“Race to the bottom – The situation in which companies and countries try to compete with each other by cutting wages and living standards for workers, and the production of goods is moved to the place where the wages are lowest and the workers have the fewest rights” Source – ft.com
I’ll start by putting an example to you, no doubt it’ll be all too familiar to most.
….You finally get that enquiry you’re had in your pipeline for months. You go to site to survey, maybe you bring a couple of specialist subcontractors along with you for window cleaning or access equipment. You undertake a full site walk around; with your 30 years experience you know it’s essential. You strike up a rapport with the customer, discuss your previous skills with similar jobs perhaps. You leave the site happy in the knowledge you’ve got a good chance of winning the work. You set about working on the quotation and send it off to the customer in a timely manner. You get the call, with anticipation you answer the phone. What do you learn? You’re 300% more expensive than the other 2 quotes!
Their can be legitimate reasons for this, don’t get me wrong. Maybe you’re over estimated on labour, maybe your subcontractor costs are too high, or maybe you were just plain greedy. Let me illuminate on the above though for a second. 1) 30 years experience in pricing that type of work daily 2) Specialist access and window cleaning companies attended the survey with you to provide an accurate quote (which you have put no mark up on 3) Finally your labour cost on the job is 70%. Lets get down to brass tacks though shall we? The job above was priced at 68k. Our profit on the job 4k.
Now we’re not the cheapest, with a medium sized businesses overheads we can’t be, but we certainly aren’t the most expensive. How can someone be operating? Why race to the bottom?
Let’s not race to the bottom.
Since the recession started around late 2008 cleaning has been sacrificed. It’s easy to do right? It’s low skilled, any one can do it, it’s not important. Well if that’s the case, let’s all stop now shall we? Some customers now see it cheeky to be making any profit at all!
If your business plan since then has been to win work whatever the cost, you are the problem and to that end guess what? Someone will always find a way to be cheaper and more brutal than you. It’s just a matter of time.
How did we get here? Cleaning is core to any business. It affects staff morale, health and safety, absenteeism, maintenance, branding, need I go on. Let’s not race to bottom.
Efficiency savings can be made of course. Training methods improved, consumables costs reduced. Hey, even a little less profit can be made. All sensible ways to remain competitive in a low skill, low margin business environment. Corner cutting though, is something altogether more alarming and becoming far too commonplace.
EU Migration has been a great asset to our industry. It has provided some of our hardest working, most loyal staff. So integral in fact, that we are looking to provide all our staff literature in a range of languages to better serve our multi-cultural workforce. Others have seen it an opportunity of a different type. An ability to pay cash in hand, to avoid NI, PPE and all other important health and safety guidelines. Not just for migrant workers, but also British nationals desperate to work and provide for their families in times of austerity.
Cleaning is not the only industry suffering from this problem, lets look at construction.
“Nearly 90% of contractors are facing tender competition from rival firms who are bidding below cost in a desperate attempt to fill order books.”
“According to ONS data, the construction workforce has dipped to its lowest level since 2001, losing many skilled and trained workers as a result.” – Source – constructionenquirer.com
Let’s not race to the bottom. Our industry has become one of acquisition of companies, not contracts. People suicidally winning work, at cost. With the hopes of a multi national coming along and acquiring their business for the contracts they hold. Amongst the fire fighting for survival we’ve forgotten the quality of service our industry provides. Effective cleaning can be the difference between failing an audit and being shut down, or winning a new production contract worth millions. Let’s stop fighting for the scrapes and take a stand.
For those of you that don’t read Seth Godin (you should) I think he puts it better than I could.
“The race to the top makes more sense to me. The race to the top is focused on design and respect and dignity and guts and innovation and sustainability and yes, generosity when it might be easier to be selfish. It’s also risky, filled with difficult technical and emotional hurdles, and requires patience and effort and insight. The race to the top is the long-term path with the desirable outcome.”