Markets Shift but Still Reach Far
 Guy Lawrence for ENR |
Now that shortages and high prices are making headlines, it finally has sunk in that the basics of human survival on earth—clean water, clean air, sufficient energy and usable land—are finite commodities. Helping the world meet these needs has long fueled the industry’s environmental services sector. But with “green” and “sustainable” now familiar terms in the global vocabulary, ENR’s Top 200 Environmental Firms are enjoying another strong year for their missions, markets and bottom lines.
Despite shrinkage in some sectors, whether due to finished tasks, budget cuts, the housing falloff or changes in listed firms, Top 200 revenue in 2007 rose 10%, to $46.3 billion. Solid growth in a few niches as well as in the international market have helped temper early impacts of a changing U.S. economy, although some difficulties are clearly still beingfelt. “Our wins are up, but it’s taking a lot longer to go from being selected for a job to being contracted,” says Steve Guttenplan, president of the Metcalf & Eddy unit of AECOM Technology Corp.
Firms are watching closely if and how an economic downturn and a change of administration in November could affect their results this year and beyond. But they also are buoyed by a longer-term trend now taking shape that demands their expertise to integrate sustainability and resource management into how public and private clients provide their own goods and services.
“Our role has shifted from cleanup ofpast sins to helping with the business model,” says Lee McIntire, chief operating officer of CH2M Hill Cos. “To site a factory, the issue is not just the cost of steel but where you are going to get the energy and water. The pace of change is breathtaking.” WorleyParsons has even trademarked its sustainability service, dubbed “EcoNomics,” says Vice President Anthony Brown.
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Related Links: The push by corporate clients to uniformly build and operate with green methods and systems around the globe and the desire by more budding economies to develop sustainably have boosted results in at least two key Top 200 sectors. The amount of international revenue firms reported grew 48% in 2007, to $8.6 billion. That also is an 87% increase over the last two years. The total private-client revenue also rose 27%, to $19.4 billion, nearly twice the rate of the federal and municipal client groups.
“Our international clients, oil andmining conglomerates, want to adopt environmental policies that are consistent,” says Brown. “How they operate in North America is how they want to operate around the world. It’s driven by internal policies rather than by local rules.”
Firms report revenue growth in excess of 60% in the markets of Canada, Europe, Australia and Africa (see chart). “We have more employees overseas than in the U.S.,” says Bob Uhler, CEO of MWH Global Inc. “The Middle East can’t spend fast enough.”
Movers and Shakers
The global environmental juggernaut helped CH2M Hill Ltd. maintain its perch as lead firm in the Top 200. But Bechtel, with its strong position in the power construction market generating more air-emissions and carbon-capture revenue, moved ahead of Veolia Environnement North America into the No. 2 position.
The 2008 Top 200 list is notable for high-profile firms disappearing and appearing for the first time. Washington Group’s 2007 acquisition by URS Corp. nudged its new corporate parent over the $2-billion threshold. Among other Top 200 firms on this year’s list that will depart similarly next year are SECOR International Inc., acquired by Stantec Inc., and three new subsidiaries of AECOM: Earth Tech Inc., Gartner Lee and Boyle Engineering Corp.
Cash-rich EnergySolutions LLC, a major player in nuclear-waste cleanup and management through several key acquisitions, joined the Top 200 at No. 7. Inclusion of that firm’s nearly $1.4 billion in revenue helped push the maturing nuclearwaste sector 15% higher in 2007, to $5.279 billion.
EnergySolutions is among a core of Top 200 firms that are finding new work in a still-active U.S. Energy Dept. nuclear-waste-cleanup marketplace. DOE contractors spent much of 2007 preparing for a new round of multibillion- dollar cleanup, construction and management procurements at the agency’s key waste sites, Hanford in Richland, Wash., and Savannah River in Aiken, S.C. The recently awarded contracts were good news for URS, EnergySolutions, Fluor Corp. and CH2M Hill, which led or participated in winningteam bids.
“From the Fluor perspective, it’s been a good year. In general, it’s a good market, although a tight one from a cost perspective,” says Ken Smith, senior vice president of business development for Fluor Corp.’s government group. “I think the biggest challenge is just the turnover of contracts and making sure we focus on the mission at hand.”
Construction also began last August on Savannah River’s controversial and much-delayed Mixed-Oxide Fuel Fabrication Facility. The $4.8-billion plant to convert weapons-grade plutonium into nuclear powerplant fuel is being built by a joint venture of Shaw Group Inc. and Cogema, an affiliate of French technology firm Areva.
The plant, set for completion in 2014, will dispose of 34 tonnes of plutonium as called for under international treaties. “The steel and rebar are in place; we are making good progress,” says Ron Oakley, president of Shaw Environment & Infrastructure.
Battelle, which with the University ofTennessee jointly manages DOE’s Oak Ridge National Laboratory in Oak Ridge, Tenn., is waiting for funding to come through for an estimated $4-billion environmental cleanup project at the laboratory and a nearby national security complex. Battelle currently is providing preliminary planning support to help DOE determine how to best clean up the sites, which “have a large inventory of legacy waste and a large number of facilities that are no longer necessary,” says Lee McGetrick, operations manager for the laboratory.
While the Top 200’s non-nuclearwaste cleanup revenue stream decreased 4% last year, the hazardous-waste sector still represents more than one-quarter of total list revenue. Oakley sees some growth in unexploded ordnance (UXO) remediation for military clients and site cleanup in advance of booming base realignment and closure (BRAC) workpart of the U.S. Defense Dept.’s multiyear, multibillion-dollar transformation and troop relocation mission.
DOD environmental work has been a mainstay for some Top 200 firms for years. Tetra Tech has provided support for Naval Facilities Engineering Command’s Atlantic region’s environmental restoration programs since 1982. It recently won a $125-million Navy contract to provide environmental services, including BRAC-related remediation work, for the regional command. The firm also is into the second year of a 10- year, $200-million contract with the U.S. Air Force to provide engineering services and technical support for environmental restoration and pollution prevention at its bases.
In February, Battelle was awarded a$2.4-million Navy contract to verify that contractors have appropriately cleaned up UXOs at two different sites at the former Adak Naval Air Facility on Adak Island, Alaska. Since 2001, the firm also has been involved in helping design, build and support facilities to dispose of range residue at a Marine Corps processing center in Twentynine Palms, Calif.
Firms also note work in cleaning up contaminated sediments in rivers and harbors, the latter as a result of port deepening and expansion to accommodate larger Panamax vessels. Shaw is now designing and will operate plants to dewater and treat tainted sediment from New York’s Hudson River and the Fox River in Wisconsin, says Oakley. “We have 50 different patents for remediation technologies,” he says. “It gives us a competitive advantage.”
Waste cleanup, site assessment and environmental facility planning is a global market for ENSR,since 2005 a unit of AECOM. Bob Weber, ENSR chief and CEO of AECOM’s environmental management group, points to environmental work that has accompanied offshore oil and gas development, particularly in Brazil. “We’re also active in solid-waste planning in China and Malaysia,” he says. To build balanced new economies, United Arab Emirate states “need wastewater and solid waste management strategies and coastal rehabilitation plans, as do former Soviet bloc countries joining the European Union,” Weber adds.
Slowdown
For some U.S.-centric cleanup firms, the commercial construction slowdown is taking a toll. “We had good markets through the first three quarters of 2007, but the fourth quarter and into 2008 we’ve had some significant challenges,” says Bob McNamara, president and CEO of LVI Services Inc., which manages asbestos, mold and lead-abatement work.“Commercial work is off in 37 locations where we have offices.” About half the firm’s revenue comes from private-sector clients.
“Developments won’t go away, butthey will stall until the math gets better,” says McNamara. But he says the firm’s backlog is “at an all-time high” and notes new abatement work in buildings being rehabbed “to go green” and in renovation of powerplants and leadcontaining bridge and highway decks. “We have been lucky with clients getting us involved in schedule-critical projects,” says McNamara.
Concern over skyrocketing energy costs is generating a shift in HDR’s remediation work. “We’re looking at cleanup of properties that are closer in to the heart of the city, where the infrastructure is already there,” says Elwin Larson, executive vice president and national director of its environmental and resources management business group.
Upgrades of industrial and power-generating plants also are pushing more work in air-emissions and energy-efficiency projects. Top 200 revenue in the category rose 17% last year. Current federal regulations, such as the Clean Air Interstate Rule and the Clean Air Mercury Rule, are key drivers behind a strong airquality market, says Garry Hart, director of air-quality business at Black & Veatch...