Environmental Services Take Root : Competition: The industry is quickly maturing as major companies enter the field and new markets open up.

The expanding environmental-services business is beginning to grow up, even as it feels the recession’s cool grip.

Overall growth of the $142-billion industry has slowed. But many sectors will still increase business by 10% to 20% this year--a rate that would bring joy to most U.S. boardrooms.

Meanwhile, competition at home and in new international markets--not least the increased muscle of such big companies as Westinghouse, Lockheed, General Electric, Bechtel and Fluor in the field--are bringing a new sophistication to smaller companies, many of which were begun by engineer-entrepreneurs with little wherewithal.

“The transition now is from the high-growth entrepreneur company to the mature company,” says Richard Golob, president of World Information Systems and organizer of the Western session of the largest conference of environmental business leaders in the country, where much of this will be discussed beginning today in Pasadena.

More than 5,000 U.S. environmental firms now have more than 50 employees, according to the San Diego-based Environmental Business Journal.

“Many of these companies have grown to the point that they need experienced managers and executives to lead them into the more-competitive years ahead,” Golob says.

He expects this shift to be a central topic of the two days of meetings at Environmental Business ‘91: West, at the Ritz-Carlton Huntington Hotel.

Other topics are likely to be basic business concepts for tough economic times.

Grant Ferrier, Environmental Business Journal editor, will report on his publication’s recent survey of 120 environmental companies. One finding: Fully 71% now depend on repeat customers--a dangerous reliance as competition heightens.

Ferrier says the firms’ average marketing budget is 3.5% of total expenditures--dramatically lower than the 15% average for all U.S. service industries.

“Historically these companies haven’t had to go out and drum up business,” he says. “Now they’re finding that there is competition for their current customers.”

With commercial real-estate sales slowed by the recession, such allied tasks as environmental assessments and asbestos removal have fallen off. Companies have also delayed clean-up projects, notes Golob, as government agencies have reduced enforcement efforts.

“I think that regulators feel the kinds of pressures the industries are under,” agrees Steve Pearson, vice president and operations manager of the Santa Ana office of Woodward-Clyde Consultants Inc., a geo-technical and environmental engineering firm with headquarters in Denver.

Yet new markets for the largely regulatory-driven industry keep emerging.

One such new horizon is in cleaning up municipal and industrial storm-drain pollution across the country--a market far bigger than might be imagined, according to Golob.

Assessments of natural-resource damages, following the lead of litigation over the Exxon Valdez spill, are also prompting environmental firms to bring economists on board for their consulting projects.

And many companies have already obtained new air-quality work as a result of recent changes in the Clean Air Act.

Meanwhile, many U.S. companies have lately put a toe into environmental work in new markets in Europe and the Pacific Rim.

The scarcity of hard currency in former East Bloc nations has complicated some deals. Still, some have jumped such hurdles.

“The larger engineering firms have definitely begun to develop their international operations,” Golob says.

Dames & Moore--a Los Angeles-based engineering and environmental consulting company with expected sales this year of $360 million--has successfully expanded into the Soviet Union and the former East Germany.

The firm is performing environmental assessments of property for foreign and domestic investors. It has 110 offices worldwide, including the Middle East, Australia and Japan.

“This business is not having a recession,” says Jill Groswirth, a spokeswoman for Dames & Moore. “We’re dealing with success.”

On other fronts, Bechtel Group Inc., the giant San Francisco-based engineering company, already has 1,000 employees and 9,000 subcontractors working in Kuwait.

It has brought in equipment, supplies, manpower and services worth $750 million in the past eight months.

And that is before contracts are signed to clean up Kuwait’s vast lakes of spilled oil--along, perhaps, with the 350 oil-clogged miles of Saudi Arabia’s coastline.