Positioned for the Future

Kandey Company uses its growing stable of equipment to venture into new services and take advantage of every opportunity.
Positioned for the Future
Members of the Kandey Company team, pictured in front of a Vactor 2100PD (positive displacement) sewer cleaning machine, include (from left) Joe Kandefer, owner; Joe Blahowicz, owner/operator; Brett Finn, laborer; Frank Owczarczak, operator and Rich Szucs, project manager.

When opportunity knocks at Kandey Co. Inc., co-owner Joe Kandefer has learned over the years to answer the door quickly and provide new services to fill market voids — even if it means taking a risk by investing heavily in new equipment. Take the company’s latest diversification effort, for example. Led by Kandefer’s son-in-law, Joe Blahowicz, the company — based in West Seneca, N.Y. — is pushing hard to establish its maintenance services division as a regional player in hydroexcavating, pipeline inspections and municipal sewer cleaning.

The cost of market entry was not cheap, as evidenced by the company’s purchase of two new Vactor vacuum/hydroexcavation trucks from Joe Johnson Equipment Inc., and a 2010 Dodge Sprinter camera van, outfitted by Envirosight with a ROVVER pipeline-inspection system, all within the last five years.

Kandey (the name is a shortened version of Kandefer’s name) bought the first truck ­— a 2007 Vactor 2115 Plus with a 15-cubic-yard debris body, a Roots 824 PD blower made by GE Energy and a 80 gpm/2,500 psi pump ­­— to clean out large underground chambers that collect runoff from plane de-icing operations at Buffalo Niagara International Airport.

“No one else in our area owned one (a vacuum truck),” Kandefer notes. “It was a good investment because the business grew from there.”

Service expansion pays off

Taking calculated business risks is nothing new to Kandefer, who owns the company along with his wife, Marie. Back in the early 1980s, he saw an opportunity and expanded from commercial plumbing into excavation and site-preparation. Part of that move was based on convenience, in that it resulted in less reliance on subcontractors and more control over job scheduling. But it also made the company more attractive to prospective customers.

“At the time, there was no one contractor with the expertise to excavate and install the pipe,” Kandefer explains. “We filled a void because we had the equipment to do both … trenching and excavation and our own pipe installation, which gave us a great market advantage. We lived on a shoestring for many years, but we saw a market there and felt it was a risk worth taking.”

Then the firm slowly changed from commercial customers to municipalities and utilities. It also added conventional case boring and auger boring to its list of services because there wasn’t much competition in those areas, Kandefer says.

“It was a difficult transition,” he says of the move to municipal work. “The bonding and paperwork requirements in the public works market are quite a bit different than in the private market. But it was worth it because in the private [commercial] market, it was getting to the point where we were constantly chasing our money to get paid. With municipal contracts, the money is guaranteed.”

Growth fuels equipment needs

The results speak for themselves. Kandey now has 25 full-time employees and hires about 50 seasonal workers during the construction season. In addition, it owns about 200 pieces of equipment worth approximately $10 million.

The equipment roster includes a 2012 Vactor 2115 Plus combination vacuum truck/hydroexcavator, featuring a 15-cubic-yard debris tank, a Roots PD blower (3,500 cfm at 18 inches Hg) and a variable flow pump (2,500 psi at 80 gpm); 18 excavators, mostly manufactured by Komatsu Ltd.; eight wheel loaders, made by Deere & Co. and Komatsu; five tandem-axle dump trucks, made by Peterbilt Motors Co.; and six single-axle dump trucks, made by Mack Trucks Inc., Sterling Truck Corp., Chevrolet and Freightliner Trucks.

The company also owns five bulldozers, manufactured by Deere, Komatsu and Caterpillar Inc.; two horizontal directional drills, made by Vermeer; four auger-boring machines, made by American Augers Inc. and Bor-It Manufacturing Co.; four Deere rubber-tire backhoes; four pipe fusion machines made by McElroy Manufacturing; and four Ingersoll-Rand air compressors.

One of the biggest challenges the company faced during its rapid-growth years was the financial risk of continually investing in new equipment. The company financed most of the purchases, and many times profits went just toward making loan payments. It also was hard to find qualified employees, Kandefer recalls.

“It took until about the late 1980s until I felt we were on solid footing,” he says. “You finally see more pluses than minuses on your balance sheet. And our bonding capabilities started to grow. That’s when we started getting more municipal work.”

Youth movement kindles growth

Blahowicz, who heads up the company’s maintenance service division, joined the company about five years ago after earning an education degree in college. He started as a part-time employee, which evolved into a full-time job after he found the work more enjoyable than expected.

“It’s good to have Joe on board,” Kandefer says. “He has the vision to see things before they happen. If not for him, we wouldn’t be in this end of the business.”

Blahowicz says he enjoys the challenges. “Every job we do requires a thought process,” he says. “You need to visualize the end result — the goal — before you start working. That’s the part I embrace.”

The first major challenge Blahowicz faced was finding enough work to keep the first Vactor truck working in the field. He compiled lists of companies and municipalities in western New York and eastern Pennsylvania who might need Kandey’s maintenance services and started cold-calling them. Then he worked with a marketing company to produce a one-page flyer and a cover letter to introduce the Vactor and pipeline-camera technology to contractors.

“I just started networking,” Blahowicz says. “I sent out a couple hundred a week and followed up with phone calls. Now we’re trying to arrange small meetings with municipalities and contractors to talk in person about our services.”

So far, the approach has been successful. He estimates the division’s revenues have grown about 500 percent in five years, with 80 to 85 percent of its business volume coming from contractors and engineering companies (primarily for hydroexcavation and line-cleaning jobs) and the rest from municipalities (mostly for emergency cleaning of sewer lines and catch basins).

Versatile vac truck

A key component of the division’s growth is the Vactor’s hydroexcavating capability. Contractors increasingly prefer hydroexcavating because it’s a safer way to do certain jobs, such as locating natural gas pipelines, as opposed to using conventional excavation machinery, Blahowicz notes.

“Hydroexcavating is becoming so popular that it’s a must-have for locating lines and working for major utilities,” he says. “So many companies are making line-location with hydroexcavators mandatory.”

The company purchased its second Vactor vacuum/hydroexcavation truck in April after it landed a major job with a pipeline company.

“We had money budgeted in the contract to hire someone with a vac truck, so it made sense to purchase the truck and do the work ourselves,” Kandefer says. “It was the perfect time to do it. With most of the excavation work we do, ‘soft digging’ (hydroexcavating) is getting to be mandatory.”

Specialization is critical

In the bigger picture, Blahowicz believes that Kandey’s future growth will depend on specialty, niche work, such as directional boring, vacuum truck work, hydroexcavating and pipeline inspections. In that respect, Kandey is already well positioned because it owns the equipment to perform such work, and the high cost of that equipment poses a barrier to easy market entry by competitors.

“Many companies can put pipe in the ground, but that’s not true with specialty contracting,” he says.

Another key is maintaining a high level of customer service, especially as tough economic conditions in the region force competitors to consider entering new markets in order to keep their doors open.

“My father-in-law always stresses that we’re here to do a job and provide a service,” Blahowicz says. “I’ve learned from him and veteran workers in the company that your work speaks volumes about you. People know we’re going to do a job right and won’t stop until it’s done from beginning to end.

“One bad critique in this business can destroy you,” he adds. “So you always have to go above and beyond. Doing the minimum is not enough.”

Whatever the future holds for Kandey, Kandefer says the company won’t stray from its strategy of investing in new equipment when viable opportunities to enter new markets arise.

“You’ve got to spend money to make money … be able to make a decision quickly,” he says. “You snooze, you lose. When an opportunity arises, you’ve got to take it — or someone else will.”



Discussion

Comments on this site are submitted by users and are not endorsed by nor do they reflect the views or opinions of COLE Publishing, Inc. Comments are moderated before being posted.