Pan European Facility Management: interview

Increasingly globalised property business, customers and players

Structurally speaking, the Facility Management market has developed in Europe on a national basis since the 1980s.

The British market, a forerunner of the movement, expanded particularly through the public sector. Back in 1992, with the adoption of the PFI (Private Finance Initiative), the government set out to find private-sector companies able to both fund public facilities (schools, prisons, military bases, ministries, etc.) and manage and operate them over long periods (25 to 50 years on average). The British private sector rose to the challenge and outsourcing Facilities Services to a single provider became a common practice. This was made easier to implement as the flexible TUPE [Transfer of Undertakings (Protection of Employment)] regulations were introduced in 1981 to ensure job security for employees transferred to a new employer.

These practices then escalated to Northern European countries (Sweden, Finland, Denmark, Norway and the Netherlands) and in Ireland. Facilities services were also outsourced in both the public and private sectors. Aware of the need to standardise legislation concerning personnel transfers, the European Union voted the ARD directive (2001/23/EC: Acquired Rights Directive), a European-scale version of the TUPE. Nevertheless, this directive covers very different realities in the various European Member States.

Obstacles to the development of a European Facility Management market

Lack of public sector drive

Continental countries such as Germany and France followed the movement to outsourcing Facilities Services with a slight time lag. The practice was spurred on by private-sector companies, in particular banks or industrial technology groups. The public sector long remained wary about private funding and transferring public-sector employees to private companies is still a thorny issue. Using private service providers for public buildings such as prisons, hospitals or cultural facilities only really took off after the year 2000 and concerned new facilities rather than the renovation of existing property.

Cultural resistance to the outsourcing process

Southern European countries (Spain and Italy in particular) stood back from the trend of outsourcing Facilities Services as labour costs in these countries are traditionally lower than in Northern Europe and the more patriarchal model of corporate management did not look kindly on outsourcing internal staff.

A fragmented market hindering all-round solutions

This leaves the Eastern European countries emerging from fifty years of communism. Until recently, employers had their own personnel for all services needed by employees, including, for instance, childcare for employees’ children.

The collapse of the system resulted in a fragmented market of small-scale players, based on the expertise of a few people. These service providers could not develop complex building and staff management systems which lay at the core of modern building management. The market is therefore underdeveloped as a range of appropriate services is unavailable on the market.

Yet many foreign companies present in Eastern Europe, particularly German groups, have used German Facility Management companies to “import” their expertise and their model of building and services management. Following this trend, the Facility Management industry has started developing in Eastern European countries, based on these principles and business activities.

A slowly developing Facility Management market on a European scale

The worldwide spread of the Facility Management model

The concept and practice of Facility Management originates from the United States, where building and services management was streamlined and standardised nationwide just after World War II. American groups, having become multinationals, wanted to manage their property worldwide according to the model which made them successful: they therefore applied their business model which was tried and tested in the United States, after endorsing and bringing it into line with each country’s culture and customs.

American technology groups (starting with IBM) therefore outsourced their internal corporate service management teams, and applied this concept in Europe in the 1990s, entrusting their corporate service management to Facility Management groups operating in several European countries. This model was copied by many major American and multinational groups, which then started to select service providers by geographic zone (the Americas, Asia Pacific, and Europe which is grouped together with the Middle East and Africa in the acronym EMEA). These contracts are being renewed for the second or third time, and their scope is gradually extended to new services over time or as their clients expand.

At the same time, European groups, in the technology sector in particular, followed suit by entrusting building-related service management in five, six or seven European countries to groups such as Faceo. Alcatel-Lucent, which selected an outsourcing Facilities Services provider able to support their development, is a prime example.

Increasing need for Facility Management solutions over a wide geographical area

With the stronger need for service providers operating across Europe, a growing number of Facility Management players spanning several countries have emerged. Two types of companies stand out: those offering a well-developed Facility Management model, and those wishing to extend and complete their core business (cleaning, catering for example).

Lines of products and services offered by Facility Management providers, or would-be Facility Management providers, on a European scale, have burgeoned, in particular through acquisitions, on the rise since 2005. Invitations to tender (ITT) over several countries are commonplace today. Their scope is often inconsistent in terms of requirements, even though organised multinational groups increasingly demand a single management capacity from a single point with a single system and helpdesk from their facility managers.

The development of Pan European Facility Management is a reality unhindered by differences between national regulations concerning personnel transfers. Globalisation and the use of a single provider for several buildings in several countries are therefore rapidly spreading, in spite of the differing levels of service between countries, and the constant opposition between headquarters and group subsidiaries which outsourcing Facilities Services.

By Amaury de Varax – Business Development, Marketing & Communication Director