Environmental Business Journal (EBJ) anticipates growth of 4% for the U.S. environmental industry in 2016, buoyed by the upward trajectory of U.S. construction and infrastructure spending, according to preliminary estimates published in EBJ鈥檚 annual Environmental Industry Outlook edition.
Drawing on the results of EBJ鈥檚 2016 Snapshot Survey of environmental industry executives, this edition ranks the best business prospects for environmental firms in 2016-17, including opportunities by client, service, media and geography.
鈥淓BJ鈥檚 Snapshot survey takes the pulse of environmental companies at the outset of 2016 and checks in with executives regarding business trends,鈥� said Editor-in-Chief Grant Ferrier. 鈥淭ypically environmental executives are slightly more optimistic about future growth, and respondents to EBJ鈥檚 2016 survey forecast average growth for their environmental services firms of 5.6% in 2016, slightly higher than EBJ鈥檚 forecast for the industry overall,鈥� he noted. Final figures for 2015 will be published in EBJ鈥檚 Annual Overview issue in the fall, but compiled company data already points to the industry鈥檚 steady recovery from the 2009 financial crisis when revenues of the environmental industry鈥檚 14 segments declined 1.3%.
EBJ 2016 Snapshot Survey Highlights:
Growth prospects by client sector:聽Out of 33 customer areas, respondents to EBJ鈥檚 Snapshot Survey ranked Renewable Energy as the number one growth prospect in 2016-2017, followed by Healthcare, Water Utilities, Power Utilities, Hospitality, and Port Authorities.
鈥淣otable client categories water and power utilities and ports are among the top six ranked clients in 2016, pointing to infrastructure as the next big driver in the environmental industry,鈥� observed Ferrier. 鈥淓ven renewable energy could be construed as an infrastructure segment in that a significant amount of work is related to transmission, distribution and storage as well as generation assets.鈥� Respondents ranked Oil & Gas, Mining and Primary Metals in the bottom six client sectors.
Growth prospects by service category:聽The top-ranked prospects for 18 services in EBJ鈥檚 Snapshot Survey were Water Recycling & Reuse, Environmental Management Information Systems (EMIS), Green Building, and Outsourcing of Environmental Health and Safety (EHS).
鈥淚t was no surprise to see EMIS systems and services ranked second as it has been the only segment of the environmental industry with double-digit revenue growth for the last couple years, and companies report continued growth in 2016,鈥� said Ferrier.
The trend towards outsourcing the EHS function was reflected in its ranking as the fourth strongest service category, with 68% of respondents rating it as 鈥渟trong鈥� or 鈥渧ery strong鈥� in terms of growth prospects, the survey revealed.
鈥淥utsourcing in all forms has seen a revival recently,鈥� said Ferrier. 鈥淢any environmental contractors note that their client base, particularly in mature environmental industry segments such as water utilities and wastewater treatment works, have retiring technical and management staff and either lack qualified replacement or are reluctant to take on employees, benefits and pensions associated with full time staff. This is giving a boost to EHS outsourcing.鈥�
Growth prospects by media:聽Air Quality, Renewable Energy, Energy Management/Efficiency, Water and Environmental Information led 14 growth prospects by media, according to survey respondents. Air quality work continues to be driven by air toxics, local regulations, advance work for the Clean Power Plan and the transitioning of a number of coal power stations.
Growth in solar and wind surged in 2015 and expectations are even higher in 2016, with the multi-year extension of the Production Tax Credit in late 2015 bringing certainty to developers and financiers. The environmental industry participates in the renewable energy market in the form of EIAs, siting, planning and permitting, in addition to design, construction and being called on to bid on operations & maintenance contracts.
Growth prospects by Geography:聽Regions noted for having the best growth prospects for environmental firms in 2016-17 were headed by Southern California, the Southeast, Northern California and the Pacific Northwest, as property development superseded oil & gas development as a major driver of environmental work. Internationally, India, Germany, Nordic Europe and China offered the best prospects for sales and contracts, according to EBJ survey respondents.
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