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10 Companies

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These ten companies highlight a whole range of themes that characterise facilities management over the past decade – change, growth, consolidation, technology, service scope and focus, variety. Each is a small history lesson in its own right. 

Atkins
FM has seen change and innovation driven by various factors, and customer demand is certainly one of them. It was about 10 years ago that Atkins, the international consultancy active in a whole range of areas, began to transform its service provision in this sector. Term maintenance contracts were evolving into service contracts on the back of increasingly professional helpdesks that centralised customer support.

Atkins' Asset Management business began delivering managing agent services from the late 1990s to financial and retail companies. In the early days, data and processes were often lacking (by its own admission), but the business grew as systems and technology developed. Its helpdesk now is a 130-agent, 24/7 service, fully enabled with web and workflow technology, plus Atkins' own management systems.

This growth in technology has enabled huge improvements in management information and the transparency of service delivery as FM in the workplace has tried to keep pace with client expectations - often set by the experience we have as home users of things like Amazon and e-Bay.

As managing agent, Atkins maintains independence from the supply chain. An important benefit, but how does its position stack up if it's competing against the likes big service providers such as Carillion and Interserve?

Head of the business Andrew Wilkinson believes that the skills required to manage and develop the delivery of services are different to the skills required to deliver services or even to plan and think strategically. Looking forward, he suggests: "The managing agent service may develop into 'knowledge agent' services where knowledge can be delivered to help inform client strategies and decision-making processes. We have the products and processes to turn vast amounts of data into management information. Through our expertise we can then create knowledge which will help clients make informed property strategy decisions."

As for the future of the industry, Wilkinson adds: "We also expect to see a continuation of the integration between the traditional professions of estates, projects and facilities management as the lines between revenue and capital budgets become even more blurred."

Carillion
Like i-FM, Carillion marks its 10th anniversary this year following its demerger from the Tarmac construction group. Carillion says that its double-digit organic growth, coupled with strategic acquisitions, has seen it become the UK's market leading facilities and property management service company. A reasonable claim: Carillion does sit of the head of the i-FM Top 50 rankings, and it certainly has a reputation in the marketplace as a solid player.

And as for those acquisitions – it's arguable that Carillion has done more to shape, or re-shape, UK FM than any other company. It bought the well-regarded M&E services group PME in 2005. At the time, it was said that the price paid, £40m, was over the odds; but Carillion didn't want to see one of the last big independent specialists go to anyone else. That buy was followed with the 2006 purchase of Mowlem, which was followed with the 2007 buy of Alfred McAlpine.

The company got its taste for all this with its first serious foray into the FM sector: it had bought Citex in 2002 for £11.5m.

Both Mowlem and McAlpine had become mired in business problems – in the construction division of the former and in the quarrying division of the latter – but both had strong and promising FM operations. McAlpine's had been built on its own acquisition of the Stiell business in 2002. (A number of the key people behind Stiell's growth are now at Europa, but that's a different story.)

Carillion, which appears to be managed by some very hard heads, delivered steadily improving business on the back of those acquisitions and was not shy about selling on the parts that were deemed non-core – cleaning company Pall Mall after the Mowlem deal, for example, and IT and environmental consulting businesses after McAlpine.

In line with these moves, Carillion also shifted its Stock Exchange classification, moving from the unexciting world of 'construction' to the up-and-coming 'support services' in June 2008 – as the company sees it, a major landmark in its evolution.

Now, its facilities management businesses employ over 19,000 people providing services that range from building and engineering system maintenance through to total outsourced asset management solutions, generating annual revenues in the region of £1.6bn.

Around 70% to 80% of these service revenues come from the public and regulated sectors.

Cofely
The Cofely name is a new one in the FM sector, created only in March 2009 when the massive French group GDF Suez merged its Cofathec and Elyo businesses. The logic was the creation of a unified brand name for its energy services activities, in order to consolidate its position across Europe, increase visibility and facilitate expansion.

Cofely, like its predecessors, operates in the growing markets of energy and environmental services. It offers expertise in energy performance, the production and distribution of local and renewable energies, and integrated services including engineering, installation, operations and maintenance.

Cofely has also absorbed the Axima engineering services brand. Axima was originally part of the Sulzer Infra group. The Zurich-based Sulzer bought CBX, one of the early pioneers of outsourced facilities management in the UK, in the heady days of the late '90s when the idea of a pan-European service solution was all the rage. Having got that wrong, Sulzer subsequently wound the rapidly declining CBX into Axima and then sold the lot in 2001 to Belgian company Fabricom, which was owned by Tractebel, which was owned by Suez. And that's just a part of the story – you can see why the group would want to create a single coherent brand.

Cofely across Europe is a big business. It operates in 15 countries, has 35,000 employees and accounts for more than half of the revenues from the Suez energy services business - about €14bn in 2008.

In the UK and Ireland, where the focus is on hard services, especially energy, Cofely has about 2700 staff covering 13,000 customer sites and producing a turnover of about £300m.

Incentive FM
Jeremy Waud walked out of OCS in search of independence – and found it with the creation of Incentive in 2002. "I always said FM is great fun, but I would never do it with my own money: what did I know?" he says looking back on those days. He also says that forming the company and pushing it into the marketplace with limited funds but plenty of passion and determination has been 'really exhilarating'. And pretty successful, too. Incentive is relatively small (number 40 in the Top 50) but it has grown steadily and developed a reputation for creativity. In September it won its largest ever contract, a multi-million pound deal at London's Covent Garden Estate.

Growth has come through organic channels, as well as some of that creativity. The firm has been something of a pioneer in taking FM thinking into industrial sectors, and it grew into catering by taking on a client's operation. And its consultancy business has led it into Europe. Earlier this year, it gave its cleaning operations a big boost with the acquisition of the £6m contract cleaner Quality Assured Services.

Indeed, one could look at the way it has grown and think 'this looks like a mini OCS in the making' – but Waud is wary of size. In his view, the big providers lack personality in both their pitches and their service delivery. He's a great believer in a true open-book approach (not just pretending they're open, he argues), and in offering real career prospects and appropriate rewards in order to get the 'remarkable' from people.

Incentive has grown up as PFI has continued to impact the marketplace, with its focus on big, often complex and always long-term contracts. If Waud has one regret about the private sector market in which he normally operates, it is that consistency and long tenure are not generally valued features of the contract landscape. A common theme in FM, where clients often still seem to feel some comfort in the standard three-year contract despite good arguments that retendering can be both costly and disruptive.

Macro
One of the few companies in UK FM committed purely to the management role, Macro was set up in 2002 by three alumni of the pioneering CBX: Bill Heath, as Managing Director, Gary Youngs, as Operations Director, and Peter Brumby, as Technical Director. Joining them as Business Services Director was Alison Hartigan, a former senior property manager at British Airways.

That team was backed by Mace, the construction management firm, in the belief that there was a clear need for effective FM input into any significant building project – and not just post-handover. The goal was to offer clients operational management support but at the same time to draw on the Mace culture with input into everything from initial design decisions through to lifecycle planning.

At the start, Macro set itself the very ambitious goal of delivering a £50m turnover by year five. Its growth trend has been remarkably strong, and in 2008 it was virtually on the turnover target. All this was achieved mainly through organic growth, though it did buy FM24, the helpdesk specialist, along the way.

Like everyone else, its plans have been slightly derailed by recession – but it has proved that there is real demand in a niche that most FM companies abandoned in favour of a diversified offer. Macro has continued to take on new clients and to extend and expand the scope of existing deals. It is beginning to look at international expansion in response to demand from existing clients, most recently into the US.

And on that subject, Bill Heath passed the MD title to Peter Brumby last year when he moved to Dubai to launch Macro International in the Middle East.

MITIE
In many ways, MITIE embodies the whole concept of an evolving outsourcing market. Like that market, the company has moved from a collection of single services, through bundling, and on to capabilities in integrated services and TFM.

The MITIE name is an acronym for Management Incentive Through Investment Equity – the basis on which the group was built. Launched in 1987, the principle was to buy into successful operators, adding to their reach and expertise but leaving the original owners with enough of a share in the business to feed their desire for growth. The company is a very different place now but it still aims to foster 'an environment where hard work and success are rewarded'.

MITIE, which sits at number 4 in the Top 50, is active in virtually every facilities service and generally on a nationwide basis. The transformation of the company over the years has been interesting to watch. Up to about the mid 2000s, it seemed very much a collection of almost independent businesses that just happened to share the same name. Then about the time that Ruby McGregor-Smith arrived as Chief Executive in 2007 (having moved up from Finance Director and then COO) things started to change. The MITIE branding was applied more consistently, its tired website was finally overhauled and the organisation started talking about itself in a whole new language – for example, referring to itself as 'the strategic outsourcing and asset management company'. Clearly, the decision had been made that it was time to push the business up the value chain in buyers' minds. And all this was handled quite subtly: there were no big announcements, no launches, no round of interviews with senior executives…just enhanced design, improved communication and consistent presentation. A case study, really, in one effective strategy for re-positioning.

And that was topped off this year, with the acquisition of the Dalkia FM business, a £130m deal that adds an energy/technical orientation particularly well suited to current marketplace concerns. But MITIE is no stranger to the big buy – in 2006 it scooped up Initial Security for £75m, solving one problem for Rentokil and making MITIE the UK’s second-biggest player in manned guarding.

Rentokil Initial
Rentokil traces its history right back to the early 20th century when it got its start in the pest control business. Initial, about the same age, had started in towel supply, then moved into laundry services. The two came together in the mid 90s when Rentokil bought support services group BET, by then Initial's owner. That's the period that really shaped Rentokil Initial and in a sense appears to have sealed its fate – at least as far as that fate has been played out so far.

As a result of the ambitious but disjointed strategy of those days, the group became a collection of largely unrelated service businesses – and so it remains to a great extent. As market interest in bundled services, and particularly a couple of years ago integrated services, grew, Rentokil has tried to respond. There have been various in-house teams over the years charged with building bridges between the businesses in search of the collaboration that would deliver bigger multi-service contracts. In 2006, a formalised initiative - Initial Integrated Services - saw substantial development culminating in its own market debut, complete with brand development, press campaign and launch event. But it would be fair to say all that hoopla is forgotten now, though there's a continued recognition that multi-service contracts have their attractions.

RI is not unique in finding the whole integrated thing a bit hard to get one's head round. But it does appear to have struggled more than most in operating in any serious way as something else in addition to an amalgamation of single service businesses - despite consolidating a number of services under the Initial Facilities Services banner in 2007.

In the past five years or so, there has been a string of boardroom changes as the group has cast around for a strategy that would stem its declining performance. It has continued to acquire in areas that are its 'natural' home, for example cleaning and pest control, and has pulled out of other areas, such as manned guarding. At the same time, adjustments in structure and personnel have continued – and it is beginning to look as though the new senior team (appointed in 2008) is getting sufficient grip on the business to see it stabilise and perhaps even return to group-wide growth.

SGP
Like Carillion and Cofely, SGP has a history that brings together a variety of strands from the annals of UK facilities management.

SGP itself started life as the property division of the old Sears Group retail business. In 2000, current MD Kevin Elliott and the management team led a buy-out to create an independent services operation with various Sears brands as leading clients. With the business growing, its development strategy led it into the arms of the Johnson Service Group in 2005. Johnson had previously bought FM business Workplace Management, and initially the two simply operated independently in their established domains. Indeed, Elliott has said that part of the attraction of doing a deal with JSG was that the new owner was likely to allow them the freedom to continue running their business.

Workplace Management had come to the group after a number of years as part of property advisors Chesterton, a business that was at the time in chaos with strategy and senior personnel seemingly changing weekly.

But not long after the SGP acquisition, trouble arrived at Johnson in two forms. First, the group found itself struggling to cope with declining business in some other divisions (its traditional areas of operation are laundry and linen services and dry cleaning), as well as high costs and an ongoing reorganisation programme. Then Fujitsu, a major client at Workplace Management, announced plans for a re-tender exercise that would ultimately see much of the service provision taken back in-house.

Some months after the departure of WM MD Hamilton Comely, Elliott was named as his replacement – putting him in charge of both businesses. Soon the market was being surprised with the news of a name change: Johnson Facilities Management…despite the fact that there was a rather well known Johnson already in the marketplace. Under this structure, SGP and WM were to retain their operating brands. Then, a year later, with raised eyebrows still not entirely returned to their natural positions, the decision was made to rebrand again: this time to SGP Property & Facilities Management – definitely a more logical and less confusing fit.

Though significantly smaller now, the business appears to have settled into a promising niche that features the benefits of a well-established helpdesk operation serving as the key focus for many of its service lines.

Sodexo
From its roots as a family business specialising in catering operations for cruise ships, Sodexho started to branch out into staff restaurants, schools and hospitals in the mid 1960s. It grew rapidly, first across France and then into continental Europe. In the mid 90s, it struck up an alliance with Gardner Merchant, opening up the UK market, and later followed a similar path into North America with Marriott Services.

Both of those alliance partnerships were subsequently acquired, Garner Merchant in 2000 and the Marriott venture in 2001.

In 2008, still growing, Sodexo dropped the 'h' from its name in order to simplify the spelling. The move was also part of a re-brand put in place to reinforce the company's ongoing transformation from a purely catering focus to a broad base of support services provision.

That change was followed early in the spring by news of a number of senior management changes. Then by late spring, Sodexo was announcing that it had been accredited under the Security Industry Association's Approved Contractor Scheme. The company – the first with food service roots to achieve this - declared it was clear evidence of its commitment to becoming a leading player in the facilities management sector.

More evidence emerged in the form of a series of contract wins for non-catering services; and then early this year, it poached Neil Murray from GSH to move in as the new MD of the FM division. At the time, the Chief Exec of Sodexo UK & Ireland described FM as a 'vital pillar' of the business and noted that 40% of its turnover already came from non-food services.

The degree to which it was being taken seriously as a player is suggested by the fact that when Dalkia was first rumoured to be up for sale, Sodexo was tipped as the likely buyer.

Market research in the catering sector has been telling us for years about the steady diversification of services offered by 'contract caterers', but few have moved on the FM market with such determination as Sodexo. In mid 2008, Eurest, the Compass Group business, was relaunched as a 'one stop shop' for a broad range of soft and hard support services, from food through maintenance and cleaning to security. It said then that the move followed research suggesting that UK businesses are increasingly looking to consolidate outsourced workplace services with one provider. No doubt true in many quarters, but Eurest has yet to make the convincing market impact with this transition that Sodexo is achieving.

Telereal Trillium
Trillium did its first major deal in1998 with the signing of a long-term property and facilities management partnership contract with the Department for Work and Pensions. A pioneering move, it spurred a flurry of interest elsewhere in the public sector and in the private sector, too. Indeed, in i-FM's early years, so-called 'corporate PFI' was a regular topic on our news pages – often with companies looking at the attractions of outsourcing their property and services, coming close to doing deals but then backing off as a result of concerns about being locked into long-term contracts, amongst other things.

Trillium seemed to have the knack, though. It was acquired by the property group Land Securities in 2000, and further big deals followed. Landsec itself teamed up with another investment group, William Pears, to launch a joint venture called Telereal that would take on an extensive BT property portfolio. And Land Securities Trillium signed an important contract with the BBC, focused on major enhancements to the Corporation's accommodation.

Telereal and LST both continued to grow, taking on new clients – in the case of the latter including Barclays and Norwich Union, amongst others, though ultimately the BBC deal fizzled out. In 2005, Landsec sold its 50% stake in Telereal to Pears in order to focus on its core business and the LST services business. This saw it move into PFI deals and subsequently Building Schools for the Future. Shortly after LST won the £1.8bn Kent BSF contract, however, it announced it would no longer be pursuing PFI contracts because the bidding process took too long and cost too much.

This came just weeks before it emerged that Telereal had bought Trillium for £750m. It was no secret that Landsec had been looking to sell the business as the credit crunch brought new and difficult pressures to the property world.

This move could have resulted in an interesting situation in Northern Ireland. Telereal and LST were both shortlisted as prospective partners for a major public sector outsourcing plan. Regrettably, the deal was abandoned due to financial pressures and collapse in the property market.


More information about the history, development and current performance of these companies (and many others) can be found on i-FM, where you can search our archives on any company name, keyword or phrase.