Environmental firms steadily ease into the next stage of their development

PRIVATE PROFITS
By contrast, the Top 20 private business sector market a robust 45% gain in 1998, to $10.2 billion. Industrial clients are embracing outsourcing and design-build, but there are pitfalls, warns Steve Hough, marketing director for Santa Ana, Calif.-based Carollo Engineers, a water-wastewater treatment specialist. “I don’t think the industry has figured out how to do design-build and protect owners’ interests,” he says. “We have seen several [competitors’] projects recently where treatment plants have been completed, then were not able to comply with treatment requirements.” Design-builders are often not in synch with equipment suppliers, he adds.

Design-build is catching on, says Ken Jacob, CEO of Cajun Contractors in Baton Rouge. “We’re involved in several alliances, with engineering firms, equipment manufacturers and even other contractors to go after design-build work. We’re getting calls all the time.”

Outsourcing has been profitable for Quanterra Inc. The Englewood, Colo., firm has been working in Alaska as an outsource contractor for the Alyeska pipeline, doing environmental and operations work, says Vice President Brad Figley. Pharmaceutical firms also are providing work, he says.

Public sector outsourcing is “a big part of our growth across business lines,” says Diane Creel, CEO of earth tech, Long Beach, Calif. The firm is helping the Navy dispose of property at the shuttered Long Beach naval shipyard. “The government can’t convey property back until they have a plan for asset distribution,” she says. “We’re getting paid to distribute assets and getting a percentage of assets that we sell. It’s a good-margin business.”

Creel has pushed earth tech into the No. 9 spot on the Top 200 with several years of aggressive acquisitions that were funded by parent conglomerate, Tyco International, and says she isn’t finished shopping. The it Group’s DeLuca says he’s not done either, nor does he expect his competitors to quit. Cajun’s Ken Jacob says a shake-out is inevitable, that he’s seen these cycles before. Maybe that’s the point: The environmental industry has reached adulthood.