Shrewsbury, United Kingdom, July 30, 2012 --(PR.com
)-- The latest report from market research firm Environment Analyst concludes that the UK environmental consultancy (EC) sector expanded by a meagre 0.7% in 2011, to stand at £1,227 million. However, this follows two consecutive years of significant declines, heralding a return to stability. Overall, since the market’s peak in 2008, some £219 million (15.2%) has been lost from the EC revenues of firms operating in the market.
The sector is still struggling as the result of both industry cut-backs and government austerity and the curtailing of local authority expenditure, all brought on by three years of wider economic troubles. Between 2009 and 2011, £96 million in public spend was lost from the environmental consulting market. Private sector spending on environmental consulting has declined by £148 million in this period, although most of this took place in 2009 as industry – and construction and transactional related activities in particular – responded quickly to the recession.
In 2011, private sector spending actually returned to growth, at 4.1%, whilst public sector spending – which contributes some 28% of total EC market revenues - recorded another large fall, at 7.2%.
While headcount reductions have become familiar territory for these firms over the last few years, staffing trends among the 32 leading players suggest a modest number of job losses in 2011 at around 2.1% of the workforce – compared with the 6-7% declines during 2009 and 2010.
Environment Analyst research indicates that the top environmental consultancy practices have shed some 15% of their staff (equivalent to around 2,000 job losses) since 2008. The situation now seems to be stabilising with only l5% of firms expecting to axe further jobs this year.
The report’s co-author, Liz Trew, comments: “Although there have been some high-profile casualties of the recession – with those strongly reliant on public sector contracts coming under the greatest pressure at present – the rationalisation and restructuring of many of these firms has left them in better shape to adapt to the changing market conditions, shifting client demands and continued squeeze on margins. The most successful have been able to raise internal efficiency and increase staff utilisation in spite of the backdrop.” As evidenced in the report, there was a 3.2% increase in environmental consulting revenues per head among the top 32.
In terms of service areas, environmental impact assessment (EIA) and sustainable development remains the top income generator for UK environmental consultants, recording a solid 13.8% increase to reach £188 million, following two consecutive years of decline. The reversal in fortune has been assisted by investment in offshore wind farms and other large-scale infrastructure developments such as High Speed 2 and the nuclear new build programme. The number-two service area, contaminated land, also saw a return to growth, with revenues rising 11.2% to £180 million, although it still has a long way to go before returning to its peak value of £216 million seen before the property market crash in 2008.
One major area that did not fare so well was climate change and energy services, which had until last year remained something of hot spot despite the recession. In 2011, there was 12.5% decrease in climate change and energy revenues to stand at £112 million, hit by government austerity and changing priorities within industry. However, this statistic is influenced by one major consultancy that has been historically strong in climate change and energy services, particularly in the public sector. The climate change and energy area is still expected by environmental consultants to offer the greatest opportunity for growth in 2012.
Not surprisingly, overseas markets have also been a focus for growth among those firms able to cultivate an international dimension to their business. Liz Trew comments: “For many of these companies, staff utilisation has been maintained or improved through the deployment of UK staff to work on overseas projects. Our research finds that this element accounts for an average of just under 10% of the UK environmental consultancy revenues of the leading 32 practices.” Furthermore, the international environmental consultancy business of the peer group – including all overseas activities and acquisitions – grew at a healthy rate of 11.3% in 2011.
Back in the home market, overall conditions are set for further incremental improvement in 2012 in spite of the continuing impact of government austerity and uncertainties surrounding economic growth and the Eurozone crisis. Almost half of the firms surveyed report that their Q1 2012 performance was better than they had budgeted for with a further 40% stating growth was in line with expectations.
Environment Analyst is therefore predicting 1.8% growth in 2012 as the UK market continues to rebound, albeit at a modest rate. However, it is not expected to reach its record value of £1.45 billion in 2008 during the next five-year timeframe. Although the signs are that the double-dip recession will continue through this year, our research does highlight that long-term drivers for environmental consultancy remain intact – namely, the need to invest in capital infrastructure projects to stimulate a stagnant economy while delivering on strict legislative targets in the transition to a low carbon, low waste and energy-secure economy.
Contact for information:
Liz Trew, Editorial Director
Tel: +44 (0)20 3603 2106
Stuart Foxon, Research Director
Tel: +44 (0)20 3603 2107