ed itori a I Pollution business in the doldrums Where’s the huge market we’ve been hearing about? All the signs indicate that it’s just around the corner
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ollution control-said a respected (and expensive J investment advisory service back in January-“is an idea whose time has come.” To judge from the pErformance of the so-called pollution control stocks in the market since that time, its time has come and gone. During a period (January-July) in which the Dow Jones industrial average slipped 1 4 9 , the stocks of many companies who purport to be in the pollution business have lost 50% or rrore. To be sure, some of the enthusiasm for such stocks always was based on factors more illusory than real : euphoria regarding President Nixon’s January environmental message; infatuation with companies built around the appeal of fashionable words such as “ecological.” But. as we have suggested on this page before, there are good reasons why knowledgeable firms should be able to make money through pollution control. Chief among these is industry’s (grudging) willingness to pay for inexpensive technical solutions to its pollution problems. Unfortunately, something seems to have gone wrong, at least for the moment. The widely made assumption that talk necessarily leads to financial commitment turns out to have been partly incorrect. Sales of pollution control equipment seem to bolster the point. The Industrial Gas Cleaning Institute-whose member companies make 75 % of the air pollution control equipment sold in the US.-reports that sales in 1969 were only 2% higher than in 1968. First quarter earnings of many equipment companies give no reason to expect that 1970 will be much better. Yet cleanup has to come, and the bill will inevitably run to billions of dollars, much of it presumably going to companies in the pollution control business. Why, one may ask, is reality so far removed from the expectations of investors (admittedly a group not noted for being overly patient)? Well, first of all there is the scarcity of money, and its expense when available for loan. Then, there is the ever-present reluctance to spend on an inherently profitless purpose in a time when profit margins are being squeezed. Neither
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of these reasons would mean anything, of course, if polluters were forced to spend to abate pollution. Whether lack of coercion is due more to the absence of laws or to nonenforcement of laws on the books is a matter for some debate, but the fact remains that it is still possible in most places in the U.S. to pollute without being criminally prosecuted or jailed, At the same time, there is general acceptance in industry and among members of the public of the idea that laws will become more numerous and more strictly enforced than in the past. If this idea is sound-and there is every reason to believe that it is-then the market for pollution control equipr e n t and services is bound to explode. Everyone expects the explosion soon. The big question is how soon? Certainly, more firms are entering the pollution business: this year’s ES&T Pollution Control Directory, now in preparation for publication with the November issue, will list 70% more companies than last year. And, projections of the market continue to be remarkably bullish. Two stories in this issue, for instance, deal with a possible $500 million market for instruments that monitor air pollutants and a potential industrial market twice as large for desalination process technology. It therefore appears that, while spending for pollution control continues at what can only be described as a sober pace, potential demand (and certainly potential supply) is piling up. In order to give readers a better idea of how demand and supply are running, ES&T will, starting this month, expand its listing of expenditures for pollution control and of business developments in the industry (see Industry Trends, page 688). These items have previously been covered to a small extent in Environmental Currents. We expect this column to grow in size as paper projections are transformed into solid business for the pollution control industry and a cleaner environment for everyone.
Volume 4, Number 8, August 1970 623
