I recently had an interesting telephone conversation with Dale Klassen, sales manager for G.P. Fiberglass Ltd., and the topic quickly turned to water well drillers and what they charge customers for their services. It’s a subject that Klassen is quite fervent and outspoken about, and I’ll share some of the thoughts and ideas that he presented.

“When I joined G.P. Fiberglass, we wanted to start selling our casing in the United States,” Klassen explains from his office in Calgary, Alberta. “To do that, we had to replace concrete as a form of casing. At that time, it was a challenge because of the price difference; our casing was about 30 percent higher. One of the water well drillers I was working with was charging in the $60 to $70 per foot range. I suggested that, for the next three people who approach him about drilling a well, he raise his price $10 per foot. He was very skeptical but, after much convincing, he did just that on his next three proposals. No one even questioned it. He then realized that, not only was he low on his pricing, there was a perceived value to his services that he really didn’t recognize before.

“If you’re doing professional work and charging a fair price, and another guy down the street is charging significantly less, eventually that will work itself out because that other guy, at some point, will not be able to continue. I guarantee you that in most of the cases where someone is undercutting your price, that person probably is doing it below cost, and it’s probably better not to do that well. Just to keep the rig working is a waste of money. I also think that in some cases, the price objection is just an excuse. Now, if there are half a dozen drillers in town, sure, you’ll get that, but I don’t think it happens as much as people say it does.

“We have some drillers in Illinois who were up against pricing issues. They’ve taken to having a very specific contract sent out to prospective customers, and that contract will spell out all the value that they can provide their customers and their wells. It explains the work that will be done, the products used and the pricing and all the ground rules for both parties – very professional. That contract is either signed and returned – with a deposit – or it isn’t. That money up front is helpful in the event there is a dry hole. Some drilling contractors don’t even charge for a dry hole. That hole should be charged for, and that should be explained up front in the contract.

“Drillers need to be paid; they need to be paid enough; and they need to be paid in a timely fashion.

“I always try to get contractors to do a total cost analysis of their operations. Once they have those costs, they often find that they’re not charging enough per hour for themselves. I’ve asked drillers what they would charge back, and some of the answers are $20, $25, $30 an hour. If you’re a professional water well driller, you should be charging many times that amount. Your rig eventually will have to be replaced, you have to turn on the lights, you have to pay yourself so that you can take care of your family without working seven or eight days a week. Far too often, I run into drillers who have a tendency to work incredible amounts of hours that they don’t get paid for. If you ever walk into an accountant’s office or an attorney’s office, that clock starts ticking the moment you walk in. I don’t see any difference between a professional lawyer, a professional accountant or a professional water well driller.

“You have to sell your service as something that’s better than what others are doing. There has to be perceived value. One of the problems in this industry is that drillers like to be with the rig, and that prevents them from being able to sell against price objections. If drillers concentrated more on the sales aspect of their businesses, they’d have an easier time getting their prices up. You just have to go against the grain. And once you’ve done that, you’ve taken yourself out of that perception that everything is the same, and you’ve got something to sell.

“You’ve got to sell yourself, sell your products and services, and sell the value of what you’re providing to your customers. It’s extremely frustrating to me to see so many drillers leaving so much money on the table. It’s not your problem that somebody else down the street is selling for less.

“Water is going to be an extremely valuable resource. But we are very undervalued as an industry. Water stocks have outperformed oil stocks over the last five years.

“When I’m at trade shows, I find myself spending very little time selling my casing. I talk to as many drillers as I can and try to convince them to add $10 a foot to their next three quotes and see what happens. We should have more sales and marketing seminars at the trade shows and meetings.”

Latest Governmental Issues

The latest from our legislative reporter, the inimitable Caroline Mims:

The U.S. Environmental Protection Agency (EPA) and the U.S. Army Corps of Engineers have issued joint guidance for their field offices to ensure America’s wetlands and other water bodies are protected under the Clean Water Act. The interagency guidance will enable the agencies to make clear, consistent and predictable jurisdictional determinations.

Colorado governor Bill Ritter has appointed a South Platte River Basin Task Force to examine water issues and recommend possible solutions for water users in the northeast Colorado basin. The task force members include the Colorado Commissioner of Agriculture and the executive director of the Department of Natural Resources. Also included are several landowners who have had their wells shut down as a result of a lingering drought and water disputes.

The EPA is issuing new policies that will reduce legal uncertainties for public and private entities, or Good Samaritans, to help reclaim hard-rock mine sites responsible for degrading water quality. In many cases, the parties responsible for the pollution from orphan mine sites no longer exist or are not financially viable. Yet, a variety of interests, which range from nonprofit organizations to state and local governments, are willing to voluntarily clean up these abandoned sites, although they are not responsible for the pollution. Many potential Good Samaritans have expressed concerns that they may be held liable under the Clean Water Act and CERCLA, which have prevented many cleanup projects from moving forward.

The newly formed Congressional Water Caucus will serve as a forum for dialogue concerning the nation’s water issues and reaching viable solutions to those issues. The caucus will focus on promoting legislative issues involving water, as well as educating members on the nation’s water use resource.

Your August Almanac

August 27 marks the 148th anniversary of the drilling of the first successful U.S. oil well near Titusville, Pa. Other significant (and otherwise) August dates:

1st: 1969 – earliest Internet technology introduced

2nd: 1909 – Lincoln penny introduced

3rd: National Watermelon Day

4th: Coast Guard Day

5th: 1884 – Statue of Liberty built

6th: 1945 – atom bomb dropped on Hiroshima

7th: 1991 – World Wide Web debuts

8th: 1930 – Betty Boop debuts

9th: Book Lover’s Day

10th: Smithsonian Institute founded

11th: National Garage Sale Day

12th: International Youth Day

13th: Left Hander’s Day

14th: 1953 – Whiffle Ball patented

15th: 1914 – Panama Canal opens

16th: 1858 – 1st transatlantic telegraph transmission

17th: 1786 – Davy Crockett born

18th: 1920 – women given right to vote in U.S.

19th: National Potato Day

20th: 1991 – Soviet Union collapses

21st: 1959 – Hawaii becomes 50th state

22nd: 1902 – Teddy Roosevelt is 1st president to ride in an automobile

23rd: 1990 – East and West Germany decide to reunite

24th: 1932 – Amelia Earhart flies cross-country non-stop

25th: 1814 – British troops burn down White House

26th: National Dog Day

27th: 1908 – President Lyndon Johnson born

28th: 1968 – riots begin at Democratic National Convention in Chicago

29th: 2005 – Hurricane Katrina hits Gulf Coast

30th: 1967 – Thurgood Marshall becomes 1st African-American Supreme Court Justice

31st: 1897 – movie projector patented