Assessing scenarios that are likely to shape up the future of the UK FM market
The discussions around Brexit have mostly revolved around the movement of goods across borders, somewhat undermining the discussions on its impact on the services industry. Over the years, multiple services industries have flourished in the country and made a positive impact to the economic output. Facilities Management (FM) is one such industry.
According to a 2019 report by Global FM, the UK facilities management (FM) market generated revenues of £54.8 Billion, contributing 2.2% to the nation’s GDP in 2017 (We believe UK Market is £120 Billion). The same report also suggests that the UK has the biggest outsourced facilities management (FM) and Integrated FM (IFM) market in Europe, leading the continent in both sophistication and maturity.
Assessing the probable impact of Brexit on the FM sector can provide insights in to the services sector as a whole and the challenges that it would need to overcome.
The EU has been the largest trading partner for UK, accounting for almost half of the country’s trade in both goods and services. For example, according to The European Automobile Manufacturers' Association (ACEA), 51% UK-assembled passenger cars were exported to the EU in 2018. Also, almost a quarter of all UK-produced financial services are connected to EU clients. Industries on both sides have benefitted from UK’s membership to the EU, validating the premise for which EU was created in the first place.
So far, an open border has allowed UK firms to specialise in activities where they have comparative advantage and are able to add the greatest value. Affiliation with EU has also facilitated an inflow of foreign direct investment (FDI) as firms invested in the UK as a base to access EU as a single market. Additionally, free labour movement aided the UK to hire specific skillset from across the EU. All these factors have been instrumental in the growth of various services industry in the country including FM.
FM areas that would be impacted if UK decides to leave EU without a deal in place:
Labour and skills shortage – Hiring is likely to be impacted as the UK FM industry employs EU workers across multiple skillsets. The devaluation of pound sterling caused by Brexit would expectedly reduce the value of wages and influence the employees to migrate
Wage hike and contract terms – In the aftermath of Brexit, businesses are likely to struggle in filling positions essential for contract delivery and end up shelling more for the right talent in certain areas. Since personnel costs are usually the largest costs in assessing FM contract performance, higher wages could have longstanding effects.
Supply chain – one of the key concern for the FM sector is the disruption caused by Brexit to the supply of goods such as chemicals, consumables, food products and electrical/ mechanical components
Brexit in any form is likely to disrupt the FM market. FM providers should look at this as an opportunity to get ahead of the competition by actively envisaging and quashing challenges brought forth by Brexit.
While discussing Brexit Readiness – How Brexit could affect organisations, setting out key questions and areas for consideration one Question cropped up.
In the Brexit (whenever that happens!) World – What does it mean to be a UK Entrepreneur or Public Services leader today? I responded leaders will need to see what's in front of them not What's in the future!
They should have at least two – thirds of their conversations with existing customers and end users. This is the time to get their hands dirty (if they haven’t already), go back to basics to love (even more…) their customers and users and deeply want their users to sustain and grow. What do you think – How should we dig deep and support each other and our clients?
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