As many western economies continue to struggle in the wake of the recession, top companies in the environmental sector are expanding their global reach through a mix of organic growth and aggressive acquisitions. Within the water and wastewater sectors, competition has been particularly fierce, as firms look to narrow the bidding lists through consolidation and capitalize on emerging economies.
“It’s clear that AECOM and our competitors have moved the focus on global expansion to balance off North America and diversify,” says Robert Andrews, global managing director of Los Angeles-based AECOM’s water business. “The big firms are getting bigger, and the North American firms are getting more global.”
As part of its ongoing growth strategy, Andrews says, AECOM will leverage firms that have given it a regional presence, even if they currently have no water or wastewater capabilities. For example, the company’s acquisition of London-based Davis Langdon, which was completed in August, gives the company a presence in South Africa. Quebec-based RSW, which was acquired by AECOM in September, also works in Africa.
AECOM also is working to expand its water business in the Middle East, where the company already has a strong presence in transportation and vertical building. In March, the company announced contracts for design and construction supervision on two projects in Abu Dhabi.
Englewood, Colo.-based CH2M-Hill is among the big U.S.-based firms hoping to capture more of the global environmental market. John Mogge, global director of business development and planning for environmental services at CH2M-Hill, says the company sees the environmental market—including water services—as an $800-billion to $840-billion opportunity.
“Since the late 2000s, the non-U.S. market has been growing at a faster rate than the U.S. market, so clearly our belief is that the market is very healthy on a global basis,” he adds.
South America is among the emerging markets that CH2M-Hill is exploring, says Peter Nicol, global director of business development in the company’s water group. Furthermore, CH2M-Hill is eyeing “a handful of opportunities” in Columbia, Argentina and Brazil, which will host both the 2014 World Cup and the 2016 Summer Olympics.
Netherlands-based Arcadis already is establishing a solid footing in South America, with operations in Brazil, Chile and Peru. The firm has built much of its business in the region around environmental work related to mining-sector projects. However, Arcadis signaled its interest in expanding its global water business with the acquisition of Malcolm Pirnie; the deal was finalized in January.
Arcadis is part of a consortium that won a water management contract in January with the Brazilian Ministry of National Integration for the implementation of the S�o Francisco River Integration Project. While several companies are looking to expand in emerging regions in the coming years, many are still fighting it out for existing opportunities in established markets.
Although the U.K. has struggled in the global recession, some firms remain optimistic that projects will move forward.
AECOM landed several large contracts in the U.K. this year, including three major projects for Yorkshire Water, as part of a joint venture, with a combined value of nearly $770 million.
Overland Park, Kan.-based Black & Veatch was selected in January for a $150-million expansion of the Mogden Sewage Treatment Works in west London for Thames Water. In October, Sutton and East Surrey Water tapped Black & Veatch to undertake the second phase of refurbishments at the Bough Beech water-treatment works in Kent. The contract is valued at $20 million.
Dan McCarthy, president and CEO of Black & Veatch’s global water business, says he sees the U.K. market “ramping up quite nicely,” especially as the AMP5 water investment cycle begins to gather speed. Although the market has been relatively flat recently, McCarthy says he is optimistic that a global upswing could come in 2011.
“Opportunities in the pipeline are very robust,” he says. “It’s really about the speed at which opportunities are coming out. When you forecast things … it’s difficult to peg exactly when [projects] are going to happen. It’s not that they won’t happen, but when will they happen.”