Environmental Service: A New Industry Matures; This industry faces boom and bust cycles, that lead to consolidation during slow times.

• Author: Swagel, Will

Mention industries that grew up from nowhere over the last 30 years and most people would think of computers and other electronics. But the environmental services industry-environmental engineering and the testing of environmental data-also has come into being and matured since the 1970s.

The Love Canal environmental disaster in upstate New York essentially gave birth to this now ubiquitous field. Prior to that, no one routinely thought to test for toxins on property they owned or wished to acquire. Waste management was deplorable by today's standards. Toxins were routinely dumped into fish-bearing streams. On military bases, spent ammunition joined fuels, paints and a long line of other chemicals not yet recognized as dangerous and thus handled unsafely.

When the danger was recognized, hundreds of millions of federal dollars flowed to Alaska to fund environmental remediation programs at Department of Defense facilities all across the state. Along with that money came stiff competition from environmental engineering firms and testing labs in the Lower 48 for the lucrative contracts. By the early 1990s, Alaska was suffering from an over-capacity of expertise for the amount of work that was here, as large as that was.

The seasonal nature of environmental work in Alaska also left these firms gasping for revenue during slow times. Since 1993, the number of Alaska engineering firms and testing labs has been cut in half as the industry consolidated, replaying the patterns of environmental services firms in the Lower 48, who had felt the effects of over-capacity years earlier.

Similar development occurred for computer and electronics manufacturers, who saw the growth of their industry take off into the stratosphere as millions of people worldwide were introduced to new products. But there too, the market eventually became saturated and growth slowed dramatically.

War Buildup

Charles Homestead of CT&E Environmental Services Inc. says World War II was the seed that ultimately led to today's shuffling out of firms. After the Japanese invaded two Aleutian islands, already high military spending in Alaska rose to a fever pitch. And it stayed that way right through the Cold War, he says.

"Whether it's the DEW (Distant Early Warning sites) along the northern coast of Alaska, whether it's testing along the western coast of Alaska where they actually spread radioactive material around on the ground to see how it would react in the cold climate, or whether...