Environmental firms steadily ease into the next stage of their development

GROW OR DIE
The consolidations aren’t through, either, says Joan Berkowitz, a partner in the Washington, D.C.-based environmental consulting firm of Farkas Berkowitz & Co. “Can you survive and not grow?” she asks. “The answer is no.”

The shopping sprees at the top of the listed depleted the ranks of the companies reporting at least $100 million in revenue, from 42 in 1997 to 38 last year. A company has to change as market segments change, says Craig Goehring, CEO of Brown and Caldwell, a water-wastewater firm in Pleasant Hill, Calif. He believes changes in the hazardous waste field are a major influence on consolidation. The hazwaste sector continues to slip in terms of market share. Gross revenue for 1998 topped the 1997 total slightly, $7.8 billion compared to $7.775 billion. But market share continues to slide, dropping from 39% of the market in 1996 to 32% in 1997, to under 30%. As if to underscore the point, the Hazardous Waste Action Coalition recently changed its name to the Environmental Business Action Coalition. The group, a Washington, D.C.-based American Consulting Engineers Council affiliate, says it is responding to clients’ demands that environmental consultants deliver economies of scale by combining remediation and redevelopment.

URS and Dames and Moore were “titans of the hazardous waste industry,” Goehring says. The buyout was “inevitable with the reduction in growth” in the sector, he says. Diversification is an option, he adds, “but Dames & Moore diversified and they lost their company.” Goehring feels comfortable in the middle. The privately held firm, ranked 36th with $111 million in revenue, bought Nashville-based Eckenfelder Inc. last year to bolster its industrial business. Goehring predicts $135 million in revenue this year, with municipal contracts in Atlanta and Orange County, Calif., in place and growth in design-build and information technology work. Bigger isn’t necessarily better, Goehring says: “We haven’t had a customer yet ask us if we’re a billion-dollar company.”