UK environmental laboratories achieve steady 4.8% growth
A unique report by market intelligence providers, Environment Analyst, charts the aggregate performance of twelve of the leading environmental laboratories in the UK.
According to the aggregated UK environmental laboratory (EL) revenues of these players, which reached £148.3 million in the last financial year (2011/12), the study finds that the sector posted growth of 4.8% - thus outperforming the economy which grew modestly by 0.9% (in real GDP terms).
Growth in the environmental sector has been supported by a number of factors, not least of which is the expanding regulatory framework (such as the EU’s REACH registration scheme and water framework directive) driving industry towards increased testing and more sophisticated analyses. There has also been significant consolidation happening in the sector, with multinational testing and compliance groups moving in to the UK environmental laboratory space and other industry-based operators either buying up or selling off internal laboratory functions.
Another important trend is that many of the government-steered or public sector laboratories are looking to commercialise their operations and capture share in the private sector side of the market, as austerity measures hit public sector funding streams.
Co-author of the report Ross Griffiths comments: “Competition in the UK environmental laboratories sector is intensifying on two main fronts. Firstly, the movement of public sector laboratories to secure more commercial income using the government’s Wider Markets Initiative. And secondly, previously ring-fenced public sector contracts are being opened up to the wider marketplace.”
The report finds that newcomer ALS Environmental is the largest environmental laboratory by revenue following the takeover of Severn Trent Laboratories (also known as Severn Trent Services - Analytical Services) by the 13,000-strong Australia-based international testing, inspection and certification group ALS in February. ALS Environmental claims a total market share of just over 20%, reflecting its strong presence in the energy and utilities sector. The next three top-ranking operators by market share are all from the public sector stable, namely: Fera, Cefas and NLS.
Nine of the twelve laboratories in the assessment achieved growth in their EL revenue in their last financial year, with only three seeing a decline. Fugro EMU and Intertek are particularly notable for their strong performance last year, benefitting from the acquisitive tendency of their large international parent groups.
Together, the peer group employs some 1,806 EL staff, which puts the average environmental laboratory revenue per head at £82.1k, although some of the operators achieve significantly higher rates per head.
Reflecting the strong presence of government executive agencies and retained laboratories, public sector sources account for almost half (47.0%) of the aggregated peer group’s EL revenue. Energy and utility clients form the next largest client grouping by revenue stream, followed by consultancies and other service providers.
Analysis of the activities of the twelve profiled operators finds that in terms of sampled media, water and effluent related samples account for a dominant 34.8% of the market, followed by marine work (25.4%) and land/soil analysis (22.7%). Waste and air samples make up the remainder.
The report also analyses the market’s composition by service area. It finds that laboratory-based analytical and physical chemistry makes up the lion’s share of the EL sector, accounting for almost 60% of the aggregated turnover of the twelve leading service providers, followed by environmental microbiology (9.5%), taxonomy (8.8%) and site-based/continuous analytical and physical chemistry (6.8%). Other niche service areas included in the report are: environmental fate, degradation and risk assessment; ecotoxicology;
The report draws on the results of an online survey of EL market trends which was completed by over a hundred environmental laboratory managers and technicians working in the sector. The vast majority of those surveyed (68%) expect there to be growth in environmental laboratory work in 2013 compared with 2012. Only 8% expect a reduction in workload this year compared to the last in spite of the ongoing government funding cuts.
Furthermore, according to survey participants, the sector is projected to grow by an average of 4.4% (CAGR) over the next three years.
Griffiths says: “As the public sector and private sector laboratories come into increased direct competition and operate on a more level playing field in the years to come, operators will need to develop new ways to differentiate their offering - be that through investment in cutting-edge technology, the development of in-situ monitoring solutions or partnerships with other research bodies and institutions.”
For further enquiries about this report, please contact Lorna Madeley, tel: +44 (0)1743 818 008, email:lorna.m@environment-