Published September 2007

Vac Loading May Offset Dip in Residential Work

By Jim Kneiszel, Editor (page 12)

When I talk to pumpers and portable restroom operators these days, I ask if a local slump in the housing market is hurting their bottom line.

The answers vary, of course, as it appears lagging home construction and sales have had a more devastating impact in some areas and are barely noticeable in others. And while a housing industry drawback may hurt pumpers who also install onsite systems, provide restrooms for construction sites or real estate sales inspections, those who stick to existing system pumping and maintenance might not be suffering as much.

The National Association of Realtors released statistics confirming a slow market — for new and existing home sales — expected to continue through 2008.

Among the unsettling figures, the inventory of unsold homes is at its highest level in 15 years. Median home sales have dropped for 10 months in a row, falling to a national average of $223,700. The sales declines have been heaviest in the South and West, while numbers are increasing in the Northeast and maintaining in the Midwest.

Economists, however, expect the housing declines will be tempered by continued lower mortgage interest rates. And most pumpers I’ve talked to lately remain optimistic about the general economy and continued growth.

I’m wondering if the theme of this month’s issue — industrial vacuum loading — is cause for industry optimism in the face of real estate woes. Perhaps commercial vacuum opportunities could take up the slack for pumpers during times when there’s a down housing market. Could this be the time for traditional haulers to consider investing in new equipment to bolster service offerings?

Doing Critical Work

Look at industrial clients: food processors, factories, municipalities that don’t have their own vacuum loading equipment. These potential customers provide essential services, and the work will never go away, especially as environmental regulations over waste byproducts continue to grow. The pressing workload America’s food industry and municipalities create may insulate pumpers from the impact of a mild recession.

The Pumper Pipelines column in this issue offers some enlightening perspectives from contractors contemplating adding industrial vacuum loading services. Writer Mary Shafer talked to Amanda Sims, co-owner of Brad’s Drain Cleaning in Hersey, Mich., who sees immense potential for adding industrial vacuum loading to the company’s slate of services.

“We usually have to educate our customers about new services, but this is work just sitting there, waiting to get done,’’ she said of the commercial vacuum loading jobs. “We can only see the trend continuing, so it’ll be a good investment. Whoever has the equipment is going to get that work.”

Shafer also talked to Mike Beebe, owner of Southern Sanitation Inc., Naples, Fla., who was upbeat about industrial work in a market hard hit by real estate slowdowns. He is considering buying a unit combining industrial vacuuming with hydro-excavating, and envisions a 15-20 percent increase in billings.

The challenge for contractors will be having the capital and the potential for enough work to justify buying the vacuum equipment and training workers to use it. Each waste hauler will have to examine the market, crunch some numbers and determine if adding industrial vacuum loading makes sense. But it’s good to have options for new revenue streams in a dynamic industry.