Service industry adapts to clients changing needs.

Over the years, the commercial cleaning and facilities services industry has adapted to meet the demands of its clients. In 2006 and beyond, we will continue to see forces pushing this industry in various directions. While no one occurrence will markedly impact 2006, certain trends will continue to influence and transform this traditionally "human-based" industry into one more technologically advanced.

To clarify, for this article, the commercial cleaning and facilities services industry is comprised of companies providing one or more of the following services to public and private institutions: commercial cleaning, facility maintenance, engineering, lighting and security services.

At a strategic level, full service companies like ABM Industries, Inc. or companies that offer more than one service line have seen two major trends that they expect to continue in 2006 and beyond: the move towards "accounts based" servicing and the increase in technology use. "Accounts based" servicing has generally occurred with larger companies who have multiple facilities across the country. It allows the client company to outsource multiple facilities services from one company for all the different facilities (offices, warehouse, retail, industrial, etc.), ensuring them of the same level of quality at a discounted price and provides the client with one single point of contact. Thus, benefiting clients by allowing them to focus on their core business.

While smaller, regional companies do not have these same needs, we are seeing other trends occur, specifically at the individual business line level.

Commercial cleaning has become a commodity pitting potentially lower priced "mom and pop shops" against higher value full service firms. To compensate, larger companies are expanding their service lines by buying up smaller regional businesses. This allows them to offer economies of scale from operational efficiencies, personalized service within certain market segments and the ability to attract and retain a knowledgeable labor pool. Additionally, larger companies are shifting the conventional vendor-client relationship to more of a partnership based relationship. The end result is more customized services and more satisfied customers.

The security services industry, impacted by the events of September 11 is expected to continue its dramatic growth. As customers look for additional ways to cost effectively secure their facilities, providers are seeing a shift away from "manned security" towards integrated electronic security solutions. Instead of having three guards patrolling a facility, now one guard can remotely monitor it while one other patrols as a deterrent.

The dwindling number of security personnel needed to secure a facility is giving rise to a need for a more highly skilled labor force who can better meet the current challenges. As such, there appears to be a high demand for continual training and providers responding by developing e-learning systems to disseminate training and classes. Finally, in larger cities more at risk for terrorist attacks, we are seeing a trend toward greater communication between government agencies, such as the Department of Homeland Security, state and local fire and safety and the private sector. Police and FBI agents are being recruited to the private sector at record numbers for both their experience and network.

Similar to the other lines of business, engineering and facilities services are seeing an increase in technology usage, specifically, web-based maintenance management information systems. These systems help customers to measure and achieve goals of increased reliability and cost reductions within their facilities. Also impacting this industry is a decrease in qualified skilled labor which is putting the squeeze on smaller regional companies who may have a harder time recruiting and training workers.

Corporate social responsibility and the triple bottom line: economic, environmental and social is a global trend led by well-known companies such as Starbuck's or Newman's Own (food/drinks) and BP (oil producer). While social responsibility is still the most well known issue regarding corporate responsibility, clients are pushing engineering and facilities services to improve environmental factors. As a result, new corporate programs are being developed to identify and implement sustainable business practices for companies regarding their real estate operations.

With energy costs at record highs, all organizations are looking for ways to reduce their energy consumption this year and to stave off inflation for the coming years. Yet, energy is not the only factor driving new trends for 2006. Manufacturer's of all lighting products, including lamp manufacturers have designed new systems capable of cutting energy costs by nearly half while increasing light levels and enhancing color performance. In many cases, these new products also offer longer life therefore reducing maintenance costs.

All eyes are on "Energy"? This will make for an interesting year filled with new regulatory actions, increased environmental standards and federal tax and utility rebate incentives. Combine all these factors, and landlords and property managers are primed to take advantage of energy saving opportunities. Whether industrial, commercial, retail, or office, 2006 will be the time to look to energy efficient lighting upgrades as a low cost, high performance solution.

As 2006 starts and picks up steam, we look forward to seeing providers react to the forces that are altering the commercial cleaning and facilities services industry forever. We believe there will continue to be a market for both the small to mid-sized and larger players to compete. Conversely, we think that those who will truly succeed going forward will be the companies that embrace the technological, social and environmental changes of the market and develop new and creative solutions for their customers.

BY SCOTT SALMIRS, EXECUTIVE VICE PRESIDENT, ABM INDUSTRIES, INC.