During the past three years, severe droughts in states with high groundwater extraction rates have increased demand for market services, boosting price; additionally, high growth in the value of construction has helped raise demand and price
Los Angeles, CA (PRWEB) November 01, 2014
Water well drilling services have a buyer power score of 2.0 out of 5, indicating unfavorable conditions for buyers. “Adverse weather patterns in states that heavily use groundwater have contributed to a significant rise in demand for drilling services during the past three years. California and Texas, which together account for about one-quarter of the nation's groundwater withdrawals, have experienced severe and persistent droughts during the period. In these states, private markets for groundwater have become larger, water prices have soared in agricultural areas and property owners have increasingly sought access to the water beneath their land,” according to IBISWorld business research analyst Hayden Shipp. Additionally, a handful of other states that rely heavily on groundwater (e.g. Nebraska, Idaho, Kansas and Colorado) have been drought stricken during much of the period. Rising demand in the largest regional markets for well drilling services has pressured the average price upward.
Significant increases in construction activity have also bolstered demand for water well drilling. Residential, nonresidential and water supply infrastructure construction have increased at moderate-to-strong rates during the past three years, indicating a heightened need for water wells for private residences, commercial users and municipalities. The period's substantial increases in residential and nonresidential construction are also linked to higher demand for geothermal boreholes for heating and cooling systems. Additionally, because groundwater satisfies about one-third of public water demand, steady population growth has required increased well drilling. As such, construction and population trends have led to higher market prices.
This market's substantial price increase has been accompanied by lengthy lead times in areas where demand outstrips supply. For example, buyers in California's Central Valley are facing lead times as long as 10 to 12 months in 2014; spots in suppliers' waiting lists sell for as much as $10,000 in private markets. Buying conditions vary considerably based on local market conditions, though,” Shipp says. Buyers in regions with lower demand benefit from above-average buyer power.
Market share concentration is low for water well drilling services, with the top four suppliers (Layne Christensen Company being number one) generating less than 10.0% of market revenue. The large number of suppliers, at about 8,500, and their generally small size reflect this market’s fragmentation. About half of all suppliers employ fewer than five people, and 85.0% of suppliers employ fewer than 20 people. For more information, visit IBISWorld’s Water Well Drilling Services procurement category market research report page.
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IBISWorld Procurement Report Key Topics
This report is intended to assist buyers of water well drilling services. Suppliers design, drill, electronically log, complete and develop water wells. They also provide and install pumps for wells and drill geothermal boreholes for heating and cooling systems. This report does not include oil and gas drilling services.
Executive Summary
Pricing Environment
Price Fundamentals
Benchmark Price
Pricing Model
Price Drivers
Recent Price Trend
Price Forecast
Product Characteristics
Product Life Cycle
Total Cost of Ownership
Product Specialization
Substitute Goods
Regulation
Quality Control
Supply Chain & Vendors
Supply Chain Dynamics
Supply Chain Risk
Imports
Competitive Environment
Market Share Concentration
Market Profitability
Switching Costs
Purchasing Process
Buying Basics
Buying Lead Time
Selection Process
Key RFP Elements
Negotiation Questions
Buyer Power Factors
Key Statistics
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