Upstream The Newsletter of Incentive FM Group Autumn December 2019 Inside This Issue Market Changes Contract Wins Company news 2019 Conference Health and Safety Training Charity Update Welcome to the December 2019 edition of our newsletter. We hope you enjoy reading about what has been SURVIVAL OF happening in and around our business in the second half of this By Jeremy Waud, Chairman year. THE FITTEST at Incentive FM Group It has been suggested that ‘the only thing ence which party, or which Prime Minister is at that is constant is change’ – which perhaps is the helm. It has been a shambolic year which has a fair observation for the wider facilities not helped businesses one iota. The lack of clarity management and contract service industry or certainty for our clients across a wide spectrum in 2019. So what are the main influencers of sectors has been an unhelpful side effect of and disruptors of the moment? Brexit, and is reflected in the incredulity with which we are viewed from overseas. Our cus- Stability of Competitors tomers are understandably nervous, uncertain It cannot have escaped the attention of many and risk averse at every turn, which is not a that big names in our sector have got themselves healthy backdrop to try and operate in front of into trouble over the last year. These include: and to make investment decisions within. Carillon’s collapse into the warm and friendly arms of its bankers; Mitie’s long spell of enforced Friend or Foe? restructuring; Interserve’s ‘Pre-Pack’ to a new Another major change of the past year has been owning company to avoid a complete collapse; the effect of some of the major global surveying and Kier are in the news and under the micro- organisations diversifying into service delivery. scope. A number of smaller single service compa- For example, CBRE acquired skills and capability nies have also gone out of business as a result of in the mechanical and electrical maintenance sec- a tough market which we consider to be largely tor for the buildings it manages through the driven by the factors below: acquisitions of Norland and Johnson Controls Continued... Politics and the Economy The majority of our politicians have clearly never run a business and may not have ever even run for a bus! Yet, they are empowered to decide on the health and direction of our nation, whether in Europe or out and it seems to make little differ- fm group limited Our Annual Conference Incentive Teams Power On! By Jessica Strawbridge and Martin Reed This year’s Incentive FM power to the extreme with an outdoor stuck it out, smiled, laughed and commit- event including rage buggies, quad bikes ted themselves to the event despite the cold Group Conference proved and off-road Segways. In addition, the and wet. That’s what Incentive is all about! another powerful reminder of teams had to show their power of thought As ever the day finished with our by erecting tents while blindfolded and annual awards dinner where we celebrated what makes our Group the starting fires with nothing more than flint or the success of our business, its outstanding success it is – Our People. a string bow. individuals and most of all its world class The culmination of the afternoon teams. Our employees were once again The theme of Incentive Power provided a brought both brain and physical power to guests of honour and received a standing platform for the day which explored both the fore with the teams having to design ovation from the management team for the the energy within the business, the power and build their own raft to carry six people excellent work they and their teammates do of our teams and the ability to generate across a lake. There were some interesting every day on behalf of the group. business growth and career opportunities concepts which, when brought through to I am so proud to host this day as it for all involved. reality, proved a mixed bag in both speed confirms that although we are often work- The morning business session started and the ability to stay afloat! ing very remotely from other parts of the with an update on our six trading compa- I have to comment on the dreadful, business either at company or contract nies and the Group as a whole. The UK FM almost biblical rain that came down several level, there is a real one team spirit and a market continues to be a challenging envi- times during our four plus hours in the field. culture of love for the group that is most ronment due to various factors but the MDs But of over 150 people almost everyone powerful of all. revealed the plans and initiatives which will drive our companies forward in to 2020. As MC I then invited a number of ‘powerful’ individuals to the stage to tell their stories of adaptability, development and success. Steve Alderson and Louis Wright explained how they had put their physical and mental capabilities to the test, developing their skills and supporting the business and our friends at Scotties Little Soldiers. Emily Cunnane, Darren Peacock and Sam Paxton discussed how they had devel- oped their careers with IFMG through pow- erful performance and a willingness to adapt their skills and capacity to take on bigger and more demanding roles. They showed how potential can be turned in to real success through hard work and a will- ingness to adapt. The afternoon session really took Page 2 Continued from page 1 GWS. These skills, now wrapped under the parent branding, are changing the way it chooses to deliver services to its managed properties and it is not clear where this will this end up. Similarly, JLL made the significant M&E acquisition last year of Integral. These busi- nesses are indeed friends of ours and big customers as are other major surveyors, notably Savills, who this year acquired the property management business of Broadgate Estates from British Land. All the while these organisations buy from us in sensible volumes, we will not be entering the property management market – hence we are all friends and not foes. Procurement Trends We are of course a big service delivery organisation, employing more than 3,200 staff in the process. We therefore spend a large part of our time on the receiving end of procurement departments and special- ists with differing levels of appreciation of what we do and what needs to be done. Buyers are largely charged with the respon- sibility of delivering even better value for their ultimate clients. Longer term viability and operational reality can often be a sec- ondary consideration. This drive comes from economic pressure, opportunism and of course good practice, as defined by cor- porate governance and the likes of the RICS in the challenging retail sector. Our consultancy business, along with other specialists in this sector, helps many high- profile companies with their procurement strategies and processes. Having specialist FM procurement, such as Incentive Consultancy, can help to understand and bridge the gap from ‘generic’ buying prac- tices to a 360-degree view of the chal- lenges from all sides. Commercial Sanity None of the above drivers or disruptors make for higher contractor margins, in fact quite the opposite. The result is too much risk exposure and cash management pres- sure being levelled on the contractors in the sector, so much so that you can almost hear the pips squeaking! The challenge for the market going forward is to not be backed into the cor- ner at every turn, but to deliver attractive, creative and mould breaking service deliv- ery solutions that share risk with the clients and intermediaries. So a final message to all those who think contractors can operate within the 5- 10% gross margin space, take high risks, be paid at 60 days, employ all of the semi and lower skilled staff that are needed in their operation and then invest in all manner of skills, experts and technological advances – please get real and think again. Thank you. Page 3 How are we responding to Market Changes? By Jeremy Waud and Martin Reed In recent months we have seen a plethora of exciting £9 Million of New Business! contracts wins, some of which are covered later in this newsletter. Incentive FM has been awarded a contract by LV covering their offices in Bournemouth and elsewhere in the UK under a new TFM deal. On the cleaning front, Incentive QAS have been awarded the main landlords cleaning contract for the Canary Wharf Tower, One Canada Square in London’s Docklands by Canary Wharf Management. (The tower is 235 metres tall has 50 floors and its total floor area is a staggering 1.75 million square feet!) Incentive TEC has won a major planned maintenance (PPM) contract for The Co Op Bank covering its data cen- tres in the Manchester area. These big deals come on the back of two portfolio management instructions for multi service, multi-site contracts with niche managing agents Fidum Property Management and Nightingale Property Management. Our Consultancy team have been instructed to help Plymouth Argyle Football Club in a review of its FM services, the third football club that we have been involved with. Facilities Management Market Repositioning As mentioned in our cover story, we are seeing the effect of many of our clients in property management positioning them- selves to large owner occupiers and land- lords as an integrated property advisor and FM services provider. This does somewhat change the lie of the land and in part justi- fies our historic stance of offering a variety of service packages from single service to TFM or even consultancy.