Recession: Businesses at risk as cost-cutting, debt burden squeeze FM industry

In more ways than can be imagined or expressed, the economic recession now ravaging Nigeria is taking its toll on businesses, households, individuals and industries. In a very significant way, it is impacting negatively on businesses through various channels and one of such channels is the facilities management (FM) industry whose services contribute to efficient operation of companies.

Many companies or businesses can no longer afford the services of facilities managers due to low productivity, declining income and purchasing power of their customers or clients.  Many of the private estates or residential housing which requires the services of FM can no longer afford same because  a lot of the middle income professionals who live in those estates have lost their jobs or have their income reduced and are therefore unable to pay their service charge.

Contract for facility management services is being revoked or renegotiated for as low as 20-30 percent downwards against rising cost of maintenance. “The challenge in this industry today is that recession has brought cost-cutting and saving mechanism;  people don’t have full appreciation of the support service we render as facilities managers;  they don’t see it as money spinner or one that brings returns”, said Tunde Obileye, MD/CEO, Great Heights Limited, in an interview.

When people sit down to make decisions, their mind does not always go to things that don’t impact directly on their core business as they always think of improvising or doing it on their own. “But the money people don’t  want to spend now is going to impact on the business sooner or later. This is because a lot of things about the business, especially the ambience, will begin to run down”, Obileye noted, saying,  “the result is that customers of those businesses will begin to ask questions”.

Continuing, he said, “as far as recession is concerned, those in our kind of business are faced with very tough choices. This is therefore, time to think and be innovative. People should now be thinking of how to render service and deliver value to the client without taking the cost beyond what he can afford”.

FM industry players are really lamenting that services are not paid for and where they are paid, it is often delayed, pointing out that customers are now coming up with crazy ideas of their own that are not professional. Services are now being deferred to a point where even security is no longer seen as critical. This is reducing the capacity to respond to an emergency.

“The rate of deferred maintenance is increasing and the repercussion is long term because it is going to cost more to repair those assets after a long time of neglect. This shifts focus from preventive to reactive maintenance. Apart from mounting pressure on the service provider, it also brings discomfort to the customers, distress to the equipment and puts the business at risk”, says a player who did not want his name mentioned.

The level of debt in the industry is rising by the day, meaning that it is not only the banks that have non-performing loans. Service providers also do as people are no longer paying service charge. Debt profile is rising and when this happens, it impacts on the ability of the FM company to deliver quality service.

According to the players, an average FM firm is squeezed or incapacitated because in an estate of 50 people, for instance, only 20 can pay their service charge and the remaining 30 cannot. Obileye attribute all of this to the economic recession.

The recession, he posited, is an outcome of years of lack of accountability, abuse of power and position that  led to corruption. “Today, corruption is no longer about people stealing or embezzling money or inflating contract; it has extended to virtually everything.

“People are no longer afraid of anything because when you don’t see anybody questioning whatever you do, you can then do anything. Nobody is challenging anybody; the police man can arrest somebody for doing nothing in particular and nobody cares”, he said.

According to him, “there is general culture of impunity and it did not start yesterday. I t has been there for a long time. The situation we have at hand is like that of a family where the father is not just doing or saying anything. The children will behave any how they like because they know that the man in charge of the house won’t do or say anything”.

He argued that if there was going to be a turn around, it would be the responsibility of everybody, saying,  “our orientation has to change. People need to begin to think more about the country than themselves. Increasingly, we need to be patriotic. Government can always come up with policies, but if the people who have to make the policies work are not ready, the policies are useless”.