Has the whole of British
industry gone outsourcing mad?
Is it just me or has the whole of British industry gone outsourcing
mad? Every couple of months or so there is news of yet another massive
outsourcing deal being signed or talked about. The last two months
have been no exception.
April brought news of a £1 billion deal whereby Balfour Beatty's
facilities management arm Haden Building Management took a 49 per cent
stake in Consignia's (the Post Office to you and me) facilities
management arm Romec.
Essentially what this means is that Haden and Romec have formed a
joint venture company, with a seven-year contract to manage
Consignia's (that word again!) £1 billion portfolio of buildings.
There was a time when a £1 billion deal was something special, big
news, especially in facilities management, but this is becoming less
and less the case. As if to prove the point Haden Building Management
also just happen to be one of the founding partners in Monteray,
(another joint venture company, another £1 billion deal!) which holds
the much sought after, talked about and reported facilities management
contract with British Telecom - a deal covering 8,500 buildings in
all!
With such large amounts of money up for grabs the big three
outsourcing companies, Land Securities, Trillium and Mapeley are quite
rightly coming under increasing competition. Why should only a few
reap such large rewards?
It came as no surprise to read in April's newspapers that such a
company was wanting in the wings, eager to get in on the act. Reports
started to circulate that Axa Real Estate Investment Management (Axa
REIM) was planning to launch a rival pan-European outsourcing company.
It is currently holding talks with investors.
Axa has seven operations in nine countries across Europe and is in a
good position, thanks to its infrastructure and foothold in Europe, to
compete for corporate outsourcing deals.
Not wanting to be left out of the current surge in joint ventures, Axa
UK (holding company for Axa Insurance, SunLife and PPP Healthcare) is
in talks with facilities management company Mowlem and property
services company Nelson Bakewell to set up a joint venture to manage
its portfolio of 300 properties.
There is also money to be made in the multi-million pound government
Private Finance Initiative scheme (PFI), the type of outsourcing deals
that are so common in public sector schools and hospitals. Consultant,
Mouchel is set to invest £30 million of the money it makes listing on
the stock exchange, under the support services banner, in chasing PFI
contracts.
If Land Securities full-year results are anything to go by outsourcing
is definitely the way to make big bucks. Chief Executive, Ian
Henderson was quoted in The Daily Telegraph as saying: "We have
identified a compelling case by companies for outsourcing."
Land Securities announced it would be returning £500 million to
shareholders because it was, "surplus to requirements." The company is
also planning to invest £1 billion in its property outsourcing arm
Trillium in the next five years, in the hope that it will be able to
provide 25 per cent of group operating profits. Land Securities
pre-tax profits were up 12 per cent to £364 on last year's figure.
What more proof do we need that facilities management is the place to
be?
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