AM74003

AMA RESEARCH MARKET REPORT : UK Contract Cleaning Market Report January 2003

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BRIEF DESCRIPTION

Covering the period 1998-2005, this report overviews the market for contract cleaning services, providing estimates of market size & penetration, a breakdown of the market by end-use sector & analysis of key influences. It considers the mix between outsourced & in-house service provision within each sector, analyses the structure of the industry & provides market share estimates for leading contractors. It also estimates the size of the market for powered cleaning machines, cleaning chemicals & manual cleaning materials, & analyses key trends, influencing factors & future prospects. Analysis of distribution channels covers direct sales, distributors & tool hire.

Incorporating original input and primary research, the report examines the contract cleaning & allied services market, including a review of materials and equipment supply.

Over 100 pages, the report covers:-

UK Market for Contract Cleaning & Allied Services - size, trends and key influences.

Market Mix by end-user sectors - sizes, trends, key influences & penetration

Competitor analysis and market shares.- cleaning specialists, multi-service providers, franchise networks and facilities services providers

Cleaning Equipment & Materials - cleaning machines, manual cleaning products and cleaning substances.

Analysis of key suppliers of equipment and materials.

The £multi-billion market for Contract Cleaning & Allied Services has undergone strong growth during the last 5 years and is expected to show further growth over the next 3 years. Key market drivers include multi-service/FM contracting, EU and government legislation and construction trends, underpinned by increased levels of outsourcing in the public and commercial newbuild sectors.

Areas of particular interest:-

Market activity levels of 2000-2002, with forecasts to 2005.

Trends in the 10 key end-user markets - growth sectors, key drivers

Extensive competitor analysis - general contractors, IFM companies, franchise networks, multi-service providers.

Review of equipment and materials supply - cleaning machines, manual cleaning materials & chemicals - market size, trends key suppliers.

The report analyses the size and development of the overall market in recent years, as well as individual product sectors. Emphasis is placed on both QUANTITATIVE and QUALITATIVE market assessment.

Key areas of coverage in the report include:-

THE MARKET

Market overview - estimates of total market size in 1998-2002 and forecasts 2003-2005, estimates of market penetration, breakdown of market by end-user sectors, key influences e.g. out-sourcing, 'bundled' service contracting, UK commercial construction trends, government legislation and changes in working practices e.g. full-time workers, multi-skilling, automation.

Analysis of key end-user markets for contract cleaning - commercial, healthcare, industrial, food hygiene, retail & distribution, leisure, central government, transport, local authorities - key trends within sectors e.g. outsourcing, newbuild, consolidation.

Market size estimates for each end-use sector from 1998-2002, forecasts for 2003-2005, market penetration, leading contractors in key markets, growth sectors etc.

Mixes between outsourced and in-house service provision within each sector.

CONTRACTOR ANALYSIS

Market structure - high level of fragmentation, increasing polarisation, growth in franchising sub-sector, increasing penetration by FM service providers.

Market share estimates for leading contractors.

Extensive review of leading 'general' contract cleaning companies, FM service providers, franchise groups and specialist contractors.

Recent changes in supply structure.

EQUIPMENT & MATERIALS SUPPLY

Estimates of size of UK markets for powered cleaning machines, cleaning chemicals & manual cleaning materials - key trends, influencing factors, future prospects.

Analysis of factors impacting on growth in market concentration - multi-servicing, mergers & acquisitions, impact of government legislation.

Analysis of distribution channels - direct sales, distributors & tool hire.

Review of key manufacturers and importers/distributors - company size, product ranges etc.

KEY INFLUENCES

Outlines of recent key trends in UK construction market by key sectors -newbuild output, new orders.

Relevant aspects of key pieces of legislation - 'Best Value', TUPE, WTD, NMW.

Private public partnerships and growth in FM outsourcing, especially PFI market.

EXECUTIVE SUMMARY

The market for contract cleaning and allied services has experienced strong and sustained growth over the last 5 years.

Key factors underpinning growth over the 1998-2002 period include steady underlying growth in the UK economy, trends toward outsourcing, and the impact of EU and government legislation.

Without doubt, the trend towards outsourcing in both the public and private sectors has been a key driving factor and, in the public sector, there has been a marked increase in the number of private-public sector partnership developments over the last few years. This has been supported by the continuing trend towards 'bundled' service contracting among larger organisations in the public and 'Blue Chip' sectors, resulting in higher-value contracts, and contributing to overall market growth.

Government and EU legislation on contractors costs, e.g. Part-time working, Working Time Directive and National Minimum Wage, have led to an increase in operating costs, a proportion of which have been passed onto clients and, therefore, stimulated market growth.

In some end-user sectors, market potential for cleaning contractors is either near saturation or has already reached maturity, e.g. 'Blue Chip' commercial, retail, leisure, transport and central government. Growth potential in these markets, therefore, is largely dependent upon increasing levels of investment in commercial and industrial newbuild. In the commercial sector, office newbuild continues to grow strongly, while the recent high levels of output are expected to be maintained over the medium term, underpinned by a substantial number of large office and mixed-use developments due to come on-stream during the next 2-3 years.

The other main growth impetus will come from increased levels of outsourcing in certain key end-use sectors, in line with the trend towards multi-service contracts. This is expected to be strongest in the public sector, where over 50% of contracts are still undertaken in-house. Tight budgeting requirements among local authorities and NHS Trusts are expected to generate increasing demand for support services specialists and facilities management contractors. Recent Government commitments to health and education spending is likely to underpin the trend towards outsourcing, despite recent criticism of poor performance and quality standards in some sectors.

While growing construction output and increasing levels of outsourcing are expected to provide opportunities for growth, standard or 'pure' contract cleaning companies face several threats. As barriers to the contract cleaning industry are low, there continues to be an increase in competition from facilities management and the larger contract catering companies in key end user sectors e.g. MoD, healthcare and multi-site 'Blue Chip' businesses.

The trend towards 'bundling' is also supporting the switch to national and larger regional contractors at the upper end of the market, where client organisations are seeking better value through 'one stop' service provision. This factor, together with a number of major acquisitions during the last three years, is clearly leading to a further polarisation of the market, although no company has a dominant market share. The largest five - Rentokil Initial, OCS Group, ISS UK, MITIE and Mowlem Pall Mall - have a combined share of around 25% with the rest of the market very fragmented.

Increasing competition for fewer higher-value contracts at the upper end of the market, combined with demand for higher productivity and the impact of legislation, are generating the need for improvements in employment structure and operations. Already, there are signs of a gradual shift towards full-time labour, perceived as more cost-efficient than part-time employment.

The emphasis on higher productivity is also creating demand for more productive cleaning machines. Higher labour costs are expected to force many contractors to reduce labour input and increase investment in machinery, especially robotic floor cleaning equipment for buildings with large expanses of floor areas and for multi-function cleaning machines.

The UK market for industrial cleaning equipment and chemicals is estimated to be worth around £820m msp, with industrial cleaning chemicals accounting for around 65% of sales. Leading suppliers include Johnson Diversey, Ecolab and Deb etc., although owing to high degrees of fragmentation in the product and end-user markets it is difficult to establish specific market shares.

Sales of powered cleaning equipment account for some 25% of the total market, at around £205m, while the remaining 10% (£80m), is accounted for by manual cleaning materials, although there is some overlap between domestic and commercial use.

The leading suppliers of powered floor cleaning equipment in the UK include Numatic and Nilfisk-Advance, the largest suppliers of branded machines in the commercial vacuum cleaners sector, although Soteco is a key manufacturer of 'badged' vacuum cleaners supplied under a range of brands. Alto and Karcher are the dominant suppliers in the market for pressure washers. Tennant UK, Dowding and Plummer, Hako Machines, Walter Broadley, Premiere Products, Johnson Diversey and Truvox etc. are leading suppliers of larger items of hard floor care equipment i.e. scrubber driers, large area floor polishers etc.

The market for manual cleaning products is dominated by a handful of manufacturers, each with strengths in differing product sectors, including Ramon Knitting, Robert Scott, SYR, Contico Manufacturing, Addis Commercial, Vileda and Numatic International.

TABLE OF CONTENTS

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Text © 2003 AMA Research

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Last updated by Amanda Porteous February 2004