Market News

 March 30, 2009
State of the Environment Industry

 The current economic downturn has exacted a heavy toll on many industry sectors. The collapse of the banking and finance system, the humbling failures of the big three North American automakers, and slowdowns in construction and housing market spending have prompted massive injections of government cash to keep the wheels of commerce turning - however slowly.

In the U.S. the Associated Builders and Contractors expects the value of commercial and industrial construction to fall between 10 to 20 percent in 2009, while the National Association of Home Builders forecasts a 25-percent decline in total housing starts.  The market for highway and bridge construction is anticipated to remain stable in 2009, due to increased federal highway spending that has offset declines in state and local expenditures.

Even in the energy sector, mega-projects have been cancelled or delayed and existing projects re-phased to conserve critical finances in the face of tighter capital supply.

While politicians and economists wrestle with multi-billion-dollar bailouts and stimulus packages, leaders of environmental and civil engineering firms - both large and small must continue to look for opportunities to keep clients coming in the door.

With their efforts come a number of questions such as which markets will experience growth? What staff expertise will be needed to take advantage of growing markets or to ensure survival when the markets do improve? What efforts are required to maintain or grow their business in an economy beset with so many problems? Also, will government stimulus spending be sufficient to keep these firms afloat?

GLOBE-Net has reached out to government and industry leaders in an attempt to find answers to these and other questions concerning the state of the environmental business sector.

Overall there is cautious optimism that things will get better, in part due to the massive stimulus plans that have been out into place, and partly due the underlying strength of the North American economies. But that optimism is tempered by concerns that if the economy fails to turn around in 2009-2010, things could become very bad indeed.

As a consequence, many environmental and engineering firms have adopted a ’wait and see’ approach and have held back on hiring or expansion plans. "As with many other sectors of the economy, many of Ontario’s environment industry firms are watching and waiting," says Alex Gill, Executive Director of the Ontario Environment Industry Association.

"Depending on the focus of the firm, some have seen their client base affected by the credit crunch or ongoing challenges facing traditional manufacturers.  Others may have full order books but are holding back on hiring or restraining discretionary spending because they are cautious about what may happen in the next several months.  Overall, we have an industry that is cautious, but optimistic about longer-term prospects."