Copyright © 2011-19 Helical Pile World, LLC. All Rights Reserved.
Is it Time for Consolidation to Begin
in the Helical Pile Industry?
by Bill Bonekemper
Publisher & Editor-in-Chief
Industry consolidation is a phenomenon that has been happening on the planet since the very first competitors realized that it made more financial sense to join forces rather than competing for the same dollar and watching that very dollar diminish in size. Some entrepreneurs resist mergers and acquisitions simply due to their or their family members’ ideals and dreams - thinking that what they have built from scratch will last “forever.” Other entrepreneurs take the complete opposite stance by intentionally building a successful company with the underlying intent to sell it someday for a substantial sum – the proverbial ship comes in.
Why should the helical pile industry be any different? It’s not. It’s inevitable that sooner or later the consolidation process will surface in our industry – the only question is when.
What are some of forces or conditions that will spur consolidation activities?
- Too many manufacturers competing for the same sales dollar
- Valuable product patents with substantial years remaining before expiration
- Long-term contracts with high volume customers
- Substantial annual sales that would become more profitable through operation consolidation
- And of course, there is the time-tested axiom – you either grow or die
Since this author began working in the helical pile industry in 2001, the industry has undergone an impressive amount of growth – both in the overall annual revenue the industry now generates and in the number of helical pile manufacturing businesses and/or importers that have entered the competitive arena. HPW’s research reveals there are now at least (17) helical pile manufacturers and/or importers located in the U.S. and at least (6) manufacturers located in Canada. The combined total of (23) companies is more than twice the number of companies that were manufacturing and selling helical piles in 2001. Think about that – that’s (12) new manufacturers in slightly over thirteen years.
The good news – our industry is very healthy and growing very rapidly. And by the way, there is a relatively short list of helical pile and anchor pioneers that deserve the lion share of the credit for laying the ground work for the success that our industry is enjoying today. (More on this list in an upcoming article)
The other news – competition and downward pressure on profits are becoming more prevalent with each passing month and year.
Maybe, just maybe, the growth bubble is a long way from bursting, as manufacturers begin looking to the international markets to sustain unit sales growth. Shipping containers of helical pile products to distant ports of call is expensive and time consuming. In this day of shorter and shorter order-to-delivery cycles, it is certainly plausible to think some U.S. and Canadian manufacturers will be establishing manufacturing operations in other countries – or possibly already have.
Nonetheless, consolidation is inevitable. It isn’t whether or not it starts – but rather when it starts.