i

North Carolina Environmental Business Study

Study Sponsors:

North Carolina Environmental Technologies Consortium North Carolina Alliance for Competitive Technologies

and

6 SELFBHELP - The Center for Community Sev-Help,

Self-Help Credit Union and the Self-Help Ventures Fund

Study Co-Authors:

David A. Kirkpatrick Kirk Works

Kathryn Gavaghan Self-Help

Kirkworks good works for the good earth

July 1996

Top and bottom left photographs provided by Entropy, Inc.

Copies can be down loaded from h ttp ://w w w. n cacts. state. n c. us/lVCA CTs/

i

North Carolina Environmental Business Study

July 1996

Study Sponsors:

North Carolina Environmental Technologies Consortium North Carolina Alliance for Competitive Technologies (NC ACTs) Post Office Box 14482 Research Triangle Park, North Carolina 27709-4482 Contact: Jodi Bakst, Deputy Director, NC ACTs Tel(919)248-4 1 12, Fax (9 19)248-4 105

Self-Help 3 11 Main Street Post Office Box 3619 Durham, North Carolina 27702-3619 Contact: Bob Schall, President, Self-Help Ventures Fund Tel(919) 956-4400, Fax (919) 688-3615

Study Co-Authors:

David A. Kirkpatrick Kirkworks Post Office Box 15062 Durham, North Carolina 27704-0062 Tel(919) 220-8065, Fax (919) 220-9720 Email Dkirkwks@igc.apc.org

Kathryn Gavaghan Self-Help Post Office Box 3 6 1 9 Durham, North Carolina 27702-36 19 Tel(919) 956-4400, Fax (919) 688-3615

This study was conducted for research, educational, and economic development purposes. Neither Kirkworks, the NC Environmental Technologies Consortium of NC ACTs nor Self-Help guarantees the reliability of information we received for the study. We do not assume any liability for any loss resultingfiom, or occurring in connection with, the use of information contained, described, disclosed or referenced in this publicaiion.

Partial funding for this project was provided by the National Institute for Standards and Technology, U S. Department of Commerce, under Cooperative Agreement No. 4H1595.

Copyright 0 1996 by Kirkworks, the Center for Community Self-Help, and the North Carolina Alliance for Competitive Technologies. All rights reserved.

1 North Carolina Environmental Business Study Copyright 0 1996 Kirkworks, SewHelp, and NC ACTs

mailto:Dkirkwks@igc.apc.org

TABLE OF CONTENTS I . INTRODUCTION ...................................................................................................................................... 3 II . EXECUTIVE SUMMARY " 10 III . STUDY METHODOLOGY ................................................................................................................. 19 IV . NORTH CAROLINA ENVIRONMENTAL INDUSTRY SEGMENT REPORTS ......................... 25 ENVIRONMENTAL SERVICES .............................................................................................................. 25 2) WASTEWATER TREATMENT ....................................................................................................................... 28 3) SOLID WASTE AGE MENT .................................................................................................................... 31 4) HAZARDOUS WASTE AGE MENT .......................................................................................................... 34 5) REMEDIATIONANDUSTRIAL SERVICES ....................................................................................................... 37 6) ENVIRONMENTAL CONSULTING & ENGINEERING ...................................................................................... 41 ENVIRONMENTAL EQUIPMENT .......................................................................................................... 45 7) INSTRUMENT MANUFACTURING ................................................................................................................ 45 8) WATER EQUIPMENT & CHEMICALS ........................................................................................................... 48

10) WASTE MANAGEMENT EQUIPMENT ......................................................................................................... 54

............................................................................. .....................................

1) ENWR0"TAL TESTING & ANALYTICAL SERVICES .............................................................................. 25

9) AIR POLLUTION CONTROL EQUIPMENT ...................................................................................................... 51

1 1) PROCESS AND PREVENTION TECHNOLOGY ............................................................................................... 57 ENVIRONMENTAL RESOURCES .......................................................................................................... 60 13) RECYCLING .............................................................................................................................................. 63 12) WATER SUPPLY ........................................................................................................................................ 60 14) ENVIRONMENTAL ENERGY ...................................................................................................................... 68 SUSTAINABLE PRODUCTS AND SERVICES ...................................................................................... 73 15) ALTERNATIVE TRANSPORTATION ............................................................................................................ 73 16) SUSTAINABLE AGRICULTURE, AQUACULTURE. AND FORESTRY .............................................................. 78 1 7) GREEN BUILDING ..................................................................................................................................... 82 19) ECOT~URW ........................................................................................................................................... 87 18) GREEN R E T ~ L ......................................................................................................................................... 85 20) ENVIRONMENTAL EDUCATION AND m m w s ...................................................................................... 90

START-UP AND PlWATE COMPANIES ............................................................................................................ 93 1°K CAPITAL SOURCES ............................................................................................................................. 93 BUSINESS A C ~ V I TIES ..................................................................................................................................... 94 GEOGRAPHIC MARKETS ................................................................................................................................. 95 TYPES OF MARKETS SERVED .......................................................................................................................... 96 IMPEDIMENTS TO COMPANY GROWTH ........................................................................................................... 97

V- ENVIRONMENTAL TECHNOLOGY BUSINESS SURVEY RESULTS ........................................ 92

BENEFICIAL TYPES OF GOVERNMENT ASSISTANCE ........................................................................................ 99 INTEREST IN FOREIGN MARKETS .................................................................................................................. 102 VI . -RECQMMEND ATIONS .................................................................................................................... 104 VI1 . RESOURCES ..................................................................................................................................... 107 APPENDIX A: SEGMENT STATISTICS CALCULATION EXAMPLE ........................................... 113 APPENDIX B: COMPARISON TO EBI PROJECTIONS FOR NORTH CAROLINA .................... 116

2 North Carolina Environmental Business Study Copyright 0 1996 Kirkworks. SeFHelp. and NC ACTS

!

I. Introduction

The Environmental Technologies Consortium of the North Carolina Alliance for Competitive Technologies (NC ACTs) is working to stimulate the development of the North Carolina environmental industry. NC ACTs commissioned Kirkworks, an environmental economic development firm, and Self-Help, the state’s community development bank, to conduct The North Carolina Environmental Business Study to provide an in-depth characterization of the state’s environmental industry.

Study Objectives This study achieves two important objectives. First, it provides an in-depth understanding of all of the types of environmental companies in the state. The study identifies twenty distinct sectors within the environmental industry and reports the unique business characteristics of each sector. The study also highlights the products, services and markets for each of these industry segments.

The second objective of this study is to heighten awareness of the importance of the environmental industry to the state’s economy. By quantifjring the number of companies and their employment, sales, and growth rates, this report documents the significant economic impact that environmental companies have in the state. Indeed, the environmental industry is larger and more diverse than other industries on which the state has focused significant economic development resources. Many North Carolina environmental businesses are enjoying strong growth.

In conducting this study, Kirkworks and Self-Help contacted a range of trade associations and organizations that represent different environmental industry segments. Many of these associations provided a database of their members in North Carolina, along with business information that helped to characterize their industry segment. By developing a comprehensive database and characterization of North Carolina’s environmental industry, this study will help to focus economic development efforts.

Defining the “Environmental Industry” The North Carolina Environmental Technologies Consortium has adopted a definition for environmental technology businesses that encompasses a great variety of North Carolina companies:

“Environmental technology businesses are those that create, develop, adapt and apply products, systems, and services to monitor, eliminate, control, treat and prevent pollution and conserve and restore natural resources. ”

For the purposes of this study, we have chosen to be more inclusive, rather than exclusive, in deJning the environmental industry. All of the companies included in

3 North Carolina Environmental Business Study Copyright 0 1996 Kirkworks, Se,f-Help, and NC ACTS

the study database fit within the definition above. Some are most directly involved in preventing or dealing with pollution, such as testing labs, waste management companies, remediation firms, consulting and engineering companies, and environmental equipment manufacturers. Other companies included in the database provide goods and services beyond those of the typical “environmental technology” company. For example, insulation companies, organic farms, recycling processors, green retailers, and environmental education groups all play a role in resource conservation and environmental protection. We have therefore included these types of companies in the study, as described in the segmentation section below.

By being more inclusive, we hope to encourage a creative approach as to how all North Carolina businesses and institutions can operate in a more environmentally positive manner. Indeed, many of the companies we study here are on the leading edge of moving traditional industries towards more sustainable practices. Examples include ecotourist enterprises within the travel and tourism industry, sustainable foresters within the timber industry, recycling companies within the waste management and manufacturing industries, and solar companies in the energy industry. Environmental companies as broadly defined above are not captured by any set of Standard Industrial Codes (SICS), but rather incorporate the more environmentally innovative subset of companies in many different industries, especially those with major environmental impacts.

Fostering these types of environmental companies in North Carolina will further economic development and job creation in the state. Environmental firms, especially those in conservation, renewable energies, pollution prevention and waste reduction, also help commercial, industrial and residential customers to reduce their operating costs. Strengthening environmental companies can help many different industries, institutions, and homes operate more efficiently by reducing energy, water, waste disposal and environmental compliance costs. Strengthening North Carolina’s environmental industry will also help state companies become more competitive in meeting the environmental standards that are being adopted in many markets around the world.

Segmenting the Environmental Industry In order to develop a more thorough understanding of the more than 3,200 diverse environmental entities in North Carolina, we characterized them based on business activity. For the purposes of this study, we identified 20 environmental industry segments. The first 14 segments are grouped into the industry areas of Environmental Services, Environmental Equipment, and Environmental Resources as defined by Environmental Business International of San Diego, California. The final industry area, Sustainable Products and Services, was included by the study authors to assess six additional sectors. Chapter 11, Study Methodology, explains this segmentation process in more detail. A summary table of the sectors, their descriptions, and examples of clients, is provided in Exhibit I- 1.

4 NO& Carolina Environmental Business study Copyright 0 I996 Kirkworks, SelfHelp, and NC ACTS

Environmental Services 1 ) Environmental

Testing & Analytical Services

2) Wastewater

3) Solid Waste

Treatment

Management

4) Hazardous Waste Management

5) Remediation/ Industrial Services

6) Environmental Consulting & Engineering

Environmental Equipm 7) Instrument

Manufacturing

8) Water Equipment & Chemicals

9) Air Pollution Control Equipment

10) Waste Management Equipment

1 1 ) Process & Prevention Technology

Exhibit 1-1

Testing and analysis of environmental samples (soil, government, environmental water, air and some biological tissues) and remediation contractors

Management and operation of wastewater treatment plants

Regulated industries,

consultants, hazardous waste

Private developments, municipalities & industries

Collection, processing and disposal of solid waste industries

Municipalities & all

Management of on-going hazardous waste streams, medical waste and nuclear waste

Chemical, petroleum and many other industries

Government agencies

Physical cleanup of I Government agencies contaminated sites, buildings and environmental cleaning of - operating facilities I Industry Engineering, consulting, I Industry, Government assessment, design, permitting, project management, O&M, monitoring Waste management

companies I

a t

Instruments for the analysis of environmental samples Governments,

Analytical services,

Regulated companies

Equipment, supplies and maintenance products for the industries delivery and treatment of water and wastewater

Municipalities & all

Equipment and technology to control air pollution

Utilities, waste-to-energy

Industries

Equipment for handling, storing I Municipalities or-transporting solid, liquid or industries hazardous waste. Environmental

in-process (rather than end-of- pipe) pollution prevention and treatment.

5

North Carolina Environmental Business StuaTy Copyright 0 I996 Kirkworks, Self-Help, and NC ACTS

Exhibit 1-1 (cont.)

~~

Production of power with renewable energy. Conservation of energy through energy efficiency, insulation and demand side management

12) Water Supply Delivery of water to end users

13) Recycling Collection, processing, and manufacturing of recyclable or scrap materials

14) Environmental Energy

Sustainable Products and Services 15) Alternative

Transportation Mass transit services and products, compressed natural gas (CNG), electric and other alternative fuel vehicles

16) Sustainable Agriculture, Aquaculture, and Forestry .

Organic f m products, aquaculture products, sustainable timber and wood products

17) Green Building Building products and design services with environmentally positive characteristics

18) Green Retail

19) Ecotourism

Green retail products

Natural food groceries

Ecological tourist sites

Outdoor activities

lo) Environmental Education and Programs

Environmental education, advocacy, and professional services

Private developments, municipalities and industries

Municipalities, citizens

Solid waste companies

Industries

Utilities

All industries and consumers

Commuters, local governments

Company or government fleets

Vehicle manufacturers

Consumers

Organic and natural food stores

Wood products companies

Home buyers, commercial developers, building product retailers

Consumers

Tourists

Citizens, environmental companies

6 North Carolina Environmental Business Study Copyright 0 1996 Kirkworks, SewHelp, and NC ACTS

Study Partners The Environmental Technologies Consortium of the North Carolina Alliance for Competitive Technologies (NC ACTs) is the primary sponsor of this study. The mission of NC ACTs is “. . . to plan, coordinate and evaluate the state’s technology-based economic development efforts and serve as a catalyst in forging strategic partnerships to link support with the needs of new and existing technology and manufacturing firms to ensure North Carolina’s leadership in the worldwide marketplace.” Environmental technology is one industry focus for NC ACTs. This study was commissioned to help inform and provide direction for the Consortium.

The second sponsor of this study is Sew-Help, including the Center for Community Self- Help, Sew-Help Credit Union and Self-Help Ventures Fund. As North Carolina’s community development bank, Self-Help’s mission is to stimulate development in economically disadvantaged communities by providing financial and technical assistance to small businesses, non-profit organizations and home buyers. Self-Help co-sponsored this study to develop a better profile of the environmental companies which it might assist through its financial services. Self-Help is interested in expanding access to capital for small enterprises like those common in the environmental industry. Kate Gavaghan, an environmental consultant with Self-Help, is a co-author of this study.

David Kirkpatrick, the Principal of Kirkworks, is the other co-author of the North Carolina Environmental Business Study. Kirkworks is a environmental economic development firm dedicated to fostering the environmental and recycling industries through creative financing strategies, business assistance, market research, and program development. Kirkworks helps to organize investment forums for recycling companies and conducted the North Carolina Recycling Business Study with Self-Help for the North Carolina Office for Waste Reduction in 1995.

Acknowledgments As noted above, this study was made possible by the sponsorship of the North Carolina Alliance for Competitive Technologies (NC ACTs) and Self-Help. Robert Schall and other staff at Self-Help, and Jodi Bakst, Walter Plosila and the Steering Committee of the Environmental Technologies Consortium at NC ACTs provided excellent guidance and feedback for this study. The Steering Committee members are listed below.

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North Carolina Environmental Business Study Copyright 0 1996 Kirkworks, SeFHelp, and NC ACTs

North Carolina Environmental Technologies Consortium Steering Committee Members

Mr. Alan Rimer, Chair, Blasland, Bouck & Lee, Inc. Mr. Adam Abram, Front Royal Environmental Services Mr. William Adair, Duke Power, Environmental Division Mr. Steve Arella, Cherokee Environmental Group Dr. Robert Bruck, North Carolina State University Mr. Tom Cecich, Glaxo Wellcome Mr. James H. Coley, Jr., DuPont Environmental Remediation Services Mr. John GanZi, Environment & Finance Enterprise Mr. Orlan Johnson, Pilot Ventures Mr. Dave Masters, Thomasville Furniture Industries, Inc. Dr. Fred Pfaender, University of North Carolina at Chapel Hill Mr. Andrew Starzecki, George Goulston Company

In addition, a host of organizations contributed membership datmises, ..idustry studies, background and support for this study, including:

4 4 4 4 4 4 4 4 4 4 4 4 4

4 4 4 4 4 4 4

Bearskin Technology Group, Lawson Huntley Carolina Consortium for Electric Vehicle Systems, Dr. John Patten Carolina Farm Stewardship Association, Marjorie Bender Center for Holistic Resource Management, Stacey McClain Composting Council, Collette Kolodzinski Conservation Council of North Carolina, Diana Frame Employment Security Commission, Ann Colenda and Janice Pierce Energy Division, North Carolina Department of Commerce, Timothy Butler EnSafe, Inc., Keith Johns Ensolve Biosystems, Inc., Donald Kelemen Environmental Business International, Duc Nguyen Environmental Industries Association, Kathleen Sheehan Environmental Resource Program, Margaret Newbold, Fran Lynn and Gina Sanguinetti Fisheries Development Council, Stephanie Stewart Front Royal Environmental Services, Craig Coker Handmade in America, Becky Anderson In Business and JG Press, Jerome Goldstein and David Riggle Institute of Clean Air Companies, Jeffrey C. Smith Land Trust Alliance, Kathy Hamilton National Environmental Training Association, Suzanne Lanctot National Insulation Association, Denise Nevins

8 North Carolina Environmental Business Study Copyright 0 I996 Kirkworks, SewHelp, and NC ACTS

+ Nature Conservancy, North Carolina Chapter + NC Department of Environment, Health and Natural Resources (NC DEHNR),

Steven Berkowitz, Dwight Lancaster + North Carolina Alternative Energy Corporation, M e Katz, Susan Luster + North Carolina Center for Nonprofits + North Carolina Department of Agriculture, Aquaculture Division, Tom Ellis + North Carolina Department of Commerce, Bob Goodale + North Carolina Forest Service, Moreland Guelt + North Carolina Office of Waste Reduction, Michael Shore, Matt Ewadinger + North Carolina Recycling Association and the North Carolina Green Building

Council, Craig Barry and Ramsey Zimmerman + North Carolina Solar Center, Henry Rogers and Larry Shirley + North Carolina State’s Cooperative Extension Service, Wilma Hammett + North Carolina Zoological Park Gordon Clark + Parks and Recreation Division, NC DEHNR, Kim Huband and Lyndal Pearsal + Piedmont Natural Gas Corporation, Greg Johnson + Public Staff of the North Carolina Utilities Commission, Andy Lee + Public Water Supply Section, NC DEHNR, Rick Durham + Rural Advancement Fund, Betty Bailey + Secondary Materials and Recycled Textiles Association, Bernie Brill + Solid Waste Section of the North Carolina Department of Environmental Health and

Natural Resources, Andrea Borenson + Sustainable Agriculture Network, Gwen Roland + Triangle Transit Authority, Jim Ritchey + Underwriters Laboratories + US Department of Transportation’s Alternative Fuel Development Center, Kurt

Ettinger + US-Asia Environmental Partnership, Kate Hawthorne + Water Environment Association, North Carolina Chapter, Cindy Finan + Water Resources Research Institute, Kenneth Reckhow and Jeri Gray

9 North Carolina Environmental Business Study Copyright 0 1996 Kirkworks, Self-Help, and NC ACTS

11. Executive Summary North Carolina’s environmental industry is a large and diverse collection of more than 3,136 private companies with 3,400 locations in the state’. The companies prevent or clean up pollution, conserve material and energy resources, and offer environmentally sound consumer products and services. They range from the high tech prevention, equipment, and engineering firms to water utility, recycling, solid waste, and organic farming companies. Below we highlight some salient conclusions from our research into North Carolina’s environmental industry.

Environmental enterprises employ about 43,000 North Carolinians, including 1 7,000 in environmental service firms, 6,000 in environmental equipment companies, 13,500 in water, recycling, and environmental energy businesses, and 6,500 in companies offering sustainable products and services. The environmental industry in North Carolina generates more than $4.2 billion in annual sales.2 Those companies for which historical sales data were available averaged an annual sales growth rate of ten percent in the last three to five years. The environmental service sectors are larger in North Carolina than expected, based on national averages. Higher than expected numbers of companies and revenues were identified in the testing and analysis, remediation and industrial services, and consulting and engineering segments. Recycling is the largest environmental business segment, with 586 company sites generating almost $950 million in annual sales. The environmental consulting and engineering segment is second largest, with 530 companies responsible for almost $570 million in environmental sales. Sustainable products and services includes some of the smallest segments, including sustainable agriculture, aquaculture and forestry, green building, and green retail. Companies in the alternative transportation and ecotourism segments were difficult to identify, thus industry statistics were used to estimate revenues and employment. The most significant barriers to growth reported by environmental service and equipment companies are an uncertain regulatory climate, Jinancing di@culties, competition and the inability to penetrate markets. Less important barriers to business success are access to a skilled work force and technological impediments. Pollution prevention, waste reduction, resource and energy eficiency, and green design are emerging business strategies to proactively eliminate environmental problems rather than relying on “end of the pipe” treatment solutions.

All analysis for this report was done at the individual company location or entity level, including average sales and employment statistics. Each segment report notes how many companies are branch sites.

For comparison purposes, the state’s biotechnology industry is comprised of 75 companies generating $750 million in sales and employing 10,500 workers. Rani, David, “Biotech ready to multiply revenue,” The News and Observer, May 15, 1996, p. D- 1.

10 North Carolina Environmental Business Study Copyright 0 1996 Kirkworks, Self-Help, and NC ACTS

1

Estimated statistics on the number of company sites, total sales, and total number of employees for each environmental industry segment are depicted in Exhibits 11-1 to 11-5.

Exhibit 11-1 Total Sales & Employment for NC Environmental Industry

2) Wastewater Treatment 3) Solid Waste Management 4) Hazardous Waste Management

Remediatioflndustrial Services

7) Instrument Manufacturing 34 $55 1,040 8) Water Equipment & Chemicals 187 $184 1,520

10) Waste Management Equipment 64 $127 1,180 11) Process & Prevention Technology 56 $58 600 Subtotal - Environmental Equipment 440 $685 6,360

9) Air Pollution Control Equipment 99 $260 2,020

1 5) Alternative Transportation n/a $104 870 16) Sustain. Agriculture, Aquaculture, & Forestry 157 $46 610 17) Green Building 168 $41 640 18) Green Retail 77 $73 1,080 19) Ecotourism n/a $199 1,660 20) Environmental Education and Programs 239 $66 1,610 Subtotal - Sustainable Products and Services 641 $529 6,470 IGrand Total - Environmental Industry 3,407 $4,217 42,930 I

Sales and employment estimates for alternative transportation and ecotourism were derived from industry 3

studies, instead of statistics from segment companies, as described in Chapter IV, Segments 15 & 19. I 1

North Carolina Environmental Business Study Copyright 0 1996 Kirkworks, SeFHelp, and NC ACTS

Exhibit 11-2 1994-95 Employment for Environmental Services Segments

Environmental Services 16,640 NC Employees

1) Environmental Testing & Analytical Services

Treatment 2 Yo

3) Solid Waste Management

20% 5) Remediatiod

Industrial Services

18% 4) Hazardous

Waste Management

4%

r

Exhibit 11-3 1994-95 Employment for Environmental Equipment Segments

Environmental Equipment 6,360 NC Employees

8) Water Equipment &

Chemicals

Prevention Technology

9%

Management Equipment

19%

12 North Carolina Environmental Business Study Copyright 0 1996 Kirkworks, SeIfHeb, and NC ACTS

Exhibit 11-4 1994-95 Employment for Environmental Resources Segments

Environmental Resources 15,250 NC Employees

14) rironmental Energy 21%

13) Recycling 67%

12) Water S 12%

Exhibit 11-5 1994-95 Employment for Sustainable Segments

Sustainable Products & Services 6,470 NC Employees

20) Environmental Education and

21% Progl.am

15) Alternative Transportation

13% 16) Sustainable

Aquaculture, and Forestry

Agriculture,

9 yo

19) Ecotourism 26%

Products 17%

17) Green

10% Building

13 North Carolina Environmental Business Study Copyright 0 1996 Kirkworks, Self-He@, and NC ACTS

In Exhibit 11-6 we present the average and median sales and employment levels for company sites in the different segments. Conclusions that we draw from this data are listed below.

The average sales per environmental company site is about $1.53 million and the average employment is I5 jobs. The “typical” environmental company, as indicated by median, instead of average, values has $500,000 in sales and seven employees.

The smallest entities in the industry tend to operate in the wastewater treatment, water supply, organic farming and environmental education segments. These companies are typically small, locally owned and operated enterprises with sales of a few hundred thousand dollars or less. The largest companies in the environmental industry are in the air pollution control equipment, waste management equipment, ana’ hazardous waste segments. Companies in these segment average more than $2.3 million per year in sales. These companies also have some of the highest average sales per employee, at $141,000 to $164,000 per worker.

Companies averaging between $I and $3 million dollars in sales are found in the environmental testing, solid waste management, remediation, consulting, water equipment, process and prevention technologv, environmental energy, recycling and green retail segments.

Wastewater and water supply companies are primarily small Brms averaging about $300,000 in annual sales and providing services to private developments. Only a small percentage of total water services in the state are operated by private businesses, with all large municipal systems being publicly owned and operated.

Sales and employment data were obtained from individual companies in all segments (except alternative transportation and ecotourism) as outlined in Chapter 111, Study Methodology. For most segments, information was available on more than 75 percent of the companies. This percentage varied by segment, depending upon data sources, as noted in each segment description in Chapter IV.

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North Carolina Environmental Business Study Copyright 0 1996 Kirkworks, SeFHeIp, and NC ACTS

Exhibit 11-6 Average Company Sales and Employment

Solid Waste Management $1,967,000 12.3 4) Hazardous Waste Management $2,489,000 13.6

6) Environmental Consulting & Engineering $1,727,000 18.3 Subtotal - Environmental Services $1,620,000 15.9

5) Remediatioflndustrial Services $13 5 6,000 20.0

7) Instrument Manufacturing $1,972,000 37.0 8) Water Equipment & Chemicals $1,137,000 8.9 9) Air Pollution Control Equipment $2,778,000 22.8 10) Waste Management Equipment $2,347,000 20.6 11) Process & Prevention Technology $1,311,000 13.0 Subtotal - Environmental Equipment $1,795,000 16.4 '

12) Water Supply $384,000 12.3 13) Recycling $1,969,000 17.4 14) Environmental Energy $1,884,000 14.6 Subtotal - Environmental Resources $1,545,000 16.4

1 5) Alternative Transportation d a d a 16) Sustain. Agriculture, Aquaculture, and Forestry $42 1,000 6.4 17) Green Building $3 18,000 4.8 18) Green Retail $2,147,000 26.1

20) Environmental Education and Programs $5 17,000 10.7 19) Ecetoluism Pia a'a

Subtotal - Sustainable Products and Services $639,000 10.2

IGrand Total - All Sectors $1,533,000 15.4

North Carolina Environmental Business Study Copyright 0 I996 Kirkworks, Serf-Help, and NC ACTS

Exhibit 11-7 Sales and Employment Growth

2) Wastewater Treatment n/a n/a 3) Solid Waste Management n/a n/a

5 ) Remediationhndustrial Services 17% 8% 6) Environmental Consulting & Engineering 17% 7%

4) Hazardous Waste Management 13% -1%

8) Water Equipment & Chemicals 9) Air Pollution Control Equipment 10) Waste Management Equipment 1 1 ) Process & Prevention Technology

5% 3 yo 7% 8% n/a 5 yo n/a n/a

13) Recycling I 14) Environmental Energy 8% 5% 7% 7% In Exhibit 11-7 we present annual growth rates of sales and employment for all business segments with more than a ten percent availability rate of historical data.4 Annual growth rates were calculated from employment and sales levels in 1994-95, three years prior, and five years prior and indicate that:

+ All segments showed sales and employment growth, except for hazardous waste management, which showed only revenue growth.

+ Most segments show much stronger sales than employment growth. + Environmental services companies grew more quickly than environmental equipment

or resources companies, for those firms for which we had historical data. In particular, remediation and industrial services and environmental consulting and engineering firms showed strong growth both in revenue and employment.

Historical data was not obtained for more than 10 percent of the companies in Segments 2,3, 1 1 , 12 and 15-20 or for revenue for Segments 7 and 10. Historical data were available on fewer companies than were current data. Hence the rates reported in Exhibit 11-7 have a lower confidence level than the average per company figures reported in Exhibit 11-6.

16 North Carolina Environmental Business Study Copyright 0 1996 Kirkworks, SeIfHelp, and NC ACTS

4

Exhibit 11-8 Average SalesLEmpIoyee

~2) Wastewater Treatment 3) Solid Waste Management 4) Hazardous Waste Management 5 ) Remediatiodlndustrial Services 6) Environmental Consulting & Engineering

$99,000 $161,000 $148,000 $94,000 $86,000

fktbhtal- Environmental Services $1 19,000

17) Instrument Manufacturing $90,000 I 8) Water Equipment & Chemicals I 9) Air Pollution Control Equipment $123,000 $164,000 I 10) Waste Management Equipment

$83,000

n/a I 15) Alternative Transportation 16) Sustainable Agriculture, Aquaculture, and Forestry $94,000 17) Green Building $89,000

$1 12,000 n/a

~~~ ~~~~

(Grand Total - All Sectors

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North Carolina Environmental Business Study Copyright 0 I996 Kirk Works, Self-Help, and NC ACTS

We present average sales per employee in Exhibit 11-8. This ratio ranges from $68,000 to $164,000 among the eighteen different environmental business segments for which we obtained data. As explained in Chapter 111, Study Methodology, these averages were calculated only for those companies in each segment for which we obtained both sales and employment information. We note from the sales per employee ratios that:

+

+

On average, each employee in environmental companies in North Carolina generates about $120,000 in annual sales.

Environmental equipment and resources companies have higher sales per employee ratios than environmental services and sustainable products and services companies. The former companies tend to rely more on capital equipment and resources to generate sales, while the latter companies are more reliant on direct labor and services to generate sales.

Solid waste management, hazardous waste management, air pollution control equipment, and waste management equipment companies all generated sales of more than $I 40,000 per employee.

Environmental education entities averaged the greatest number of jobs for the revenue received, at $68,000 per employee.

Detailed information on each of the twenty environmental industry segments, including sample North Carolina companies, segment characteristics, revenue and employment data, and market trends, is provided in Chapter IV, Environmental Industry Segment Reports.

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111. Study Methodology

For purposes of this study, we applied the environmental industry definition developed by the North Carolina Environmental Technologies Consortium. Thus, our research includes those businesses that “ . . . create, develop, adapt and apply products, systems and services to monitor, eliminate, control, treat and prevent pollution and conserve and restore natural resources.” This definition determined the scope of our research and data collection.

We next determined how to categorize and analyze the many types of businesses that fall within this study population. Other environmental business studies conducted at the state and national level have segmented the industry by resource or waste type (e.g., water, air), by industry clients (e.g., the petroleum industry), or by product or service (e.g., solid waste management). We chose to present our findings working fiom the model used by the Environmental Business Institute (EBI). EBI is a leading research organization in the study of environmental businesses, based in San Diego, California. Perhaps most recognized as the publisher of the Environmental Business Journal, EBI has conducted numerous studies on the international and domestic environmental ind~stry.~

Environmental Industry Segmentation We chose to use EBI’s industry segment definition in compiling and presenting our data. We believe that following EBI’s model facilitates comparison between trends at the state level and those at the national and international leveL6 While several other states have undertaken studies similar to the North Carolina Environmental Business Study, most used a categorization scheme unique to their study. This limits the extent to which one can compare the size and growth of businesses across states and nations. By working with the EBI segments we hope to encourage research standardization within this industry. We also hope that our work contributes to the inclusion of sustainable product and service segments in subsequent studies.

This study is based on the following categories and related industry segments as defined by EBI.’

For further information contact: Environmental Business International, 4452 Park Blvd. #301,

Appendix B provides a comparison of EBI estimates for North Carolina’s environmental industry based

5

San Diego, CA 921 16, (619)295-7685.

on a national model and the estimates from this study. Appendix B also notes where our defmitions of industry sectors vary from EBI’s, especially in that we do not include public entities.

International, Inc., San Diego, California, 1996.

6

The Global Environmental Industry: A Markt and Neea% Assessment, Environmental Business 7

19 North Carolina Environmental Business Stu& Copyright 0 1996 Kirkworks, SelfHelp, and NC ACTS

Environmental Services 1) Environmental Testing and Analytical Services 2) Water Treatment Works (Wastewater Treatment) 3) Solid Waste Management 4) Hazardous Waste Management 5 ) Remediatioflndustrial Services 6) Environmental Consulting and Engineering

Environmental Equipment 7) Environmental Instruments 8) Water Equipment and Chemicals 9) Air Pollution Control Equipment 10) Waste Management Equipment 1 1) Process and Prevention Technology

Environmental Resources 12) Water Utilities (Water Supply) 13) Resource Recovery (Recycling) 14) Environmental Energy Sources

This study also includes several other types of businesses that fit within the NCETC’s definition of the environmental industry. These entities focus on providing environmentally positive products and services as alternatives to traditional products and services, and include:

Sustainable Products and Services’ 1 5) Alternative Transportation 16) Sustainable Agriculture, Aquaculture and Forestry 17) Green Building 18) Green Retail 19) Ecotourism 20) Environmental Education and Outreach

These types of businesses have been included in other efforts to categorize the environmental industry. The Organization of Economic Cooperation and Development (OECD), for example, has been developing a classification scheme that groups “core” mcl “non-core” enviromientd businesses. Corc businesses include traditional goods and services, such as air pollution control and waste water management. The non-core category includes clean products and processes, energy conservation, organic farming and

These segments could be classified under the EBI Environmental Services, Products and Resources categories. We separate them in order to maintain comparability between our results and EBI national data, and to note the distinction between these types of sustainable development businesses and those providing more traditional environmental goods and services.

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sustainable resource development, and ecot~urism.~ Private organizations, such as the US-Asia Environmental Partnership have also developed classification schemes. The development and use of several different schemes within the industry suggests a need for further discussion and standardization in this area.

Data Collection A large and diverse population of more than 3,100 North Carolina companies meet our definition of environmental businesses. We acquired information on these entities from numerous sources, as listed in Exhibit 111-1. Below, we describe our most important sources and the information they provided.

+ Survey of Environmental Technology Businesses. Beginning in March of 1995, the North Carolina Alliance for Competitive Technologies (NC ACTs) surveyed 600 North Carolina environmental technology businesses for information on goods and services produced, size, employment, revenues and growth. NC ACTs received approximately 1 75 responses, primarily from traditional environmental companies (e.g., equipment, remediation, consulting). This detailed survey forms the basis of Chapter V, Environmental Technology Business Survey results.

+ North Carolina Recycling Business Study. In late 1994, Kirkworks and Self-Help conducted a survey of recycling businesses in North Carolina. This study was sponsored by the North Carolina Office of Waste Reduction and provided information on business activities, size, employment, wages, revenues and growth for 474 companies.

+ North Carolina Business Directory. American Business Lists, Inc. (ABL) compiles data on all businesses in North Carolina that are listed in the Yellow and White Business Pages. As much information as possible is initially obtained by ABL through public information (e.g., SEC data, annual reports). ABL then contacts each entity by telephone and surveys them for information on sales, employees, etc. The NC Business Directory furnished us with data on approximately 1,600 entities that met our environmental industry definition.

+ Dun & Bradstreet. Dun & Bradstreet (D&B) is well known for collecting and reporting data on a broad range of public and private entities. D&B compiles this data through mail and telephone surveys. Typically purchased by credit authorities and investors, D&B reports provide data on an entity's employment, revenue and credit history. We were able to obtain D&B data on approximately 1,800 of the companies in our database, and used this information to characterize sales and employment information within the different environmental industry segments.

~~

The Global Environmental Industry: A Market and Nee& Assessment, p.9. 9 21

North Carolina Environmental Business Study Copyright 0 1996 Kirkworks, SelfHelp, and NC ACTs

+ Trade and Professional Associations. We contacted numerous trade and professional associations in order to obtain lists of their members in North Carolina. In contacting associations, we focused on those entities for which we had not obtained good contact data from our other sources.

+ Government agencies. Several government offices were helpful in providing contact information on entities that met our definition of environmental businesses. These included the Employment Security Commission, the Department of Transportation, the Department of Environment, Health and Natural Resources (Forest Resources Division, Marine Fisheries Division, Office of Waste Reduction, Office of Solid Waste Management), and the North Carolina Department of Agriculture (Division of Aquaculture).

In Exhibit 111-1 below, we show the ap roximate number of environmental businesses we

entities we included in our database. In most instances, sources actually provided information on a greater number of companies, or duplicated information on companies already in our database.

Po ~ identified through each of our sources. Note that this table specifies only the number of ~

1,577 445

Carolina Utility Commission 240

x x _ _ I _ _ -" I - __I "x - l̂ l ' North Carolina Business Directory "--- --I-.--II-_-_ "" ~ North " Carolina I _" - -- Recycling -"__I-__ _.- Business _ _ Study I -- ~

Environmental Technology Survey Database1 1 160 Carolina Farm Stewardshin Association 170

"_ l_"""_l - e-

Survey of Environmental Technology Businesses ' 155 The NO& Carolina solar Center 150 North Carolina Recycling Association 120

100 _- --- -- -- - __I - ^-_I_ - - -- I - I I

- . The Water Environment Association Ecodata-Pro: The Environmental and Consulting Database (Direct Contact Publishing) Air and Waste Management Associatibn

80

55 --- I ~ -- I ~ "_ lllil" -I_I_ "" I

- _ - I - I I _ x Dun & Bradstreet 45

40 35 30

Consulting l"".""" Engineers " Council ~ " " I" DE-mR, _I .- I" Office of Socd "I I yzisle " -

"" - " I I DEHNR, Division of Environmental Management

" I" I I - " "" " Water Resources Research Institute I 25

25 - I.-"x ~ I I - ~" DEHNR, Office of Waste Reduction " _ " " North Carolina MasFTransit Association 20

We only include sources that contributed information on ten or more entities. Includes companies that received the Survey of Environmental Technology Businesses, but did not

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Data Analysis Our first step in analyzing the data was to compile basic demographic information on all entities (e.g., name, address, phone number, etc.) into a large “contact” database. We next assigned companies to a particular industry segment based on Standard Industrial Codes (SIC) andor descriptions that we had about company operations. In the absence of such information, we relied upon the entity’s trade association membership or, where fairly descriptive, the company name (e.g., “Air Purifling Systems”) to assign an industry segment.

We then linked the entities in the contact database to tables containing information on their employment levels, revenue, survey responses, etc. These included databases compiled by the North Carolina Recycling Business Survey, the Environmental Technology Business Survey, the North Carolina Business Directory, and the Dun &

~ ~~ Bradstreet database. Each company was assigned a unique ID number in the contact database. Multiple sites of the same company were coded, enabling us to identify single- and multi-site entities. Using the unique ID numbers, we linked the contact database to all other databases in which the entity appeared. This enabled us to pull information from all of our sources when analyzing companies and industry segments.

After completing our analysis, we issued an initial draft for peer review. Through this review process we identified additional environmental companies, eliminated others, and shifted a number of companies from one segment to another. Readers who have reviewed the initial draft of this report will thus note that our segment and summary figures have changed somewhat.

Data Limitations The accuracy and breadth of our industry analysis was constrained by several data limitations. In this section we highlight these issues, and discuss their impact on our findings.

Incomplete data. Our database does not include all of the environmental businesses existing in North Carolina. We will have missed some companies in our data collection efforts; others may have begun business too recently to have been profiled by the North Carolina Business Directory or Dun & Bradstreet. For similar reasons, it is likely that our database contains entities that are no longer in business.

m. . inis lack of information on defunct and start-up businesses ais0 affects our trend analysis. Trends in revenue and employment may look more favorable than is truly the case, as they do not include those companies that have gone out of business. However, the growth of start-up businesses is also not included.

Focus of study. Our study focuses on entities that are primarily environmental businesses, and thus does not include environmental divisions or environmental products manufactured by other types of companies. While we do not have an

23 North Carolina EnvironmentalBusiness Study Copyright 0 1996 Kirkworks, SeFHeIp, and NC ACTS

estimate of the percentage of environmental goods produced by other industries, some studies suggest that could be significant. For example, a survey conducted by the Environmental Business Council of New England found that approximately 17 percent of the region’s “environmental companies” generated less than 40 percent of their revenue through environmental goods or services.’* Our study does not capture many of the entities whose environmental products make up only a small share of their revenues. An exception to this is our analysis of Environmental Testing (Segment 1 ), Consulting and Engineering firms (Segment 6), Recycling (Segment 13), and Green Building companies (Segment 17), which include some companies that are not primarily environmental. For these companies, we used available information to estimate the percentage of total revenue and employment that could be attributed to environmental goods and services.

~~ --+ Reliance on estimated data. Much of our data on current and historkal revenues, employment and wages comes from Dun & Bradstreet and the North Carolina Business Directory. These data are self-reported by the companies profiled.

~ ~ - - - ~

+ Extrapolation from median values. For 916 entities, or approximately 26 percent of the companies, we did not have any data beyond basic demographic information. That is, these were entities that had not been surveyed through either the Recycling Business Survey or the Environmental Technology Business Survey, nor had they been profiled by the North Carolina Business Directory or Dun and Bradstreet. We estimated revenue and employment for these entities based on the median revenue and employment figures from companies within that segment for which we did have such information. This enabled us to assess total revenues and employment for 18 of the 20 environmental industry segments. Note that by using median instead of average employment and sales data to extrapolate total segment figures, we were using a very conservative approach. For example, for the entire company database the average company employment figure is 15, while the median value is 7 employees. Similarly, the average company site sales figure is $1,533,000 while the median company sales amount is $500,000.

+ Independent derivation of estimated data. Average and median sales, employment, and sales per employee figures were calculated independently of each other using best available information for each measure on each company in the database. For this reason, the summary figures do not correlate mathematically with each other but rather each statistic correiaices with the actuai data on companies in the segment. An example of the calculations of these statistics for one segment is provided in Appendix A.

A Profile of the New England Environmental Industry, conducted by Price Waterhouse, LLP, for the 12

Environmental Business Council of New England, April 1996.

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IV. North Carolina Environmental Industry Segment Reports

Environmental Services

I ) Environmental Testing & Analytical Services

Segment Description Environmental testing companies typically provide services to industries, other environmental companies and governments with environmental clean-up or monitoring needs. Services include:

~- -~ + ~ ~- Collectingsamples ~~ ~ ~ at contaminated sites or industrial discharge points; ~- -~ ---~-Ex&wtkg compounds or pollutants of interest from samples and analyzing their

concentrations using analytical instruments in company labs; and + Reporting to customers on levels of pollutants and their relation to environmental or

safety and health regulations or standards.

Most of the laboratories included in this segment concentrate on extraction and analysis, with fewer providing field services. Companies in this segment are largely listed as SIC code 8734, (Testing Laboratories), with a few listed as SIC code 8731, (Commercial Physical Research).

North Carolina Companies We identified a total of 142 environmental testing companies. Nine of these companies have more than one location in the state, for a total of 23 branch offices in addition to their nine home offices. Environmental testing companies comprise four percent of our total database of North Carolina environmental companies. In Exhibit IV.1-1, we display a sample list of these firms. The companies and their branch offices are located primarily in three urban regions of the state, with 44 in the Research Triangle

Aquatech Environmental En-Cas Analytical Labs Entropy Underwriters Laboratories Environment 1, Inc. Hydrologic, Inc. IEA, Inc.

Triangle Laboratories, Inc. Compuchem Environmental Corp.

!ategrated Lzboratou Systems

Park region, 24 in the Triad area, and 23 in and around Charlotte. Some of the companies are wholly focused on environmental testing, while others, such as Underwriters Laboratories, perform a range of laboratory work.

25 North Carolina Environmental Business Study Copyright 0 1996 Kirkworks, SeWHelp, and NC ACTS

Employment and Sales North Carolina has a strong environmental lab industry. Total estimated sales for environmental testing and analytical services companies for 1995 is $161 million, or about five percent of the total estimated environmental industry sales in North Carolina. The companies in this segment provide approximately 2,000 jobs in the state. North Carolina sales comprise a 12 percent share of the $1,692 million national market for environmental testing services as estimated by EBI and the TechKNOWLEDGEy Strategic

M , 1 1 1 & a € €ist of market legers compTed3y EBI, five North Carolina

~-

2) Multiple company sites included in total

A newcomer to the analytical services segment in North Carolina is Sylvanus, Inc. The company promises 24 hour turn-around on tests used to ascertain chemical contamination of soil and water. The company founder, Stephen Friedman, was formerly a vice president of research and development for EnSys Environmental Products. He pioneered the migration of immunoassay tests @om the medical field to the environmental arena.13

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companies appear with combined 1993 lab services revenue of almost $70 million. These companies are Triangle Laboratories, CompuChem Environmental Corporation, Entropy, HydroLogic and IEA. NC environmental testing companies average $1.3 million in revenues and about 16 employees. A few large companies are well above this average, while many smaller niche firms are better characterized by the median statistics of $300,000 in sales per year and seven employees.

Exhibit IV.l-214 1994-95 Environmental Testing: and Analvtical Services Estimates

3) Total estimated segment NC annual environmental sales 4) Total estimated segment NC employees

11) Total number of companies identified in North Carolina I 142 I

$1 61,460,385 2,100

1) Annual saleshompany 1 $1,2:66,100 1 $300;000 2) Number of employeedcompany 3) Annual sales/employee ratio $1 01,000 $62,702

I I 5 ) Annual employment growth rate i 990- i 995 i YO 0%

l3 “Company Hoping to Clean Up Quickly,” The News and Observer, The News and Observer Publishing Company, October 3, 1995.

As detailed in Chap. 111, Study Methodology and Appendix A, average and median sales, employment, and saledemployee figures were calculated independently of each other using the best available information on each company in the database. Thus, figures in the table do not correlate mathematically to each other but rather each statistic correlates to the primary data on companies in the segment.

North Carolina Environmental Business Study Copyright 0 1996 Kirkworks, Serf-Help, and NC ACTS

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We obtained sales information for 87 percent of the companies and employment data for 83 percent. We also obtained sales growth figures for only 9 percent of the 142 companies and employment growth information for 33 percent. The larger employment growth sample showed modest average employment growth of one percent. However, some of the larger companies have experienced very rapid sales growth over the last three to five years, averaging ten percent. Finally, the sales per employee ratio ranged from a median of $63,000 to an average of $101,000.

Market Trends The three major types of markets for environmental testing firms are the environmental industry (51 percent), private regulated industry (32 percent) and governments (17 percent). Environmental industry customers are primarily consulting and engineering

7firmsthat require independent testing and analysis to determine the scale and nature of . - environmental problems and to measure progress. Other environmental industry

customers are in the remediation, hazardous waste, and solid waste management segments. The private regulated industry markets need testing to monitor their facilities and assess contamination problems. All major discharging industries are represented in this market, led by petroleum marketing and distribution companies such as gas stations, petroleum exploration and refining corporations. Finally, governmental markets include local governments that require wastewater and landfill testing, and state and federal governments that need contaminated site testing for private and governmental locations. ’’ The market for testing services can also be viewed by the type of media sampled, as shown in Exhibit IV.l-3. EBI estimates that the US market by media consists of remediation-related testing of soil and groundwater (36 percent), water and wastewater testing (24 percent), hazardous waste (21 percent), solid waste (9 percent), air (5 percent) and other, primarily radiochemical, testing (5 percent).

Hazardous Waste -1.9% 339 298 Remediation 4.3% 602 790 Solid Waste 3.4% 146 181 ‘WaterNastewater 4.WO 388 507 Air Compliance 3.9% 81 103 Other (esp. radioactive) 8.3% 81 135 Total 3.3% 1,636 2,O 14

’’ EBI 2000, p. 225-236. ‘6 EBI 2000, p. 242.

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2) Wastewater Treatment

Segment Description Treating wastewater from residential, commercial and industrial sources is an important part of keeping North Carolina’s streams and rivers clean and conserving the state’s water resources. Most North Carolina cities and towns own and operate their wastewater treatment facilities, while private operations serve smaller developments and some industries. Nationwide, it is estimated that there are 17,000 publicly owned wastewater treatment plants and another 13,000 privately run facilities. ’’ These facilities are responsible for assuring that discharged water meets environmental standards. This large-scale environmental activity may represent an area for new business opportunities, if additional privatization of water supply and wastewater treatment is pursued, as it has

~ _ _ _ _ _ ~ 4” kEurq~c -Thissegmetlt i r r c h c k ~ e s ~ € ~ ~ d &wastewater treatment, which are included in the Environmental Services segments. Businesses which primarily supply potable water are reviewed in Segment 12, Water Supply, in the Environmental Resources section.

North Carolina Companies In this study we quantify only private revenues and employment in the wastewater treatment business. Wastewater treatment operators in North Carolina must be certified by the Water Pollution Control System Operators Certification Commission. approximately 4,500 active certifi in the state. These individuals governmental or private waste facilities. North Carolina is o states that require licensin treatment and collection plant of biosolids application, spray irrigation and subsurface system operators. l 8 Talley Water Treatment Co.

About one half of the homes in North Carolina are connected to septic tanks and fields, rather than to community wastewater treatment systems. Thousands of additional septic systems are constructed each year, while existing systems require pumping and maintenance.” Our database does not include a comprehensive list of the thousands of small septic system and plumbing companies active in the state, and their employment and sales are not fully documented by this study.

” EBI 2000, p. 122. Personal interview, Dwight Lancaster, Technical Assistance and Certification Group, May 3, 1996. Personal interview, Steven Berkowitz, NC DEHNR, May 3, 1996.

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Fifty-four of the 11 1 North Carolina companies identified in this segment are regulated by the Carolina Utilities Commission. These water utilities often provide their customers with water supply as well as wastewater treatment services. Regulated companies with higher reported sewer revenues were included in this segment, while those with higher reported water revenues were listed in the water supply segment in the Environmental Resources section. Most of the North Carolina wastewater treatment companies provide water services for private developments not connected to a publicly owned system, or operate publicly owned wastewater treatment under contract. Many of these companies are listed as SIC code 4952, Sewerage systems.

1) Annual sales/company

2) Number of employees/company 3) Annual sales/employee ratio

___- -.

Employment and Sales We identified 1 1 I wastewater treatment companies in North Carolina, most of which are small, independent operations. Only six companies have documented annual sales over $1 million, with average sales at $291,000. Many of the companies also operate other ~

- ______ __ --businesses, such as water supply, plumbing services, or property management. Average reported sales per employee, at $99,000, are 18 percent below the overall environmental industry average of $120,000. Future industry consolidation and the growth of larger wastewater treatment companies in North Carolina operating multiple sites could help generate larger sales for private wastewater companies and provide sufficient resources and expertise to assure compliance with environmental standards.

~~ ~

$29 1,000 $67,468

4.6 2 $99,000 $64,500

_ ~ _ _ -

Sales information was obtained on 73 percent of the companies in the database, including many of the smaller firms. Employment information was obtained on 24 percent of the companies, primarily the larger firms, yielding a higher average figure of 4.6 employees per company.

1) Total number of companies identified in North Carolina 2) Multiple company sites included in total

1 1 1

0 3) Total estimated segment NC annual environmental sales I $25,6 10,000 4) Total estimated segment NC employees 1 290 I

As detailed in Chap. 111, Study Methodology and Appendix A, average and median sales, employment, and sales/employee figures were calculated independently of each other using the best available information on each company in the database. Thus, figures in the table do not correlate mathematically to each other bat rather each statistic correlates to the primary data on companies in the segment.

North Carolina Environmental Business Study Copyright 0 1996 Kirkworks, Self-Help, and NC ACTS

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Market Trends EBI estimates the total national market for wastewater treatment at $23.4 billion, and the total North Carolina public and private market for these services at $646 million.21 Our figures indicate that the private sector currently has only about a 4 percent share of this total wastewater treatment market in North Carolina. However, with the recent interest in privatization among local governments, several large national and international environmental companies are exploring entering the wastewater treatment business in North Carolina. French and English companies have developed expertise in the private water markets and are expanding to the United States.

Recently, Wheelabrator EOS Inc. proposed to buy and operate Charlotte’s largest wastewater treatment facility. However, city officials turned down the offer after a feasibility study found legal and regulatory diEculties, and projected that sewer rates

need to repay its investment in the facility purchase (with a net book value of $152 million.) Wastewater treatment privatization has proceeded more rapidly in other parts of the country where local governments are permitted to run deficits and have difficulty financing upgrades or new facilities. However, in North Carolina municipalities cannot have deficits. They often have strong credit ratings and are able to finance facilities often at lower rates than private firms.

-w€mM inwease. Md*&ofts-h4aein*t*k w--- ~ ~~- ~~

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Municipal Water Management - “The municipal wastewater market looks more interesting for environmental companies than it has since 1980. Revival of the economy, congressional sewage firnding, Clean Water Act reauthorization [pending], stormwater rules, infrastructure repair, privatization and renewed public concern are the primary market drivers. EPA estimates 70% of U. S. facilities have documented water quality or public health problems, and $I IO billion should be spent by municipalities for wastewater treatment over the next 20 years. ” Industrial Water Management - Overview24 “With over 3,000 industrial and electric utility facilities being classiped by EPA as water

pollution dischargers, the treatment of industrial wastewater presents some exciting possibilities for market participants. Capital expenditures exceed $4 billion annually. I’ stormwater Management - overviewzs “EPA ’s stormwater discharge rules have spawned a multi-billion dollar business. Stormwc&?r-related expenditures hove the highest market growth rate in water management related fields.

EBI 2000, p. 12 1 and EBI States Environmental Exports Forum, North Carolina Profile, p. 1 Grey,Jeri,”The Privatization Prescription: Cure or Potion?”,Urban Water Consortium News, Feb. 1996. Miller, Richard K., Environmental Markets 1994- 1997, Rich. Miller & Associates, Inc., 1994, p.292.

24 Miller, p. 320. Miller, p. 328.

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3) Solid Waste Management

Segment Description Solid waste management companies collect and dispose of refuse from residential, commercial and industrial customers. In North Carolina, solid waste collection and disposal traditionally has been conducted by public sanitation departments within city limits, with most refuse going to publicly owned county landfills. However, with the upcoming requirement that all landfills meet EPA Subtitle D regulations requiring liners and leachate collection systems, many publicly owned landfills are closing due to increasing compliance costs?6 Larger solid waste management companies have developed several large regional landfills to accept solid waste from a range of public and private sources.

2 Many large and small private waste hauling companies collect refuse from residential customers in rural and unincorporated areas. In urban areas, cities are beginning to contract or allow open market collection of solid waste from commercial and industrial customers. Solid waste collection companies also have diversified into recycling collections. Counties and cities have implemented curbside and drop-off recycling collection programs across the state, often contracting with solid waste management companies. Local governments were charged to achieve 40 percent waste reduction by 2001 by the Solid Waste Management Act of 1989 and follow-on state solid waste -legislation. Only a handful of waste-to-energy facilities operate in the state, handling a small fraction of total solid waste.

North Carolina Companies

- Industries (BFI), Waste Management, and more recently Republic Industries, have been active in acquiring smaller, locally owned solid waste companies. The growing consolidation in this segment is indicated by the fact that 69 of the 274 company sites listed in our database are branch sites of larger companies.

American Refuse Systems Inc. BFI Waste Systems Cleveland Container Sewice Inc. D&L Waste, Inc. GDS 1nc.l Republic Industries Waste Enterprises Waste Industries, Inc. Waste Management, Inc, The 274 companies identified in North Carolina I

represent eight percent of our total environmental company database, with only the environmental consulting and engineering and recycling segments having more

Subtitle D of RCRA outlines standards for treatment and disposal of non-hazardous, non-industrial 26

waste. 31

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companies represented. Collection and processing companies that are primarily recycling operations are included in the recycling business segment. Companies in the solid waste management segment are often characterized by SIC code 4953 (Refuse Systems).

Employment and Sales Average company or branch site sales were about $2 million, with a broad distribution of revenues between the national, regional and smaller local firms. Average employment for documented companies was about 12 employees per company. Sales and employment estimates were obtained for 93 percent and 94 percent, respectively, of the solid waste companies.

Exhibit IV.3-227 1994-95 Solid Waste Management Segment Estimates

______--- - - __ __

11 ) ~ n n u a l sales/company 1 $1,967,000 I $750,000 I 12) Number of employeeskompany 7 I 13) ~ n n u a l sales/employee ratio 1 $161,000 I $107,143 I

We estimate total private solid waste management sales in the state at $515 million and employment at about 3,300 jobs. EBI’s national model predicts total public and private solid waste management revenues for North Carolina at $664 million. The EBI estimate likely underestimates the total state solid waste market (or we overestimate the private solid waste market), since public sector operations are still predominant in most North Carolina cities. Thus, the private sector share of the total market should be lower than the 77 per cent share indicated by these two estimates.

There is significant overlap between Solid Waste Management (Segment 3) and Recyc!ing (Segment 13). We hzve included dl waste hauling companies in Segment 3j even if they operate recycling collections, material recovery facilities (MRFs) or composting operations, since the majority of their revenue is still tied to traditional solid waste collection and landfill disposal. However, firms which specialize in recycling

As detailed in Chap. 111, Study Methodology and Appendix A, average and median sales, employment, and sales/employee figures were calculated independently of each other using the best available information on each company in the database. Thus, figures in the table do not correlate mathematically to each other but rather each statistic correlates to the primary data on companies in the segment.

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collection, processing, and manufacturing are included in Segment 13, since they are primarily involved in recovering and conserving resources instead of providing environmental services as in Segment 3. In this segmentation we differ somewhat from Environmental Business International, in that they include recycling collections, MRF and composting operations in their solid waste management segment.

Markets The privatization of solid waste disposal will likely continue in North Carolina, given the difficulty and cost of siting new landfills and local government budget constraints. Private solid waste management revenues will surely increase with a larger share of landfill tipping

~ fees and transfer station operations fees going to private firms. A recent U. S. Supreme Court decision29 makes it more difficult for local

_ _ ~ ~

_____ - _ _

Landfilrs - “There are a wide range of business opportunities associated with land$ils, inciuding operations and management, privatization, construction, methane recovery, closures, andlandjli mining. ”

~~ ~~~~

governments to direct the flow of solid wastes to landfills or transfer stations where they can assess a tipping fee. This inability to enact “flow control” ordinances is inhibiting the development of new publicly owned disposal capacity. Also, the trend towards contracting for recycling collections provides private companies with the opportunity to privatize combined recycling and solid waste collections for North Carolina cities and counties. This should result in greater collection and processing efficiencies, and lower overall solid waste system costs.

Commercial Collection Waste-to-Energ yhncineration

Miller, p. 35 1 . C&A Carbone vs. Town of Clarkstown, NY, May 16,1994. EBI 200, p. 259. (This table excludes MRF revenues of $1,900 million and composting revenues of

$285 million, which EBI includes in the solid waste market, but we include in Recycling, Segment 13)

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4) Hazardous Waste Management

Segment Description The hazardous waste management (HWM) industry is comprised of companies that are authorized to handle, treat, store, recycle and dispose of hazardous wastes. Wastes are deemed hazardous based on the Resource Conservation and Recovery Act (RCRA) Subtitle C, which covers several hundred specific contaminants, as well as characteristic wastes which are hazardous based on their reactivity, corrosivity, flammability or toxicity. Medical and nuclear wastes are also regulated as hazardous.

Several different types of HWM companies exist, including waste haulers, treatment facilities, and owners/operators of Subtitle C disposal facilities. In many instances,

waste on-site. In other instances, separate HWM firms may serve customers who do not own and operate their own Subtitle C facilities. In these instances, a generator’s hazardous waste stream may be too small to warrant treatment on-site, Alternatively, generators may find off-site treatment to be more economical for the wastes they generate. Many HWM firms also provide environmental testing in conjunction with waste collection and disposal.

rrfthnt_ ~ . . . ~~~~ ~~ _~ c ~ ~ * ~ ~ t e ~ ~ ___ __ ___ ___ - ~ _ _ _ ~

Farkas Berkowitz and Co. estimated that the 1992 market for off-site hazardous waste services was distributed as follow^:^' + 25% - Incineration + 20% - Landfilling and deep well injection + 25% - Solvent recovery and fuel blending, including cement kilns + 30% - Other treatments, including stabilization, recycling, physical detoxification,

chemical detoxification and biological detoxification.

HWM companies fall within several SIC codes, including 4953 (Refuse Systems), 5093 (Scrap and Waste Material) and 873 1 (Environmental and Ecological Services). To some extent this industry segment overlaps with companies in Remediation and Industrial Services (Segment 5), as a number of larger, vertically integrated companies involved in site remediation also treat and dispose of hazardous waste. The industry also overlaps somewhat with Solid Waste Management companies (Segment 3). Here again, a number of the larger firms provide both solid and hazardous waste management services.

North Carolina Companies Within North Carolina, we identified approximately 66 HWM companies, representing about two percent of our total database of environmental businesses. Ten of the 13 largest national hazardous waste treatment and disposal companies have branch ofices in

Miller, p. 4 18. 31 34

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North Carolina. These include Allwaste, Chemical Waste Management, Clean Harbors, Envirosafe, Laidlaw, OHM, Republic Environment, Rust, Rollins, and Safety Kleen.

2) Multiple company sites included in total

A geographical review reveals that many of these companies are located in Charlotte (20 percent) and the Triangle area (30 percent). In Exhibit IV.4-1 below, we provide a sample of HWM companies in North Carolina.

1

data, this industry segment employs about 700 North Carolina residents. The typical HWM firm employs six to 14 people. We estimated "11 sales in-this segment

____ $125 million in 1995. This is somewhat below the state estimate of $157 million developed by EBI using their national model. The HWM segment appears to be in the mid-range of all of our industry segments, with sales falling

~~

3) Total estimated segment NC annual environmental sales

Envirochem Environmental Hazards HES Hazardous Environmental

Laidlaw Environmental Services Matrix Environmental Technologies WMI Medical Waste

~ ~~

$125,340,000

between $87,000 and $148,000 per employee. This is comparable to the EBI national estimate of $120,000 in sales per employee for this segment.

Exhibit IV.4-232 1994-95 Hazardous Waste Management Segment Estimates

1) Total estimated segment NC employees

11) Total number of companies identified in North Carolina I 66 I

690

5 ) Annual employment growth rate 1990-1 995 -1% 0%

1) Annual saleskompany $2,489,000

2) Number of employeeskompany

3) Annual sales/employee ratio __-

$148,000 I $87,319 - ____ ~- ____

4) Annual sales growth rate 1990-1 995 I 13% I -1% I - 1 I

As detailed in Chap. 111, Study Methodology and Appendix A, average and median sales, employment, and saledemployee figures were calculated independently of each other using the best available information on each company in the database. Thus, figures in the table do not correlate mathematically to each other but rather each statistic correlates to the primary data on companies in the segment.

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Markets The HWM industry has traditionally been driven by environmental regulations (e.g., RCRA, the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), the Toxic Substances Control Act (TSCA)) that mandate certain forms of treatment and disposal for hazardous wastes. Although disposal standards have been relaxed for some de minimus and de micromus (Le., very low concentration) characteristic waste streams, in general hazardous waste regulations apply to most industrial waste streams, and treatment and disposal traditionally have been very costly. Cost and liability avoidance has thus been driving waste minimization efforts across industry sectors, reducing the volume of hazardous waste streams. According to EBI, volumes of hazardous waste disposed off-site have declined by ten percent over the past two years. Other studies suggest that off-site waste streams could continue to decline by as much as

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EBI estimates that the national HWM industry peaked in 1992 - 1993 with annual sales at close to $9 billion. This followed a period of industry expansion, during which Subtitle C landfill capacity increased. Over the next decade, lower volumes of hazardous waste, coupled with greater disposal capacity, are expected to reduce sales to about $5.5 billion, a decline of nearly 40 percent. While greater

Medical Waste Management - Overview34 “The market for infectious waste management is strong, but regulatory and competitive pressures point to increasing consolidation in the coming years. Price competition and waste minimization programs will hinder Jirture market growth rates.

waste minimization is certainly a positive trend for industry and the environment as a whole, it does translate to a shift of markets from the HWM segment to the Process and Prevention Technology segment (Segment 1 1) and Environmental Consulting and Engineering segment (Segment 6). Our data indicate some leveling off in employment in North Carolina’s HWM industry. We did not obtain sufficient historical data to analyze revenue trends in this segment.

EBI 2000, p. 15. Miller, p. 444.

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36 North Carolina Environmental Business Stu4 Copyright 0 I996 Kirkworks, SeFHelp, and NC ACTS

5) Remediatiodlndustrial Services

Segment Description The remediation and industrial services industry can be divided into three sub-segments:

+ Site remediation, which includes clean-up of contaminated areas, and comprises about 40 percent of the industry at the national level;

+ Abatement services, which mostly consists of asbestos and lead removal, and comprises another 40 percent of the industry; and

+ Industrial services, such as industrial facility, equipment, and storage tank ~~ -~

~ ~~

-_ -

Companies within this market segment serve both public and private customers. Private customers include all types of industrial facilities that may choose to contract for cleaning services, as well as companies that own contaminated sites that must be remediated. Most of the public sector work in this market segment involves site remediation at large government facilities, such as DOD and DOE sites.

Companies within this market are often listed under SIC codes 1799 (Specialized Trade Contractors), 8711 (Engineering Services), and 7699 (Tank Cleaning, Lining and Coating). The remediation and industrial services market overlaps with several other market segments, most notably Hazardous Waste Management (Segment 4), Consulting and Engineering (Segment 6), and Analytical Services (Segment 1). Overlap within this industry is increasing, as companies within mature and declining markets move to expand services into new markets.

North Carolina Companies Within North Carolina, we identified about 170 remediation and industrial service companies, 15 of which are branch facilities. These companies represent about five percent of our total database of environmental businesses. Based on our data, it appears as though 50 percent of these entities are remediation companies, 30 percent specialize in abatement, and 20 percent are industrial hygiene entities. This is not significantly different from the industry profile at the national level.

A geographical review reveals that these companies are widely dispersed throughout the state, although a higher percentage are located in Charlotte (1 8 percent) and the Triangle area (28 percent). In Exhibit IV.5-1 below, we present a sample of remediation and industrial service operations in North Carolina.

37 North Carolina Environmental Business Study Copyright 0 I996 Kirkworks, SeFHelp, and NC ACTS

North Carolina residents, with most firms employing seven to 20 people. Based on available data, this segment generated revenues of approximately $230 million in 1995. Both our employment and revenue figures are somewhat higher than estimates

Y

Asbes-Tec Cherokee Environmental Group Contaminant Control Inc Demolition & Asbestos Removal DuPont Environmental Remediation Services EME, Inc.

developed by EBI for North Carolina using their national model ($185

~~~~ ~ _ _ _ ~ ~ - - ~ millha-md 2,147 ~ Eer employment, respectively) It is possible that EBI’s model does not account for the fact that remediation efforts in the Southeast generally lag behind those of the Midwest and Northeast, thus causing HWM segment growth for this region to occur more recently.

~ _ _ _ _ .

Average annual sales in the remediation and industrial service segment ranges from $75,000 to $94,000. This is comparable to EBI’s ratio, which estimates sales at $86,000 per employee for this industry.

Industry Markets and Trends The remediation and industrial service companies serve both private and public clients, and as such respond to a range of industry drivers. In this section on markets and trends, we discuss the three sub-segments of the remediation segment separately.

The site remediation market, which represents about 50 percent of this segment in North Carolina, grew dramatically with the advent of the CERCLA (Superfund) and RCRA statutes in the early 1980s. The liability rules of these regulations, which make all owners joint and severally responsible for site clean-up, have spurred investigations and clean-u