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Largest market in Europe28th of June 2012
In the latest of our special country focus reports, ECJ takes a look at the cleaning sector of Germany. With the help of industry experts we focus on the contract cleaning sector, its potential for growth and the structure of the market. We also report on the latest statistics related to cleaning equipment manufacturers.
The commercial cleaning trade is the most employment intensive sector in Germany, with a turnover of more than 11.4 billion euros in 2010. With its total turnover volume, the German cleaning industry ranks first in Europe before Britain, France, Italy and Spain.
The 2,500 members of the Federal Trade Guild Association (BIV) cover roughly 87 per cent of the turnover and of the employees and it told ECJ: "Latest figures indicate there were 17,194 German cleaning companies in 2010, employing a total of 532,144 people." The number of companies is still increasing - it was 15,746 in 2009 and 14,276 in 2008. The number of employees, however, is decreasing - from 540,248 in 2009 and 549,591 in 2008.
The German building cleaning market is, like in most other European countries, made up of mainly small and medium-sized companies. The operating range goes from small specialists who serve niche markets to large service providers who offer all services in and on buildings, and in some cases they have up to 40,000 employees. Small businesses with less than 500,000 euros annual turnover are by far the largest number of companies (about 80 per cent) however, they account for only approximately 15 per cent of industry turnover.
At the top end of the market, made up of firms with over five million euros turnover, around two per cent of the companies generate over 46 per cent of total industry sales. In the medium-sized category - between 500,000 euros and five million euros turnover - 17 per cent of the companies share 39 per cent of sales.
BIV says its main concern for 2012 is the EU's eastward enlargement. Fair competition must be guaranteed, it says, by member states with lower social security contributions and tax limits. No competitive advantage should arise through deployment of people from these countries.
It continued: "On the other hand, the European legislator has to make sure that in the future all domestic and foreign companies can be checked likewise by Customs, if they are in compliance with the minimum wage corresponding to the assignment act. A revision of the deployment of workers directive aimed at improving cross-border cooperation of the law enforcement agencies is essential, because such an administrative cooperation is not working so far, according to our findings."
Another trend which is adversely affecting the cleaning industry is the intense competition in the field of commercial trade which is leading to huge cost, performance and profit pressure on the sector's businesses. There has also been a displacement of private enterprise through an
increasing trend towards in-house cleaning in municipal buildings.
The possibilities for growth are almost exhausted among commercial clients, with outsourcing of maintenance cleaning at 79 per cent and window and glass cleaning at 92 per cent. This means cleaning companies have to expand their range of services.
This expansion of services results in a more comprehensive offering comprising pick-up and delivery services, catering, gatekeeper and concierge services, etc as part of modern building and integrated facility management contracts.
In combination with the core competencies of 'management of tasks', 'management of works' and 'people management', the new image of the industry is now emerging more clearly. Five of the current top 10 companies in facility management have their origin in the cleaning trade. This shows clearly the importance of the industry.
The distribution of male and female workers in the German cleaning sector corresponds to the European trend with a percentage of 79 per cent women. The number of foreign workers is about 35 per cent according to BIV. Demographic change and the recruiting of qualified specialists are the most important challenges.
The proportion of the population that will be available to the labour market in Germany will go down twice as fast by the year 2050 according to the forecasts of different research institutes, like the number of inhabitants. As a labour intensive industry, the cleaning sector will be particularly hard hit.
At the same time, the number of workers is not only decreasing, but they are also becoming older. Therefore an interest in their personnel's health is becoming more and more a focus for companies in the industry. "The creation of a good professional perspective in a modern service trade is a basis to attract and keep qualified professionals for the sector," said BIV.
The interest of the customer remains strongly focused on the lowest price, says BIV. "Therefore a fair price has to be pursued for cleaning services in the sense of an economic offer, ie, a feasible square metre performance, taking into account sustainable social and environmental components," it told ECJ.
"The Federal Trade Guild Association of National Confederation of Guilds has developed a system in cooperation with customers, which enables us to evaluate the cleanliness condition of each object. But implementation often and surprisingly fails due to the complexity of apparently simple cleaning."
The industry's most important step forward over the last five years was theintroduction of cleaning into employee assignment law. "By installing nationwide minimum wages, fair conditions of competition have been created on the German market, and this is an important signal against wage dumping," said BIV.
"The biggest challenges for the coming years are the preservation of fair competition by the same European framework for commercial trade, as well as the promotion of economic, ecological and social sustainability by means of close cooperation of machine manufacturers, the chemical industry and the cleaning service providers," concluded BIV. "This is how we can seek to implement holistic 'sustainability'."
According to VDMA, the trade association representing manufacturers of cleaning machines, 2012 had been expected to be a difficult year in view of current economic conditions across Europe and in the USA. "However the first quarter of the year showed double-digit growth for the vacuum cleaner sector," Peter Hug told ECJ. "In other floor care machines, growth of between two and six per cent was achieved so the industry still remains optimistic."
Hug continued: "The German manufacturers are internationally very well positioned, especially due to positive development in the important home market."
In 2011 the cleaning machine industry saw a significant increase in its domestic market, up by five per cent compared to 2010. The volume of the German cleaning machines industry amounts to approximately 840 million euros. "For 2012 a cyclical sideways move slightly above 2011 is expected - an increase of up to three per cent - as long as the downturn due to the base effect in the first half of the year is compensated by slight increases in the second half of the year," explained Hug.
"The European export markets where, due to the financial and debt crisis it is difficult to gain growth, are a challenge for the industry. Major export countries outside Europe in the first quarter of this year were Brazil, Russia, India and China (BRIC countries). Trends show that Indonesia is going to become the next major market for the cleaning machine manufacturers due to its population and its economic growth."