The facilities management (FM) market across the globe took a severe hit during the pandemic. It has however, shown healthy signs of bouncing back with future growth focused on technological innovation and sustainability.
The sector is going through a transformative phase primarily led by technology revolution, new business models, emerging value propositions, Mergers & Acquisitions and customized service offerings. The FM services are commoditizing across several geographies around the world and there is a need for innovation and new value propositions if suppliers are to avoid the cost trap.
The future of FM is technology-enabled, and the pandemic accelerated digital technology use. The Internet of Things (IoT), big data, and advanced connectivity will drive efficiency for service suppliers and clients.
Facilities Management in Ireland
With an estimated worth in Ireland of €1.2bn, the facilities management sector has enjoyed rapid growth in the country in recent years, and with annual global growth forecast of 11 per cent, it’s an industry that is showing no signs of slowing down. The Ireland facility management market is expected to grow at a CAGR of above 1.6% during the period 2022-2027. Ireland’s facility management industry operates with integrated contracts provided by significant global vendors and small local players focusing on single contracts and single-service solutions.
In terms of end-user demand, the public sector’s contribution to the facility management market in Ireland is more significant than any other end-user. This is primarily driven by the government’s constrained budgets that lead to the continuous outsourcing of essential facility management services. However, the growing competition in the market impacts the profit margins and growth of existing vendors. The level of competition between suppliers is so high that the FM services are transitioning and getting commoditized in the country.
Considering the market for Ireland facility management, it has been subjected to moderate growth due to the rise in demand for people with an improved requirement. The Facility Management providers will need to navigate how to communicate with a broad audience, including subcontractors, suppliers, customers, other third parties, employees and contractors, regulators, analysts, and markets.
The commercial end-user sector covers office buildings occupied by business services, such as corporate offices of manufacturers, IT and communication, and other service providers. Owing to this, the provision of necessary fitments and interiors and commercial building decoration and management has gained significant importance, driving the country’s commercial sector market.
The Facility Management market is witnessing multiple partnership activities between the vendors and the commercial entities in Ireland. For instance, in February 2022, BAM FM secured a series of new contracts across various commercial sectors like energy, housing, and education in Ireland. BAM FM partnered with Student Roost, a student accommodations provider, to manage over 50 of its student residences across the UK and Northern Ireland.
There is a paradigm shift in the market as multiple industries are transforming from utilizing a single FM outsourcing type of model to an integrated services model that can meet all the core needs of customers on a large scale.
The ongoing war between Russia and Ukraine has increased the demand for hostels due to the sudden inflow of refugees into Ireland. In April 2022, Allpro Services, an integrated facilities management company bagged the contract for managing the hostel accommodation.
Key FM Players occupying competitive space in Ireland
The Ireland Facility Management Market is fragmented with the presence of numerous players of different sizes. This market is expected to experience a number of mergers, acquisitions, and partnerships as companies continue to invest in offsetting the present slowdowns that they are experiencing strategically.
April 2022 – Global integrated facility services and solutions provider, ABM, completed its acquisition of Dublin-based Momentum Support, in an all-cash transaction. This acquisition is reflective of ABM’s ELEVATE strategy to grow via strategic acquisitions which expand the company’s footprint in attractive geographies and end-markets.
Brexit Impact on Ireland Market
After the Brexit, the UK has lost the rights and benefits it had as an EU Member State and it is no longer a part of the EU’s Single Market and Customs Union or covered by the EU’s international agreements. While the European Union respects the UK’s decision to leave, Brexit regrettably has far-reaching consequences for citizens, businesses, public administrations and stakeholders in both the EU and the UK.
The Withdrawal Agreement includes a Protocol on Ireland and Northern Ireland that’s designed to prevent a hard border on the island. This Protocol came into force on 1st January 2021. The protocol was a major priority during Withdrawal Agreement negotiations and it required a creative, workable solution to protect the all-island economy and the Good Friday (Belfast) Agreement.
Brexit has made frictionless trade between the EU and the UK impossible but the Protocol is a complex system that allows Northern Ireland to remain in the UK customs territory and, at the same time, benefit from access to the Single Market. It contains provisions that protect unique circumstances on the island of Ireland such as continuation of the Common Travel Area between Ireland and the UK.
Brexit Consequences
While much has been done to mitigate the impact of Brexit for Irish businesses and citizens through the Protocol, some consequences can’t be avoided. Online consumers may have to pay VAT, Customs Duty or both when purchasing from the UK, depending on the value and origin of the goods. EU consumer protection legislation may no longer apply when buying from the UK. Instead, consumer rights are set down in UK law.
Businesses importing or exporting goods to the UK (apart from Northern Ireland) now need to register for Customs. VAT rules of trade with a third country now apply to trade with the UK. Northern Ireland is treated as a Member State with regard to VAT on goods, but not on services.
People born in Northern Ireland who retain their right to be Irish citizens will also retain their EU citizenship so they still have the right to live, work and study in an EU country without a visa and with no time limit. The Common Travel Area between Ireland and the UK continues to be recognized along with the rights it grants to Irish and British citizens. This includes the right for Irish and UK citizens to live, travel, work and study within the Common Travel Area.
However, these rights do not extend to EU citizens resident in Ireland. Goods moving between Ireland and Northern Ireland will not have any Customs, tariffs, or other restrictions placed on them.
Impact from both Covid-19 and Brexit has defined a new and very different labor market in which, even in those areas where candidates were previously fruitful in their availability, there is now far less labor available. Unemployment rates are extremely low, many candidates are unable to work due to the legal impact of enforced isolation periods, many left the country during Covid and because of Brexit. In effect, supply has reduced and demand has returned to its pre-pandemic levels, leaving a huge shortfall in candidates.
Managing consultant at FM hiring firm Catch-22 recruitment across the whole industry is challenging at all levels. The most experienced/skilled candidates are highly sought after are quickly moving off the market or receiving several offers giving them a lot of bargaining power. This is leading to employers either providing roles with lacking salaries that are not appealing to suitable or qualified applicants or if we can explain this current issue to them and they do agree to increase the salary they then have higher expectations due the increased salary which then escalates the issue.
Finding sourcing cleaning staff and semi-skilled maintenance staff within the education sector/for service providers operating in education has become a real struggle. Shifts for cleaners in schools are often short. There is requirements for DBS checks and some organizations say candidates are not able to start with the check in progress so have to wait 4 to 8 weeks for these to come back again and loss of candidate due to the wait is another issue.
Upcoming:
How UK public sector and private sector cleaning FM landscape is changing? What’s the role of digitization in cleaning business? How client expectations have evolved over the years? Get the answers to all these questions and more in our upcoming webinar “UK Facilities Management Market Analysis : Cleaning Services Breakdown.” The webinar aims to discuss:
- Overview of outsourced FM Market in UK: Split by Service & Sector, Share of key players
- Deal volume by type of FM over next four years
- Type of approach in different markets of public and private sector FM
- Digital transformation in cleaning companies in UK
- Advice for cleaning suppliers navigating recession