Global Cleanup Spots Find Revenue-Hungry US Firms at the Door
LAST fall, Omega Environmental Inc. set up a subsidiary in Mexico City to market its technology for environ- mentally safe fuel-storage tanks.
The company, based near Seattle in Bothell, Wash., is one of many United States companies that is looking abroad to boost revenues. The domestic market for environmental products and services is less robust than many companies had expected.
``US prospects abroad are very good,'' says Charles Manger, president of Catalyst International Inc., a recently formed Seattle firm that matches the expertise of American firms with environmental projects in developing nations.
The global business of managing waste and cleaning polluted water, soil, and air is already valued at $180 billion and promises to reach $300 billion by 2000, Mr. Manger says.
The Environmental Business Journal, published in San Diego, puts higher numbers on the business - $295 billion now and $426 billion in 1997. The market in Southeast Asia and Latin America is projected to grow from $13 billion to $25 billion in the same period. In Eastern Europe and the former Soviet Union, spending should grow from $14 billion to $27 billion.
One factor behind the growth, Manger says, is that more financing from multilateral bodies such as the World Bank is now conditional on meeting basic environmental standards. Thus, markets are growing even in countries that lack tough regulations. Clean drinking water, sewage treatment systems, and cleaner energy production are among the hottest areas, he says.
Little wonder that in a recent study the US Congress's Office of Technology Assessment urges American businesses to seek global markets and presses the federal government to focus more of its research dollars on developing environmental technologies. But the agency warns against expecting too big a boom: Even when US companies win business, much of the money will flow to local labor and materials.
Competition also is strong. Currently, export revenues of environmental businesses total $11 billion for Germany, $7 billion for the US, and $5 billion for Japan, according to the Environmental Business Journal.
America's strength is in technology and project management, Manger says, while Germany and Japan excel at turning technology into environmental products. US companies should try to follow suit, he says, to meet the needs of consumers and businesses abroad that want to buy products, not services.
Many of the service companies that have developed foreign operations ``have not done that well,'' Manger says, because they fail to manage costs or to use initial projects as steppingstones to win more business. A good local partner can help, he adds.