Environmental Protection

A 360-degree View

Our panel of experts provides a well-rounded analysis of where the environmental field stands today


Our first annual roundtable is a no-holds-barred forum exploring issues affecting the environmental industry. From trends in regulations to developments in the job market, our panelists offer their insights. This roundtable is a must-read for every environmental professional who wants to be on top of new directions in our industry.

The participants in this roundtable, which was held in Dallas on September 26, represent some of the leading companies in the environmental field. Environmental Protection’s publisher Glen Stout and editorial director Angela Neville moderated the discussion. What follows is the transcript of the roundtable, edited for length and style.

2007 Environmental Protection Roundtable Participants
Steve Blocki, PE, is vice president of environmental and energy systems division at Dürr Systems Inc. in Plymouth, Mich.
Chip Duffie, JD, is assistant general counsel specializing in environmental matters at Safety-Kleen Systems in Plano, Texas.
Rich Grzanka is regional vice president at Anguil Environmental System Inc. in Mendham, N.J.
Jim Hattler is president and COO at Mercury Waste Solutions Inc. in Columbia, S.C.
Jay Hofmann is president of Trinity Consultants in Dallas.
Mike Mueller is director of marketing at Adventus Americas Inc.
Jim Norgaard is vice president of R& D and product development at Photovac Inc. in Waltham, Mass.
Laura Redmon is marketing manager at Trinity Consultants in Dallas.
Neal Rosen is senior solutions engineer at Environmental Support Systems Inc. in Houston.
Scott Wilson is president and CEO at Regenesis in San Clemente, Calif.
Steve Yakshe is president of Pressure Systems in Hampton, Va.

REGULATORY TRENDS

EP
:What regulatory trends do you predict happening in the areas of air quality, water quality, solid waste management, and hazardous waste management during the next five years?

Rich Grzanka: What we're seeing drive our business a lot is market-based expansions -- plant expansions that comply with existing regulations. So we see our industry more tied to the general ebb and flow of the economy than regulatory promulgation of new regulations as used to be the case.

Steve Blocki: We're seeing a similar trend, and the enforcement of what's in place tends to also ebb and flow with the administration. We see more with Democrats, less with Republicans. The laws aren't changing. However, interpretation, enforcement, and so on is. So it chips away from regulatory environmental issues, more toward the political issue. It's something you're probably going to have to live with.

Rich Grzanka: The Clean Air Act was passed around 1990. A lot of infrastructures are getting about 15 years old. A big part of our market has now shifted to replacement, upgrade, and retrofit as opposed to chasing the new regulation that's coming down the road.

Jim Norgaard: Over the last 10 years, a lot of the rules that have been promulgated are from VOC emissions -- the question is really whether any effects that were intended are really occurring. Ten years after the fact, there's some real concern that what you think should have occurred really has not, and this seems to transcend the politics. I'm not going to argue whether one administration or the other is driving it or culpable here.

But it does seem to me that there is now some investigation about what better ways can be brought to bear to bring these industries into compliance. So to me, that kind of trickles down to ultimately the kind of technology you want to bring to bear as an instrument maker. But at a trend level, I think we're at a decade now and seeking some insight as to just how effective have all these rules really been. It really is not as good as it should have been.

One other thing I wonder about -- I wonder at what point risk and liability management is going to start coming into play. We're going to see insurance companies or the re-insurance companies start to drive regulatory compliance. I'm obviously curious about it, but I wonder if anyone here has any insight into that or whether that type of thing may ultimately affect your various businesses.

Neal Rosen: We're hearing more and more the term "risk.” Instead of people talking about, “We need an environmental management system” or “We need an EHS (environmental, health and safety) system,” they're saying, “We need an operational risk management system.”

The other thing I've seen, and it seems like it's a long time coming, because it seems like it should have happened a long time ago, but it seems like the state agencies and the EPA, are finally accepting and wanting a lot of reporting electronically. …They need to get this stuff electronically so it can be a database and they can process it and get it out quickly on their websites rather than having a pile of paper at the end of each year. So that's a trend we've seen, going to paperless reporting of all these areas.

Jim Hattler: …(A major retail chain) just introduced this huge initiative to try to get everyone to shift to compact fluorescents, and it's striking. We're going to a conference next week in Las Vegas. They said, why did we pick Las Vegas? Well, there are 125,000 hotel rooms. Each one has an average of five bulbs. If they replace their incandescents with compact fluorescents, it's the equivalent of taking 22 thousand cars off the road. It's the equivalent of taking 32 million pounds of greenhouse gases from the atmosphere. Savings on the bulbs are $4 million a year, $21 million over the lifetime of the bulbs. So I mean, it's just an incredible dynamic when you stop to think about it.

Jim Norgaard: The whole RoHS Directive (Restriction of Hazardous Substances) initiative that's going on in Europe and in some states in this country and it's popping up in Asia, speaks exactly about what you talked about with the light bulbs. … There are some huge technological challenges we've got staring us in the face because of these regulations. I saw in California, very aggressively. They basically passed what you have in Europe, but they're only enforcing it at the level of CRTs and monitors and the like. But sooner or later, it's going to extend to a whole lot of other consumer products and eventually into industrial products. It has a big impact at the raw material level and the design level and even to large degree at how products perform, because the different materials have different characteristics that don't really allow the same kind of performance.

Jay Hofmann: Getting back to the implementation of the Clean Air Act. Certainly, the market-based capital programs have reached some general level of acceptance, I guess you can say. Starting with the sulfur dioxide (emissions trading) program that went in place, and now we're looking at other pollutants getting involved, particularly the power plants and that kind of thing. Ultimately, I think you'll see the carbon dioxide presumably go the same way, although that may be still a number of years off at the federal level of the United States, but maybe not. We'll see where that ends up, maybe a different president or whatever or, then again, maybe even Bush in his lame duck years.

Chip Duffie: From the hazardous waste standpoint, there are several things that are happening. Our company president is testifying today or tomorrow on Capitol Hill about electronic manifests, which means at a minimum, that's two years off probably. But it certainly seems like a reasonable thing that will happen.

Just in September, the uniform hazardous waste manifests law went into effect, which from our prospective, you know, handling hundreds of thousands of manifests a year makes it much easier when you don't have different ones to handle (in each state). So another streamlining trend that you will see is to make it easier to regulate things that necessarily cross boundaries and state borders.

One rule that has been promulgated and is now the subject of a lot of debate is the changing of the definition of solid waste. ... In order to be a hazardous waste, you've got to first be a solid waste, and if you can exempt something from being a solid waste by changing the RCRA (Resource Conservation Recovery Act) definition, then you open up a whole new avenue. One side says it’s a much easier way to manage their waste. Another side says we would lose complete control, and all of the good RCRA would be lost in this. So it's a debate that is really divisive, but one that is really being driven by rule change. It's already been promulgated. It's been commented on. EPA has not issued a final rule. It will significantly change the hazardous waste market if that occurs.

Jim Hattler: I agree. Already, there's a trend toward trying to get out of the RCRA requirements -- so essentially, delisting or testing and testing and testing until it's no longer RCRA hazardous, because there is a tremendous paperwork burden.

Chip Duffie: …If you have a waste stream, if you're generating 1,000 containers of waste a month and suddenly that waste becomes nonhazardous, well, you're still generating the same amount of material at the same concentration, the same toxicity. But if it's not hazardous waste, you can count it toward your waste minimization goals. So it looks like you've reduced. You're able to meet a goal on paper and completely drop the amount of waste you're creating. But in reality, it's just fallen out of the regulatory program. It's still being generated. It's still there, so you can understand why there's a strong incentive to push toward more streamlining and less RCRA regulated waste.

ENVIRONMENTAL JOB MARKET

EP: What do you predict the job market for environmental professionals will be like during the next five years?

Scott Wilson: I was struck, I guess, about nine months ago by Forbes magazine and an article on the hottest jobs. I was surprised to see that environmental engineering was in the top three. … I don't know if you've been trying to staff up lately, but we've been staffing up across the U.S. and internationally. It's incredibly difficult to find talented people. And I spoke to Joe Hughes down at Georgia Tech, which is probably one of the best funded environmental engineering programs in the nation academically, and his comment was, “We just can't get students into environmental engineering in the U.S.”

It's just not a job that a lot of people want. They want financial planning, law, health care. … They're not interested in civil and environmental engineering. So to answer the question, I think it's going to be a very robust market -- probably second only to what it was in the ' 80s -- in the coming next five years.

EP: Are you finding that you have to pay more for these environmental engineers?

Scott Wilson: Undoubtedly. It's incredible. You're paying more than I would ever expect to have paid for a mid-level engineer. And that's the same across the nation because we're hiring across the nation.

Mike Mueller: We're hiring ourselves and on our staff right now, we've got citizens from Sweden, Poland, India, and, of course, Canada. We sponsor a student award competition every year at the University of Massachusetts Amherst, and invariably, most of the students are not American. It's uncommon to find interest from experienced Americans coming through our Web site right now.

Neal Rosen: Environmental professionals seem to also really be strong IT (information technology) people, at least the ones that keep their jobs. …They (company management) want to keep the staff less, so they want people that can understand environmental regs and do applicability analysis and that kind of thing, but at the same time, also run their data management system and provide the reporting to corporate and all that kind of stuff, so it becomes sort of an IT environmental department.

Steve Blocki: Almost any industry would have a need for environmental focus somewhere -- recycling, minimizing waste, minimizing energy consumption -- at some point. Or it could be somebody from the law profession that's got an environmental focus. In the more traditional engineer, there's an environmental focus. It's all fragmented throughout business and is not isolated in only the environmental profession.

Chip Duffie: From a local and state regulatory standpoint, we're seeing less and less budget available to hire the good people or to retain people so that the environmental agency folks that drive your permit, drive your compliance -- they're just having more and more to do.

And I'm sure a lot of you deal with remediation. When you're trying to do closure or obtain state buy off, those agency folks are just swamped, and there's too much work for too few to do. … It seems to be in the private sector, it's booming, but on the public side, there's doesn't seem to be enough money at the local or state levels to hire those folks. It's interesting that there seems to be two such divergent paths.

Jim Hattler: In contrast, I have a friend Tom who owns a transportation company in Western New York. In the past, he’d get an inspection every year, and then all of sudden, twice a year, and now, it's like, every other month. Tom said to the inspector, “You're killing me here. What happened to this once a year thing?” He replied, “Tom, you don't understand. Do you know how many businesses I used to inspect that are now shut down or moved elsewhere?”

So this is a case where the inspector is trying to keep his job. He's got to do something. The Western New York economy is not exactly booming.

Steve Yakshe: I wonder what kind of answer you would get to this question if you asked it in Europe. Because I think they've been driving a lot of this, what we see today. We touched on the RoHS initiative and waste elimination, which I believe came out of Europe and many other things that drive a lot of that. I wonder how they would answer that question, because we're obviously just talking about the United States in this discussion.

IN-HOUSE ENVIRONMENTAL MANAGERS’ OUTSOURCING OF DUTIES

EP:What types of functions do you see in-house environmental managers outsourcing more to consultants in the next five years?

Neal Rosen: From the software company perspective, what we see now are firms willing to host the software systems. Now, since many systems are Web-based, they can be hosted outside the company.

Jim Norgaard: I'm wondering if I were a company and I were trying to manage environmental issues, how sensitive should I start being to my legal responsibilities for my doing that kind of work and assuming the burdens of professional competency versus outsourcing it totally to someone else. Can I shift the burden of that competency and my ability to a third party by doing that?

Chip Duffie: That's a deep question, but I'll just tell you that a simple answer is no. You can outsource anything you want, but ultimately, you're responsible for what's outsourced. I think people would fool themselves by thinking they could insulate themselves by outsourcing something.

And maybe I misinterpreted the question, but I think that it's a simple cost issue. If somebody's going to want ado something that they can do cheaper, then they have to live with the product that is generated. You see that all the time. … Do I want to have the responsibility of outsourcing it and live with the product that I get or do I want someone who knows my business? A lot of companies ultimately employ a project manager that owns it, that knows the business and manages those resources. That seems to be the balance, but I mean, to directly answer the question, in-house managers outsourcing to environmental consultants, it's almost unlimited. It's essentially every report that can be done, the collection of data, from the sampling of wells to the waste generation reports. There's the ability -- the market is there already to outsource a lot of that.

Jay Hofmann: When it comes to environmental work, there's a little bit of a unique liability issue there. We found in our staffing business, they'll staff one level below that environmental manager level being generically defined, say, a plant level. But they don't want to staff up to the actual manager. They really want that to be the company man, if you will, or company woman.

Steve Blocki: The specialized trend is outsourcing non-core functions … We're seeing more and more acceptance of the outsourcing, not responsibility, not decision making, but the hands on day-to-day maintenance, troubleshooting, emergency response and so on.

Rich Grzanka: There's a fair amount of ongoing recordkeeping required of air quality permit holders through continuing compliance. That data collection and reporting is often times outsourced.

Jim Hattler: …Waste management is not the company's primary factor, so essentially, they're hiring companies to actually come in and manage that activity so they actually have people on site, who actually do that and part of their reporting is sometimes measured by the amount that they save … The difficult part of the waste business is your return on investment for spending this on disposal is absolutely zero, so it's always the first thing that's targeted when you're asked to reduce costs.

Mike Mueller: From our perspective, consultants are the distribution channel, through which a large percent of our product is sold. That's the fact of our lives. And some of the functions that we see them adopt, that we are benefiting from, include the opportunity to adopt different approaches, and that means trying out innovative quality remediation technology that would replace something that currently didn't work.

A SHIFT IN JOB DUTIES FOR ENVIRONMENTAL MANAGERS

EP
:What changes do you see happening in the near future as far as job duties for in-house environmental managers in industry and the public sector?

Steve Blocki: We see it everywhere -- you've got to do more with less. Somebody said they can't get the funding for a detection system. They can't get the funding to hire the right people … You've got to do it all but can't have more money for more staff, so the doing more with less and getting the managers feeling burdened -- it's an unfortunate trend that I see.

Jim Norgaard: From the demonstration of compliance, the reports, the filings and data management that, too, requires some skill sets that go beyond the normal operator levels. So I guess I just throw the card in for a lot more sophisticated technology and broader professional skills to deal with these challenges.

Scott Wilson: In the last five years or so, I think much of the environmental health and safety manager's responsibilities have shifted to trying to contain the liability in M & A (mergers and acquisitions) work. …There's also been some noted real problems with indoor air quality that people just saw no signs of -- just were blindsided. So I think health and safety managers are now focusing a lot more on the liability associated with both indoor as well as subsurface problems and acquisitions.

Chip Duffie: That's not really a skill set that they had developed. It's more of an on-the-job training. They get thrown into this.

Neal Rosen: I feel like environmental managers today just have more contact with senior management in their companies, like say, marketing could tell something environmentally friendly -- just look at BP’s commercials these days ... So it seems like they just elevated a bit more who they're talking to and who they have to produce reports. Suddenly the CEO might want to know how many environmental spills we had this year and that kind of thing. And then also, the other direction -- it seems like they just have smaller professional staffs, and the compliance activities are being pushed out to operations people. So it's really a hard job is the bottom line.

EMERGING ENVIRONMENTAL TECHNOLOGIES

EP: What do you see as the big growth areas related to environmental products during the next five years?

Steve Blocki: Heavy emphasis, for obvious reasons, on any product with improved energy efficiency -- anytime you can reduce that consumption. The spike in natural gas and oil has subsided a little. However, we don't see the trend stopping yet, which is good. We don't want people to be too short sighted about it. They are giving legitimate attention to the life cycle cost.

One other thing we see that's a little unusual, as the economy changes, factories close. They're doing more out of some factories and closing others. It's freeing up a lot of used equipment that's still in reasonably good operating condition. We see more people purchasing used equipment, reconditioning, and using it. Good from the recycling point of view, and if the energy and efficiency improvements can be incorporated to old equipment, it works for everyone.

Jim Hattler: There's a whole industry that's grown up around brownfield redevelopment, but just like anything else, the drivers are basically location, location, location. So if it's in the middle of Buffalo -- we'll use that since it's near where I grew up -- you're not going to get brownfield development money. And as the real estate market cools, then it's all driven by economics.

Scott Wilson: I think there's a good market for building products. … With regard to indoor air quality, there's now low formaldehyde emissions construction material that's coming out on the market. Really interesting to me are the outdoor building products, like the stormwater runoff products for parking lots that are now getting built that actually retain the water beneath the parking lot. That's cool stuff: The top of the green buildings and roofing material that actually incorporate plant material, higher reflection, less heat absorption, and so forth. A lot of unique products are coming on the marketplace for environmentally friendly construction.

Steve Yakshe: I just want to talk a little about the instrumentation side, since that's what we deal with. What we're seeing is a strong trend toward real time, remote, on-demand products, monitoring systems as well as the software for deployment. So, for example, somebody in California could sit down and monitor something that might be in Virginia and make decisions based on that. It's usually over the Internet.

COMING TRENDS IN ENVIRONMENTAL SERVICES

EP
: What do you see as the big growth areas related to environmental services during the next five years?

Chip Duffie: You're seeing more and more financial products available. And insurance and markets that are opening that otherwise would not have been there previously for things like redevelopment and sales of contaminated real property. The financial markets are no longer alarmed at a Phase One environmental site assessment that has a bad result, as long as it looks like it's something that can be managed. I mean, the market is aware that these things can be remediated.

There is no reason that a finding of contamination should unnecessarily hold up a sale. You can get new insurance products to back up your cleanup, and maybe you will see some of this in your remediation sales that you do. … There are lenders that are much more accommodating to someone who wants to sell a piece of impacted property, than certainly there was historically. And I think that trend is going to continue, because it's a manageable issue with folks who want to move that property or redevelop it.

Steve Blocki: There are demands for control systems to better automate the recordkeeping. That's one example.

Jim Hattler: The approach that we take is kind of a combination of delivering both services and technology. We'll provide a service (disposal of light bulbs that contain mercury) that includes the IT function, if you will. And we recognize a couple of facts. One, you're dealing with an environmental staff that has to do more with less. And secondly, they've got a big enterprise typically that they've got to maintain from a regulatory compliance prospective. That's what the whole concept behind ours is: push the reporting out, yet deliver your product. But one of the side benefits is you can track it by division, by region, by state, by whatever the state may be, so if you use our product, you get this as a bonus.

Jay Hoffman: If you look at the market research that's done, I don't know that you would categorize that any particular market as a “big growth area.” …I think five years from now, we'll look back and say, yeah, there were a couple of areas that were big growth for services. But it's hard to get a handle on that now from my perspective. Nobody seems to be, at least from my world, predicting anything that's 50 or 100 percent growth.

NEW DEVELOPMENTS AFFECTING POLLUTION CONTROL TECHNOLOGIES

EP: From a different perspective, what major trends do you think will affect the manufacturing of equipment used for pollution control during the next five years?

Rich Grzanka: Besides the actual manufacturing of the product, the cost of the raw materials is increasing. For example, our equipment is steel. The ebb and flow of those raw material costs have really impacted our industry both ways. The prices were declining for years and years and years. However, more recently, they've turned the other way. So five years from now, who knows? If some of the economists are correct, the price of raw materials will be much higher. However, if the economies of primarily India and China slow down and the steel demand goes down, too, you might see prices go the other way. So I think you just need to be aware that you need to be flexible in your design and manufacturing base and be able to shift as the market shifts. I think a low cost of production is the goal no matter how you get there.

Jim Norgaard: What I was thinking of may be a little more on the design side. We see a pervasive demand for smaller, cheaper, tougher, and more reliable products. One of the other interesting things is that, as you broaden the kinds of things you detect and as you go for more sensitive detection levels, the underlying technology can be pretty complicated. …The instruments today are, under the covers, incredibly complex. But today if you can say to an operator, just push the big red button that says start, life is good.

In the world we work in, intrinsic safety is a big deal. In fact, it's really a gatekeeper. That has proven to be enormously difficult in terms of getting it engineered right.

Up time of a product is a big deal. So not only does a product have to be manufactured in a durable way, if something goes wrong, the time to repair it has got to be as short as possible. …I've gone to people who run consulting companies who are actually service providers. This is a big deal. They simply have to keep their guys in the field working as much as they can.

Steve Yakshe: On the intrinsic safety stuff, we deal with that as well. And, of course, some of those over in Europe can be quite costly, not just to get the intrinsic safety but then also the infrastructure you build around it, material traceability, things like that. I find that intrinsic safety costs seem to be escalating.

Jay Hoffman: Getting back to the Clean Air Act. Again, I don't know how much this is affecting equipment designers yet, but the United States is now grappling with fine particulates, more so than ever before. You have visibility issues related to those. We're not sure what is going to be regulated. …There's nothing particularly sexy about it, but it seems to me with the power plants coming under the gun over the next decade or so, there's going to be a market beyond the historical VOC (volatile organic compounds) controls.

PURCHASERS OF ENVIRONMENTAL PRODUCTS

EP
: When you're out in the field with products and services, do you find that the decision makers you're calling on are at a higher level?  For example, you're not calling on the compliance plant manager, per se, but you're at a higher level, maybe the business development vice president. Is that a trend that you're seeing, depending on the size of the company? 
   
Neal Rosen:  We definitely are. Just in general, the opportunities we have are all or nothing these days. It used to be that we’d run around and sell our products plant by plant. …Now, a company like Dow is looking for a centralized solution. … So when you enter a room at the customer’s facility, the CEO might at least peak his head in. … The decisions are more up on high, and the meetings we get are more up on high, but it's more risk. It's more risk and more reward for us, because we can win a job with a whole corporation or just have no chance at any money from them at all.
  
Mike Mueller:  Our general experience is that for initial purchases and strategic purchases, the higher level management people are involved. For smaller and repeat purchases, that falls down more to the project manager at the plant level for us.    

Jim Hattler:  For us, we do a lot of our work in retail. And the first question that we ask someone when we're talking on a retail establishment is who is your EHS officer?  And if the answer is, we don't have one, we move onto the next one….

Jay Hoffman:  In the environmental consulting world, often you start out at the plant level, but then you start knocking down a few plants and next thing you know, some corporate environmental person takes notice.

Steve Blocki:  I'd like to note that access to the higher levels is not always preferred. As we try to grow our efforts and service outsourcing, I may want to sell some energy efficiency improvement, maybe take on responsibility of something that's key. The upper management may want that, but they're really not involved. They're tasking the plant to stay in production, to reduce energy consumption, and so on. So the appropriate contact is probably at a lower level.    

Jim Norgaard:  I would argue that I would love to see the broader institutional sale of a product. But in reality, you wind up with lots of small sales, but then you lose the ability to get institutional acceptance. As a small manufacturer, I find it very challenging when you know what you want, but the realities of distribution are not necessarily working in that direction. 

Laura Redmon:  I think one of the things we've seen is that when we're assisting clients with just routine permitting and compliance issues, we still tend to work directly through the plant manager and environmental manager. But as we become more involved in greenhouse gas emissions and positioning strategies, establishing baselines, which are obviously more of a corporation issue, then we're certainly much more in touch with the corporate level staff.   

DEMAND FOR CLEAN WATER

EP: Will the skyrocketing need for clean water, which is driven by population growth and the increased requirements of industry, affect your company?  And if so, how? 
 
Rich Grzanka:  We see an opportunity to develop instrumentation for first level detection, very simple detection for the VOCs. It's pretty much just an initial alarm whether you're at facilities or treatment plants or whatever.

Scott Wilson:  There's a trend in the United States that's disturbing. While we have water problems and everybody acknowledges the shortage of water, there are large bodies of the U.S. that are writing off their ground water resources. In certain areas of Texas, you don't have to clean up the ground water beyond a certain level, because it's not going to be used for drinking. And so while we don't need it right now, we're allowing areas of the U.S. to lay contaminated, well above drinking water standards. … And that's a problem that the National Ground Water Association has taken head on inside the Beltway, trying to get people to become aware of the fact that we may not need that water under Chicago right now, but we might need it later.

Chip Duffie:  One legal vehicle that's being used to combat that problem is the increase of natural resource damage (NRD) claims. That's significant for companies, because you may have settled a Superfund site. You may have gotten closure from a regulatory agency, and it's off your books, and you think you're good to go when, in fact, you can get an NRD claim for what you've already spent, you now are not carrying anything on your books for. So that's a relatively new enforcement mechanism that is aimed at directly that problem. In some states, it's very problematic, because they actually have bounty hunter provisions, which feeds the lawyers, which no one likes. However, that (NRD claims) is a solution to that well recognized problem.  

Steve Yakshe: There is a place on the East Coast that does have a problem, and that's Florida. They have all kinds of water problems. They're sucking their aquifers dry, and they're getting sink holes everywhere. And so they've been working on a lot of desalination. There's been some progress in desalination to bring down the price of the infrastructure. I think desalination offers some tremendous opportunity in the decades to come.     

THE OFFSHORING OF U.S. BUSINESS

EP: What effect do you think the trend of more and more U.S. manufacturers relocating to foreign countries, such as China, India, and Brazil, will have on in-house environmental managers? 
  
Jay Hofmann:  I guess the question was, what do you think the trend will have on in-house environmental managers?  I think at the plant level not much. At the plant level, you're dealing with your local market, your local culture, or whatever. But certainly at the corporate level, these folks have to get broader, in terms of understanding the requirements in China, India, or wherever. And we have seen a few of our customers make that change as they've seen their operations go overseas. One of the impetuses that we have in setting up in China is our customers asking about: Hey, we just acquired this plant in China. Can you tell us anything about what we've got to do over there?

Rich Grzanka:  If you're selling to the organization, you can still make a reasonable presentation, reasonable impact with the corporate people. Now, the second part of the equation is you need to have somebody in the country that can execute the project. So it makes our job harder to sell, and it forces us to follow our customers. If the customer is going overseas, we need to go overseas. But a lot of times -- again, U.S. multinationals tend to have a strong corporate center, not always, but some do -- what you do, you can still impact here.

BUSINESS OPPORTUNITIES ABROAD

EP: What business opportunities do you see in the coming years for U.S. companies that export environmental goods and services to foreign countries?

Steve Blocki:  Durr does a lot of business already in Korea and China. … The opportunity is short term only if you can't really compete on a low cost basis, which seems to be prevalent everywhere in Asia. The threat is that it's a much more Wild West environment where people could see their technology stolen. And what we found is (it's still evolving since the early stages), the way to protect that technology is to attempt to do as much nonintellectual fabrication locally that helps to drive your cost down. Some kind of licensee or partner, a positive relationship -- if everybody is making money and profiting, you can help protect your technology. If you try to jump from partner to partner, there’s a good chance the technology could be stolen. We've already had one partner become a competitor in Korea, which was a little bit painful.     

Rich Grzanka:  I think five, ten years ago, a lot of U.S. multinationals going to Asia, in particular, brought technology with them. A lot of the air pollution control technology was U.S. based. It kind of went along with the multinationals. Now that the economies are developing and they're developing their own homegrown companies, their air permit regulations are stiffening also, and air pollution control technology is less tied to the U.S.
 
Jim Hattler:  And that's why we've never entered in the market, because I guess it's a fairly easy intellectual property robbery issue. And there's no real international law that protects you.

Mike Mueller:  Finding a good partner is going to be the key to success or failure, because even if you get them to sign a noncompete or a nondisclosure agreement that does not protect your rights. And our patents, even though they're filed in many, many countries, don't reach that jurisdiction.   

We're oftentimes asked by companies in other countries, can you send a free sample? Well, what do you want to use it for? 

Because there are right ways and wrong ways to use it, and if we wanted to be sufficient in the field, we have to have some control over what the field engineering process is like. So we don't send those out just willy-nilly when they're requested. We try to further qualify. You'll find very quickly that that kind of separates the wheat from the chaff.

Steve Yakshe:  We market and sell down in Latin America, but you have to be real careful. There are a couple of problems down there. Number one, if you get a distributor, especially an exclusive one, you can get tied into him for years if you're not careful, with the laws that they have. So you have to be real careful with your distribution down there. The other thing is -- it's volatile. If there is opportunity down there for infrastructure development that's needed, now we cherry pick it, because, I'll tell you what, if you invest a lot in it, you might lose it.   

Jim Hattler:  When I was working for Safety Kleen in the past, we actually bought a facility in Ciudad Juarez. I figured we would service the Mexican industry. And we thought, well, we'll invest on the Mexican side of the border. Then all we got were weekly visits and shut down until you paid your fines. So we were in operation less than a year before we shut down the operation. And we said, all right. We're going to service that market from the U.S. side of the border like everybody else. I have no idea what's happening with that plant right now, but it was a short-lived experiment for us.

Laura Redmon:  We really seem to be seeing some interest in the Middle East for our modeling products and also for training on the way we do things here in the U.S. from a regulatory perspective as well as modeling techniques and that kind of thing. Of     course, you know, there's some concerns that go along with that, as far as sending trainers over there, in terms of personal safety and that kind of thing. That's kind of a double-edged sword. 

Jay Hofmann:  On the pure services side -- engineering consulting – there are only a few places in the world where U.S. rates and costs will stand the test of time. That's the Middle East (the modernized part of the Middle East), probably Hong Kong, Western Europe, and that's about it. On the services side, we've got some folks in China, and we're hiring people right there, Chinese labor rates, etc., etc. There isn't much of a domestic market for our services there, but we hope over time one will develop, and we're kind of getting prepared for that.

There's all this focus, of course, on Asia and emerging Asian tigers and these economies. But the Brookings Institute put out a really interesting report a couple of months ago on the transatlantic relationship and showed some statistics that really are eye opening. The report points out that the relationship between North America and Western Europe, particularly, is stronger than those relationships and will be so for a long time. And it cites statistics like three of the lands of Germany, Bavaria, and Dusseldorf, each had GDPs (gross domestic products) greater than any of the four Asian tigers, which are Singapore, Taiwan, Hong Kong, and South Korea. And these are industrialized economies. They have a profound need for remediation of ground water. They've got high living densities. They need to flip the land quickly so that it can be reconverted for other uses.

You have countries like Poland coming into the EU. They are qualifying for billions of Euros in subsidized monies from Brussels for remediation. And so we're seeing these sorts of back door opportunities to sell to former Eastern European countries. A lot of times they are former military sites or industrial sites. They need to convert them.

TERRORISM’S IMPACT ON THE ENVIRONMENTAL INDUSTRY

EP
: What developments do you predict will occur in the environmental field as a result of the continuing concerns about terrorist attacks in the United States?

Mike Mueller:  I read it in the paper this morning. I think they voted for a $35 billion dollar Homeland Security bill. And, yes, there is a compromise that's been worked out to allow Michael Chertoff's department to regulate safety of chemical companies and their manufacturing facilities. And if it's determined that they're unsafe or they're not meeting the new regulations, they could presumably shut them down

Steve Blocki:  You touched on one of the observations that I fear might happen. Increased spending on Homeland Security and a focus on that type of work may give people an excuse to pressure lawmakers to relax regs, relax enforcement of regs, to delay regs. They may not be related, but any time industry has a reason to delay those, they seem to take advantage of that. 
  
Mike Mueller:  I know the American Chemistry Council was concerned that they were unable, through their lobbying, to get the federal laws to pre-empt the state laws. So in places like New Jersey, they still hold industry to the stricter laws that New Jersey will impose on them, rather than some of the federal laws that Chertoff will be administrating.    

Jim Norgaard:  One of the issues that came out in the 9-11 Commission report and certainly the post-Katrina analysis has been the relative inability of various systems to communicate, and you wind up with a disorganized response instead of a coordinated response.

As the designer of portable gear, one of the  things we're now putting more attention on is how can I be transparent to the realties of first responders and other institutional systems that we should assist.

There have been several good products hit the market for monitoring of water quality, whether it’s reservoirs, in pipes, or it’s point of use -- these are first-alert sensing. The water is toxic. There’s something changed and there’s just no funding for those products. These companies really went out on a limb to develop a relatively good technology.

Jim Hattler:  I feel it's a very awful question to ask, but I wonder if that whole world would change if another attack would occur? Is there a cause-and-effect system in our government and our spending?  And while no one in this room, I think, wants to see something happen, I suspect should something happen, the technology you just talked about would be funded in spades, breaking the door down.  

Steve Yakshe:  One of the problems I think you have is that you've really got two sides of it. You've got the distribution system, which is very compartmentalized, and operated by municipalities. Then you've got the water resource where you've got the rivers, the lakes, the reservoirs, the underground aquifers and so forth. One possible solution is that it's left up to the municipalities, and they'll have to fund it themselves. The other one is pretty much controlled either by the states or the Feds, and they already are pretty taxed with other Homeland Security issues. So it may take some event before it actually gets the attention. But I think everybody agrees that it's vulnerable.
   
Chip Duffie:  For a company like Safety-Kleen, we have a fleet of trucks that travel 60 million miles a year distributing flammable and hazardous materials, which could make a pretty vulnerable target. We have to be willing to be responsible and take every step we possibly can to be secure. There are some things you just can't stop, and if someone really wants to take one of your trucks of fuel off the road, they can. And so at what point do you bear such a cost that it becomes unprofitable to even operate?

Neal Rosen:  Often now in the private sector, there's someone in a room who is worried about being NIMS (National Incident Management System) and ICS (Incident Command System) compliant. That never happened years ago. So in the same room, you have the same person that might be worried about making sure you correct minor chemical spills that aren't terrorist attacks.

I don't think it's required right now, but you walk into these places, and it feels different now than walking into a chemical plant in the past. And I think it's more likely that down the road, we're all going to have federal background checks when we walk into these places.

Steve Blocki: We see it at almost every level. Plant access is much tighter now. The routine mom-and-pop plants have even gotten a little diligent. The plants that were already difficult sometimes, as far as gaining access are extremely difficult now. It doesn't really change our business. Like the inability to check toothpaste on a plane, it makes your life a little less convenient.

This article originally appeared in the 01/01/2007 issue of Environmental Protection.

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