Hammer and Bit Trends -- Part 1
Falling to the wayside are the old cable-tool bits, Thomas tells us. "That's been dwindling down for years; there's very few of those left around anymore. Tri-cones are slowly fading out - basically because of the hammers and PDC bits. In about 10 years, we're going to see a big difference in the supply of tri-cones."
Interestingly, right now, Thomas estimates his business is 75 percent tri-cones, and 25 percent hammers and bits. "The hammer market is very competitive and the profit margin is really slim. I don't push the hammers but I do supply the hammer customers that I've been working with over the years." The guess here is that Bit Brokers' 75:25 ratio will be changing -- steadily, if not rapidly -- real soon.
Alldredge, who sells three different brands of hammers, reports that the newest trend he's noticed is the popularity of the 10-gauge buttons. "That's what I'm selling the most -- the ones with the double-domed carbide bits. The drillers can get a better penetration rate with them and they're about the same price."
Both suppliers sell more new products than used. "We sell probably 80 percent to 90 percent new hammers vs. used," says Thomas. "Our used market has dropped off considerably because of the imports. I was selling used U.S.-made hammers for more than what the imported stuff cost brand new." That really shrunk his used hammer market. "I've refocused some of my marketing strategies and that's taking me further away from the used hammers. I've been concentrating primarily on the new equipment. But we still sell lots of used bits; that's probably about 25 percent of our sales."
Alldredge adds another reason why the new products are more popular: "In the deeper hole applications, go with the new bit. I'd be concerned with the used one shanking."
Neither Thomas nor Alldredge have much in the way of kind words for the imported products, particularly those that have been coming out of Asia. "They were hot for a while," Alldredge recounts. "People were buying them for the price, but they're just not lasting. That gives everyone a bad name." Score one for the you-get-what-you-pay-for camp.
The two suppliers featured in this first installment have rather different business plans for the immediate future. Alldredge reports that his business is up from last year, a continuation of a dramatic growth spurt over the past five years. "I also sell tri-cone bits, hole openers and stabilizers -- just about everything," he says. "It's turned into almost more than I can handle; I'm afraid of getting too big."
Thomas on the other hand, currently has six employees and is keen to expand. "We just moved into a new 5,000-square-foot office with a 10,000-square-foot shop building so we've got room to grow," he explains. "I expect we'll begin interviewing [this] month. I've got people calling here all the time for things I can't supply -- tools, lots of replacement parts, mud pumps and the like. I'm concentrating on the hammers and bits and it's kept me plenty busy. But I'm also leaving money on the table by not picking up some of these other items. I'm evaluating that right now, looking at what would be good to get into."