The impact of Brexit on FM

THE CLEANING FIRM’S VIEW
TIM DEEKER-HARRIS, 
BUSINESS DEVELOPMENT AT PRIME CLEAN

With Brexit around the corner (although the actual distance to that corner seems to be forever debated) I real have concerns over the service industry as a whole and where it will leave the largest proportion of our workforce.

Wherever we go, the service sector is made up from hard-working foreign labour who work the hours that so many Brits simply won’t do. Many of these workers have left their families back home to come over to the UK for a “better chance of employment”. This workforce is the backbone to our businesses and what message are we delivering through voting to exit Europe? The stats show that Brexit was predominantly supported by people who are nearing retirement, or already retired, and whom may not have to worry about the longer-term impact this decision is likely to have on our country.

From my own perspective I have concerns for our industry. Not to begin with, as I am sure the scaremongering of a hard Brexit simply will not come to fruition… thank goodness. However, I worry for the medium to long term and what will become of the majority of our workforce. Will foreign nationals still want to reside in a country that voted for greater border controls? Will we still be an attractive option for low skilled workers? I am sure the industries that attract top talent and pay high wages, for example banks and insurance companies, will not suffer from a loss of skilled foreign workers but I do fear for the low skilled worker who make up our country’s service industry. This is much broader than just cleaning; who is going serve food in restaurants? Drive our buses? Stock the supermarket shelves? The list is almost endless!

Direct labour costs are extremely likely to rise if the pool of workers was to lessen. Furthermore, the cost to buy materials and equipment is also likely to rise due to increased wage costs within other sectors. This can only lead to one of two things, reduced profits or price increases. Now we all know that approaching a client mid-contract and asking for above inflationary increases can leave people in difficult situations. Not all clients will be able to support this outright and may need hours to be cut in order to allow for the increased rates of pay. This in turn has a negative impact on the quality of work and in essence the client satisfaction. Pull all this into the equation and you may find the length of cleaning services contracts shortening due to the challenge of balancing service levels with increased wage costs. 

DANIEL DICKSON,
CEO UK & IRELAND,
ATALIAN SERVEST

Much of the debate around Brexit stands in contrast to the growth and openness of the facilities management market — one that has repeatedly demonstrated a progressive, entrepreneurial and outward-looking spirit. Our industry is estimated to be worth more than £120 billion to the UK GDP while employing around 10 per cent of the working population. Professional FM bodies such as IWFM have long stressed the sector’s value as somewhat of a leader for the wider UK economy. This means, however, that FM may feel the adverse effects of Brexit more than some other sectors.

At Atalian Servest, we mobilised a ‘Brexit Taskforce’ group shortly after the referendum in 2016. Since then, the group has met regularly to look at the effects of the supply chain on our business and, more importantly, the impact on our colleagues. We are therefore ready to react to the possibility of a deal or no deal scenario. The group feed back the results of each meeting to our divisional teams and regularly liaise with our suppliers and partners on progress.

Labour is one of the highest costs in FM, regardless of whether it is in-house or outsourced. With a large number of workers from other EU member states – particularly in soft service provision – restrictions on the free movement could therefore result in a reduced supply of workers, leading to wage inflation and, thus, increased costs across the board. In preparation for such an outcome, we have provided staff in our hospitality division the opportunity to complete the Home Office settled status form using the required app, with our support as an employer. Once we identified that the app is only available on Android, we invested in a large number of suitable devices and appointed ‘Brexit Champions’ to help EU citizens working on our sites complete the registration. Nearly 75 per cent of our hospitality sector workforce are from EU member states, so this initiative is vital if we are to help remove the obstacles to registration for our valued workforce before the new rules come in effect in January 2021. Just by doing this, we have seen our colleague retention rates increase significantly and, in addition, we have signed up 155 colleagues to hospitality apprenticeship programmes to aid in their development.

Elsewhere, Brexit could have a profound impact on FM’s supply chains. Facilities services depend on large and complex contracts that can often include hundreds of disparate suppliers and subcontractors. Any disruption within this network could create a domino effect on many of the customers and providers of FM services. Leaving the EU without so much as a cushion could, for example, result in disastrous delays at the border for imported goods due to increased ‘red tape’, while the weakening of the Pound against the Euro and the addition of custom tariffs could lead to greater inflation.

The onus is on the government to keep supply chains intact and maintain Britain’s reputation as an open and attractive destination for national and international investment. Those of us procuring and delivering FM services, however, must consider the risks posed by the all the permutations once the UK formally extricates itself from the EU and mitigate them where possible.

Pan-European and global FM contracts are on the rise because customers increasingly understand the strategic value of joining up their operations across borders. Brexit shouldn’t change this, and as an organisation, we understand this innately. We are fortunate enough to have a strong network of suppliers across Europe – which represents the sort of strength and resilience that the FM market will need going forward.