Contractor's Faith in Viability Allows Hydrovac Company to Grow Rapidly

Rapid growth followed father and son’s big calculated business gamble.

Contractor's Faith in Viability Allows Hydrovac Company to Grow Rapidly

The team at Nor-Cal Pipeline Services includes, from left, Dallas Roach, laborer; Dave Jaeger Jr., vice president; Nick Azevedo, general manager; and Jacob Eck, operator.

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In a go-big-or-go-home moment during the deep economic downturn in 2007, Dave Jaeger and his son, Dave Jaeger Jr., decided to start Nor-Cal Pipeline Services, a sewer cleaning and inspection company in West Sacramento, located in California’s Central Valley region.

Despite the rocky economy, they invested in a CUES camera truck and Vactor combination vacuum truck with a hydroexcavating package and started doing small jobs they obtained through previously established business contacts.

The duo’s faith in the business venture’s viability was rewarded. Roughly five years later, the company was running 27 trucks and employed more than 75 workers.

The pivot point for this dramatic growth surge? Getting hired in 2009 as a subcontractor to do sewer cleaning/inspections and hydroexcavating work related to a massive, $721 million freeway-expansion project in Los Angeles.

The lessons learned? Hard work and providing solid customer service can lead to unexpectedly big opportunities down the road. And be ready to shift gears quickly when opportunity knocks, observes Dave Jaeger Jr., vice president of the company.

“We were fortunate to be in the right place at the right time,” he says. “That project put us on the map and allowed us to scale things quickly.

“After we got to Los Angeles, the job supervisor said he needed four hydroexcavating trucks, which led to eight and then to 16,” he continues. “Eventually we had 27 trucks and 55 employees on that job, running day and night.”

The company’s safety record — a critical factor in the hydroexcavation industry, particularly for companies trying to break into new markets as well as retain customers — was as impressive as its growth spurt: No recordable injuries during the 6-year-long project, Jaeger adds.

ONE THING LEADS TO ANOTHER

The project centered on adding a 10-mile-long high-occupancy vehicle lane (only for commuters with passengers) on Interstate 405 in Los Angeles. Project components included realigning existing on and off ramps, reconstructing or modifying 23 bridge and ramp structures, building approximately 18 miles of retaining walls and doing road improvements on adjacent city streets. 

Nor-Cal was hired as a subcontractor by a Fortune 500 construction-and-engineering firm in Nebraska. The Jaegers had previously worked with someone who became a head official at the company, which led to a request to submit a bid on the immense project, which ended in 2015.

“They knew we did good work and understood the company’s culture,” Jaeger explains. “We were lucky because the economy wasn’t very good at the time — it was a combination of a little bit of luck and a good work ethic and building on previous business relationships.”

Nor-Cal’s primary role was exposing utility lines that had to be relocated in order to widen the freeway, one of the busiest in the country. Hydroexcavation was a great technology for the job because there wasn’t a lot of room to stage equipment, such as excavators and dump trucks.

“But a hydrovac truck provides a lot of versatility because it can dig and remove the spoil,” Jaeger says. “It’s a safer way to excavate, too, especially since there was a spiderweb of utility lines on surface streets next to the freeway and poor documentation of their exact locations.” 

RENTING EASED FINANCIAL PRESSURE

Ramping up equipment and employment for the project was a challenge. To ease the financial burden of investing in so many expensive vac trucks in a relatively short period of time, Nor-Cal relied on rental-purchase options, or RPOs.

“Renting so many of the trucks helped us get on our feet quickly and build up some equity in the vehicles,” he says.

That strategy also helped the company avoid a costly situation: too many idle pieces of equipment after the project ended, he adds.

“I absolutely was worried about that,” Jaeger says. “But you’ve got to be versatile and be willing to focus on taking care of your customers. Sure, there was some risk there that required a leap of faith. But that goes for just about anything in business.”

Finding employees was not as big a challenge because so many truck operators were unemployed at the time, Jaeger says.

“It was one of those rare instances where you benefit from a bad economy,” he notes. “With such a poor economy, there was a lot of construction talent available at all age ranges and backgrounds. And this project was basically the only game in town.”

As the freeway project was winding down, another stroke of luck occurred: Nor-Cal won a bid to do sewer line cleaning and inspection work on a large municipal pipe lining project in Sacramento.

“My dad ran that project while I managed the Los Angeles project,” Jaeger says.

Another big project that spurred the company’s growth emerged from the tragic gas pipeline explosion in San Bruno, a suburb of San Francisco, in September 2010. The blast killed eight people and leveled 35 houses while damaging many more. That set the stage for pipeline rehab and maintenance work, the latter for which Nor-Cal was hired around 2012, Jaeger says.

“That allowed us to transition trucks from Southern California as that job was winding down,” he notes.

LARGE EQUIPMENT INVESTMENTS

Today, hydroexcavating generates about 65% of the company’s annual revenue. A newer service, pipe lining, contributes another 20% and sewer cleaning and inspections accounts for the rest. Aside from West Sacramento, the company also has offices in San Diego, Long Beach, Hayward, Chico and Reno, Nevada, says Nick Azevedo, the company’s general manager.

To better serve customers, the company relies on a large fleet of equipment and machines, including 33 hydroexcavating rigs built by Vactor, Foremost, Rival Hydrovac (made by Foremost), Kaiser Premier, Rebel Vac Systems and RAMVAC Vacuum Excavators by Sewer Equipment. Most of the trucks are equipped with 12-cubic-yard debris tanks, water pumps made by Cat Pumps and blowers built by Robuschi.

The company also owns seven combination sewer trucks built by Vactor and Sewer Equipment. The trucks generally feature 12-cubic-yard debris tanks, water pumps made by Vactor and Robuschi blowers.

“We rarely buy trucks with cash,” Azevedo explains. “We utilize our good relationships with vendors to negotiate favorable RPO terms, to the point where the majority of our rental payments can go toward purchasing vehicles. This helps us manage out utilization rates.”

For pipe lining projects, the company relies on technology from Perma-Liner Industries for smaller-diameter pipes and Manufactured Technologies (previously known as MTC and owned by Aegion) for larger-diameter pipes, as well as boilers/steam trucks built by Rush-Overland. The company also uses UV-light-cured pipe lining technology from Cosmic Engineering GmbH.

To clean sewers, the company owns three water jetters made by US Jetting and two jetting trucks built out by Sewer Equipment and Vactor. For pipeline inspections, the company owns camera systems made by RapidView IBAK North America and CUES. To line leaking manholes, the company uses Imerys Aluminates’ SewperCoat, a cementitious lining product.

PIPE LINING TECHNOLOGY

Nor-Cal’s core service area is Northern California. Most of its customers are utilities and major construction contractors, plus a few municipalities for which it does pipe lining and cleaning/inspection work, Jaeger says.

The desire to offer customers a diverse array of services — to be as much of a one-stop shop as possible — steered the company into trenchless pipeline and manhole rehab around 2011. In another bit of fortuitous timing, the company was able to hire a crew of experienced pipe lining technicians who were let go after the company where they once worked, a global waste- and water-management corporation, was closed by its owner, he says.

“The plan was always to get into pipe lining,” Jaeger says. “We want to be able to take care of our customers’ needs, and that means doing as much as we can instead of subbing out work. It just makes sense to offer our customers more and more services.

“Pipe lining also has a lot of potential for future growth,” he adds. “To be able to replace a sewer line in one day when it normally would take weeks to do makes too much sense for the future.”

ADVANCED-TECH MINDSET

Differentiating the company from competitors and continual investments in advanced technology that boosts productivity and profitability have also been keys to Nor-Cal’s success. It also helps that the company is small enough to quickly respond to opportunities, Jaeger says.

“The fact that we’re family owned means we can react quickly to opportunities and changing market conditions,” he notes. “We’re more nimble; we’re not bogged down by being a big corporate conglomerate, where it can be harder to make decisions and act quickly.

“The I-405 project offers a pretty good example,” he continues. “We went out there to clean and TV sewer lines, and a night supervisor asked us to start doing hydroexcavating. We had to pull four hydrovac trucks out of nowhere. Other companies might have needed corporate approvals, but we just went after it.

“We’re not afraid to take calculated risks to grow the business.”

As for investments in new technology, Jaeger says it’s crucial to stay at the forefront of new advances. “My dad always says we need to have the latest and greatest technology. Specifications for pipe lining, CCTV and hydroexcavating are always changing, so you have to keep investing in order to stay ahead of the market.”

How does the company stay abreast of technological developments? By developing close business relationships with vendors and manufacturers, attending trade shows and listening to employees who might come aboard from other companies that use different technology, Jaeger says.

“You have to be humble enough to listen and understand there might be a better way to do something,” he says.

THE HUMAN FACTOR

Two other factors have served Nor-Cal well: disciplined management and a stronger emphasis on employee development and retention.

“We’ve learned that you don’t change your habits during a good economy,” Azevedo explains. “You want to operate as if you’re in a bad economy, and always be mindful of what might be coming. You can’t stop being vigilant.”

To improve employee retention in an industry where job-hopping is common, the company learned it had to be more proactive. The tools in its employee-retention toolbox include competitive wages, a profit-sharing program and formal job reviews that are used to determine merit raises and chart career paths for employees, he notes.

“As we grew, we realized we had to incentivize people — motivate them to take ownership of what they do,” Azevedo says. “So about two years ago, we implemented a profit-sharing program. It motivates them to make the business as profitable as possible because they share in it.”

In addition, the company recently hired its first human resources director to develop a formal annual-review process for nonunion employees. The company also wants to improve employee retention by figuring out where employees might need help and where they want to go careerwise, he says.

“People want to know how to succeed within the company,” Azevedo notes. “We want to know what direction they want their careers to take. So far, it’s been very well received.”

MORE SERVICES, GEOGRAPHIC EXPANSION

Looking ahead, Jaeger and Azevedo — who plan to eventually become majority owners of the company — anticipate continued growth for Nor-Cal. That growth will come from leveraging existing business relationships, expanding geographically into neighboring states and solving customers’ problems.

“We try to never say ‘no’ to customers,” Jaeger notes. “We thrive on finding solutions when other people can’t figure out what the answer is.

“We don’t want to slow down,” he continues. “We want to offer customers more services, such as root foaming (to prevent tree roots from infiltrating sewers).”

But Jaeger also envisions slower, more controlled growth that allows the company to maintain quality control while still increasing revenue. But that’s not to say the company will shun big projects when they emerge.

“The I-405 project was maybe a once-in-a-career opportunity,” he says. “But if something like that comes along again, we’ll jump feet first into the fire.” 



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