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Brexit uncertainties and the facilities management industry

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One year on from the UK’s shock vote to leave the European Union (EU), there is still much uncertainty about the impact Brexit will have on businesses and the economy.

 

Nowhere is this uncertainty more pronounced than in the facilities management (FM) sector, which relies so heavily on migrant labour.

 

Back in March, the UK government formally announced its intention to leave the EU by invoking Article 50 of the Lisbon Treaty. This marked the beginning of formal withdrawal negotiations and speculation has been rife since about what exactly leaving means. Some talk of a ’hard’ Brexit which would see the UK would leave the single market and customs union. Others talk of a ’soft’ Brexit in which some parts of full membership were kept. At this stage, no one knows precisely what will happen.

 

For buyers and category managers in the FM sector, this uncertainty does not help. Neither does the fact that whatever the outcome of negotiations, there will likely be tougher immigration rules, which will make it harder for firms to hire migrant labour and make those migrants already living in the UK consider whether they continue living in the country.

 

Indeed, more than one-quarter of employers believe that the EU nationals they employ are considering leaving their positions in the near future, according to a study by Chartered Institute of Personnel and Development (CIPD). Meanwhile, 11% of businesses reported that the number of EU nationals they have recruited since Brexit has decreased, indicating an air of scepticism among some employers and employees.

 

The soft FM industry, which includes security and cleaning services, would be hit most directly because of its reliance on low-skilled migrant workers. Demand for such workers would quickly outstrip supply, increasing wages and as a result, costs.

 

Outside of that, there would also be currency volatility, which will add to costs and the general uncertainty in the market.

 

As a short-term fix, many firms would turn to using local secondments or outsourcing services. These, however, are short-term fixes and would prove expensive long term.

 

So what should buyers do?

 

While the outcome of negotiations and the consequent impact on the FM services industry hangs in the balance, there are some elements where FM category managers can attempt to maintain control. They should assess potential risks and costs and consider how they will work in collaboration with suppliers to try and mitigate them as far as possible.

 

It is also critical to invest in their current contingents, maximise talent and maintain quality of service.

 

Read more in the 2017 Total Facilities Management category report

 

This article is a piece of independent writing by a member of Procurement Leaders’ content team.

Daniel Owusu
Posted by Daniel Owusu