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USA is still building business27th of April 2012
ECJ's new USA reporter is Ron Segura of Segura & Associates. Here, he asks whether cleaning is a recession-proof industry.
Is cleaning really a recession-proof industry? Companies making cuts in other areas of their business still need to spend money to have buildings cleaned.
But because of economic challenges, firms now expect to pay less for the same cleaning and maintenance services. Some building services contractors (BSCs) meet these altered expectations by slashing rates and doing more work for far less money.
The flip side is these same BSCs now seek to reduce their product costs. Bob Friedman, sales representative for CleanSource, a California-based cleaning products provider, predicts smaller jan/san distributors may be unable to compete in this market. Reduced cash flow and buying power will force change.
CleanSource dealt with this shift by expanding its offerings after a larger distribution company acquired the firm in late 2010. The company then began pursuing maintenance, repair and operations (MRO) business, which includes lighting, HVAC tools, paint and other products.
“The MRO side is 10 times the spend when compared to janitorial,” Friedman says. “This makes us more valuable to the customer.”
Savvy distributors also look to online ordering to build business. While online ordering currently represents less than 10 per cent of CleanSource’s business Friedman indicates this percentage grows daily. “Couple that with an interactive website and distributors are able to accommodate more customers and their needs,” he says.
BSCs like the international firm UGL-Unicco Service Company are experiencing similar pressures to expand service offerings. “The most significant area of growth is with bundled services - a total facilities maintenance (FM) approach,” says Richard Fineo, Unicco, director of business development. “The companies that have the ability to provide services across different parallels have a story to tell.”
He too sees the little guy faced with challenges that could put them out of business. “Service providers with national and international capabilities are being prioritised,” he says. “The consolidation, and theoretical cost reduction, linked to bundling services in a variety of locales is a growing mindset.”
Sustainability a must
'Greening' BSC services and tapping into advanced technologies can help smaller BSCs maintain a foothold in the market. “Greening has become the cost of admission,” Fineo says. “If you are not actively embracing sustainability, you’re not going to get any consideration.”
Advanced technologies set BSCs apart. “Handheld devices, tracking work orders, quality control inspections and ultimately labour, are everywhere,” he says. “Service companies who were good at response but lacking in technological ‘anticipation’ are being shown the door. Today’s clients want and need you to be their eyes and ears out there in the Sargasso Sea known as technical innovation.”
Whether on the distribution side or the service side of the jan/san industry firms need to be at the top of their game. Service and technology expansions must be part of the playbook to compete and succeed in an economically challenged climate.