The Toro Co.: Painting the Underground Construction Market Red

The horizontal directional drilling market got an unexpected player in 2012 when The Toro Co. leaped into the fray after acquiring product assets from Astec Underground, including directional drills, riding trenchers and other utility products.

The real eye-catcher of the deal was the directional drilling line, which services the smaller to medium-size rig customers — a growing underground customer base. Toro officials are excited to be a part of the trenchless market and are eager to show off its new equipment lines in its signature Toro red colors.

Trenchless Technology spoke with Rick Rodier, general manager of Toro’s Siteworks Systems Business, about the company’s plans for its directional drill line, as well as his thoughts about the market future of horizontal directional drilling (HDD). Rodier has been with Toro for 26 years, managing the Siteworks Systems Business group for nine years.

Though the acquisition was made in 2012, the products are still being manufactured at the Astec Underground facility in Loudon, Tenn., but that will be coming to an end. Operations to make the product at Astec will soon cease and all manufacturing operations will move to Toro’s 375,000-sq ft commercial plant in Tomah, Wis. By fall, all new equipment will carry the Toro name and branding, as well as sport its signature red.

“This is a pretty big integrated process,” Rodier says of the acquisition. “We are not just launching a product. We are launching an entire product line and business and are really excited.”

The Purchase
The Toro Co. (NYSE:TTC) announced in February 2012 that it had acquired certain utility and underground product assets of Astec Underground, wholly-owned subsidiary of Astec Industries. Toro, which marks its 100th anniversary in 2014, purchased Astec’s equipment line of vibratory plows, trenchers and horizontal directional drills.

For some construction businesses watchers, the move into the underground construction market was surprising, but Toro officials say they don’t understand why: working in dirt is already a key component to the company’s success through its commercial Siteworks Systems Division, which includes compact utility loaders, pedestrian walk-behind trenchers and stump grinders. Instead of working aboveground, they are transitioning to more ground engaging and underground products.

“For Toro to venture into the underground market is a head-scratcher for some who don’t know our company very well and if you do, it makes perfect sense,” explains Rodier. “We are already in the dirt market. We understand what it takes to support contractors and professional contractors. Seventy percent of The Toro Co.’s revenue comes from our professional segments compared to our consumer/residential businesses.

“One of the things that makes Toro so dynamic and strong is the fact that we are a diverse company and we were fortunate not to be as affected as some of our competitors were during the 2008 recession. It helps to build on that diversity and [this acquisition] helps to create another leg on the stool so we are not so dependent on any one channel, market or customer,” Rodier says.

Toro has had its eyes on the underground construction market for some time and was determined to be a part of it whether by in-house innovation or acquisition. “It’s always been on our radar,” Rodier says. “For us, entering this market wasn’t a matter of should we do this but how and when we will do this.”

The decision of how to become a part of the trenchless mix became clear once Astec Underground became available for purchase. “At the end of the day we are a product company,” Rodier says. “We have the wherewithal to do this internally, but it came down to what made the best sense at any given time.

“We knew Astec and its products and we heard very consistent and good things about the product line in terms of strength, performance and durability,” he says, noting that Toro will be making tweaks and upgrades to some of the equipment, as well as developing new equipment.

For Toro, directional drilling represents a completely new market it does not compete in today but one that company officials believe will result in a huge payoff globally.

“The drills were definitely the difference in making the purchase of Astec. We would not have done this without the drills, no question about it,” Rodier says. We’ve built a pretty solid name in the dirt world with our compact utility loaders and pedestrian trenchers, with [Astec’s] riding trenchers complementing our current line. The drill products bring just that much more opportunity to us.”

Toro is also excited for its network of dealers that will be adding another component to its showroom floors for customers. “I think that is really critical not only for the brand development but for your dealers,” Rodier says. “Two things that dealers want more than anything: new products and new customers. The broader we can bring our product categories to them, the more opportunity we bring.”

Toro started the vetting process for its trenchless dealer network last spring. Recently Toro announced that several equipment dealers were added to its equipment distribution network that will carry the trenchless line.
“We are built around our partnerships. We have dealers that are third, fourth and fifth generation families running them. We plan to build the same type of partnerships with our trenchless dealers,” Rodier says.
Rodier is enthusiastic about what lays ahead for the directional drilling market as more attention is paid to underground utilities that utilize the smaller- to medium-size drills. Rodier wouldn’t comment on any future acquisitions to expand its underground businesses, but he was clear that Toro plans on making future investments to its product line.

“[The HDD market] is obviously a healthy market right now, and we see it continuing to be healthy, worldwide .… There’s a tremendous amount of underground work that can and will be done with today’s trenchless technologies and tomorrow’s new trenchless technologies. We think it’s exciting, and we want to be a part of that. We look at this as a substantial opportunity for Toro for the long term.”

Sharon M. Bueno is managing editor of Trenchless Technology.