To regain revenue, the industry will forge new partnerships and expand internationally
Los Angeles, CA (PRWEB) April 28, 2012
Over the past five years, the Janitorial Services industry has experienced moderate growth. Commercial, industrial and government entities that contract operators to clean facilities are the primary markets for the Janitorial Services industry, but demand from these clients fell during the recession. According to IBISWorld industry analyst Caitlin Moldvay, low business profit and increased pressure to restructure caused many business clients to cut expenses, consolidate or close. Furthermore, the rate of non-residential construction fell, decreasing future business demand for cleaning facilities. Consequently, demand for janitorial services suffered and the industry shrank during the height of the Great Recession, with a 6.4% dip during 2009. As a result, over the past five years, the industry has recorded only slow average annual growth of 0.9%. The industry began to recover from the recession in 2010 and has continued to grow steadily. IBISWorld expects revenue to rise another 3.1% to $47.2 billion in 2012. This is primarily due to an expansion in the number of businesses and lower office vacancy rates. Over the five years to 2017, revenue is projected to increase. In the five-year period, the economic recovery will boost demand for cleaning services from businesses and households, says Moldvay. The rate of non-residential construction will also experience an uptick, further driving demand. Lastly, the aging US population will be a growth source as third-party elderly care institutions and households owned by the elderly expand.
The Janitorial Services industry has a low level of concentration. ABM Industries Inc. is the industry’s major player. The majority of industry operators are small firms that specialize in specific regions or industries. Market share concentration has risen due to increased merger and acquisition activity, primarily on the part of ABM. For example, in December 2010 ABM acquired the Linc Group LLC for $301 million. Market share was also favorably affected by the acquisition of OneSource Services in 2007. The industry is expected to continue to have a low level of concentration in the five years to 2017. More firms are expected to enter the market as the construction sector improves, but the majority of these operators will be smaller firms that left the industry during the Great Recession. This trend is similar to other sectors dominated by small operators: these entities often enter and exit an industry depending on changes in demand. Overall, the industry tends to be small-business oriented and fragmented. However, franchised operations are a growing industry segment and may increase the average size of firms during the next five years.
As the number of firms increases over the five years to 2017, the industry will enter a period of consolidation as large clients increasingly look to purchase cleaning services as part of a bundled service offering that includes security, catering and other building-related activities. To meet these needs, many players will acquire other companies or forge partnerships with companies that offer these services. International expansion is also imminent as operators try to gain footholds in growing economies, such as China. For more information, visit IBISWorld’s Janitorial Services in the US industry report page.
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IBISWorld industry Report Key Topics
Establishments in this industry clean building interiors, the interiors of transportation equipment (e.g. aircraft, railcars and ships) and windows. Industry activities include contract cleaning services for factories, retail outlets, shopping centers and malls, business and government offices, trains and airlines and house-cleaning services.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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