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FM sector has weathered the recession

21 January 2010

The UK FM market currently valued at £87bn, grew 1 percent in 2008 despite the recession, according to MWT Research in its latest FM Market Report.

The FM market has outperformed many other key sectors of the UK economy according to the FM Market Report from MTW Research. The recent performance of the FM market as a whole is described as ‘reasonably positive’ against the backdrop of a relatively deep recession during 2008 and 2009.
The UK FM market is estimated to have grown in value by around 9 percent since 2004, reflecting  the general trend toward companies seeking to outsource non-core activities. This continued into the second quarter of 2008 when the impact of the ‘credit crunch’ resulted in a slowdown, though not a cessation, in volume growth – particularly during the last quarter of the year as business confidence declined rapidly.
The Report predicts that the FM market will continue to see a dramatic shift toward multi-service provision in 2010 with FM clients following ‘flight to price’ procurement strategies to reduce outsourcing costs. Despite a rapid decline in business confidence in a large number of key end use sectors within the FM industry, the market is estimated to have grown by just over 1 percent  in 2008. However, indications are that much of this stimulus emanated from reasonable performance in the first half of the year, followed by what is generally described as a  ‘flat’ period, possibly declining slightly during the last 2-3 months of the year

One key sector which has benefited from the need to increase efficiencies in the FM market has been the ‘total FM’ companies.  The Report estimates that there are currently around 600 ‘TFM’ companies active in the UK. This sector has flourished in recent years with high levels of consolidation and acquisitional activity. Indications are that the supply and procurement of integrated FM services will continue to grow in the near term, as pricing pressures remain keen.
Based on sales figures from the industry, the total FM market is currently worth just under £90 billion according to MTW, with operations and maintenance services the largest sector in 2010 and integrated or ‘bundled’ FM service provision now the second largest market segment. The report states that security services provision, which includes CCTV monitoring, access control, security screening etc has grown steadily in recent years.
MTW’s report also reviews the structure and current health of the FM industry, with just over 65 percent of FM contractors viewed as having either an ‘excellent’ or ‘good’ credit rating, reflecting a core strength in the market in terms of financial standing. However, the impact of the recession is clearly evident, with the report identifying that around 11 percent of the companies active in the sector are viewed as being at imminent risk of failure.
The 200 page report is available to purchase for £565 from MTW Research’s website

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