrations. That’s another great thing about fusible products is that having no joints means no leaks. It’s a strategic reason to make sure we’ve invested in trenchless products.”

As HD Supply Waterworks has positioned itself for growth in the trenchless rehabilitation market with its fusible product line, Hanes says other challenges have been in markets outside of waterworks, such as oil and gas. He says that the company’s national expansion of fusible products and service has countered those challenges.

“The biggest challenge to the HDPE industry in the last year has been the energy market, especially regionally,” Hanes says. “The downturn in the energy market and in fracking has slowed that segment. That’s kind of a regional implication. For us, going from regional to national, we have the ability to buy equipment and buy inventory without too much trouble. Our biggest challenge is getting the best of the best talent and onboarding them onto our team.”

The Waterworks business has also enhanced its in-house fabrication capabilities, allowing the company to work closer with the contractors or municipalities to complete more custom fabrication of larger pipe than it could even five or 10 years ago. Hanes says that addition has been one of many results of a push to hire better industry talent to enhance the company’s customer service expertise.

“We’ve hired significant industry talent over the last five years and we continue to look for that best of the best talent that will enable us to lead in the waterworks segment,” he says. “Once you’ve got all the fusible equipment and the people who understand the products, you can leverage that and enter into adjacent markets, such as landfills, mines and other industrial applications.”

Recent Investments & Going Forward

In the short term, Hanes says he sees even more growth for the trenchless rehabilitation market, citing aging infrastructure as a primary driver, but also the underinvestment in the water sector that will cause more projects to become necessary.

“You read about how we’re $600 billion behind in investment in water infrastructure. That scenario can’t continue forever,” he says. “At some point, [trenchless] really becomes a much bigger portion of the overall waterworks market. We feel we’ve done the investment strategically now to be positioned to continue as the No. 1 player in all of waterworks distribution as that transition naturally occurs.”

LeClair adds that HD Supply Waterworks has also positioned itself to deal with recent challenges, such as workforce and training.

“I think our biggest challenge that we have is that our growth is outpacing our human resources,” says LeClair. “Over the last few years we’ve grown over a quarter of a billion dollars. We’ve added 15 to 20 branches across the country, and finding qualified people has become one of the challenges that we face.”

To counter this, a significant investment HD Supply Waterworks has made in developing its personnel was the opening of its multi-million dollar training facility in August 2014 in St. Louis. LeClair says 500 to 600 people attend the facility throughout the year and receive training in any area from operations, sales, estimating and quoting to specialty applications and fusible products.

“It’s designed to give people a rapid emergence into the different industry segments that we serve,” says LeClair. “We’re able to better educate employees, but it also helps get them better acquainted with our subject matter experts.”

Going forward, HD Supply is seemingly poised for long-term success. LeClair reiterates that despite its established position as a full service, nationwide distributer, it has also maintained its local feel in the relationships it has forged with customers.

“You only have set number of municipalities that are supplying water, and for underground contractors, it’s a pretty small group overall,” he says. “Our sales people and our branches get to know the local folks and those relationships last over years and years. That’s what really makes the business special and this industry special. That’s what I was especially drawn to with the business and that’s the thing we’ve really tried to preserve.”

Andrew Farr is associate editor of Trenchless Technology.