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KN90009

KEY NOTE CONTRACT CLEANING JUNE 1999

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Executive Summary

Table of Contents

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EXECUTIVE SUMMARY

The UK contract cleaning market is estimated to have grown by 9.4 percent at current prices in 1998, equivalent to a real growth of 4 percent after taking account of price increases. This market is currently worth an estimated £3.49bn, but is potentially worth considerably more, since a substantial element of industrial cleaning is still performed in-house. Key Note estimates that, if this were to be included, the market would be valued at nearer £8bn.
Industrial cleaning services include the interior cleaning of buildings of all types, including offices, factories, shops, institutions, other business and professional premises, and multi-unit residential buildings. The sector also includes window cleaning, chimney cleaning and the cleaning of fireplaces, stoves, furnaces, incinerators, boilers, ventilation ducts and exhaust units, and the cleaning of trains, buses, planes and other vehicles and transport infrastructures. In addition, an increasing range of services is being provided by companies that have hitherto specialised in the contract cleaning business, but now operate in a much wider market for the provision of services related to the management and operation of buildings.
Between 1994 and 1998, services grew more rapidly than the rest of the UK economy. Within this sector, the fastest growing subsectors were `business activities' (including industrial cleaning) and `other services' (including laundering and dry cleaning). Over the 5-year period, industrial cleaning activity grew at an average rate of around 6.5 percent per annum. This expansion, although quite healthy, is well below that experienced in the early 1990s, when public sector cleaning contracts were being won from local authority in-house Direct Service Organisations (DSOs) under the former Conservative Government's Compulsory Competitive Tendering (CCT) legislation.
In more recent times, the pace of legislative change affecting the sector has accelerated. Although the impetus for many recent developments has come primarily from the European Commission (EC), much legislation affecting the sector has been initiated at both UK and European levels. Regulatory issues include fairness at work, parental leave, part-time work, the minimum wage, working time, and the long-running issue of the rights of employees transferred between organisations following acquisitions and other changes in company ownership. In another recent initiative by the Labour Government, the pursuit of `best value' in public sector organisations has built upon, rather than replaced, the CCT approach. As the trend for outsourcing proceeds, opportunities continue to be provided for further penetration of the market in both the public and private sectors.
In the medium-term future, as the service sector continues to expand at the expense of manufacturing, some contract cleaning opportunities will be closed off, while others will be opened up. Increased environmental awareness will also provide a growing number of opportunities for the expansion of existing cleaning-related services or the creation of new ones. On balance, UK contract cleaning services are expected to grow faster than the UK economy as a whole, with the sector predicted to be worth around £4.42bn by the year 2003.

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TABLE OF CONTENTS

Executive Summary

Market Definition

INTRODUCTION

MARKET SECTORS

MARKET POSITION

MARKET TRENDS

Table 1: Comparison of Cleaning Activities As Defined by SIC (80) and SIC (92)

Table 2: UK Gross Domestic Product by Industry Sector at Current Basic Prices (£bn and percent), 1998

Table 3: Subsectors of the UK Business Services Sector by Annual Turnover at Current Prices (£m), 1998

Table 4: UK Gross Domestic Product by Key Industry Sectors at Current Basic Prices (£bn), 1994-1998

Table 5: Subsectors of the UK Business Services Sector by Annual Turnover at Current Prices (£m), 1994-1998

Market Size

THE TOTAL MARKET

MARKET SECTORS

Table 6: UK Industrial Cleaning Sector by Turnover at Current and Constant Prices (£m), 1994-1998

Industry Background

RECENT HISTORY

INDUSTRY CONCENTRATION

EMPLOYMENT

TRADE ASSOCIATIONS

Table 7: Subsectors of the UK Business Activities Sector by Number of Businesses and Turnover (£m), 1998

Table 8: Numbers of Industrial Cleaning Businesses by Size of Business - Comparison with Total 'Business Activities', 1998

Table 9: Numbers of Industrial Cleaning Businesses by Size of Business (number and percent), 1996-1998

Table 10: Employee Jobs in the Industrial Cleaning Sector - SIC (92) 74.70 - in Great Britain (000 and percent), as at June 1994-1998

Competitor Analysis

THE MARKETPLACE

MARKET LEADERS

ADVERTISING AND PROMOTION

Table 11: Estimated Shares of the UK Industrial Cleaning Market (£m and percent), 1998

Table 12: Advertising Expenditure on Office Cleaning Services (£000), 1994-1998

Strengths, Weaknesses, Opportunities and Threats (SWOT)

STRENGTHS

WEAKNESSES

OPPORTUNITIES

THREATS

Buying Behaviour

CONSUMER PENETRATION

Table 13: Demand for UK Industrial Cleaning Services (£m and percent), 1998

Outside Suppliers to the Industry

INTRODUCTION

SUPPLIERS OF CLEANING MATERIALS

MANUFACTURERS OF CLEANING EQUIPMENT

Table 14: Sources of Supply of Goods and Services to the UK Industrial Cleaning Sector (£m and percent), 1998

Current Issues

INTRODUCTION

LEGISLATIVE DEVELOPMENTS

LABOUR TURNOVER AND RECRUITMENT

TRAINING

BENCHMARKING

MARKETING ISSUES

COMPETITIVE DEVELOPMENTS

Forecasts

KEY ISSUES 1999 TO 2003

FORECASTS 1999 TO 2003

Table 15: Forecast Turnover of the UK Business Services SectorÅ (£m), 1999-2003

Company Profiles

INTRODUCTION

DEFINITIONS

FURTHER INFORMATION

Further Sources

ASSOCIATIONS

PERIODICALS

DIRECTORIES

GENERAL SOURCES

HOPPENSTEDT BONNIER INFORMATION SOURCES

GOVERNMENT PUBLICATIONS

OTHER SOURCES

Text © 1999 Key Note

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Last updated by Jacob van Eldik 26th January 2000