Environment Sector Profile - Southeast USA

Sector Overview - Environment

The US accounts for the largest share, 73%. The global environmental industries market, which is valued at $800 billion, generates a variety of always evolving technologies, products and services.

The environmental sector in the SEUSA consists of firms, large and small, with a presence in all six states that is typically proportional to their populations. Georgia is by far the biggest, due to its population and to the concentration of consulting engineers who reside in Metro Atlanta to use its mega airport to fly anywhere in the US and be ready to meet with clients by 10:00 AM. Most nationally known US environmental engineering firms, and many from Canada, Europe and Asia, have executed projects in Georgia, the Carolinas and Tennessee, followed by Alabama and Mississippi. Some Canadian firms have local operations, including Golder, Stantec and Morrison Hershfield.

Georgia, Alabama, Mississippi, Tennessee, North Carolina and South Carolina have seen great development and expansion in the Southeast USA, much of this having occurred post WW II. The region, which boasts approximately 35 million inhabitants, has been a major transfer destination for companies and individuals since the 1960s, as manufacturers and service providers have moved their operations from “Rust Belt” to “Sun Belt” states. Great population growth, the accompanying infrastructure development, and the presence of a large number of military bases have resulted in significant environmental degradation in all sectors - corporate, governmental and military.

Market and Sector Challenges (Strengths & weaknesses)

Expert forecasters such as Robert Murray, Sr. VP of McGraw-Hill’s econometrics unit, feel that most segments of environmentally related construction will continue to be strong for the next 12 to 18 months, though spending may abate somewhat in the 2009 period. McGraw-Hill defines “US Public Works - Environmental” as projects involving the engineering and construction of sewers, dams/water resources and water supply systems. The outlook for all of these is “strong” to “very strong” through 2008. Sewers, dams/water resources spending will reach nearly $16 billion and water supply systems $12 billion in 2008. The related activity of highways and bridges, many of which require extensive environmental review before they can be built, will top $55 billion in 2008.

The SEUSA is home to 55 military bases for the Army, Air Force, Navy, Marines and Coast Guard; some have operated for 100 years or more. Many will be closed, or are already in the process of decommissioning, due to decisions handed down by the BRAC - Base Realignment and Closure Commission. Long existing environmental remediation challenges must be addressed in order for these bases to comply with Federal and State regulations, so excellent opportunities exist for Canadian firms with skill sets that position them to take on large brownfield projects created by the closing of these bases, plus the plethora of small to large municipal brownfield projects spread among more than 70 MSAs (metropolitan statistical areas) that comprise the bulk of this region’s urban centers. Given the expected doubling of populations in many metropolitan areas over the next 20 to 25 years, the outlook for Canadian environmental equipment and services industries is already great and constantly expanding.

Looming close on the horizon in Atlanta alone are three major brownfield projects, the largest of their respective types in the USA, that could make use of - among others - Canadian in-situ soil remediation and fresh water technologies, processes and machinery. These include BRAC projects Fort McPherson and Fort Gillam representing respectively 487 acres and 1427 acres. Also high on the list is the unique, one-of-a kind Atlanta Beltway comprising 1,400 acres in a 22- mile long corridor ringing the city inside of the existing beltway, I-285.

The execution of many major projects, including the enormous water and sewer replacement project of over $4 billion, and its airport’s fifth runway and seventh terminal expansion, making it the world’s largest by several measures, have put Metro Atlanta at the forefront of SEUSA cities. Add to this a myriad of residential, commercial, industrial, healthcare, education and incarceration projects completed and still in the pipeline throughout the entire region, including the rebuilding in the GO (Gulf Opportunity) Zone due to hurricanes Katrina and Rita, and one can easily see the potential for Canadian suppliers of just about any environmental sector product or service.

Sales strengths of Canadian exporters of environmental products and services lie in the correct perception that their products are of high quality and therefore a good value. There is overseas competition from firms in Europe, Japan and other developed nations. That said, rigorous usually similar US and Canadian codes and standards create demand for products and services that meet these costly, always evolving requirements and performance tests. Strong existing relationships among Canadian suppliers and US buyers and specifiers, that have been forged over many decades, create high market entry costs for off-shore firms.

Canadian SME environmental services and products firms can position themselves to deliver their products via joint ventures, ad hoc relationships, and/or other means of working together with SEUSA firms. Canadian products manufacturers could, in some instances, seek out US partners to invest in, do share swaps with, or form other types of enduring business alliances that would give them a better, quicker market profile than they would have if starting from zero. Larger firms establish, as many already have, branch or subsidiary offices over which they have full control.

An area of still enormous opportunity is the GO Zone (Gulf Opportunity Zone) in the states of Alabama and Mississippi, both of which offer long term environmental assessment and remediation opportunities resulting from Hurricanes Katrina and Rita. Though no longer in the daily press, GO Zone will provide significant employment and export markets for many years to come. And when the next big storm or storms hit, Canadian firms that have established a solid presence in both of these states will reap the benefits.

The six-state SEUSA region is dynamic and robust, and will be for many decades to come. It is an excellent place in which to do business and a prime market for Canadian environmental science, products and services exporters endeavouring to increase their market share in the US.

Environment Sub-Sector Identification

The environment breaks down into sub-sectors, the major ones being air, water, soil, solid waste collection and disposal, industrial waste collection and disposal, fresh water production and supply to residences and industries.

Competitive Issues - Opportunities for Canadian Expertise and Partnering

The US South’s strong move towards environmental assessment and remediation, and Canada’s long standing leading global position in both products and services for this burgeoning sector, create great potential for Canadian exporters. Canadian engineering services firms and product manufacturers in the SME category should position themselves to deliver their knowledge and products via joint ventures, ad hoc relationships, and/or other means of working together with SEUSA firms. Larger firms can, and many already have, establish a direct corporate presence via branch office or subsidiaries.

Policy implications surrounding environmental issues are receiving heightened attention by the public and the state governments throughout the territory in response to the acute drought affecting the region. Efforts to address this situation so far have focused on voluntary water conservation and reduced consumption. However, in November 2007 Atlanta announced incentives for purchasing low-flow toilets. This could be signalling the start of a broader trend encouraging region wide adoption of resource efficient products, practices and technologies, be they for water, energy, waste management or other.

All six states in the territory continue on paths of relatively strong economic growth, creating energy and infrastructure demands that present potential opportunities for Canadian providers in key sub-sectors including water/wastewater treatment, solid waste management, soil remediation, brownfield redevelopment projects and sustainable buildings.

Strategic Direction

The Consulate General in Atlanta continues to develop and maintain networks to enhance the visibility of Canadian providers in the market and to promote potential market opportunities to Canadian providers. This is achieved through our reaching out to local and regional market agencies, including state and municipal governments and key industry stakeholders. These efforts develop international business activities and enable us to identify opportunities for Canadian environmental goods and services providers, leading in turn to an expanded market presence.

Examples include international events such as America’s Competitiveness Forum, which is under consideration to be held in Atlanta in 2008, and the American Water Works Association Annual Conference and Exhibition, to be held in Atlanta in 2008. The Consulate General will organize activities and events to showcase innovative Canadian technologies to targeted groups in local markets identified through ongoing contact.

The Post will work to achieve greater visibility for Canadian providers by communicating the advantages of sourcing Canadian goods and services through using business, industry and international media and events to convey our message. We will target the establishing and developing of networks focused on gathering market intelligence, creating or identifying opportunities to bring Canadian goods and services providers together with potential clients, and promoting Canadian capabilities effectively in the SEUSA market. These undertakings will build on Canada’s strong international reputation and the existing positive view of our technological strengths, while contributing to our strategic objectives of supporting a sustainable, competitive Canadian environmental industry and assisting Canadian environmental industry firms to develop strong global partnerships.

Canadian Government Contacts

Consulate General of Canada in Atlanta
William B. Stolz, Trade Commissioner
1175 Peachtree Street, NE
100 Colony Square, Suite 1700
Atlanta GA 30361-6205
Phone: (404) 532-2017
E-mail: william.stolz@dfait-maeci.gc.ca
Internet: http://www.can-am.gc.ca/atlanta

Excerpts from Environment Sector Profile - Southeast USA, November 2007, Foreign Affairs and International Trade Canada.

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