In recent years, the ebbs and flows of the global economy have undoubtedly impacted the business operations of thousands of worldwide pollution control and environmental organizations.

As a result, a majority of organizations have had no choice but to lay off hundreds, if not thousands, of loyal employees just to stay afloat. Many organizations have also significantly reduced their budgets and cut back expenses in order to operate on a large-scale basis in the future.

But has the pollution control industry’s capital expenditures been reduced lately, especially regarding the purchase of equipment and services? Will such spending change at all in the near future? Also, what are some of the most likely capital expenditure trends – and what motivates organizations to purchase some goods and services rather than others?

To answer such questions, Pollution Engineering recently conducted a comprehensive survey, entitled Pollution Engineering’s 2011 Capital Expenditure Study, to identify environmental capital expenditure trends within the pollution control industry. Overall, 9,489 Pollution Engineering subscribers were contacted from Oct. 26 through Nov. 9, 2011. Of the survey respondents, 43 percent were working as consultants, 36 percent were employed in manufacturing and 21 percent either worked in utilities or for governmental organizations. Here are some of the more salient points that were discerned by our staff.

Chief motivations behind 2012 capital expenditures
As pollution control organizations prepare for the future and continue to work towards the path of economic recovery, survey respondents shared their thoughts regarding their organizations’ pending strategies for 2012.

All respondents revealed that their companies are primarily focused on achieving the following six objectives this year:
• Improving business efficiency
• Maintaining existing business
operations
• Increasing capacity
• Improving organizational
sustainability
• Building new facilities
• Reducing labor expenses

However, depending on each survey respondent’s particular industry, some organizations are more focused on achieving particular goals over others. According to survey results, consultants’ organizations are especially determined to utilize their capital expenditures while improving efficiency (55 percent), maintaining their business operations (43 percent), increasing their capacity (39 percent), developing new facilities (35 percent) and improving sustainability (32 percent).

Yet, for manufacturers, some of these objectives are not quite as important to them as they are to consultants. Sixty-three percent of all manufacturers consider the improvement of efficiency as a prime reason for their organizations’ capital expenditures in 2012. At the same time, manufacturers’ organizations will also likely spend their expenditures on the maintenance of business operations (60 percent), the improvement of capacity (43 percent) and sustainability (38 percent) and the reduction of labor expenses (21 percent).

Finally, like manufacturers, employees that either work in utilities or for governmental organizations believe their organizations will be primarily focused on maintaining their operations (61 percent) and improving efficiency (47 percent). Thirty-nine percent of respondents stated their organizations will increase capacity, while 36 percent believe their employers will focus on their sustainability initiatives. Twenty-five percent of utility or governmental employees also think their organizations will build a new facility in 2012.

2011 equipment, services and technology purchases
Meanwhile, survey respondents also revealed what percentage of their organizations’ budgets were used towards the acquisition of equipment, services and/or technology in 2011. Again, each of these figures tended to vary according to the types of positions respondents held, as well as their particular employers’ industries of focus. See Figure 1.

The data indicated that government entities tended to spend less of their total budgets on these services. On the other hand, consulting and manufacturing sectors spent significantly more as a percentage.

2012 equipment, services and technology purchases
In the meantime, it appears consulting organizations expect their expenditures will slightly decline in 2012 compared to 2011. Still, manufacturing and utilities organizations, as well as government institutions, will roughly spend the same amount in 2012 as they did last year. See Figure 2.

Nevertheless, the data also appears to show that some manufacturing operations are expecting to increase their equipment budgets throughout 2012, especially as the economy strengthens.

2012 vs. 2011 capital expenditure budget
It appears that a majority of respondents have a bright outlook for 2012. In all sectors, more than half of the responses stated that their organizations fully expected budget increases throughout the duration of the new year. See Figure 3.

All respondents who stated their organizations’ budgets would increase from 2011 to 2012 were asked to provide further information regarding their expenditures. While government operations remained the least optimistic, some sectors still anticipate an increase in their organizations’ budgets, sooner rather than later. See Figure 4.

Pollution Engineering also questioned survey respondents who had stated that their budgets would decrease in 2012, in comparison to 2011. Demonstrating a split in optimism, there were a number of respondents who believed that their budgets would likely be reduced. See Figure 5.

Looking ahead even further, the government sector remained the most pessimistic, while consultants and manufacturers were much more upbeat. In all cases, over half of the respondents replied that they fully expected their organizations’ financial stability to be much more robust in 2013 than in recent years.

Which purchasing factors are the most significant?
Consulting – To further determine exactly why pollution control organizations were either increasing or decreasing their capital expenditures, the survey also asked all respondents what purchasing factors mattered the most to them and to their employers.

Consulting engineers, who comprise 62 percent of Pollution Engineering’s subscribers (more than any other environmental magazine), tended to believe that quality was the single most important factor in making purchasing decisions. In addition, price, total cost of ownership and the ability to contribute to operational efficiency were also viewed as significant purchasing factors. See Figure 6.

Manufacturing – All manufacturing respondents also offered information regarding the factors that are generally imperative to their purchasing decisions. Again, we see that overall product quality was the largest purchasing factor. Notice that, at this point, there was a divergence from the consulting group. Consultants believe that contribution to efficiency, customer support, price and total cost of ownership are also imperative purchasing factors. See Figure 8.

Utilities/Government – Lastly, respondents from the utilities group shared the opinions of the other groups in regards to the idea that product quality was the most important purchasing factor. This factor was then followed by price, ease of maintenance, contribution to operational efficiency and total cost of ownership, in order of apparent significance. See Figure 7.

2012 purchasing plans
Finally, the Pollution Engineering’s 2011 Capital Expenditure Study sought to discover the types of equipment, services or technology the subscribers will likely purchase in 2012, as a result of their capital expenditure budgets. Overall, we listed 15 categories; according to survey results, it appears subscribers will most likely purchase consulting services, pumps, pipes and valves systems, air pollution control, water pollution control, software and hazardous waste control systems throughout 2012.

Conclusion
According to the study, many survey respondents’ organizational budgets are expected to increase in 2012, in comparison to 2011. Forty-nine percent of manufacturers and 46 percent of consultants believe their organizations’ budgets will expand throughout 2012. Although such figures were much lower regarding survey respondents that work in utilities or for government-controlled organizations, a majority of respondents still believe their companies will spend between one and 60 percent of their budgets on the purchase of equipment, services, and technology this year.

As organizational budgets continue to increase in 2012, there is little doubt the environmental spending of Pollution Engineering subscribers will also rise. And, participants believe that trend will continue into the next year. Expect those plans to be built during the coming year. PE