Layne Christensen Company History

Address:

1900 Shawnee Mission Parkway
Mission Woods, Kansas 66205
U.S.A.

Telephone: (913) 362-0510
Fax: (913) 362-0133

Wholly Owned Subsidiary of The Marley Company
Incorporated: 1882 as Layne & Sons
Sales: $222 million (1997)
Employees: 1,261
Stock Exchanges: NASDAQ
SICs: 1381 Drilling Oil & Gas Wells

Company History:

Layne Christensen Company is the leading water well drilling, well repair and maintenance, mineral exploration, and environmental drilling firm in the United States. The company has four core business areas: water supply services, in which the company provides site selection, drilling and well development, pump installation, and well rehabilitation services to customers around the world; mineral exploration services, such as drilling technologies for mineral exploration that have made Layne Christensen into one of the international leaders in diamond bit technology for drilling and coring; geotechnical construction services, including innovative methods for jet grouting, ground freezing, and dewatering applications used in major construction projects by municipalities and government agencies around the world; and environmental services, where Layne Christensen provides state-of-the-art techniques for assessing and monitoring water quality, filtration and treatment, and groundwater recovery system maintenance. In 1996, Layne, Inc. merged with Christensen Boyles Corporation, one of the most promising firms with operations in mineral exploration services, geotechnical services, environmental services to form Layne Christensen Company.

Early History

Layne, Inc. was founded by Mahlon Layne in 1882 in Shawnee, Kansas. Like many during this time, Layne had traveled from the East Coast to the western plains in order to own and farm his own homestead. Initially stopping in St. Louis, the ambitious pioneer journeyed via covered wagon with his wife and children on to Kansas to take advantage of the wide open spaces of the American plains. Having settled on a piece of land near Shawnee, Kansas, the young man began plowing wheat in his expansive fields. Soon, however, he discovered that the soil was dryer in Kansas than he had anticipated, and more water was required to make his land a profitable, let alone a living, venture. So Layne began to experiment with different types of water well drilling equipment and methods. Before long, the success of his own homestead attracted the notice of other men throughout the area.

Most of the homesteaders wanted Layne to visit their land and suggest methods for drilling water, and thereby irrigate their farm more effectively. As Layne began to experiment with various methods of well-water drilling, and showed how successful he was at it, the people whom he had helped encouraged him to establish his own company. In 1882, Layne decided to open his own business, and within a short period of time had contracted most of the homesteaders around Shawnee Mission, Kansas. As his business grew, he brought his sons into the management and supervision of the company's operations and renamed his firm Layne & Sons.

By the end of the 19th century and well into the 20th, Layne & Sons had established a reputation for reliable and inexpensive water drilling. As farms grew, however, along with the expansion of municipalities and transformation of the rural landscape by the slow encroachment of small, independently-owned manufacturing firm, a concern amount of water contamination began to surface. Cholera had been one of the most dreaded diseases of the 19th century, and it was well known that good sanitation measures significantly reduced the threat of contamination. Industrial and municipal waste compounded the water sanitation problem. Layne & Sons, now managed by the second generation of Laynes, was contracted by small municipalities throughout Kansas to advise them on the best and most cost-effective method to ensure a clean and safe water supply.

The Great Depression, World War II, and the Postwar Era

When the Great Depression swept across the United States after the stock market crash in October 1929, every business in the country was affected, including Layne & Sons. Although the company was forced to reduce its workforce, which had steadily grown since the early 1920s, Layne & Sons was able to remain free of debt and escape bankruptcy. People still needed water drilling services for their farms in Kansas, and rural municipalities that had contracted the company years earlier remained loyal customers during the difficult years of the early and mid-1930s.

As the economic climate began to improve during the late 1930s, and then expand with the advent of America's entry into World War II, Layne & Sons was asked to develop new and more innovative water drilling devices for farms to increase their produce in spite of labor shortages. Soon the government was contracting Layne & Sons for their water drilling services throughout the Plains states. It was during World War II and the immediate postwar era that Layne & Sons began to transform itself from a local or statewide water drilling services company to a regional firm. As this expansion took place, revenues also increased. Nearly 200 employees were working for the company when America became known as the "Breadbasket" to the world during the late 1940s and early 1950s.

As the company expanded during these years, it began to increase the kinds of services provided to customers. Layne & Sons had always engaged in such activities as site selection, pump installation, and well design, but now the company began to hire geologists and hydrologists who would analyze geological data and recommend the best placement of each well and the most suitable well type for that location. Sophisticated instrumentation began to characterize the company's water drilling services and led to an even more enhanced reputation for reliability and efficiency. Throughout the 1950s, the company contracted more and more municipalities within the Plains states, resulting in greater revenue.

Continued Growth and Expansion

During the 1960s and 1970s, company management saw significant opportunities in the increasing awareness and public concern over groundwater contamination. Taking advantage of the federal regulations passed by Congress to investigate, monitor, and correct contaminated sites and municipal aquifers, the company concentrated on providing services to federal and state agencies within the United States, as well as corporate clients, who were concerned about meeting the regulations on groundwater contamination. Access to clean and safe groundwater become more of a concern than any other issue, and the company provided extensive consulting services to assess the harmful effects of population movements and expansion, deteriorating water quality, and the limited availability of surface water.

The expansion of the company's activities consequently led to its higher profile, and a change of name to Layne-Western Company, Inc. to reflect its growth in the western portion of the United States. Not surprisingly, such a well-run and successful company garnered the attention of interested buyers. In 1968, the company was purchased by Marley Holdings, L.P., a limited partnership of individuals interested in the development of Layne-Western.

Operating as a wholly-owned subsidiary, Layne-Western was spurred on by its new owners to engage in an aggressive acquisitions policy. One of Layne-Western's most important acquisition included the during the 1970s was that of The Singer Company, a prominent well drilling and pump installation and repair business with a presence throughout the western United States. This strategic acquisition immediately added 17 locations to the company's operations. In addition, Layne-Western made smaller strategic acquisitions to expand into new geographical areas or new services. By the end of the 1970s, the company had acquired five more companies, and was not finished.

During the 1980s, Layne-Western continued to expand its operations. The company contracted more municipalities, industrial companies, agribusinesses and a smaller number of residential users. The largest contracts during this time involved the municipalities of Houston, Los Angeles, and Las Vegas, with growing populations and limited access to surface water. Layne-Western's water well drilling services became highly sought after by such municipalities due to drought and the ever-increasing need for surface water. To ensure quality service to its clients, the company continued its strategic acquisition policy by adding five more companies to its operations.

The 1990s and Beyond

In 1992 Layne changed its name from Layne-Western Company back to Layne, Inc., to reflect its broadened scope of national and international operations. At this time, the company had four core business areas, including water well drilling, which provided 31.7 percent of the firm's revenues; well and pump repair and maintenance, which accounted for 28.3 percent of revenues; environmental drilling, accounting for 22.7 percent of revenues; and mineral exploration and drilling services, which totaled 17.3 percent of company revenues.

During the early 1990s, part of Layne's strategy involved developing, designing, and installing high production municipal and industrial water wells. Requiring greater technical ability and more sophisticated drilling equipment than the capabilities of most other drilling contractors at the time, Layne began to make significant strides toward capturing a large share of the municipal and industrial markets in this area. By the end of 1992, the company reported that 56 percent of its well water drilling revenues came from municipalities and that 29 percent came from industrial manufacturers. Municipalities included regional water utilities, local water districts, cities, counties and various other local and regional government agencies responsible for providing water supplies to commercial and residential customers.

In 1992, Layne was contracted to provide water well drilling services by some of the most prestigious municipalities and industrial manufacturers in the country, such as the City of Memphis, the City of Los Angeles, Alcoa Company of America, and the Georgia Pacific Company. Interestingly, Layne's aggressive recruitment of municipal and industrial clients was so successful that even with such prominent customers not one of them accounted for more than ten percent of the firm's total revenues during the early 1990s.

Having over the years provided drilling services for geological assessment, specifically for mineral and mining exploration, for gold and copper producers within the continental United States, the company shifted its emphasis to foreign markets as these producers expanded their search for economically minable orebodies. Layne commenced its mineral and mining exploration drilling services in Mexico in 1991. Since that time, the company's international projects in the mineral exploration industry have grown dramatically. Just as important, however, is the fact that the firm's operations in the Latin American mineral industry opened up opportunities for groundwater drilling and pump repair and well rehabilitation. Layne's expanding activities were so successful in Mexico that by 1995 the company had opened a 22,000 square foot office facility in Hermosillo, and in 1996 opened an even larger office facility in Toluca, both of which functioned as water drilling and well rehabilitation service centers.

Additional water and mineral exploration projects have been undertaken around the globe. The company opened an office in Thailand in 1995, and in 1996 acquired Georesources, a Thai-based water drilling company. At approximately the same time, Layne opened a newly-constructed facility in Bangkok to manufacture drill rods for customers operating within the mineral exploration industry in Asia. The company's Canadian subsidiary, Elgin Exploration, began working near one of the world's largest kimberlite diamond mines located in the Northwest Territories, and other similar water well drilling and mineral exploration activities were begun in Bolivia, Argentina, and Peru. Perhaps one of the most important of these projects, however, was located in Chile. Along with its South American partner, Geotec Boyles Brothers, S.A., Layne initiated a $6 million water project. Drilling 13 wells ranging from 700 to 950 feet, a specially built pump rig needed to be transported from the United States to Chile in order to finish the project.

In 1996, Layne merged with the Christensen Boyles Corporation to become Layne Christensen Company. Christensen Boyles had been one of the most successful firms in the same core business areas as Layne, so the managements of both companies saw added value to the formation of one firm. Upon the conclusion of the agreement, Layne consolidated all of its mineral products manufacturing operations into the Christensen Boyles facility at Salt Lake City, Utah, while Christensen Boyles consolidated its geotechnical construction and environmental business into Layne facilities and operations.

One reason for the merger was to increase the opportunities in the international arena, where Christensen Boyles' Latin American partners and affiliates immediately enhanced Layne's ongoing operations. Joint projects were soon initiated in Bolivia, Argentina, and Chile, with plans to expand operations in Brazil. The merger with Christensen Boyles transformed the mineral-related business of Layne into its second largest product line, with revenues increasing by an astronomical 163 percent, and placed the new company into the position of soon becoming one of the world's largest providers of mineral drilling products and services.

As the century drew to a close, Layne Christensen Company intended to expand its groundwater drilling services in the United States, expanding its mineral drilling exploration business throughout Latin America so that its name would become as prominent as in the United States. Moreover, the company hoped to develop its geotechnical services into a major force within the geotechnical construction industry. With the combined management and financial resources resulting from the merger, Layne Christensen would likely have no problem at all with its ambitious strategic plans.

Principal Subsidiaries: Georesources, Inc.; Elgin Exploration, Inc.; Dunbar-Stark Drillings, Inc.; Jim Cole Enterprises, Inc.; Becker Drill, Inc.; Envirodrill Services, Inc.; Stanley Mining Services, Ltd.

Layne Christensen Company History

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