Joe Burgess saw a company in Insituform Technologies Inc. that was waiting for nation’s maze of aging underground water and sewer pipelines to fail so it could cash in on the recovery. But there’s a big difference between potentially making money and actually growing as a company.
“There has always been a disconnect at Insituform between the long-term potential of its business and the reality of its near-term growth potential,” says Burgess, the 3,000-employee pipeline service company’s president and CEO. “If I looked at how Insituform positioned itself in the past, it focused a lot on that long-term need and that, eventually, it was going to materialize and drift down to the local level and then this business would grow at a much faster pace.”
The problem, at least from Insituform’s point of view, is that pipelines don’t just break down all at once. And if they’re not broken today, most public officials at the local and state level are content to cross their fingers and hope they’ll hold out another year.
“So I could speculate that caused [the company] to take the approach that it would get better over the long term,” Burgess says. “We’ll just stay in this market and maintain our leadership position, and when the dam bursts, it will be a great story.”
When Burgess arrived in April 2008, he decided it was time to stop waiting.
“We’re a U.S. public company,” Burgess says. “We need to operate our business in the here and now. We need to look at the economic conditions and the now of our market and figure out how do we optimize financial performance for our investors now.”
Burgess does not deny that there is value both in planning for the future and trying to fill a niche.
“But if we had kept the company 100 percent wastewater and 100 percent in municipal markets, our company really is just floating along waiting for that dam to burst,” Burgess says. “There are some investors who have that kind of patience. But it’s my view most do not.”
Burgess needed to show people that there was revenue to be generated in areas besides just municipal sewer or wastewater pipeline rehabilitation.
“We needed to make some decisions and develop some workable plans to broaden the strategic direction of the company,” Burgess says. “That’s a challenge when you’re running a business that’s essentially been doing one thing for 40 years.”
