From Sept. 11 on, the media have been saying that everything is going to change. Already in a recession, the U.S. economy supposedly suffered a cataclysmic blow when the World Trade Center towers fell. Almost immediately after the attack, pundits began predicting factories would close, people would lose their jobs and the recession would deepen as a result.

And some layoffs and closings have occurred, leaving building service contractors to wonder what’s going to happen to their businesses. Don’t worry too much, say customers. BSCs can expect some turbulent times ahead, but many facility professionals say if contractors are providing top-notch service at a fair price, they are at little risk of losing the account.

"Clearly, [businesses have] had some stressful times," says Bruce Phillips, senior economist for the Nashville-based National Federation of Independent Business (NFIB).

Manufacturing, for instance, has been hit hard, and contractors working in factories and plants should keep an eye out for layoff or closing announcements, Phillips says.

On the other hand, there even are some industries that are experiencing strong performance. So, a diversified portfolio of clients drawn from various industries could soften any isolated blows BSCs might encounter.

"If you work with financial institutions, you’re not doing too bad," says Phillips. That’s because, with low interest rates, more demand for life insurance and other factors, banks and other financial institutes are busy. Defense contractors and security-related firms also are faring well. In addition, many computer and technology companies that saw a dip in business after the dot-com bust also are thriving on increased computer-security business.

And overall, small business owners seem to be weathering the current economy pretty well, according to a recent NFIB study. For instance, 51 percent of business owners surveyed in January expected the economy to strengthen over the next six months, whereas only 8 percent expected the economy to weaken. Historically, readings like this quickly have been followed by actual growth in the economy, according to the report.

Likewise, the Small Business Optimism Index, a summary of owners’ attitudes regarding their businesses’ future and potential for success, rose between November and December. While the index hasn’t reached its pre-Sept. 11 levels, "normalcy is being restored," the report claims.

In general, that cautious optimism is shared by a variety of facility professionals. Most companies do report some financial weakness, but in many cases, they expect minimal impact on their cleaning operations.

"Some services, such as carpet cleaning, windows or floor finishing, are really a very small part of a business’s expense," says Phillips. And while some companies may be willing to stretch out or put off some periodic maintenance, many are unlikely to forgo them altogether.

"When you look at refinishing a floor, compared to a $1 million computer upgrade, it’s really not that expensive to begin with," he adds.

And that seems to be happening at defense contractor Lockheed Martin’s Sunnyvale, Calif. plant: The custodial operations department recently has scheduled some major project work, such as window cleaning.

Some institutions intend to hire more outside work this year; the University of Delaware, which normally cleans its residence halls in-house, plans to bring in a BSC this summer to support the conferences hosted there.

Weathering the storm
Not everyone, however, is expecting to add cleaning services; in fact, customers in some industries report they are looking for ways to trim costs, increase value, or both as precautionary measures.

Other facility professionals say their contractors have anticipated needs and already have offered to restructure their services.

"[The BSC] always is looking to automate processes to save man-hours and minimize needed staff," says Bruce Vaughan, director of business operations for Virginia Wesleyan College in Norfolk, Va "The company has offered to provide additional needed equipment in a number of areas at their cost."

Similarly, some customers are looking at supply costs, rather than labor, to trim at least a few dollars from their budgets. For example, the facilities department for the city of Fairfax, Va., encourages its contractors and its in-house staff to search for less expensive cleaning chemicals, even if it means using a lesser-known brand or a private label.

"We’ve never been extravagant," says Terry Lawver, facilities supervisor. "If we find a brand name does better, we’ll use that, but otherwise, it saves money."

Also, Lawver and his contractor keep a close eye on equipment breakage and loss to ultimately reduce costs. While some wear and tear is normal, reducing excessive loss due to negligence or theft can help stretch a budget without sacrificing service.

There still are some companies that are reducing their cleaning budgets, and are requiring their contractors to trim their costs. But most are doing so for reasons more indirectly related to today’s economy.

"We have downsized more locations because of the economy and because of changes in our corporate plan," says George Brown, building services manager for Green Bay, Wis.-based Humana Health Services. "Because we reduced the square footage of some offices, we decreased the amount of cleaning that’s necessary."

The contractor, Brown says, understood, and adjusted the contract accordingly, reducing its price along with their services because it valued his business.

And, Phillips admits, BSCs might see a need to restructure services or reduce frequencies to lower cost and remain competitive. But they could do so in exchange for extended contracts or other customer support.

One good strategy is to pay attention to your customers’ dealings. If they seem to have fewer customers, reduced state funding or higher-ups grumbling about budget cuts, suggest concrete ways you can help them.

"Always make decisions which are beneficial to the customer," Vaughan advises. "Most will be win-win. If the customer is in a ‘lose’ position, the feeling of partnership is quickly lost."

The real problems
Of course, not every BSC is willing or can afford to slash margins or revenues, and there are some customers that will change contractors because of it. But more often, even in a recession, it’s displeasure with service that will cause a customer to put out a contract out to bid.

In fact, most customers say their reasons for requesting new bids remain quite mundane — looking for better quality, standardization and greater value. BSCs that can be more flexible, innovative or efficient than their customers will have a better chance of keeping their current accounts, as well as landing new ones.

The Germantown [Tenn.] Baptist Church, for example, is considering changing its BSC to one with a more standardized training approach — and is willing to pay more for it. The church covers 88 acres, and includes five buildings of classroom, administrative, gymnasium and worship spaces.

"Training costs in the short term, but in the long-term of customer satisfaction and employee retention, it is a sound investment," says Bob Seals, director of physical plant and property.

Recession or not, it’s always better to focus on keeping accounts. That way, if times turn tight, they will more likely see you as an asset then a liability.

"Stay in close concert with your customer, and stay in tune with their mission," suggests Jerry Staples, director of facility management for North Carolina Agriculture and Technical State University in Greensboro. "If you get out of sync, it will impact you economically."




POSTED ON: 2/1/2002