Water Systems Council analyzes 2023 State of the U.S. Water Well Industry report

Sept. 8, 2023

Commissioned by the Water Systems Council (WSC), and conducted by a third-party company, WSC produced a survey and compiled a report on the State of the U.S. Water Well Industry

The 2023 State of the U.S. Water Well Industry reports on how the industry looked as we closed out 2022 and the outlook for 2023. Industry members stepped up to share their perspectives. Survey respondents were asked to weigh in on their industry outlook, regulation, workforce challenges, weather, technology and investment. In addition, survey respondents shared information about themselves and their businesses. Thanks to widespread participation, the industry now has data and insights that inform and drive action.  

Overall, there were 890 respondents representing over 550 companies that completed the survey, including 577 contractors and 313 suppliers. 

“Cautious optimism.” That is the phrase most often used to describe the water well industry in 2023. With interest rates on the rise and uncertainty around the economy, there is reason for pause. But high demand, strong backlogs, and thoughtful business planning left participants hopeful for another good year.  

“Everyone I talk to is extremely optimistic. They have a backlog of work, some into 2024. It is encouraging to hear that drillers, pump installers, and technicians have a significant backlog of work,” said Matt Servant with Pentair and president of the Water Systems Council Board of Directors. 

Digging into the results  

Nationally, the average well contractor has 13 employees and $2.4M in annual revenue. This represents an increase in revenue over the 2022 report by $500K. However, contractors pointed out that revenue was boosted largely by significant price increases for goods sold and does not always indicate a growing business or increasing margins. 

The well contractors reported owning an average of 2.9 drill rigs and drilling 58 wells per rig per year. Annually, contractors reported drilling an average of 111 wells per year and those doing geothermal work reported doing 47 geothermal wells per year. Residential/light commercial is the most predominant market with 94% of respondents serving this market. 

While industry participants remain positive, the overall optimism outlook for the industry slipped from 7.3 for 2022 to 6.9 for 2023, a 6% decrease in optimism. The Southeast leads in optimism for 2023, while the Northeast is the least optimistic, and, at 18%, also has the greatest percentage of contractors reporting a decrease in revenue.  

Positive factors like home starts and the economy continue to drive optimism, followed by urban flight and the increased awareness of water quality. In fact, water quality entered the top three positive factors for the Mid-Atlantic and Northeast regions. 

“In our area [North Carolina], we don’t think a recession will impact our business. We are insulated due to development. Builders are not slowing down,” said John Boyette with Boyette Well and Septic. 

Industry challenges

However, negative factors like inflation weighed on industry participants as the health of the overall economy leaped to the number two concern. Inflation is top of mind for good reason – although in decline since its peak in June of 2022, the annual inflation rate remains the highest in decades. And, although “Economy” makes an appearance as both the #2 positive factor and the #2 negative factor, 16% more respondents rated it as a negative. 

“Finding relevant applicants” is the top workforce challenge across the industry, followed by “successfully hiring the desired candidates” and “retaining employees.” When asked how employers have or plan to overcome these challenges, more than 25% volunteered some version of “raise pay.” Despite a willingness to pay up for employees, employers are having a hard time finding applicants willing to work, especially in a labor-intensive field. 

According to one survey respondent, “Labor force is the biggest issue we face. Short of finding a steady supply of hard-working young people who want to train, we must automate our industry as much as possible, so it requires less people to do the same work.” 

And while there is mild improvement, the industry is still challenged with an older workforce. 

An estimated 48% of the industry’s workforce is at or near retirement age (55+), double the 23% of 55+ workers in the U.S. labor force. At age 53, the average well contractor is approximately 10 years older than the average U.S. worker. 

Workers appreciate working for a small or family-owned business, even if they are not part of the family. It is interesting to note that “working for a family-owned or small business” is not just appealing to those working in their own family business. In fact, the same percentage of non-family members within a family business (69%) indicated that working in such a business was appealing to them. 

Sixty-six percent of respondents rate the impact of regulation on their business as moderate to significant. The Northwest and West regions feel the weight of regulation with 74% of respondents reporting a moderate to significant impact – a full 10% more than the national average. The leading topic of “Other Government Regulation” is the number of new, complex regulations and the work and cost it takes to comply. Also mentioned frequently were CDL requirements. Respondents find CDL requirements more onerous than other mandated licensing. “More rules and reports to do every day,” a survey respondent shared. 

75% of respondents report an impact on their business from weather-related events. While often the impact from weather events is balanced, “Abnormal temp” has the highest number of respondents reporting a negative impact and is much more likely than other weather events to have a negative impact than a positive one.

Interestingly, contractors continue to have a positive attitude toward adopting new technologies. One survey respondent shared, “I think the water well industry is growing and getting better with technology, especially since the kids entering the workforce are technology driven.” 

Investing in 2023  

As far as investments go in 2023, contractors are listing equipment/vehicles, adding staff, and training as their top investments. And when making a purchasing decision in 2023, quality is the most important consideration followed by price, customer service, and availability/lead time. 

Overall, the water well industry has never been busier. And while there are challenges, there is also reason for optimism and avenues to continued growth. WSC will be conducting their 2023 survey for the 2024 report in mid-November through December. If you are part of the water well industry, do not miss your opportunity to be heard.

About the Author

Margaret Martens

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