Chemical companies play the environmental market; slumping markets still 'a logical fit.' (includes related article Environmental Liability Acquisitions) (Cover Story) (Industry Overview)

Chemical companies' waste minimization practices and a slowdown in remediation efforts have environmental services players mired in tough times. Following 20%/year growth spurts in the 1980s, the business has matured into a large--$250 billion/year--though unprofitable activity; however, chemical companies see niches in the market that they are willing to bet on as perfect fits with their primary businesses.

Environmental services is "a logical extension of the chemical business," says Frank Sardo, director/environmental services at Rhine-Poulenc (RP). For example, if a client must treat a particularly tough waste stream, the company working on the project can call within its own organization to find the solution, he says. "This is just a part of overall stewardship of a company's program."

The market has shrunk, however. Minimization efforts have eliminated 2%-4% of wastes that would normally go into landfill and 6%-8% of incineration markets. In addition, …