Mopping up in the office cleaning business
A handful of cleaning companies continue to mop up from Warsaw's ongoing office-space expansion, keeping the smaller competitors at bay.
While more than 30 companies operate in the sector, executives at cleaning companies said that only the largest competitors are continuously able to win contracts with big buildings.
"There are about five to seven major players on this market," said Krzysztof Dziewulski, president of DC System cleaning company.
While just a few years ago cleaning companies such as the Continental Group Services, DC System or Impel could expect annual revenue increases of almost 100%, that kind of growth is no longer possible. "The market is slowing down due to the high vacancy rate (in offices)," Dziewulski said.
Executives said that the lower prices often offered by smaller firms has done little to improve their competitiveness. The reason is that building managers are willing to pay more for reliability, said Maja Biesiekierska, who used to work for Healey & Baker as manager of the Sienna Center and now works for King & Sturge, a property consulting company.
"Hiring an unskilled or unknown company for cleaning is risky," she said. "The major factor in deciding whether to hire a given cleaning company should not be the money but the firm's reliability; its status on the market."
She estimated that cleaning fees account for approximately 20% of a building's operating costs.
Large cleaning companies are capable of handling spaces totaling 100,000-600,000 square meters, sources said. Among the top firms are Continental Group Services, Impel, DC System, Centrum-Usluga, Piepenbrock and Morwar.
While large cleaning companies may benefit from the warm feeling they give tenants, that doesn't mean that they don't feel pressure from smaller firms. Well-established companies such as Morwar, DC System and Piepenbrock said smaller competitors often hire disabled employees to benefit from tax breaks. "They can lower prices as they benefit from tax incentives," said Leszek Gabalewicz, commercial director at DC System.
Those prices, which can be up to 25-30% lower than large competitors, play well with cost-sensitive clients. "We don't have a chance in a tender procedure," he said.
Dziewulski of DC System, whose firm lists Blekitny Wiezowiec, Norway House and Saski Point among its clients, said that cheaper is not always better.
Smaller players confirm that offering lower prices is not enough to get contracts in big buildings. "I don't see myself in there (a class-A office building)," said Leszek Duda, who owns the small Transs cleaning company. Duda, who specializes in cleaning small individual offices, added that he lacks capital and enough staff to be able to serve large buildings.
While cleaning may seem to be a straight forward mop-and-soap business, Dziewulski said that cleaning glass and marble class-A buildings actually requires quite a bit of skill. Putting the wrong cleaner on a carpet, for example, could cause thousands of zlotys worth of damage.
To ensure that his personnel understand such nuances, Dziewulski makes sure his employees are trained before they enter a building. He also checks their background extensively before putting them within reach of others' belongings.
The quality rhetoric only goes so far in winning clients, however, as most companies have to go through a tender procedure for any new building. Price plays a significant role in that selection process, but company executives said that client-recommendations also weigh in.
"The reference list is what counts," said Janusz Mikolajczyk, director of Continental Group Services. "Somebody told something to somebody about a cleaning firm. That's how it works."
Most large cleaning companies charge zl. 2.5-zl. 4 a month for each square meter of a building. That price includes daily cleaning without any special services. The price also depends on the number of hours a cleaning company's employees work, how much staff is required and the amount of supplies used. Cleaning company workers make on average zl. 800-zl. 1,500 a month, depending on the number of hours worked.
Gabalewicz of DC System said that profit margins in the cleaning business tend to run 10-25%, depending on a building's size and the level of service. Big buildings tend to be more profitable, he said. "If there is more space to tidy up, profit is bigger, too."
