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Posts Tagged ‘compliance services’

Heritage-only firms must market

April 13, 2012 1 comment

Its list time in Canada, when many of the provincial lists of qualified archaeological firms get updated. Recent articles in Heritage Business Journal have noted a shift in market share away from heritage-only firms. In the draft of the current list of qualified Alberta archaeological consultants there are 27 companies listed: 19 of these were heritage-only firms and 8 were multidisciplinary firms. This listing also suggests that multidisciplinary firms have more staff (average of 2.8 vs. 1.8 for the heritage-only firms). There are three caveats here. First, I sorted the firms on my knowledge of what they do–they are not listed that way. Second, while more heritage-only firms have a single archaeologist, the number of staff on the list is not very consistent. Third, it should be noted that not all the firms on the list are actually in Alberta, in case readers are wondering how a single province supports 27 archaeology firms.

Archaeology, like many environmental services, is a requirement for some development approvals. Developers who do not know how to find an archaeologist are given the list of qualified firms. My hunch is that lists such as the Alberta Consultant’s List form the entire marketing plan for many small heritage-only firms. This raises the question of whether the reported switch to multidisciplinary firms is due to a customer desire for one stop shopping, or whether it is because multidisciplinary firms out-market and out-brand heritage only firms. Read more…

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Heritage consulting thrives in Australia’s “two-speed economy”

March 19, 2012 Leave a comment

Australia’s “two-speed economy” features a dynamic mining and energy sector, contrasted to flagging retail and manufacturing business. Heritage consulting firms in Australia continue to flourish through providing heritage management services for mining and energy developments throughout the country.

English: The plant at the Brockman 4 mine in t...

The plant at the Brockman 4 mine in the Pilbara region of Western Australia.

According to current Australian Government budget projections, “following growth of 34% in resources investment in 2010‑11, resources companies expect to increase their capital expenditure by a further 74% in 2011‑12, supporting a strong outlook for commodity exports and activity in the related construction and services sectors.” The growth of resources sector investment in Australia for the 2011 calendar year is reported at $450 billion.

Western Australia has the highest value and fastest growth, particularly in iron ore, petroleum and natural gas. The value of Western Australia’s mineral and petroleum industry reached a record high of $101.2 billion in 2010–11 representing an increase of 39 per cent over the previous year. This amounted to nearly 57% of Australia’s total output of minerals and energy, as a major provider of these commodities on the world stage. However, minerals and energy products constituted 95% of Western Australia’s Merchandise Exports in 2010-11, illustrating the dominance of this sector of the economy. The fastest growth continues to be in the Pilbara region in the north-west of Western Australia, featuring hundreds of billions of dollars of iron ore and natural gas resource projects. Read more…

New small business thresholds in North America will change competition

March 13, 2012 1 comment

Last week in the Federal Register, the United States Small Business Administration increased 37 small business size standards for 34 industries in Sector 54, Professional, Technical, and Scientific Services. Under the North American Industry Classification System (NAICS), used by Canada, Mexico, and the United States, the industry code for Environmental Consulting Services (541620) was increased from $7  to $14 million. The majority of cultural resource consulting firms in North America are in the Environmental Consulting Services category. This change was effective yesterday, 12 March 2012.

Within the United States, many, perhaps the majority, of cultural resource compliance service contracts issued by the federal government are set aside for small businesses. This new, larger, small business size category will change the competitive landscape by allowing firms with annual revenue up to $14 million to compete directly with truly small firms for small business contracts. The American Cultural Resources Association (ACRA), the trade organization for the heritage compliance sector, classifies small firms as those with annual revenue below $400,000, medium firms as those with annual revenue between $400,000 and $1.5 million, and large firms as those having annual revenue above $1.5 million. This new ruling will not provide any protection for truly small heritage firms, those in ACRA’s small and medium categories, and create head-to-head market competition for all firms below the $14 million threshold. For companies who target the federal contracting sector, there is now an advantage to being larger and this may prompt a new round of heritage firm mergers and acquisitions in North America.

Another look at employment and market share

A very thoughtful comment was made about HBJ post Employment: Multidisiplinary firms vs. heritage-only firms (18 Feb 2012):

“Large multi-service firms tend hire and terminate for each project because their offices rarely have enough local work to retain technicians. They tend to have centralized full time labs and production centers that do not have positions for techs for after fieldwork tasks. Whereas many hertiage-only company like CRA use full-time technicians in a variety of tasks. The ability to live near a company’s office(s) to come in and do post-fieldwork tasks is the key to full time work. In addition the ability to move techs and other staff between offices reduce the need for temporary project specific techs except for the largest field projects. Plus in any given year we receive enough cold call applicants from technicians with good resumes that simply working the resume file drawer eliminates the need for an ad for most projects.”
Steve Creasman and Kay Simpson

A high turnover of technicians in multi-service firms could easily explain why there are more job advertisements from these types of companies than from heritage-only firms. To explore this more, I also took a look at senior positions (e.g. principle investigators, senior archaeologists, office/regional managers) for the same 2011 data set. Of course titles are not standardized across the sector and names can be misleading, but a full 46% of the job advertisements reviewed asked for 10-25 years of experience and 55% asked for 5-9 years of experience (a slight overlap with some asking for 8-12 years). The job descriptions and requirements (years of experience, permits, etc.) firmly place these jobs in the top levels of employment regardless of title. None of these jobs mentioned temporary employment but that does not mean it is not. However, asking for 20 years of experience for a temporary job would be rare but not unheard of (or it should be in my personal opinion). Out of 79 job postings, 61 of them mentioned their employers (some of the job postings have been removed making it impossible to see who was the employer). In this data set the breakdown is even more lopsided in favor of multi-service firms

Heritage-only firms may look for their top-level workers through other means than advertisement such as internal promotion or through professional networks. A lack of lower level positions in multi-service firms may make it hard for them to recruit internally. What these data do show is that the majority of job advertisements for archaeologists at all career levels was dominated by multi-service firms in 2011. Does this mean they get the majority of business? That can not be determined from these numbers but employment may indicate strong growth prospects.

Driven by oil, central Canada compliance is forecast higher in 2012

February 21, 2012 Leave a comment

In October of 2011, Charles Mount blogged about the correlation of construction output and archaeological licences in Ireland. The correlation was such that you could predict with some confidence, either licences or construction output, from the other. Clever, but what drives the Canadian CRM industry?

Unfortunately, as pointed out recently in HBJ by Christopher Dore (17 February 2012), there is no North American Industry Classification System (NAICS) code for CRM archaeology and there are no country wide statistics on archaeological activity in Canada. Hence begins the quest for drivers for the Canadian CRM industry.

Initial speculation was that price of oil was a significant driver in the archaeological economies of Alberta and Saskatchewan. Both provinces have growing and diverse economies, but the petroleum industry is an important component of the economy. There is no single price of oil, but the New York Mercantile Exchange (NYMEX) produced a nice online summary of the price of light, sweet crude. Saskatchewan has both light and heavy crude. For this analysis I looked at the maximum weekly price for the year, the minimum weekly price for the year, and the closing price during the last week of the year.

Next I looked at the number of archaeological permits issued by Alberta and Saskatchewan between 2008 and 2011. There are a few differences in the numbers and types of permits that both provinces issue, but these are not material to the analysis. Overall for this time period, there was a sharp decline in 2009 with a slow recovery in 2010 and 2011.

The number of permits appears to be well correlated with the maximum price of oil (permits and oil prices are normalized to a maximum value of 100). Permits also correlated with the minimum and December close, however for the latter two, the price of oil leads the number of permits by a year. So the minimum price of oil sharply declined in 2008, the year with the highest price, but the decline in permits took place in 2009.

Does this make sense? It does. There is a base price to drill and if the price of oil is too low, it is better to scale back production until prices rise. My prediction is that given the high December closing price, the number of archaeological permits will increase in 2012.

What about other provinces? I am collecting data but I am curious what others think are the prime economic drivers of their regions.

Employment: Multidisiplinary firms vs. heritage-only firms

February 18, 2012 4 comments

In a recent HBJ post (17 February 2012), Christopher Dore reported that it appears that heritage-only consulting firms are losing market share to full-service firms. To add a different set of numbers to his data, I took a look at the number of job postings for field technicians on the job websites Shovelbums and ArchaeologyFieldwork.com for 2011. Eliminating duplicate posts both between and within the websites, I looked at companies offering jobs for field technicians:  a total of 330 separate posts. Jobs were considered separate if the project was different even if the company was the same, six or more months had passed, or it was an emergency hire for a previous job (assumed to be a separate hiring event). If single ads were for multiple positions, the number of positions offered was not counted as most job postings did not give those details. Surprisingly, not every job listing had the company’s details or even the firm’s name on it. Thus, of the 330 unique postings, 295 were used for analysis. Here is the break down of job hiring events between CRM only firms, multi-service firms, and other firms.

In 2011, multi-service firms posted more than twice the number of job ads for field technicians than did cultural-only firms. These employment data seem to support Dore’s observation that heritage-only firms are losing market share to multidisciplinary environmental and engineering companies.

There are limits to what can and should be inferred by these results. There are many small CRM firms that  do not advertise for field technician positions as their projects are too small to require a full crew. Though it does say something that the majority of job adverts for lower level positions are being done by multi-service  firms. The full data can be accessed here.

Shift in market share away from U.S. heritage-only firms

February 17, 2012 7 comments

A pattern of data suggests that heritage-only compliance consulting firms are losing market share to larger multidisciplinary firms in the United States. Historically, there has been some ebb and flow of market share between heritage-only firms and multidisciplinary environmental and engineering companies. Now, however, there appears to be a more substantial, unidirectional shift and this trend has been underway prior to the U.S. economic recession of 2008.

The annual heritage compliance market in the U.S. has been estimated by many over the last decade to be in the range of $0.8-1 billion. While data to base this market estimate are poor, the fact that many authors (most notably Altschul and Patterson in 2010) have converged upon a fairly narrow range provides some measure of confidence. According to data from Environmental Business Journal, the overall environmental consulting and engineering sector of which heritage compliance is a part was valued at $27.6 billion in 2011. This, then, means that heritage compliance is 3.6 percent of the total environmental consulting sector in the U.S. Since 1991, there have only been two years (1996 and 2009) when the sector did not have positive growth. Since 2009, growth has been 2.2 percent in 2010 and 3.7 percent in 2011. Five percent growth is expected in 2012.

The American Cultural Resources Association (ACRA) has surveyed heritage firms periodically since the end of the recession. In March, 2010 44% those surveyed reported a decrease in business in the six months prior to the survey and 65% forecast that business would not grow in the six months following the survey. There was little change a year later when, in March 2011, 46% of firms reported a decrease in business over the previous six months and 61% forecast that business would not grow in the next six months. Yet, these surveys were done at a time when the industry grew by 5.9 percent, or about $53 million. What explains the opposing trends?

Most, but not all, firms that are members of ACRA are heritage-only companies. Additionally, there were some (29%) non-member firms surveyed but these firms likely fit the same heritage-only profile of member firms. So, the data indicate that while the market for cultural services was growing, the amount of work going to heritage-only firms was decreasing. If heritage-only firms were not seeing the increase, who was?

Data from the U.S. Bureau of the Census (Census) provides a clue. In 2009 and 2010, ACRA led an effort to request a North American Industry Classification System (NAICS) code for cultural resource compliance services. The request was denied and in public comment the Economic Classification Policy Committee (ECPC) of Census stated that “…ECPC considered the proposal and noted that cultural resource management, or cultural resource consulting services is a product provided by establishments in a variety of industries…Therefore, the ECPC does not recommend a new separate industry for cultural resource consulting. ”  In short, Census did not establish a cultural resource industry in North America (U.S., Canada, and Mexico) in part because other industries were adequately providing cultural resource services. These other industries were not specified, but the primary “other” must be the Environmental Consulting Services industry (NAICS Code 541620):  essentially the multi-disciplinary firms. Anecdotal data from conversations that I have had with a variety of business owners and CEOs over the last year seem to support this observation. Almost all told me that they believe that market share has been shifting from heritage-only companies to multidisciplinary environmental and engineering companies.

Business and industry data directly pertaining to the heritage industry is difficult to find. To identify and substantiate underlying industry and economic trends, one often has to stitch together disparate data and read between the lines. Such is the case with this analysis. That being said, it appears that while the market for heritage compliance services has been growing faster than the rate of economic growth (as measured by GDP) since the end of the recession, cultural-only firms are not seeing the benefit of this growth. Market share for heritage compliance services is shifting away from heritage-only companies to multi-disciplinary firms.

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