was The Top 200 Environmental Firms for 2012: Analysis
Versar Inc. is seeing new challenges working in federal environmental work. "Last year, we had record revenue of $137 million, of which 65% was in environmental services," says Michael Abram, the firm's chief administrative officer. "This year won't be quite as strong." As a result of less-certain federal cleanup budgets, he notes shorter time frames in government contracts, "with more option periods."
The firm and others also note more "performance-based" environmental contracting for federal clients. "You have to do your due diligence and spend a lot of time on your proposals, but that's where the contract funds are," says Abram. "If you're going to play, you have to play. They are complex and expensive proposals, but if done right, they can be lucrative. It's important whom you team with."
Adds Juan Hernandez, vice president of Cape Environmental, "Bundling of multiple sites through performance-based remediation contracts has reduced the number of opportunities but increased their size significantly." He says the approach has boosted "cost to capture" by up to 10 times, creating a challenge for small business in managing added risk.
Resurging energy and even manufacturing sectors are changing firms' mix of work. "Five years ago, our government work was 70% of our business. Today, it's about 40%," says Dan Batrack, CEO of Tetra Tech. "Our government work has remained stable, but the U.S. commercial side has grown so much more quickly."
TRC, Tetra Tech and other Top 200 firms see the boom in energy-related work as the key driver on the private-sector side, particularly with required environmental work related to oil and gas development. USA Environment LP sees oil-patch clients committing more funds to the cleanup of legacy waste sites, while shale-gas extraction sites are a growing draw for Top 200 expertise. "[Hydrofracking] has been going on for 40 years, but what is new is the depth it can go," says TRC's Vincze.
Richard Fox, CEO of engineer-contractor CDM Smith, says the firm has also seen a "strong surge" in environmental work for its food-and-beverage sector clients. "It's the water-energy nexus," he says. "These are not large projects, but they're fascinating."
Asbestos-abatement and demolition contractor LVI Services has seen a pickup in work from utilities retiring old coal-fired powerplants, rather than investing in new mandated emissions controls. The firm also is eyeing work in remediating a Philadelphia refinery recently acquired by Delta Airlines. Asbestos work in Las Vegas casinos and at a major Manhattan hospital before demolition also is anticipated. Cape Environmental sees funding continuing in military munitions cleanup. "As this is a highly specialized niche market, the competition is fierce but limited to contractors with the appropriate capabilities," says Hernandez. TRC's Vincze says the potential federal labeling of fly ash as a hazardous waste could generate new business, but he and others are skeptical that will happen because the designation could have a negative impact on the U.S. economy.
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Even with the rise in global work, continuing economic uncertainties and government austerity measures took a toll on some markets. Turmoil in Europe kept the continent's share of Top 200 revenue flat. One recent, U.K.-based analysis noted the local consulting sector managed just 0.7% growth in 2011. It is slightly more optimistic for 2012, predicting 1.8% growth, and somewhat more hopeful for the future. "Long-term drivers remain intact, such as transition to a low-carbon, low-waste and energy-secure economy," the report contends.
Hisham Mahmoud, president of AMEC Earth and Environment, North American operations, sees more attention to environmental regulation in Middle East countries as they invest in new infrastructure, generating new business in the region. The firm recently won an award from Kuwait Oil Co. to be program manager for remediation of oil fields damaged during the 1990-91 Iraqi invasion of the country, he says. CDM Smith's Fox says work funded by the U.S. Agency for International Development is "surprisingly steady abroad." He says the firm is working on agency-funded work in Jordan and the West Bank. "The Emirates are putting out a lot of RFPs now," he adds.
Raimond V. Baumans, U.S.-based vice president of Antea Group, says the Dutch-based firm centralized all its environmental operating units last year as a "deliberate move to a more centralized global management model."
