Strong Bets for 2006


Sometimes it seems like the trends impacting the environmental industry are as unpredictable as a hand of cards drawn in a high-stakes poker game. For example, who could have foreseen events like 9/11 or the hurricanes that hit the Gulf Coast in 2005? Nonetheless, even though we may have our limits as far as predicting everything that's in the cards for the environmental industry in 2006, our review of the current directions in our industry indicates the odds are strong that certain sectors in our field are poised to do well during this new year.

According to ZweigWhite, a leading source of management information about engineering and environmental consulting firms, hourly billing rates for these two groups have increased an average of 17 percent over the past five years. Four percent of that average increase took place during 2005. Additionally, a recent ZweigWhite report points toward the opportunities for engineers and environmental consultants related to homeland security. The report stresses, however, that at this time most infrastructure owners are using these design and construction firms to assess threats and vulnerabilities to their facilities, rather than to design and construct physical security improvements.

Water treatment continues to be one of the strongest sectors in the environmental field. For example, in a recent edition of the Environmental Business Journal, the editors pointed out, "By comparison with other segments of the $240-billion environmental industry growing at 0 to 3 percent, a water sector growing at 4.8 percent certainly appears robust."

These upbeat comments about the water sector are echoed by the analysts at the McIlvaine Company. In a report released in June 2005, the market research group predicted the global market for desalination treatment products in 2005 would hit $2.1 billion and reach an annual growth rate of 9 percent over the next five years. Along the same lines, theMcIlvaine Company released another report in October 2005 in which the firm commented that world sales of water and wastewater treatment chemicals were $17 billion in 2004 and will reach $22 billion by 2010.

The McIlvaine Company also forecasts that the air pollution control market will experience some growth in the near future -- particularly in the area of electrostatic precipitators. China has embarked in the past two years on the construction of more than 100 new coal-fired power plants. These plants will be fitted with dry precipitators to capture fly ash. Additionally, there are a number of new coal-fired power plants being built in the United States that will install wet precipitators to remove sulfur trioxide (SO3) and dry precipitators for fly ash. The McIlvaine analysts predict these new Chinese and U.S. plants will be one of the factors that will cause the world market for precipitators to rise from $3.3 billion in 2005 to $4.5 billion in 2008.

Another growth area related to air quality, according to the McIlvaine Company, is related to the sales of air filters. Worldwide sales of filters to purify recirculating air in homes, commercial buildings, and industrial plants will rise from $6 billion in 2005 to $7.5 billion in 2009. The biggest wild cards in market forecasts are bioterrorism and avian flu. The present prognostications are that sales per year for these problems will total less than $50 million. But a major catastrophe could result in billions of dollars spent for isolation of hospital rooms and commercial and residential buildings.

Even the solid waste management industry might have some limited growth in the coming year. According to the report Environmental & Waste Management Industry Survey, which is published by Standard & Poors, solid waste revenue growth should gradually pick up during 2006. The volume, however, has remained soft in many U.S. regions, and the level of sustained growth remains uncertain, especially in the wake of Hurricanes Katrina and Rita. S&P projects that solid waste-management companies will continue to seek price hikes and surcharges to offset higher fuel costs, fleet upgrades, and additional worker safety programs. As a result, the sector is likely to report modest revenue growth in 2006. Furthermore, with many municipalities experiencing budget shortfalls, S&P expects more privatization and an increased focus by state and local governments on improving recycling rates.

Hopefully, these predictions will help you stack the deck in your favor during 2006 and beyond. We welcome your insights about other trends you see on the horizon. Please e-mail your comments to me. Best of luck to you in the coming year.

This article originally appeared in the 01/01/2006 issue of Environmental Protection.

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