Contractor shifts from laying water and sewer lines to becoming a large HDD operation and sees business boom.
If not for a homeowner’s resistance to having a driveway dug up, Joel Colgrove Jr. might still be laying water and sewer lines instead of owning one of the country’s largest horizontal directional drilling companies, REM Directional.
But while the business world is full of chance encounters that send companies in totally unexpected directions, REM Directional’s rapid growth into a contractor known nationwide for tackling the riskiest, most difficult projects was anything but a fluke. Instead, the company — based in Boligee, Alabama — relied on a game plan centered on investing in cutting-edge technology that increased productivity and profitability.
In addition, it developed a diverse base of services that produced independent revenue streams and made the company more attractive to customers, and ran a relentless grass-roots marketing campaign that generated job leads and built brand recognition.
“We just beat doors down and called on everybody we could think of,” says Colgrove, 43, referring to him and his father, Joel Colgrove Sr. “We just kept staying after it, and word-of-mouth referrals just sort of spread from there.
“All we did was get out there and work hard, and keep after our goals and do the best job we could for customers,” he continues. “That’s what really paid off for us. People got to know us as a company that would show up on a job on time and get a job done.”
The results speak for themselves. Since REM Directional was formed in 2004 as a spin-off business from REM Services, employment has increased from two to 60, revenue jumped 100-fold, and the company’s roster of equipment grew from one Vermeer 50,000-pound drilling rig to a large fleet of equipment that represents an investment of more than $30 million. Moreover, the company’s service area expanded from a few-hundred-mile-wide radius around Boligee (located in west-central Alabama, southwest of Tuscaloosa) to the U.S. Midwest, South, southeastern and southwestern regions.
Not bad for a father-and-son team that in 1998 knew about as much about horizontal directional drilling (HDD) as they did about quantum physics. “We really didn’t have a clue,” Colgrove recalls of the abrupt U-turn the company took into the pipeline-boring market. “We just liked the work and were tired of laying water and sewer lines, which wasn’t very profitable at the time. We just started drilling cold-turkey by hustling up work, and by the grace of God, it all worked out.”
Colgrove concedes it was a bold move. “But that’s how we operate,” he notes. “When you make business decisions, sometimes you have to take chances.”
STARTED OUT SMALL
In 1992, Joel Colgrove Sr. founded a company called REM Services, installing water and sewer lines in central Alabama. Joel Colgrove Jr. started working for his dad after he graduated from college in 1996. But the company’s radical business shift occurred in July 1998 when a homeowner balked at having his driveway dug up for a waterline REM was installing for a small town in Alabama.
“He didn’t want us to opencut his driveway,” Colgrove recalls. “So we asked someone at Vermeer Corp. if they had a machine that could bore under a driveway. They did, and we used it to go under the guy’s driveway. Then we had to do two more similar bores.
“We liked doing it so much that we decided once that project was over, we would buy a drilling machine … stop laying water and sewer lines and do strictly HDD,” he adds. “It was the best move we ever made.”
At first, REM installed fiber-optic lines for communication companies. From there, the business slowly moved into oil, water and gas lines. Why? There were, and still are, many competitors doing fiber-optics work, which dilutes profit margins. “So we started looking at other uses of horizontal directional drilling technology and saw that the larger-diameter pipes and longer installations was a market that seemed to have more profit potential,” Colgrove says. “If someone has a pipeline that needs to go under a road or a river, we put it in for them.”
Now, drilling bores for oil and gas pipelines generates 90 percent of the company’s business. Colgrove says they learned the old-fashioned way, through trial and error. “We gained experience from every job,” he says.
In early 2000, the Colgroves established a new company entity, REM Directional, to better represent the company’s main business focus. In 2007, the company completed a pivotal job that cemented its reputation and opened doors to bigger projects: More than 100,000 feet of horizontal directional drilling to install a 42-inch-diameter steel pipe for a natural gas pipeline that stretched from Sabine Pass, Texas, to Eunice, Louisiana.
POINTS OF DIFFERENTIATION
Colgrove says several factors propelled the company’s growth. One was a strong work ethic. Another was the Colgroves’ personal touch. “We were resilient, we stayed after it,” he recalls. “And we went out and did the work ourselves (Colgrove, his father and his brother, Kurt). It helped a lot for us to be there to stay on the jobs and meet face to face with customers. They appreciated that kind of direct contact with the owners of the company because it was easier to make decisions right there on the spot.”
Another significant factor: The company’s gradual move into a niche market for the most challenging bores. “We not only like to do the longer, more difficult jobs, they’re also more profitable,” Colgrove notes. A difficult job might require an 8,000-foot bore with a 42-inch-diameter pipe, for example, or a 6,000-foot “shot” with large-diameter pipe through rocky soil.
“Where the drilling is, what it’s going under, the environmental regulations in the area — all those things dictate how difficult a bore will be,” he explains. “We even have used an ‘intersect’ drilling method for very long drills, which means we actually drill from both the entry and exit sides and meet somewhere in between. Using this method, we’ve completed drills more than 17,000 feet long.”
Offering more services than a typical drilling company also benefited REM. “We’re not your normal HDD contractor,” Colgrove says, noting that the company also performs road bores, digs footings and drives sheet piling. “We do a variety of things so that when the HDD market is down, we can do something else,” he says. “Or sometimes a customer wants one contractor to do as many boring-related jobs as possible. We’re a one-stop shop, but our bread-and-butter still is HDD.”
EMPHASIS ON NEW TECHNOLOGY
Investing in new and more reliable technology also greatly impacted the business. “We’re always trying to figure out ways to do things faster and better,” Colgrove explains. “That’s what drives our profit model. So good, reliable equipment is important. When you’re broke down, you’re not making money.”
A good example is the HRE 750 drill rig the company purchased in 2003 from Horizontal Rig and Equipment (now owned by Vermeer Manufacturing Corp.). “It was the smartest thing we ever did,” Colgrove says. “We’d been doing a lot of drilling with smaller rigs and it was pretty stressful. It’s a lot more comfortable working on jobs when you know you have the power to get things done.”
The company now owns three HRE 750s, which can generate pullback force of 750,000 pounds. In addition, REM owns eight more drilling rigs, made by American Augers, Herrenknecht AG, Roberts, Ditch Witch and Vermeer. The company also owns eight MCS 1000 mud-cleaning/recycling systems made by Tulsa Rig Iron, pneumatic hammers made by HammerHead Trenchless Equipment, 26 Peterbilt tractor cabs, and roughly 15 low-boy flatbed trailers made by Liddell Trailers and Fontaine Commercial Trailer (a Marmon Highway Technologies/Berkshire Hathaway company).
Furthermore, the company also owns an array of support equipment that includes trackhoes, bulldozers and side booms manufactured by John Deere; tanker trailers made by Dragon Products Ltd.; Godwin Pumps, a Xylem brand pumps; and CAT and Ingersoll Rand generators.
In addition, REM burnished its drilling credentials when it became the first company in the U.S. to buy a Direct Pipe pipe thrusting system from Herrenknecht. The company now owns multiple Direct Pipe systems including two Herrenknecht pipe thrusters with 500 tons of push force. The units offer a productivity advantage because they can bore a tunnel (up to 60 inches in diameter) and install pipe at the same time, as opposed to drilling a pilot hole, then reaming one, two or even more larger holes (depending on the pipe diameter) before actually pulling the pipe through the bore, he says.
“Furthermore, the Direct Pipe system doesn’t require as much drilling mud for boring and minimizes frac-out risk. Moreover, while a typical HDD rig needs a shaft dug at each end of the bore, the pipe thrusters require only one access point, and its footprint is substantially smaller and nowhere near as deep as typical HDD. On some jobs where there isn’t much room on one end of the bore, that comes in handy,” Colgrove notes. The Pipe Thruster can also be used independently as pipe-assist tool for challenging HDD crossings.
ALL HANDS ON DECK
But while investing in new technology is critical, the human touch matters, too. When asked to name his most valuable trait as a businessman, Colgrove says it’s his work ethic — a value instilled by his father that also pays dividends in terms of building great relationships with employees.
“Our dad taught us that hard work pays off,” Colgrove notes. “You’ve got to be resilient and relentless out there when you’re going after work and doing work. We’re not scared to go out there and get our hands dirty with our employees. These days, some people may think it’s odd to see the owners of a company working out there in the field, getting their hands dirty with their guys. But if our guys need help we get out there and do it to get the job done.”
Looking ahead, Colgrove is optimistic about REM’s growth prospects. He says that in one month last spring, he bid more work than he did in the last five years. He attributes that to pent-up demand created by the prolonged economic downturn. “Pipeline work is picking up,” he says. “I haven’t seen this many bids in a long time.”
But despite the opportunities presented by an improving economy, Colgrove sees measured, not exponential, growth in the years ahead. He envisions buying one more large drilling rig, then applying the brakes. “We’re comfortable where we’re at,” he says. “We’ve been bigger than what we are now, and it creates a lot of challenges. Plus, it’s so hard to find good employees and also hard to manage all of them when you get bigger. We want to keep working hard, but we want to enjoy life, too.”
Herrenknecht drill rigs bring the muscle
The workhorses of REM Directional’s fleet of horizontal directional drilling (HDD) machines are two Herrenknecht rigs, one that’s trailer mounted and produces 1.2 million pounds of pullback force, and a track-mounted rig that generates 500,000 pounds of pullback force, says Joel Colgrove Jr., owner of the Alabama-based company.
“We appreciate Herrenknecht’s innovations,” Colgrove says. “The computers on these machines are really up to date and the machines are very easy to operate. Everything is touch-screen and uses Windows-based software.”
Better yet, if something goes wrong, a Herrenknecht technician in Germany can log in to the machine’s diagnostics software and help REM employees troubleshoot the problem. “Either they can fix it remotely or tell us how to fix it,” Colgrove says. “It’s a neat feature on their machines.”
While sophisticated diagnostics and operating software are great, the units also bring another valuable asset to the job site: brute force. REM specializes in riskier jobs that require longer and bigger-diameter bores, which requires rigs with the power offered by the two Herrenknecht units, he says.
“We do the kind of jobs that your average HDD company cannot or doesn’t want to pull,” Colgrove explains. “Every rig we own has its purpose, and we use these two Herrenknecht machines for longer bores through rock or under big obstacles like the Mississippi River. They basically give us entry into a market we otherwise couldn’t serve.”
Colgrove points out that REM employees strive to prepare a borehole properly, so pulling pipe doesn’t require the machines’ maximum force. “But if we do need it, it’s great to know we have the power to do it,” he says.
The Herrenknecht machines also add value through their reliability, a critical attribute in an industry where machine downtime can be very costly. “You break down, you lose a lot of money,” he notes. “It’s just that simple.” Moreover, machine breakdowns make it difficult to generate repeat business from customers, as well as word-of-mouth referrals.
“One thing we can say is we’ve never left a drill uncompleted,” Colgrove says, noting the value of well-engineered, well-built and reliable equipment. “We have our problems at times, just like everyone one else. But we always get the job done, no matter what it takes.”