northern ireland's environmental industry: an examination of the eco-capital equipment...

Business Strategy and the EnvironmentBus. Strat. Env. 8, 108–119 (1999)

NORTHERN IRELAND’SENVIRONMENTAL INDUSTRY:AN EXAMINATION OF THEECO-CAPITAL EQUIPMENTPRODUCING SECTOR

Martin Eaton* and Tom Stark

University of Ulster, Coleraine, Northern Ireland, UK

In common with much of the rest of theEuropean Union, Northern Ireland has asmall but important and expandingenvironmental industry. The region’s ‘greeneconomy’ employs almost 13 000 peopleand is projected to grow by a further4000–6000 jobs by the end of themillennium. This article focuses upon onesmall-scale sub-sector – the eco-capitalequipment producers – and analyses theirrecent industrial performance in the contextof current regional development/industrialstrategy theory. Drawing on empiricalsurvey, comment is made on the sector’semployment characteristics, productionsequences, market structures and businessoperating experiences. Based on thisdiscussion, a series of suggestions is offeredthat could help central and regionalgovernment improve the performance of theindustry, and, in turn, the economy of theregion, still further. Copyright ? 1999 JohnWiley & Sons, Ltd and ERP Environment.

Received 4 February 1998Revised 5 October 1998Accepted 28 October 1998

CCC 0964-4733/99/020108–12 $17.50Copyright ? 1999 John Wiley & Sons, Ltd and ERP Environment.

INTRODUCTION

N orthern Ireland (NI) is a small peripheralregion of the United Kingdom that hasrecently become a focus for investigation

into the previously neglected relationshipbetween environmental activity, economic devel-opment and employment creation. It is an areathat has consistently portrayed a green andunspoilt image. Moreover, it is one where itsreputation has helped foster a burgeoning aware-ness of the opportunities offered by the globalenvironmental market. Demand for environmentalgoods and services, for example, is growing and isprojected to be worth US$600 billion by the year2000 (EIC, 1995). At present, the EuropeanUnion’s (EU’s) environmental industries (as nar-rowly defined by the OECD and Eurostat – seeCoECs, 1997) supply some 90 billion ECUs ofgoods and services, and employ over one millionworkers. In common with much of the rest of theEU (Jenkins and McLaren, 1994; EEA, 1995; IER,1995; INC, 1995; Wilkes, 1995), NI has a smallbut important and expanding environmentalindustry. While this sector is dwarfed (in absoluteterms) by the likes of its French and Germancounterparts (OECD, 1993), a significant ‘greeneconomy’ has emerged. In 1993, for example,over 12 900 people were employed in a region-wide ‘green production sector’, consisting of over580 different employment units.

Given the difficulties involved in constructing amethodology for definition and classification, NI’s

*Correspondence to: Dr. Martin Eaton, School of EnvironmentalStudies, University of Ulster, Cromore Road, Coleraine, NorthernIreland BT52 1SA, UK.

NORTHERN IRELAND’S ENVIRONMENTAL INDUSTRY

environmental industry/green production sector1

has been shown to comprise 11 main groups.These included the areas of pollution control andtreatment, waste disposal and collection, recyclingand re-use, energy conservation, consultancy andmonitoring, heritage/eco-tourism, research andeducation, forestry and organic farming, eco-capital equipment production, in-firm ‘green’employment and alternative ‘green’ production.The ninth group listed above – eco-capital equip-ment production – was, in turn, defined as ‘themanufacture of specific equipment for sewage,effluence, and waste control and disposal, pollu-tion prevention and treatment, recycling plants,energy input conservation, energy resource con-servation, and instrumentation for monitoringand measuring’ (Eastwood et al., 1996). To ourknowledge, this is a unique (but not definitive)classification for both NI’s ‘green economy’ andits eco-capital equipment production.

In 1993, NI’s green production sector repre-sented almost 2.1% of the region’s total civilianemployment. While comparisons are difficult tomake, this proportion is around twice that of thefigure derived for the rest of the EU (Berends,1995; CoECs, 1995). Over the period 1983–1993,green production sector employment in NIincreased by just over 2800 persons, and wasgrowing at an average rate of 4.1% per annum.This compares to an increase of 63 700 in totalcivilian employment in NI. The green productionsector, therefore, accounted for almost 4.5% ofnew jobs over the ten-year reference period. As aresult, it has been tentatively forecasted that thisgreen production sector will grow, with between4000 and 6000 new workers expected by the year2000 (Stark and Eaton, 1998).

THEORETICAL ISSUES

Employment expansion at this level represents asignificant number in a small, peripheral economysuch as NI, especially when recent economicgrowth has been curtailed, and particularly interms of its position in the region’s employmentstructure. In comparison, for example, to otherimportant sectors of economic activity, the green

Copyright ? 1999 John Wiley & Sons, Ltd and ERP Environment.

production sector is now around one-half the totalemployment size of NI’s clothing industry.Indeed, it is larger than the banking, shipbuildingand paper industries, and of a similar size to thetransport sector (NIAAS, 1996). Therefore, andwhile this sector is not immune to recessionaryconditions that have affected other sectors ofactivity in the region (NIEC, 1993), it is perform-ing impressively. As a result, and if there iscontinued growth at this high level, then it islikely that ‘green industry’ will become an evenmore important part of NI’s economic structure.Such a development should be neither under-estimated nor ignored, especially given thatNI’s industrial policy has changed in the 1990s(NIEC, 1991). Current policy has moved towardsimproving productivity, competitiveness andgrowth (Hitchens and Birnie, 1994), diversifyinginto foreign markets and reducing its dependenceon public finance (McKillop and Barton, 1995);all elements that we will find echoed in latersections.

The UK’s small manufacturing firms havebeen the subject of intense debate with respectto wealth creation, and, more especially, jobexpansion (Atkinson and Storey, 1994; Winterand Ledgerwood, 1994). Theoretical attention hasincreasingly been drawn to the advantagesafforded by the small firms’ innovatory capacity,their flexibility and their efficient use of resources(Bannock and Binks, 1994). NI is no exception tothis pattern of interest (Harris et al., 1990; Teague,1993; Harris and Trainor, 1995; Barkham et al.,1996). However, orthodox regional theory(Porter, 1990) would point to its peripherallocation (in a EU and a UK sense) being a majordisadvantage; indeed, NI can be viewed as aperiphery within a periphery. As Keeble (1997,p 284) explains: ‘peripheral regions with smallmarkets, limited numbers of businesses andnetworking opportunities, and often monolithictraditional industrial structures, are seen as hostileenvironments for new and small firms’. Paradoxi-cally, more modern theory (Vaessen, 1993) sug-gests that innovative and successful small firmshave been established in peripheral areas becausethe local constraints (previously mentioned) areactually being more vigorously addressed. Thedifficulties are, in fact, stimulating: ‘greater pro-active entrepreneurial behaviour, via manipu-lation, immunisation and adaptation mechanisms’
1These labels are inter-changeable.
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M. EATON AND T. STARK

(Keeble 1997, p 284). This makes for an interest-ing conundrum. However, and in spite of thisapparent contradiction, little is known about theway in which a relatively new sector of small firmeconomic activity – environmental industry – isevolving in NI. Furthermore, we know nothing ofhow its sub-sectors might be complying with/challenging the accepted industrial/developmentaltheories. Our study, therefore, aims to addressthat situation.

AIMS AND METHODOLOGY

With this background in mind, this article buildsupon research that helped determine the employ-ment picture for NI’s green production sector(DES, 1994; GEWG, 1994; Eastwood et al., 1995)in the mid-1990s. There are a number of broadaims. This article first focuses upon the eco-capitalequipment producing sub-sector (defined earlier),and its basic employment characteristics areexamined. Our initial rationale in selecting theeco-capital equipment sector for empirical studywas that the continued development of the greenproduction sector in the region would requirecapital equipment to be internally produced.Indeed, it was felt that NI’s history of having astrong and traditional manufacturing base meantit could (in theory) take advantage of diversifyinginto the eco-capital equipment producing sector.(i.e. it could ‘adapt itself in the face of monolithicindustrial structures’). Based on this premise, weassess the likelihood of eco-capital equipmentimport substitution and whether or not such atransition will take place.

These characteristics are a function of theproduction process for eco-capital equipment andin the next section we briefly examine thesequence of production from start to finish. Thearticle then attempts to measure the eco-capitalequipment business opportunities that have pre-sented themselves. Moreover, we demonstratethe ways in which those marketing opportunitieshave been translated into new areas of businessdevelopment. We also intend to raise awarenessamong companies and to show how, and inwhich directions, the domestic and internationalmarkets for eco-capital equipment will emerge inthe future. Linked in to this, we are particularlyinterested in the experiences of the units with


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respect to their market structures, and to see howthis translates itself into a competitive position forthe firm. Lastly, comments are made on the waysin which central and regional government canassist these units still further in a number of keypolicy areas. We are, therefore, attempting toprovide a grounded account of one regionalexperience, which in spite of its narrow spatialfocus does offer some discussion of wider issuesconcerning industrial strategy/regional develop-ment, and the general ‘greening’ of industry.Policy makers in other peripheral economies mayfind the article of direct relevance to their under-standing of what we will shortly see is a relativelynew, and small, but significant industrial sector.

In the summer of 1996, an empirical surveyfeaturing a structured questionnaire was adminis-tered by an initial personal contact, a postalfollow-up and a personal collection of the com-pleted enquiry. A total of 21 eco-capital equip-ment producing units was surveyed. These wereoperating throughout NI and represented 40% ofthe total number in existence. While the samplesize was small, the response rate was high incomparison to similar exercises (where 10–15% isoften the norm – McKillop and Barton, 1995). Inall cases respondents were taken from the levelsof senior management, and the themes that followare, therefore, useful illustrations of current trends.The 21 units were selected to give a represen-tative sample. This was conditioned by sub-categories, employment level (and, therefore, theirrelative importance within localized economies),as well as their being awarded the ConnectEnvironmental2 label. An original target of inter-viewing 50% of all the units was not achieved,largely due to non-response to initial telephonecontact and/or subsequent refusal. Given the rela-tive heterogeneity of the activities carried out bythese units, the survey focused on qualitative,behavioural and attitudinal aspects related to theproduction sequence. We wanted to find out whatwas taking place, and to show what was likely tobecome ‘best practice’ for a sector of this type.Indeed, several important lessons were learnt

2Connect Environmental is a label awarded by a privatecompany – Kompass Ireland – and the Irish Trade Board (ITB) inDublin. The label represents inclusion in an all-Ireland trading database held by the ITB and is designed to publicize and cross-reference environmental activities and services for potentialcustomers.

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from these 40% of ‘flagship units’3, some of whichare unique to the region but others that we thinkwill find a wider resonance in environmentalindustries in the rest of the EU.

ECO-CAPITAL EQUIPMENTPRODUCING UNITS IN NI

In a separate exercise, Eastwood et al. (1996)found that NI’s employment in one aspect ofthe green economy – eco-capital equipmentmanufacturing – was relatively small in compari-son to that of other European countries. In 1993,52 eco-capital equipment producing employmentunits were identified in the province. The rangesof their production activities were varied butoften highly specialized. They included the manu-facturing of environmental monitoring equipment,drainage pipes, energy efficient heating systems,skips and litter bins, gauges, water purifying andtreatment systems, clean air equipment, doubleglazing apparatus, hydroelectric turbines, wastecompactors and waste recovery systems. The 52units employed 796 persons in 1993. This repre-sented a modest increase from 43 units and 722persons in 1988, and from 1983 when therewere 35 units and 685 employees. If this growthrate was to continue then we could expect around100 new jobs to be created in eco-capital equip-ment production by the year 2000. While thenumber of units has increased, the averageemployment size of a unit has declined – from19.6 in 1983 to 15.3 in 1993. Just under one-halfof these units employed fewer than ten persons,thus, reflecting the importance of the ‘small’environmental unit to this aspect of the region’s‘green economy’.

Based on primary survey data, the basicemployment characteristics of this sector make forinteresting reading. The establishment of theeco-capital equipment sector in NI is a relatively


recent phenomenon – 13 of the units surveyed,for example, have only been in existence since1981. However, several units are family-ownedbusinesses established in the first half of the 20thcentury. They have survived – in line with theviewpoint of Vaessen and Wever (1993) – bydiversifying into new and innovative sectors ofenvironmental production. As we have suggested,employment sizes of units were variable. Forexample, the smallest had three employees mak-ing specialist environmental monitoring equip-ment. On the other hand, the largest unitemployed 240 workers making clean air equip-ment (including heat recyclers, fume extractorsand environmental control fans). The mean size ofthe units surveyed was 64 workers. However,most of the units employed between ten and 50workers (62%); again, confirmation that we weredealing with small- to medium-sized enterprises(SMEs)4.

In terms of the types of jobs available, mostunits were a typical mixture of administrative,management and manual workers. Perhaps sur-prisingly, given their functions, it was found thatenvironmental concerns within the units were notoverly catered for. For example, only three unitshad designated environmental officers in house.This again reflected the small size of the unitsinvolved and the relative unimportance of havingan employee of this kind. However, the threeenvironmental officers did have responsibilitiesfor reacting to relevant legislation, and respond-ing to the environmental impacts of a unit’sactivities. They were, therefore, importantmanagement personnel and their influences arelikely to increase with time. In part recognition ofthis changing perception, several units did givethese environmental duties to either a qualitycontrol manager or health and safety officerwhen circumstances dictated. Such a combinationof activities showed that while awareness ofenvironmental legislation is important, it shouldnot be viewed in isolation. Indeed, it should beconsidered as part and parcel of a wider series ofinfluences that are impacting upon this sector inNI; influences to which we now turn.

3Flagship units are considered leading companies in their own areaof industrial and/or economic activity. Self-assessment (admittedly,a notoriously problematic notion) by the 21 units involved in thesurvey showed that each had a relatively high opinion of theirrespective standing in NI’s environmental business structure.Sixteen of the units (over three-quarters of the group surveyed)graded themselves as ‘good or better’ with respect to their currentperformance.

4To qualify this point, the mean size of the eco-capital equipmentproducing units in the green production sector was just 15workers.

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THE ECO-CAPITAL EQUIPMENTPRODUCTION PROCESS

The eco-capital equipment production process tobegin with involves its own use of capital equip-ment (i.e. at the initial equipment or input stage).Expressed more simply, pieces of machinery andequipment are required to manufacture a givenpiece of equipment, say, a water treatment plant.We suggested to units that production costsmight be lowered if capital equipment (currentlypurchased, for main examples, from the UnitedStates of America, Germany and/or from Italy)could be ‘home’ produced. Home productioncould either be by the unit itself, or by otherbusinesses elsewhere in NI. The results on thisfactor of import substitution were both revealing,and surprising. Only one-third of the interviewedunits felt that eco-capital production equipmentcould be home produced. The remainder felt thatthe equipment they needed was either too readilyand/or cheaply available elsewhere. Alternatively,they thought that the equipment was too special-ized and could not be produced in house, or in NI.This clearly contradicts our initial expectationwith only a minority actually controlling theproduction sequence at the outset by producingtheir own machinery in order to produce theireco-capital equipment.

It was, therefore, the middle part and end prod-uct, and not the starting point, that was the keyfactor in the sequence. To illustrate this idea, thencontinued success was obviously vital for a unit,and the concept of new-product development anddiversification was important to one-half of theunits. The survey showed that 11 units (52% ofthe sample group) initially identified a niche mar-ket for their specific products. These units, there-fore, developed new eco-capital equipmentproducts to capture specific environmental oppor-tunities that presented themselves. The productsdeveloped were based on both entrepreneurialstimulus and intrapreneurally motivated ideas5.Several units, for example, had engineering skills


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within existing production processes that could beeasily adapted to new market demands. There wasevidence, therefore, of dynamism and innovationamong managements of the units surveyed. More-over, a majority (81%) of the units has displayedan ability to modernize by introducing new (final)products into their production ranges since theturn of the decade. The remainder has producedimproved variations on existing products.

Most units (76%) claimed to have producednew products in direct response to an increasedawareness of the changing requirements of theenvironmental market. Again, this increasedawareness had usually come about through theimposition of constantly evolving environmental,health and safety directives and legislation fromthe European Commission (EC). These regulationsare important considerations, and they areenacted within the UK by incorporation into statelegislation before eventually being implemented(subject to a time lag) in NI through an order in(parliamentary) Council. Despite the delay, thebusiness and commercial drive derived by unitsfrom stricter EC regulations (finding their wayinto NI) since the start of the 1990s was a keyfactor to emerge from the survey.

However, and while the outlook (according tothe units) was ‘generally bright’, this potential didnot necessarily mean that the employment situ-ation would dramatically alter. Of the units inter-viewed, 13 (62%) thought that there would beslight increases in employment levels but mostunits were unable to quantify those increases. Theremaining units said that employment levelswould remain stable, and/or be safeguarded in theshort term. These findings help substantiate ourearlier tentative prediction that there would besteady if unspectacular job growth in this part ofthe green production sector. Perhaps more signifi-cantly, given the flux in the regional unemploy-ment rate, it shows that job contraction was notexpected. Several units, nevertheless, pointed outthat their present workforces would require muchmore specialized levels of environmental trainingto secure their existing jobs. This vocationalaspect was important and where employmentincreases were likely then they would involvespecialized and highly skilled but largely tradi-tional workers in the environmental field. Forinstance, opportunities were cited for exportmanagers in the water purifying and treatment

5We were careful to distinguish between entrepreneurial andintrapreneurial initiative during our survey. Entrepreneurs arenormally (but not exclusively) businesspersons with an idea and/oran innovation that they cultivate in setting up their own business,normally on a self-employed basis. Intrapreneurs are employeeswithin existing companies with ideas and/or innovations that theyincorporate into the firm’s operations as a positive development inits evolution.

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sector. Similarly, there were opportunities forhighly trained joiners in both wood and uPVCdouble glazing, and for welders in the construc-tion of waste compactors. These findings haveimplications, therefore, for the future training andeducational requirements of the human resourcebase for the environmental industry in NI.

MARKET STRUCTURE

If we now change our emphasis to the outputstage, we can consider the various destinationmarkets for the export managers in our producingunits. Eco-capital equipment products (at the timeof the survey) were being sold to the public andprivate sectors in NI, Great Britain, the Republicof Ireland and further afield. In the region, publicorganizations including the Department of theEnvironment, District Councils, the HousingExecutive and the National Health Service wereall-important customers.

In spatial terms, and as we might expect, it wasthe localized regional market that dominated thepattern of sales revenue shown in Table 1.Domestic consumption in 1995 was high withNI’s share accounting for almost one-half of totalsales revenue. Furthermore, with nearly one-thirdof sales going to Great Britain this meant that theUK was the most important marketing ’diamond’(NIEC, 1998, p15), or client, for NI’s eco-capitalequipment producing units. The remaining shareof almost 20% meant that foreign export marketshad still to be extensively penetrated.

However, Table 1 also shows that from 1990to 1995 the NI market share for sales revenue was


actually contracting. Simultaneously, the NorthAmerican and British market shares were expand-ing. The market in the Republic of Ireland wasstatic and the other EU customers were fallingslightly. Nevertheless, sales revenue overall hadgrown by approximately 9%. Consequently, thefluctuation in sales revenue was an importantfeature and the feelings of the units were that thiswas likely to continue. Indeed, 71% of the unitsexpected their patterns of sales revenue to con-tinue to alter. At the forefront of those changeswould be increases in the share of the Britishmarket. In addition, new international marketswere likely to be opened up, particularly in theEuropean Union (e.g. Spain, France, Germany andthe Netherlands), and especially in the Republic ofIreland. To a lesser extent, they were also forecastto emerge in the Middle East, South Africa andJapan.

Of the continental EU nations, Spain wasthought likely to be the most important newcustomer. This was because Spain is demandingtwo specific types of eco-capital equipment: first,water-monitoring equipment, to avoid wastage inirrigation systems and to help counteract recentand severe, drought induced, water shortages inthat country; secondly, waste compactors are alsosignificant, as Spain becomes increasingly awareof its environmental obligations within the EU todispose of waste effectively. In addition, themarket in the Republic of Ireland offers oppor-tunities for NI’s water purifying and treatmentindustry, and for units producing clean air equip-ment. The markets for water purifying and treat-ment equipment, together with waste compactors,were also predicted to grow in the Middle East

Table 1. Distribution of sales revenue shares for NI’s eco-capital equipment producers, 1995.

Destination countryAverage percentage ofsales revenue share (%)

Percentage change in salesrevenue share 1990–95 (%)

Northern Ireland 49 "7Great Britain 32 +5The Republic of Ireland 6 0Rest of the European Union 5 "1United States of America 5 +8Rest of the world 3 +4Total 100 +9

Source: Eastwood et al., 1996.

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(e.g. Egypt and Israel), South Africa and Japan.Some of our firms are, therefore, complying withthe changes in industrial policy that have takenplace recently in NI, and are diversifying theirgoods into as yet untapped foreign markets.

Most of the units based these assessments ontheir changing marketing campaigns and research.A number were also becoming aware of thelimitations imposed by the ‘small’ home/regional(i.e. NI) market. This was an important factor.Several units, for example, recognized that profitscould be increased dramatically simply by sellingtheir goods in Great Britain, if not the rest ofEurope. The rider to this was that most unitsbelieved they were restricted by higher haulageand transport costs. Carrying goods to the rest ofGreat Britain and continental Europe was con-sidered expensive. Nevertheless, several unitsemphasized that profit margins could be con-siderably larger (because of the value added toexports) if one could gain a niche in theseoverseas markets, and the difficulties of gainingthat niche were overcome.

THE ECO-CAPITAL EQUIPMENTBUSINESS EXPERIENCE

Lessons can be learnt through the collectivesharing of our units’ experiences. The surveyconfirmed that the most important factor for aunit was the need to ensure competitiveness.Moreover, once a competitive position had beenreached, it was felt that the unit must maintain itat a consistently high level of performance. If weaccept a measure of bias inherent in questionsbased on self-assessment, then these units areclassical examples of what Vaessen and Keeble(1995, p 503) call: ‘counterfactual businesses’. Thatis, these are units that show ‘an ability to improvetheir. . . competitiveness. . . in ‘‘unfavourable’’ (i.e.peripheral) regional milieu’. In this situation theunits unanimously agreed that competitivenesscould be achieved through a combination of thefollowing factors.

First, units should strive to become leaders intheir field, and not simply followers of ’environ-mental fashion’. The ideal situation was one whereunits could dictate innovatory change. Indeed,several units found themselves in a positionwhere they could be considered leading edge


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innovators or ‘flagship firms’ (especially in thearea of water purifying). Secondly, quality of thefinal product was the most important factor inthe whole production process. Moreover, theeco-capital equipment produced must display ahigh level of efficiency and reliability, and qualityshould not be sacrificed in favour of a cheaperselling price. Thirdly, units should not see NI’sspatial borders as a psychological barrier to theireconomic activity. Indeed, they should be pre-pared to seek out and market their productsabroad. To this end, additional foreign languagetraining was imperative to help them improvetheir standards of customer service. Moreover,they should ensure that their after-sales service isexcellent. Fourthly, units should be prepared to beflexible. Several units, for example, reported theirwillingness to manufacture bespoke products.These may be ‘one-off’ pieces of equipment – apackage sewage treatment system, for instance –that is designed in house, and sold subject toexacting customer requirements. Ideally, unitswould combine all or most of these elementsinto a package that would allow them to increasetheir competitive advantages within the regionalmarket. At the same time, such a move wouldfacilitate their performances in the external orexport market creating: ‘a ‘‘double’’ diamond ofcompetitive advantage’ (Rugman, 1993; Rugmanet al., 1995). By this, we mean that internalcompetitive factors in the regional economywould interact (positively) with an outer series ofexternal factors (e.g., a common EU market) toimprove the sector overall.

However, that advantage could very quickly beundermined unless action is taken in the field oflegislation. The single most important factor toemerge from the survey was that environmentallegislation concerning control and enforcementmust be driven onto the statute books in NI at thesame time as it comes into operation in the rest ofGreat Britain. Such a concerted effort wouldencourage more companies to recognize the needto purchase eco-capital equipment. In so doing thesector could help units ‘clean up’ their ownoperations and both the environment and theeconomy would benefit – a sort of ‘doubledividend’. As way of illustration, the control ofwater polluting sources in industry was of particu-lar concern to our units. Many considered them-selves ‘clean’ when discussing their own operating

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conditions and clean-up processes. However, unitswere resentful of the fact that a factory locatednext door might not be so kind to the environ-ment in its operations. This anomaly was a causefor concern. Several units demanded that thegovernment enforce existing regulations on waterand sewage pollution and that fines for offendingcompanies should be commensurate with theoffence (i.e. they should be high).

To help industry in NI to cope with the costsof complying with antipollution controls, then themain message from most units was that thegovernment should set up a new system ofgrants. These grants would be designed to helpcompanies buy in eco-capital products fromdomestic eco-capital manufacturers. This is asystem that operates effectively in Germany,although in a different area of activity: solarheating. Significantly, one company in our surveyexported its solar panels to Germany on the basisof three factors: first, because its product lastslonger than conventional central heating systems;second, because solar panels operate more effec-tively in colder rather than hotter climes; more-over, third, and as we have said, the Germangovernment offers its own companies incentivesto install solar heating systems. A similar schemeset up in NI (and subject to EU regulations onsubsidies) would undoubtedly help the eco-capitalequipment sector to expand in the region. How-ever, such a system would be constrained by theongoing trend in the province for public financeto be superseded by private investment (NIGC,1995). Alternatively, if the government were torigorously impose the ‘polluter pays’ principle,then the region’s eco-capital equipment industrywould receive an additional boost becausedemand for eco-capital equipment products wouldgrow considerably.

Regional government (embodied in theDepartment of Economic Development for NI)could also give consideration to the capabilities ofall of NI’s eco-capital equipment industry. Oursurvey showed that many units were often smallcompanies producing eco-capital equipment thatis highly specialized, and often unique to a specificcontract/order. While most small units reported abright future based on steady, if unspectacularperformance change, there remained a problembased on self-perception. Within each sub-category, there tended to be a company that


stood out in terms of its market dominance. Anillustration of this would be the work carried outby a Belfast firm (Company X) within the waterpurifying and treatment sector. Company X wasthe largest of the units interviewed in this sub-category. As such, it was often favoured byregional government to carry out the ‘big’ jobs,because most of the competing companies wereconsidered too ‘small’ to handle them. The com-plaint from those smaller companies was thatCompany X was gaining an unfair advantage andthat their own units did possess the technicalexpertise to handle ‘bigger’ jobs. The point wasthat they needed to be recognized as also beingable to do a competitively good job (i.e. theydeserved a chance to prove their capabilities). Thiswas especially true in a situation where overload-ing of contracts upon one particular companycould well be a recipe for that company out-stretching its own capacity to do a good job in allcases. This could lead to a diminishing reputation,financial difficulties and ultimately contraction ofthe unit; all of which could be avoided if the‘contracts cake’ were to be cut much more widely.We would, therefore, suggest that a broaderawareness of this type of capability on the partof regional government is necessary for a moresuitable and effective manipulation of theprovince’s eco-capital equipment producers.

Finally, it can be pointed out that the surveyunits have a lot to offer for the general ’greening’of industry in NI because they practice what theypreach in environmental terms. There is, forexample, a high level of waste disposal controland recycling taking place among the units. In thedouble-glazing sector, for instance, wood wastewas either recycled or sold on to farmers whoused the material as animal bedding and/or forcomposting. The units wanted to see their ownhigh environmental awareness matched by astrong government drive to tighten environ-mental regulations. As we keep repeating, thiswill drive the market forward for NI’s producers.There is, however, a rider to be added herebecause while environmental equipment is becom-ing increasingly fashionable, the question remains,‘will customers be able to afford to buy it?’. Just asthe market will be legislation driven, so it will alsobe cost driven. Customers will be forced to adopteco-capital equipment most probably when thecosts of not using it become prohibitive, or

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unprofitable. How long this process will take isopen to debate. However, and to help foster theusage of eco-capital equipment, it may be anadvantage for the British government (as with theGerman case) to grant some form of financialsubsidies, particularly to those units wishing touse the equipment in the first place.

SUMMARY ANDRECOMMENDATIONS

The eco-capital equipment industry in NI is asmall but important part of a much wider ‘greeneconomy’. We have shown that it is a sector thatis operating in a reasonably successful fashionwith a steady, if unspectacular, growth in termsof jobs and sales revenue. There is, nevertheless,a great potential for eco-capital producers tobecome significantly more important playerswithin NI’s green production sector. However,and for that to happen, it is important that centraland regional government recognizes the need fora common approach. That commonality could bechannelled through a focus group6 of eco-capitalequipment producers. This ’environmental club’could, in turn, guide both this sector of activity,and, more broadly, the green production sector inNI and the rest of the UK. It could help to cement(through benchmarking) the series of factors thatwe have identified as being important to safe-guarding and enhancing the competitive positionof this fledgling industry. Clearly, it is in theinterest of NI’s general employment structure,and the green production sector in particular, tomove in the direction of the practices outlinedin this article. To achieve this, we believe actionhas to be considered in the three key policy areasof marketing, education and environmentallegislation.

First, an effective marketing strategy for theenvironmental industry is necessary. This isbecause the concept of market competition forthe sector is again conditioned by each of theunit’s perceptions. As we have seen, there was


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a tendency for units to be insular in attitude –believing (naturally) that their own establishmentwas the most important of all players. Similarly,their perception of competition was restricted,in over two-thirds of cases, to other highlyspecialized units in the home market of NI.Indeed, only three units (7%) actually acknowl-edged overseas competitors in their own field.Whether this was a deliberate ploy and an unwill-ingness to accept and/or promote other competi-tors, or simply a genuine lack of awareness ofwhat was happening in a wider spatial sense, is amatter for conjecture. Nevertheless, overseascompetition was said to be strongest in threesectors – (i) water storage containers (with com-petition from the USA and France), (ii) clean airequipment (Germany) and (iii) waste compactors(Germany and Italy). Again, the dominance of theGerman environmental industry is revealed andinvestigation into this most ‘environmentallyenlightened’ of nations is perhaps a requisite forany further study of this topic.

A second factor related to marketing is that weneed to acknowledge the difficulty of breakingout from a regional market where the customerbase is relatively small and affected by bothgeographical and, more importantly, economicperipherality (NIEC, 1994, 1998). Part of thisproblem can be explained by the insularity ofmany units – several, as we have said are appar-ently unwilling (or unable) to sell in worldmarkets. Part of the solution to this problem is toencourage units to overcome a ‘small-regionmentality’, and persuade them to market overseas.Individual examples of dynamic marketing cam-paigns have been launched. The engagement ofan Arab speaker to guide the Middle Easternexport drive of a manufacturer of clean watercontrol panels in mid-Ulster is one such example.Moreover, the sector’s relationship with theRepublic of Ireland could be enhanced. The eco-capital equipment sector in NI does not have astrong trading relationship with the Republic ofIreland. Its share of total sales revenue in 1995(6%) is only slightly above the shares for the EUand the United States of America (both 5%). Thisis not surprising, however, given that eco-capitalequipment sales are in line with the generalpattern of limited trade between the two Irisheconomies (see Hitchens and Birnie, 1994, p 6;NIERC, 1995, p 3). Significantly, sales revenue did

6A focus group involves ‘a group discussion, in which a relativelyheterogeneous, but carefully selected group of people discuss aseries of particular questions raised by a moderator’ (Goss, 1996).An extension of this process involves the setting-up of bench-marks of good practice, against which employment units can judgethemselves.

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not alter from 1990 to 1995, suggesting that themarket for these goods in the Republic of Irelandwas static. Our research, however, found thatthere were important exceptions to the rule. Forexample, units expected the size of the Irishmarket to increase in the future. However, thiswill be confined mainly to the water purifying andtreatment industry where the market was said tobe flourishing and offering real potential. Thereare obvious opportunities, therefore, for cross-border trade to improve. This is especially so,since consumer pressure for purer water, evi-denced by growing demand for bottled water andhome water purifying apparatus, has risen con-siderably in recent years and shows few signs ofaltering.

Our second area for policy action is the need toimprove the training standards of employees.Education is a key element. Increasingly, innova-tory change within the sector will dictate thenumbers of employees, and the types of skill thateach of them possess. The level of specializationwithin the units will also clarify the requirementfor professionally trained workers in a range ofactivities. According to the units, these willinclude administrators, export managers and com-puter experts, together with highly skilled manualworkers such as joiners and welders. The avail-ability of such employees in NI will be a keyfactor in the future development of each of theunits’ human resource bases and needs to beacknowledged. A further educational factor is thatenvironmental business literacy is now an import-ant issue. While few of the units surveyed hadenvironmental offices/officers, most were awareof the onset of EU legislation. The training ofmanagement to deal with this issue is, therefore,both important and a problem. Often, the personcharged with looking after environmental con-cerns may not be a recognized expert in thefield. For example, he/she may be a quality controlmanager, health and safety officer or sales man-ager. There is, therefore, a need for relevanttraining to be provided, and for grants to bemade available to help subsidize the cost of sucheducation for both individuals, and the companyitself. The training will either be in house, and/orthrough additional adult learning programmesat the fourth University level. It could well beadvantageous, therefore, for developments suchas the recent introduction of a suite of post-


graduate environmental courses in the province’suniversities to be supported by governmentfunds.

Finally (and a point that has been constantlyreiterated) the issue of legislation needs to beseriously addressed. Unless the British Govern-ment enforces EU and British environmentallegislation simultaneously in NI then theenvironmental industry as a whole will be leftbehind. By pushing through legislation in thisfield, the Government will simplify the role ofeco-capital equipment producers and, more sig-nificantly, enlarge the relatively small regionalmarket. As we have seen, there is a reluctance formany businesses to take on board environmentalcontrols until actually compelled to do so. Theimposition of environmental legislation hashelped eco-capital equipment producers to diver-sify and develop in the past. However, by speed-ing up the legislative process then so theopportunities available will flourish. Clearly, thisis an area that Government needs to look at as amatter of urgency.

In conclusion, we have seen that NI’s eco-capital equipment producers are in a state of fluxwith each of them demonstrating a variety ofoperational performances. While a number ofunits are forceful, dynamic and innovative, othersappear content to maintain their current positionsof stability. The former, the ‘counterfactual’ busi-nesses, hold a unique position in this peripheralregional economy and have contributed severalimportant lessons to the overall well-being of thesector. They also offer optimism to the minorityof non-risk-taking, insular and restricted unitsaffected by the perceived hostility of this sameperipheral environment. As we have seen, someof the local-level, NI constraints are graduallybeing overcome with our units looking, particu-larly, to enhance their domestic and/or externalcompetitive positions. Industrial behaviour is,therefore, changing and the environmental indus-try (as typified here) is at the forefront ofthat change. Many units are proving themselvesto be good examples of the modern, manipulativeand adaptive entities that current regionaldevelopment/industrial strategy theory, men-tioned earlier, would have us believe in. NI’senvironmental industry is now showing itselfto be a factor in the region’s so-called doublediamond of competitive advantage. The benefits

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of good, internal production processes, forexample, have to be squared with the opportuni-ties afforded by newly emerging, but externalmarketing structures. To this end, we haveattempted to close the loop by focussing upon atrio of factors (marketing, education and environ-mental legislation) that are unique to NI. Conse-quently, the next few years will be a definingperiod in getting these three messages across.Moreover, their successful implementation willhave significant benefits for the region’s environ-ment as a whole, and its green economy, inparticular.

ACKNOWLEDGEMENTS

The authors are grateful for the financial andstatistical assistance and advice provided by theDepartment of Economic Development for NI inthe completion of this project. Equally, we areindebted to the executives of the employmentunits who gave of their time to be interviewed.Constructive comments were provided by anumber of referees. However, all opinionsexpressed and the errors that they may containremain the responsibilities of the authors.

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BIOGRAPHY

Dr. Martin Eaton is a Lecturer at the School ofEnvironmental Studies, and Dr. Tom Stark is aSenior Lecturer at the School of Commerce andInternational Business Studies at the University ofUlster. They can be contacted at The Universityof Ulster, Cromore Road, Coleraine, NorthernIreland BT52 1SA, UK. Tel.: 01265 324663. Fax:01265 324911.

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