Impact of the recession on environmental technologies sector

Wiring cables on building course at Stourbridge CollegeThe Observatory’s skills team is working on a skills review of the environmental technologies sector (such as renewable energy, pollution monitoring and waste management) on behalf of the Learning & Skills Council, Advantage West Midlands and local authorities in the West Midlands.

While we expect to publish in summer 2009, we can report now on emerging findings from our online survey (PDF, 295KB) relating to the impact of the recession for environmental technology firms.

Profitability and turnover

Notably, the economic downturn is having a negative impact on the profitability of environmental technologies firms but our survey suggests that they are faring better than those in other parts of the region’s manufacturing sector.

  • While 6% more firms have seen profitability fall over the last 3 months than have seen it rise, this compares with a negative balance of 47% across manufacturing as a whole.
  • It is notable that 4% more firms saw turnover rise over the last 3 months than saw it fall (compares with a negative balance of 50% across manufacturing as a whole). This suggests that companies may be cutting prices and profit margins in order to maintain their turnover.
  • Some 43% of companies in our survey are diversifying into the sector with environmental technologies currently accounting for only part of their turnover (Source: Chamber of Commerce Quarterly Economic survey, December 2008).

Domestic and export markets

Market conditions for environment technologies firms, while deteriorating due to the recession remain more favourable than across the region’s manufacturing sector as a whole.

  • Home sales: 25% more companies have seen a decrease than have seen an increase in home sales (compared to -41% for the manufacturing sector as a whole).
  • Home orders: 29% more companies experienced a decrease than have seen an increase in advanced home orders (compared to a -61% for the manufacturing sector as a whole).
  • Export sales: 5% more companies have seen export sales decrease than have seen an increase (compared to -27% for the manufacturing sector as a whole).
  • Export orders: 14% more companies have seen export orders fall than have seen them rise compared to -31% for the manufacturing sector as a whole. (Source: Chamber of Commerce Quarterly Economic survey, December 2008).

Employment

Our survey shows that, while environmental technologies companies are reducing their workforce due to the recession, the extent of job cuts has been less severe than across the region’s manufacturing sector as a whole.

  • In the past 3 months, 9% more companies reduced their workforce than increased it (compared to 23% for the manufacturing sector as a whole).
  • Over the next 3 months, 13% more companies expect their workforce to decrease than expect it to increase, compared to -43% for the manufacturing sector as a whole (Source: Chamber of Commerce Quarterly Economic survey, December 2008).

However, a lower proportion of firms have attempted to recruit staff over the last 3 months and fewer cite recruitment difficulties.

Those that do face recruitment difficulties highlight problems relating to:

  • Engineers
  • Skilled environmental professionals
  • Technologists and technical analysts
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