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Environmental Concerns Keep Firm Busy on Public, Private Projects

KLEINFELDER INC.

CEO: William Siegel.

Revenue: $297.4 million in 2010; $294.8 million in 2009.

No. of local employees: 135.

Headquarters: University Towne Center area.

Year founded: 1961.

Company description: Science, architecture and engineering consulting firm involved in infrastructure and environmental remediation work.

Key factors for success: Serves clientele in wide range of private-sector and government arenas with strong demand, including military contracting.

A combination of environmental regulation, military base conversions and recent economic stimulus funding has been key to the growth of companies, such as San Diego-based Kleinfelder Inc., that deal with the eco-effects of construction and development.

The employee-owned Kleinfelder, in business since 1961, does science, architecture and engineering consulting geared to infrastructure and natural resource challenges. Much of its work is tied to environmental remediation — essentially, rehabilitations of buildings and land parcels that are being converted to new uses, but which first require some form of cleanup or preparation work.

The company ranks fifth on the San Diego Business Journal’s 2011 list of the largest private companies based in San Diego County, with more than $297 million in 2010 revenue. It also recently placed at No. 64 nationally on Engineering News Record’s 2011 list of the top 200 environmental consulting firms.

Government Work

Many of Kleinfelder’s nationwide projects in the past decade have stemmed from the conversion of closed military bases for other government uses and private-sector commercial development.

In August, it was among six firms awarded contracts, totaling up to $500 million, by the Naval Facilities Engineering Command Southwest, based in San Diego, for environmental remediation projects at several U.S. Navy and Marine Corps installations across nine Western states.

“We do all sorts of remediations for military sites,” said Kathleen Niesen, federal market manager at Kleinfelder, noting that government work comes with a growing set of challenges. “There are a lot more companies out there chasing contracts, with a limited amount of federal dollars available.”

The company, however, has been diligent about staying involved in a broad range of industries, including energy, health care and transportation, as well as public-sector arenas. Vice President Gary Goodemote noted its recent local work also includes consulting on large projects being built by entities such as San Diego International Airport, San Diego County Water Authority, UC San Diego and the San Diego Community College District.

According to the research firm IBISWorld Inc. in Los Angeles, Kleinfelder is a prominent player in an industry that has grown approximately 8 percent annually over the past five years, reaching a projected $18.1 billion in U.S. revenue for 2011.

The industry is expected to grow an additional 4.8 percent annually over the next five years.

Kleinfelder’s competitors in a relatively fragmented industry include Louisiana-based The Shaw Group Inc., with about 13.6 percent of the U.S. market; and CH2M Hill, with U.S. operations based in Colorado and a 9.9 percent market share.

Surviving the Cuts

Justin Molavi, a senior energy analyst for IBISWorld Inc., noted that Kleinfelder and its rivals have a wide enough customer base that they should be able to weather upcoming cuts in the federal budget. Even if some “cosmetic” remediation projects get put on hold by the military and other government agencies, he said those with the most pressing environmental issues will likely get funded sooner rather than later.

Also, the consulting firms are seeing rising demand brought about by the impact of natural disasters, and high-profile man-made ones such as the BP oil spill in the Gulf of Mexico.

Emerging industrial economies, including those in Asia and South America, will increasingly require consultants to help them deal with eco-pitfalls, especially as the global economy improves and the quest for new energy sources ramps up.

“Many of those overseas markets are going to have oil drilling platforms right off their coastlines,” Molavi said. “Private companies in those markets don’t want an environmental disaster on their hands.”

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