Annual sector survey points to healthy growth in demand, both at home and internationally
Revenue posted by the “Top 200 environmental firms” as listed by the US engineering and construction trade magazine ENR grew by 7.3% to $57.3bn in 2018, as the sector benefited from a strong US economy and global demand for environmental services.
Total US market revenue grew by 6% – reversing last year’s 2.1% decline (EA 18-Sep-18) – to account for $43.7bn of the total, buoyed by a US economy firing on all cylinders [2018 GDP growth of 2.9%]. A recovery in private sector (+12%) and local/state (+9%) spending helped offset a decline in sectoral income from the federal government (-3%) which continued its steady decline of recent years.
Meanwhile, international revenue for these firms surged 13% to $13.6bn, reversing last year’s decline of 1.3%. Europe is now the Top 200’s largest international market, overtaking Canada to account for 31% of all non-domestic revenue, followed by Canada (28%), Australia/New Zealand (12%), Africa (8%), Asia (8%), Middle East (7%) and Latin America (5%).
ENR’s editor at large and the coordinator of the Top 200 environmental firms list, Debra Rubin, commented on the turnaround from last year’s results, when political confusion was cited as a barrier to industry growth: “I think the strong economy in the US and in some overseas markets pushed owner investment commitments beyond the confusion, particularly in real estate transactions. Also states and municipalities continued their push to move environmental infrastructure ahead; a number are still under mandate to do so.”
While federal spending fell, Rubin believed this can not be blamed on Donald Trump’s efforts to remove environmental red tape: “Federal spending has been slowly but steadily falling over the last several years. The US Department of Defence budget [for environmental projects] has dropped, but also projects have been completed. The DoE has some growth momentum but just in just last week, it was announced that about $23bn in new contract awards at the DOE Hanford nuclear cleanup site in Washington state would be delayed into next year.”
While spending has grown at state level, Rubin does not think it will be able to take up the slack from federal cuts: “This sector will be strong, but cannot totally make up for all spending declines. Certain ‘blue’ [Democrat] states such as California, New Jersey and Washington are strongly committed. But even ‘red’ [Republican] states have environmental infrastructure mandates to meet or demand needs pushing facility expansion and upgrade.”
According to the rankings, AECOM retained its position as the sector leader with $4.4bn in environmental services revenues, followed by Jacobs with $3.8bn, with Clean Harbors ($3.1bn), Tetra Tech ($2.9bn) and Fluor Corp ($2.1bn) completing the unchanged top five.
Consolidation was stated by ENR as an important market trend with some notable risers up the Top 200 rankings as a result. NV5 for instance rose 28 places from last year, moving from 117th to 89th after its remarkable 25% growth in 2018 with most of this coming from the acquisitions of Dunn Environmental, Air Quality Consulting, AK Environmental, Allwyn Environmental and Marron & Associates (EA 12-Mar-19). The firm may rise further up next year’s rankings following its most recent acquisitions of WHPacific and GeoDesign (EA 10-Jul-19).
Meanwhile, Montreal-headquartered WSP’s $400m purchase of the 5,000-strong Louis Berger helped it to climb 22 places from 38th last year to 16th in the 2019 Top 200 list (EA 01-Aug-18). For Aussie player GHD, a strong organic performance (EA 19-Sep-18) in North America and the launch of an advisory business (EA 20-Mar-18) helped it jump up nine places to 16th.
The Top 200 firms’ most successful work area – accounting for 26.4% of the $15bn revenue total – remains hazardous waste and clean-up services which grew by 16% year-on-year, thanks to a growing support services market dealing with PFAS/PFOS contaminants. This area is also set to benefit from the award of “many billions” of new and expanded nuclear and hazardous waste clean-up and management contract awards at former federal weapons sites over the next couple of years.
The second and third most lucrative areas for the Top 200 are water supply and wastewater, generating 21% and 18.5% of aggregated total environmental services revenue respectively. The remainder is classified as environmental science (10.7%), nuclear waste (9.9%), environmental management (7.3%), air quality (4.7%) and ‘other’ services (2%).
Fuente: ENVIRONMENT ANALYST