April 12, 1999—For Immediate Release
New Statistical Results Show 39 % Decline in Environmental Professional Services Sector Between 1993 and 1998
511 out of 3392 closed in last two years
Contact: Cary Perket Phone: 619/488-4760
Minneapolis, Minnesota—Environmental Information Limited (EI), a leading research firm on the marketplace for environmental services and technology, has released its newest statistics on the environmental services sector. EI’s most recent statistical analysis of nearly 3400 environmental professional services indicates that there has been a nationwide 13% decrease in the surveyed service firms between 1996 and 1998. These statistics, in combination with past EI research, indicate an overall closure rate of over 39% between 1993 and 1998. (See attached state by state statistics)
Given the fact that many of the surviving environmental consulting firms have down-sized their operation during this same period, overall annual market demand is seen as having dropped by $2 to $3 billion during this period.
EI Senior analyst Mr. Cary Perket says the situation is likely to continue, if not increase during the next two years, for the following reasons:
The regulated community has completed many of the projects mandated under previous federal legislation. (e.g. underground storage tank program)
There has been limited new federal environmental legislation – without new regulations there is less driving mandates for new projects to replace completed ones
The US Congress has not reauthorized key legislation (e.g. Superfund) – delaying work on current projects
The Clinton/Gore administration's environmental initiatives (e.g. Brownfields and international exports) have produce marginal new demand for the marketplace as a whole
The USEPA’s focus has been on regulatory reform – less stringent requirements typically translates to less expensive projects
State regulatory agencies – under budget constraints – have not been taking new initiatives like in the past
The size of projects has been shrinking, forcing larger firms to pursue smaller projects than in the past and placing larger firms in more direct competition with smaller firms
Fierce price competition has decreased the revenues from individual projects
More sophisticated purchasing by customers has created barriers for smaller environmental consulting firms
Perket summarized "These factors added up to an over supply of environmental professional services in a contracting marketplace that has unattractive pricing. The reality is that this is an inhospitable market for small environmental consulting firms that are not serving unique enduring market niches. "
"In many ways, what is happening in this sector is an indicator for other parts of the environmental field. The decline in the number of firms translates directly to less demand for environmental equipment, software, and information services previously purchased by these firms for internal use. It also indicates declining needs for new environmental equipment since their clients have apparently reached compliance with existing regulations."
Environmental Information Limited specializes in research on the marketplace for environmental services and technology. The statistics in this press release were compiled from the EI Environmental Services Database, a subscription service on Envirobiz (www.envirobiz.com). The database contains information on approximately 8000 varying types of environmental services. Further information on subscribing to the database can be obtained by calling 612-831-2473 ext. 10.
Professional Services Closure Rate by State
Copyright 1999 by Environmental Information Limited.