Environmental Services & Equipment Industry Trends

Selected Industry Concentration

Service Decentralization

Consolidation

Although the industry in general is fragmented, some segments are highly concentrated. In construction, turbine, and engine machinery production, the top four manufacturers have more than 50 percent of the market. In many other segments, the top four have a 30 to 40 percent market share. Only in metalworking machinery manufacture is the market highly fragmented.

Recent reform efforts focus on decentralizing managerial discretion and empowering operational managers in public sector management. Based on a national survey of US municipal governments, decentralizing purchasing responsibility has been less successfully implemented than have budgeting and personnel systems.

Economies of scale provided by the vertical integration of waste management operations has pushed consolidation. In 1989 there were 7,500 landfills in the US; in 2000 about 3,091. Some large landfill operators have acquired waste collection companies to ensure a steady wastestream.

Globalization

Property Tax Constraints

Slower Growth in Solid Wastestream

US machinery manufacturers face greater competition in export markets both from makers of sophisticated machinery (Japan and Germany) and from producers of low-cost low-technology machinery (China and Mexico). The transfer of some US manufacturing capacity to other countries has expanded the international trade in machinery.

The steady rise of property taxes in previous decades prompted many states to enact laws that limit property tax increases. In Massachusetts, for example, annual property tax increases are limited to 2.5 percent unless local voters override the limit. This limit on the largest source of municipal revenues has forced local governments to look for other sources of revenue, such as user fees, and to more tightly regulate their spending budgets.

Americans generated 150 million tons of solid waste for disposal in 1980, 205 million tons in 1990, and about 240 million tons in 2005. The slower increase in the last decade is partly due to lower use of materials like paper. Recycling and composting increased from 10 percent in 1980 to nearly 35 percent in 2005.

More Computer Controls

Education Spending Growth

Technological Sophistication

Industrial applications are the largest consumers of computer chips. New versions of standard machinery often feature advanced electronic applications. For example, new drive-through gas pumps automatically recognize and bill customers using a microchip tag. The greater use of computer components requires manufacturers to develop new engineering skills.

Municipal spending on education has grown disproportionately in the past decade, even though the percentage of school-aged children in the US has increased only slightly. In Boston, for example, schools account for 35 percent of municipal spending. US jobs in local education increased 20 percent in the past decade.

Waste management increasingly depends on new technology, such as computers to plot the most efficient routes for waste collection and GPS to track equipment movements. More sophisticated materials handling equipment are being used to move waste, such as large dumpsters that can be loaded and unloaded by one person, or front-end loaders that automatically weigh the contents. The design and operation of landfills, dictated by a vast numbers of regulations and restrictions, is now a complicated engineering task involving the latest technology.

New Factory Designs Require Versatile Machinery

Population Migration

Increased Use of Transfer Stations

To respond to changing customer demand, more manufacturers prefer to set production factories up with machinery that can easily be reconfigured. With metalworking machinery, for example, manufacturers prefer machinery that can easily switch between different types of cutting heads.

The US population increases about 1 percent per year, but in some communities the growth rate can be higher than 5 percent per year because of migration into the area. Migration can affect the age makeup of a community and therefore the types of services the municipality is expected to offer. In many Florida retirement communities, for example, up to 30 percent of the residents are over 65 (national average: 12 percent) and municipal spending on education is well below average.

Landfills operate most efficiently when they are very large, which usually means they must be sited far from population centers, making it very expensive for waste collection trucks to access them directly. Transfer stations are increasingly used to collect local waste, process and consolidate it, and deliver it to landfills that are sometimes located in other states.