Partnership Pays Off For Pipeline Inspection Contractor

When a mature business hits the wall in terms of growth, sometimes the best remedy is a change in scenery.
Partnership Pays Off For Pipeline Inspection Contractor
Russell Tannehill of Underground Eyes prepares to lower a camera down a manhole on a job site in Nashville, Tennessee.

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Offering more services is a classic strategy for diversifying a business and generating new revenue streams. Unfortunately, going that route sometimes requires a large capital outlay for new equipment.

There’s an alternative, though: Rip a page from the Underground Eyes playbook and do even more of the work you currently perform, but do it as a subcontractor for a good company that provides a service that complements what you already do.

About three years ago, Underground Eyes shifted from inspecting and cleaning large mainline sewers to inspecting and cleaning much smaller residential lateral lines. The move was bolstered by a close working relationship with the lateral lining division of BLD Services, a municipal infrastructure and heavy construction firm based in Kenner, Louisiana.

“It’s been pretty smooth, overall,” Underground Eyes project manager Ron Robichaux says of the company’s relationship with BLD. He recognized the potential synergy between the two companies and approached BLD about joining forces in 2013. “They understand that we have other customers, too, so we can’t always be there when they need us,” he says. “They use other subs if we can’t handle it, but we do our best to keep those guys rolling.”

The result? About a 110 percent increase in gross revenues since 2013, says Robichaux. About 80 percent of the company’s work centers on laterals; the rest comes from video inspections of mainline sewers to ensure installations/pipe relinings were performed correctly. About 70 percent of the company’s lateral work revolves around inspections, with the balance coming from post-inspection cleanings, he says.

What’s key to making a relationship like this work? Robichaux says it’s critical to show the potential “partner” that working together will result in the proverbial win-win situation. “You have to be able to show how it will benefit them,” he suggests. “And the other party has to have a little trust — a little faith — in order to give it a try. So you first have to have a good relationship established.” BLD and Underground Eyes had already worked together before, he adds.

“When I went over to BLD, we needed a reliable subcontractor who could get out in front of our crews to do lateral inspections and cleaning,” says Jacob Trapani, senior vice president at BLD. “We taught them what we needed them to do and pushed them in that direction. Now they’re our biggest subcontractor."

In this case, BLD benefited because it could shed inspection services and focus more manpower, capital and resources on higher-margin lateral lining projects. And for Underground Eyes, the relationship allowed the company to stop doing less lucrative mainline sewer inspections and cleaning work and focus instead on inspecting laterals, which is a less competitive market segment with higher profit margins. It also reduced expenses because lateral inspections can be performed with smaller work crews, Robichaux says.



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