Drillers Struggle to Keep Businesses Open
One of the key factors in that struggle is the extent of the contractor's knowledge of costs of doing business today, said National Ground Water Association President Roger Renner, president of E.H. Renner & Sons of Elk River, MN.
"We don't understand what it costs to do business, and that's the reason there are half as many well drillers in Minnesota today as there were 10 years ago," Renner said. "Costs are changing every day and we are not accounting for that. We work for nothing."
He said the situation is even worse in some family-owned drilling companies. "The problem in a family business is we don't expect to be paid for our work. We expect to be paid less than the employees. How can you pay a family member less than the hired help?"
Renner noted a copier technician came to his office some time ago to repair a company copier and his fee was $110 per hour, a far cry from the $40 to $60 per hour charged by many drilling contractors. "Customers expect to pay more. The lower costs may be best for the customer, but is it good if your workers are on welfare?" Renner questioned. "Making a change is difficult, but once you find out how easy it is to charge more for labor, you'll be glad you made the change. We don't set our sights high enough. We are in a swirling toilet bowl, and unless we do something soon, we won't get out of it."
Many drillers are fearful about charging more for their work because they don't want to lose business to a contractor who will drill a well for a lesser amount," said Roy Yoder of NR Mechanical, a four-person drilling company in Montezuma, GA.
"If you charge a dollar more a foot, you may drill less wells, but you'll make more money," Yoder said. "People have a concept that if it's more expensive it must be better. If people are shopping price, they're usually asking what they can get for nothing."
"To stay in business you need to portray yourself as a professional, " he added.
The Georgia driller noted drillers also have failed to increase their fees to keep pace with the changing costs of doing business today and need to change that practice.
"In 1970, you could buy a brand new Chevrolet station wagon off the showroom floor for $3,000 and if you needed a new pick up truck, you could drill the dealer a well and swap it for the truck. You can't do that today because the cost of stuff has gone up and we haven't increased our prices," Yoder said. "We've absorbed the price increases where automobile dealers and other businesses have passed the increases on to their customers"
Yoder pointed out people today are willing to pay $20,000 for a vehicle that will only last a few years, but they may only have to pay $2,000 for a well that will last a lifetime and provide a water supply they can't do without.
Ken Dalby, of Mitchell Drilling Co. in Alamosa, CO, emphasized drillers who charge less for drilling a well have to work harder and drill more wells to make the same amount of money as a contractor whose costs are higher and only has to drill a well every couple of days to make a living and keep his employees paid.
Dalby and Yoder also predicted drillers will face more problems in the future with people having wells drilled and not paying for the work.
"From a business standpoint, we are getting stiffed on more and more jobs and not getting paid. We used to never have to collect a deposit or anything like that, but last year we went a month and a half with no pay for jobs we did," Dalby said. "We could take them to small claims court, but that's only up to $5,000 or we could put a lien on their property and eventually get paid, but that takes a long time. There's not a hell of a lot we can do if we get stiffed."
He said his company has begun requiring payment of half the cost of drilling a well as a deposit to cover the costs of paying workers and some of the cost for materials if the customer doesn't finish paying for the well.
Yoder said he also is seeing a trend of more people not paying for their wells. "A lot of people won't take the responsibility that they owe for the well and they ignore paying for it. If they don't make arrangements beforehand to pay for the well and they don't pay for it right away after you drill a well, you've got problems," he said. "You need to check on people before and after you do a job for them."
To compensate for wells for which owners don't pay, Yoder said many drillers just try to drill more wells.
"We still have a well digger mentality which is a mentality that I've got to do more work because somebody didn't pay, so I'll go and do another job so I can pay the bills," he said.