SUMMARY OF REPORT CONTENTS

The market for contract cleaning has experienced strong and sustained growth over the last 5 years. It is estimated that the market reached an estimated value of £5bn in 2005. Performance levels have varied between the end-user sectors, with the healthcare, local authority and leisure sub-sectors, for example, experiencing higher annual growth rates than the transport and industrial markets.

Key drivers for growth are:

• The continued trend towards outsourcing of non-core service

• Increasing focus on standards of hygiene and cleanliness, particularly in the healthcare and food hygiene sectors.

• A buoyant construction market.

Factors affecting the contract cleaning market negatively include:

• The general economic climate and a downturn in the transport and leisure sectors.

• The recent volatility in the financial services and IT sectors.

• Increased levels of competition in the contract cleaning market.

• An increase in labour costs.

The contract cleaning market is becoming increasingly difficult to define, due to the trend in recent years towards ‘one-stop’ multi-service provision. This has led to some consolidation in the industry, also affecting the market negatively.

It is estimated that the contract cleaning market will continue to grow by around 3% per annum until 2009, though growth rates will vary substantially between market sectors. Sectors expected to show the strongest growth are healthcare, food hygiene, local authority and leisure.

The level of outsourcing within the contract cleaning market has increased steadily since the early 1990’s and it is now estimated that around 55% of cleaning operations are contracted out, though this varies between market sectors. There are, however, limitations to the maximum level of outsourcing that can be achieved, as smaller businesses and organisations tend to undertake the majority of cleaning themselves.

The commercial sector remains the largest sector for contract cleaning services by far, accounting for 44% of the market by value. In general, sector shares in the market have been stable. Growth in the health sector has been particularly strong in recent years, and as a result the health sector share has increased slightly, whilst the transport sectors share has declined slightly during the period as a result of difficult conditions in this sector during the last 3-4 years.

The number of companies within the cleaning services category has continued to increase, initially at a rate of between 5-7%, though since 2003 the rate of increase has slowed to around 3% in 2005, with the vast majority being small companies.

Recent key features of the supply structure for contract cleaning services include:

• An increase in market concentration among the larger companies.

• Continuing diversification of services leading to more services being offered.

• An increasing integration of services, with companies able to provide complete building services under one contract.

Leading IFM (Integrated Facilities Management) and multi-service providers include ISS UK, MITIE Cleaning Services, Rentokil Initial, OCS Group and Mowlem Pall Mall.  It is estimated that these companies jointly account for around 20% of the market. Leading contractors for whom cleaning is the sole or core activity include Carlisle Cleaning Services, Blue Diamond Cleaning Services, Atlas Cleaning, Vebego Services, TC Cleaning Contractors and Lancaster Office Cleaning, though the market is still very fragmented.

Specialist companies are important in certain sectors, such as transport, food hygiene and health. Cleaning franchises are slowly taking market share in the retail, leisure and entertainment sectors in particular. Leading franchises include Service Master, Dublcheck and Jani-King.

The total UK market for non-domestic cleaning equipment and materials is estimated to be worth around £900m at manufacturers selling prices in 2005. This figure includes sales to both the in-house and contract sectors. The market is fairly mature, and has been growing at a rate of 3-4% during the last few years, though certain products, such as powered cleaning machines, have experienced higher growth rates. Hygiene related products such as soaps, gels and wipes have seen an increase in demand as a result of the MRSA outbreak and expectations of higher levels of hygiene generally.

However, the market has been affected negatively by a continued depression in certain end user markets, and is also experiencing an increasingly competitive climate, which has led to increasing levels of consolidation among leading manufacturers. An increase in distributors’ own brand products on the market may also have affected market values. It is estimated that the market for commercial cleaning equipment and materials will continue to grow at a rate of 3-4% until 2009, with growth possibly becoming stronger towards the end of the forecast period, providing the economic climate improves.

The product mix for the overall market for commercial cleaning equipment is difficult to establish due to the wide variety of end use markets involved, but it is estimated that powered cleaning machines account for approximately 25% of the market by value, with cleaning chemicals accounting for an estimated 65% and manual cleaning equipment for around 10%.

Leading suppliers of powered cleaning machines include Numatic International, Karcher UK, Nilfisk ALTO, Dowding and Plummer Ltd, Truvox International Ltd, Walter Broadley Machines, Earlex, Lincoln Floor Ltd, Hako Machines and Wetrok Ltd.  Key suppliers of commercial and industrial cleaning chemicals include JohnsonDiversey, Ecolab Ltd, Deb Ltd, Premiere Products Plc and Prochem Europe Ltd.  Robert Scott and Sons, Scot Young Research, Ramon Hygiene Products, Addis Housewares, Freudenberg Household Products and Contico Manufacturing Ltd are leading suppliers of manual cleaning equipment.

It is estimated that the vast majority of products are distributed through general supply channels, such as industrial products distributors, stationery suppliers, FM supply operations and retail operations. Specialist cleaning distributors are estimated to account for around 18% of the distribution market. Direct sales account for around 12%, with virtually all of this generated by sales of powered cleaning machines.  Key distributors of cleaning equipment include Bunzl Outsourcing Services, King Distribution & Services and networks of independent distributors such as Jangro and Nationwide Hygiene Supplies. In this sector, equipment is also often taken out on loan from manufacturers or hired out from distributors and tool hire outlets.

Companies Mentioned in this Report Include:

Rentokil Initial, OCS Group, ISS UK, MITIE, Mowlem Pall Mall, Johnson Diversey, Ecolab, Deb, Numatic, Nilfisk-Advance, Soteco, Alto, Karcher, Tennant UK, Dowding and Plummer, Hako Machines, Walter Broadley, Premiere Products, Johnson Diversey, Truvox, Ramon Knitting, Robert Scott, SYR, Contico Manufacturing, Addis Commercial, Vileda, Numatic International, ISS UK, Rentokil Initial, OCS Group, Strand, Connaught Group plc, MacLellan Group, Executive Group, Amalgamated Cleaning Services, Ideal Cleaning Services, Sira Business, Jani King, Services, Minister Services, ISS Mediclean, Sodexho Care Services, Carillion Services, Initial Hospital Services, Trident Contract Services, ISS Aviation UK, Initial Airport Services, AAS Ltd, Indigo Services, Dougland Support Services, ISS Transport Services, Initial Transport Services, Serco, Comatec UK, Indigo Services, Sodexho FM, Aramark, Compass, ISS Food Hygiene, Initial Foodguard, MITIE'S Food Hygiene Division, Aramark, Sira Business Services plc, We Are Cleaning, Barkland UK, Target Cleaning plc, Ecovert FM, Carillion Services, Aqumen Services, Amey , Haden Business Management, MacLennan International, Interserve, Initial Retail Services, OCS, LI Group, Barkland, Broadreach, TC Cleaning, GBM Services, Consultant Cleaners, Insitu Cleaning, Prestige Commercial Cleaning Services, Brompton Cleaning Services, Lawrence and Tester, Commando, Johnson Controls, ISS Aviation UK, ISS Damage Control, ISS Facility Services, ISS Food Hygiene, ISS Mediclean, ISS Defence, ISS Public Services, Rentokil Initial plc, Initial Cleaning Services, Inicial Airport Services, Initial Foodguard, Initial Industrial Services, Initial Transport Services, Initial Retail Services, Initial Window Cleaning, Initial Hospital Services, OCS Group , AAS Ltd, Trident Contract Services, DC Leisure, Select Facilities Services, A Groen Group, Glenn Management Ltd, Vebego Services, Thyssen Krupp Group, Sira Business Services, Ramoneur Cleaning & Support Services, Lancaster Office Cleaning, Onyx Environmental Group, KGB Cleaning Services Group, Regent Office Care, Crystal Group, Cibenze Services, Consistent Cleaning Services, Newpin Cleaning Services, Steeles Professional Cleaning Services, Wetton Cleaning Services, Permaclean Environmental Services, Sherwood Cleaning Group, Cooper Cleaning Group, Dougland Support Services, Service Master UK, NIC Hygiene Specialists, Dubl-check plc, Ecoclean, Target Cleening plc, Cannon Hygiene, Alltec Network, Servisair, Go-Ahead Group, Inflight Cleaning Service, ASIG, Boker Aeroclean, Aramark plc, Eurica Services, Johnson Controls IFM, Broadreach Group, Haden Building Management, Interpump group, Hefter, Robosoft, Ghibli, Lindhaus, Zelmer, Nilco, Bio Vac, Kerstar, Numatic, Nilfisk-Advance, Dowding and Plummer Ltd, Karcher, Alto Cleaning, Premiere Products plc, Taski, Truvox, Prochem, Wetrok, Stimvak, Sebo, Nilco, Lindhaus, Walter Broadley Machines, Gansow, FCM Holdings plc, Truvox International Limited, Lincoln Floor Ltd, Extracta Products, Earlex, The Rug Doctor, Cimex International, Hoover Professional Division, Karcher UK, Prochem Europe Ltd, Aquira A/S, Factory Cat, Interpump Group, Iing O Fiorentini, ITM Italia, Electrostar Schottle, Allied Paper Products, Disposables UK, Shiloh Healthcare, Wiper Supply Services, Proctor and Gamble Cleaning and Hygiene Products Europe, Coventry Chemicals, GOJO Industries, Bunzl Outsourcing Services, King Distribution and Services, Nationwide Hygiene Supplies.