Choosing The Right Path For Your Business

“We’re are a growing plumbing service company trying to make a decision and we are reaching out to industry leaders for advice. We have 8 trucks in a city of 200,000+ people and including office staff have 11 employees. We added sewer rehabilitation a couple of years ago to the other things we do including water heater replacements, leak detection, and drain cleaning. We get more drain calls than all the other things we do. We are debating expanding our lining efforts as we make better margins on that segment of the business than any of the other segments and saw a crew from out of town come in a line some of the city sewer mains. We hate to see competitors come into our city and take this high margin work away. My question is whether you think we could add lining up to 24” pipe and be successful or if we should remain doing what we’re doing? I know you are in the lining business and will most likely encourage me to make the jump, so give me your best reasons to move forward.”

This may surprise you but I’m not going to encourage you to get out of your lane, yet. Let’s go through the revenue and cost considerations. Starting with revenue, how much work is out there in your geographic region. You may start by talking to the sewer district to see how many miles of sewer lines they have in their system and if they’ve assessed the condition of the sewers. If they have, you may ask what they found and how much of it will be designated to being relined. You may also want to know about who maintains the sewers and if they are clean parts of the system regularly and who is responsible for that, in house cleaning or contract cleaning? You can find out what their 5 years budget is by asking for their capital improvement budget to see how much they are allocating for rehabilitation, cleaning, manhole rehabilitation, and assessment. These are the items you will be offering services for to perform. Once you have these numbers in hand you can move forward with pricing equipment and manpower needs to serve that market.

Let’s start with equipment. Cleaning equipment for sewers include a combination truck that holds a vacuum unit and a jetting unit on board with tanks to hold fresh water as well as debris vacuumed from the sewer system. This equipment will cost new around $250,000. Next will be the cost of CCTV equipment including a truck to house the equipment, recording equipment, and will cost about $150,000. This equipment is used for the CCTV inspection services you will offer and need to pre and post lining activities. For the lining equipment you will need inversion equipment, pinch calibration rollers, static mixing equipment, resin wet out facilities, and heater for curing. The inversion equipment will vary depending on sizes you are going to limit yourself to. If you go to 24” pipe, your air driven inversion unit may run $75,000 to $100,000 depending on the bells and whistles you add or delete. A pinch roller built to your specification, again depending on size, may run from $50,000 to $75,000 including powered conveyors, roller tables, and a vacuum system for resin impregnation. Static mixing equipment, again depending on size may run from $25,000 to $60,000. A heater may vary depending again on size and type of fuel and heater methods. A steam generator truck mounted will cost between $100,000 and $300,000 depending on size. Lastly you will need a “wet out” facility. Market forces in your region will dictate those costs. As far as manpower you will need a 6-man crew who will need to be confined space entry trained, and carry CDL’s to operate the trucks used in this activity. In equipment the total for equipment at the low end of the spectrum will cost about $650,000 and would allow you to line up to 24” pipe, offer CCTV inspection services, and clean pipe. You will need to evaluate space to house your “wet out” facility.

So here’s the bottom line. Depending on what you found on the revenue side, you can match the investment costs from the start-up costs and make an informed decision of whether this expansion will pay for itself and add positively to your bottom line. There other considerations but most are logistic and if you need more information you can reach us at 888-364-6464 or write to info@pipeliningsupply.com.

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