Recession curtails boom in UK environmental consultancy
23-Jun-09
The UK environmental consultancy sector grew by 9% in 2008 to reach a turnover of £1.46 billion, according to the findings of a major new industry report by Environment Analyst. Although 9% still represents a healthy increase, it also marks a significant deceleration on the average 13% per annum growth of the previous four years (2004-07).
Consultancy is inherently a lagging indicator of economic cycles due to work signed off in the pipeline months in advance, so it was not until the last few months of 2008 when the tide turned and environmental consultancies were suddenly struggling to keep all of their staff busy. It was during this period of uncertainty that Environment Analyst conducted its first annual benchmark survey, with questionnaires completed during the last few weeks of 2008 and first quarter of 2009.
Responses were received from a cross-section of firms, including large multidisciplinary consultancies and small boutique operators – whose combined revenues account for in excess of 35% of the total market.
The Market Assessment - based on extensive Environment Analyst research on top of the benchmark survey results - provides a unique snapshot of where and how the recession is being felt within the UK environmental consultancy sector. It also pinpoints and quantifies several areas of expertise and client demand that are continuing to flourish even during the difficult times.
The data, including an analysis of the leading companies in the sector, are available to Environment Analyst's Market Intelligence Service subscribers.
Of the twelve disciplines which Environment Analyst considers to form the core of the market, the strongest performers in 2008 were climate change & energy and ecological/landscape services – both growing in excess of 20%. Growth in revenues from environmental impact assessment (EIA) and related services also increased above the overall market rate last year, but will be inevitably curtailed in 2009 due to a slowdown in the pipeline of development support work.
Contaminated land downturn
The survey findings confirm that contaminated land, the biggest single income stream for environmental consultancies (at 16% of total market revenues), has taken the biggest hit from the economic downturn of all the major service areas. Around half of the consultancies surveyed were experiencing contracting revenues from this field of work at the time of the survey, while revenues were flat for a further 20%.
Overall, the contaminated land segment did grow by a respectable 7% in 2008 (largely thanks to projects completed in the first half of the year), but is set to fall sharply this year as brownfield development in the commercial sector has effectively ground to a halt in many areas.
A cutback in spend among specific client sectors is also evident from the survey responses. Two thirds of consultancies reported a reduction in revenues from the construction/property sector – with one in ten suffering a drop of 15% or more. Half of consultancies also saw a decline in project spend coming from financial & professional organisations as the banking sector crisis accelerated from the middle of 2008. Revenues from the manufacturing industry were also down or flat for 75% of consultancies.
But it is certainly not all doom and gloom, with demand from both the traditional energy sector (oil, gas and nuclear) and renewables industry still growing strongly for the environmental consultancy market as a whole. The vast majority of respondents were also experiencing growth in government-funded projects, with around a third achieving revenue hikes in excess of 15% or more in this area over the last year. The public sector accounted for just under a third of total market revenues in 2008.
Another positive finding from the survey is that British environmental consultancy expertise is very much in demand globally, with overseas work and projects for international clients accounting around a quarter of the sample’s total UK revenues. Extrapolating these figures to the market as a whole would mean international work brings in revenues of some £350 million on top of UK-sourced contracts. Moreover, consultancies expect to do more international work over the coming months to help offset the softening domestic market.
Top firms
Environment Analyst’s market research has identified over 500 companies active in the environmental consultancy sector, which are estimated to employ more than 25,000 people across the country and handle approximately 77,500 contracts annually.
The sector remains highly fragmented, with some two dozen firms achieving UK environmental consulting revenues in excess of £20 million.
In order of market share, these are:
- RPS Group
- AEA
- Atkins
- RSK Group
- Entec UK
- Jacobs
- ERM
- Mouchel
- Mott MacDonald
- Arup
- WSP Environment & Energy
- Aecom (Faber Maunsell)
- Halcrow Group
- Hyder Consulting (UK)
- MWH
- SLR Consulting
- White Young Green Environmental
- Enviros
- URS Corporation
- Scott Wilson
- Bureau Veritas
- Capita Symonds
- ADAS UK
- Golder Associates (UK)
In the Market Assessment, Environment Analyst concludes that 2009 will undoubtedly be one of the most challenging years these firms have ever seen, turning the idea that the environmental consulting sector is ‘recession proof’ on its head.
Respondents to our survey are projecting an average 7% drop in their revenues in the current financial year over the last, and the overall market is forecast to be flat this year, increasing by low single digits at best. However, areas with strong underlying regulatory and political drivers – such as climate change & energy and waste management – are expected to be more resilient.
- Market Assessment of the UK Environmental Consulting Sector 2009: Executive Presentation is now being distributed to subscribers to the Environment Analyst Market Intelligence Service. The presentation contains 105 slides, including 83 charts, detailing the benchmark survey results, additional research and detailed analysis
- A full list of contents and figures is available for download here
- Environment Analyst would like to thank all those consultancies who took part in our Research Club. They will receive a free summary of research results
Further Information
Register for weekly alerts
Receive these headlines by email: sign up to our FREE weekly alert service: