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Simon Cox of ISS Mediclean pursues double-digit growth

03 April 2009
Simon Cox of ISS Mediclean pursues double-digit growth

There are plenty of flashy motors in the car park the company itself, by comparison, is streamlined, efficient… and understated. And now ISS Mediclean has overtaken Compass and Sodexo in the healthcare sector. Managing director Simon Cox spoke to James Aufenast

We're in McLaren land, home to the Formula One team, and surrounded by enough open space amidst the industrial park labyrinths of suburban Woking to hide the noisiest revving engine.

Outside a bright brick-and-glass building, one particularly expensive-looking road car peeks from under a grey cover, while a garage door seems to be hiding more fast-car goodies. And directly opposite are a few other performance vehicles: 5-series BMWs and top-of-the-range Jaguars in front of the offices of catering company ISS Mediclean. There may not be a world title for catering, but the facilities management company must be doing something right in the current economic climate.

Perhaps it's hard-nosed cost-cutting that's seeing them through. We had been warned that ISS Mediclean was the archetypal no-nonsense, European cleaning company: organised, streamlined, efficient. It's based in Denmark and was founded in 1901 - workers there have spent more than 100 years making things clean and tidy. Recently their corporate side has come alive, with small companies absorbed at a great rate, leading to group turnover of £9b and a workforce of nearly half a million now in tow.

A year ago the Mediclean arm in the UK was awarded an enormous new contract: management of cleaning and catering for Imperial College, London, was handed over for five years to the Woking-based company, at a price of £100m.

So would managing director Simon Cox be prepared to talk openly about how Mediclean appeared increasingly to be gaining an edge in the healthcare market? Or might he turn out to be an expert at operations, sticking to the cleaning facts and punctuating the interview by long, painful silences?

Such were our concerns, but at least the entrance to the building was, shall we say different. A long arch, made of dark wood, beside reception jutted out under the skylights. Coloured panels lining the inside of the walkway were changing from pink, to green, to red, to blue. The effect of a mid-1990s trendy London bar restaurant, dropped casually into a town in southern England, was overpowering.

"We call it the love tunnel," says Craig Smith, ISS Mediclean's long-standing PR manager, as we walk through the multi-mood, colour-changing entrance. Too much information, perhaps?

In fact, the passageway looks like it could perform another function - squeezing out enormous pork sausages - but more of that later. We walk through into the main offices and unusual oil paintings of people pulling faces at strange angles confront us. "They're pretty disgusting, some of them," Smith says, "but the Danes have tax breaks for buying works by local artists, so we've taken on a few."

The former chief executive lived in Woking - hence parts of the company were amalgamated and moved here, but at least the Danish owners have put an unusual spin on things. "They had to do something to entice us," Cox says, as he ambles into a side meeting room. "We arrived kicking and screaming from our offices in Farnham Common."

Medium-height, with thinning grey hair and reddish eyebrows, Cox is rather disorientating at first: a combination of upstanding group managing director and naughtiness. His sonorous, RP voice sounds great played back on the tape. But he also dissolves into giggles, generally when he knows he's on difficult ground. As, for example, when we ask if Mediclean is in for any NHS trust contracts at the moment? "No, none in particular" - cue lots of laughter.

But aren't you storming ahead on the back of the recent Hammersmith, Queen Charlotte and Charing Cross hospitals contract win, a huge triumph amidst competition from incumbents Compass (the Medirest division), along with ever-present bidders Sodexo?

"Yes, we were delighted to take it off Medirest. But then their time will come when they take things back off us. In fact, we've not had a lot of success since then. We're finding business tough and have seen other companies come into the marketplace. The fact we didn't win St George's was a disappointment."

Unsuccessful bids?

That's not quite the triumphalism we were expecting from Cox - he's keener to talk about the unsuccessful recent bid for a hospital in Wandsworth rather than a major win. You're only as good as your last game, perhaps.

"It's another 8% on to turnover, yes, and we've faced a challenge in getting things started in such a short time. But we have 15 PFI contracts in healthcare, and they're all sizeable, multi-service commitments."

In fact Cox is keen to play up the fact that the company has a bigger trust contract in place at Walsgrave in Coventry and Rugby's Hospital of St Cross, worth £25m a year. He seems to be heading off any talk that the new contract has been different - or even difficult - for the company, even though it involves five sites: west London hospitals Hammersmith, Queen Charlotte & Chelsea, St Mary's, Charing Cross and the Western Eye outlet. Regeneration facilities and the lack of kitchen space following Medirest's tenure have also led to rumours that Medirest might even service the new account because they're so familiar with the space there, an amazing state of affairs that wouldn't PR particularly well. Cox laughs that off.

"What, are you serious? I don't think so, somehow. It's true that the kitchen facilities are somewhat reduced. But we have our regular suppliers, thank you!"

In fact Cox is keen to emphasise how Mediclean is different from Medirest, based on having those kitchens, and similar names notwithstanding: "We believe in freshly cooked food, along with regenerated. There are a number of contracts that wouldn't have been won if it wasn't for us offering this option," Cox says. "We offer cooked on site to people who want it, and we find that if the client really has a choice, and there are no other factors at play, they prefer something fresh."

So in practice Mediclean combines dishes made to order with pre-prepared meals from supermarket ready-meal supplier Geest, formerly known as Anglia Crown. But if this makes such a competitive difference, why aren't Compass and Sodexo up to the same thing?

"What they do is their decision. They've both committed huge resources to their cook-chill and steam facilities, so they're both bound to recommend that clients use any preferred system in order to properly sweat their assets," Cox replies. He then goes further: "We'd like to see fresh cream and butter as part of meals provided on the ward."

Hang on a minute, we didn't ask you to realign yourself with Michelin-starred chefs! "Yes, people need bulking out in hospital," Cox insists. "They are taking so many supplements, often in the form of energy drinks, and it's a complete nonsense. Good, solid, proper cooking might not hit all the healthy attitudes, but it's what patients need. In our view there's huge potential there. The lack of control around the ordering, stocking and issuing of dietary supplements is phenomenal in many hospitals. So we're talking hundreds of millions of pounds being wasted that could be spent on better food.

So: "Mediclean boss in hearty British food shock!" Few see Mediclean as a food specialist - largely the reason the company was taken on for west London was because it was doing such a good job cleaning up St Mary's. That's fair enough, based on the company history: a background in cleaning that means it's well placed for the current fashionable shift into overall facilities management - providing all the building-related work under one contract and fee. So while the other big caterers scramble over themselves to gain cleaning, buildings maintenance, landscaping and portering expertise, Mediclean is already there. Slowly and quietly, Cox has built ISS Mediclean into the largest contractor in the hospital business, overtaking Compass along with Sodexo.

But Cox himself has plenty of experience in food manufacturing, and it's partly that which has helped propel Mediclean into the food service arena, too. "It's what he's known for," says Smith, adding, more specifically: "Sausages, he's great at sausages."

"Oh god, don't get me started on sausages," says Cox, laughing uproariously. Cox didn't enter the world of sausages immediately: he trained as an engineer and seemed all set to work for Rolls-Royce - until, in 1971, the company went temporarily bust. So instead he headed off to Unilever, and went to work at the Walls factory in Harlesden, north London. And that's when he started cleaning the equipment after thousands of strings of bladder-filled meat had passed through every day. In effect he had 2,000 pigs trudging up to the slaughterhouse ready to be processed into bangers.

"That's how I know so much about food factories. And they're messy, mucky things, a complete nightmare. You have to clean the machinery each time you want to run a different line through. That's why I don't have facilities like Compass has. They're bonkers, completely bonkers!"

So the truth is out: Cox would never go down the factory route. And it's partly the fact that he's unencumbered by a manufacturing workforce that makes him so bullish about future ISS Mediclean performance. He's expecting growth in turnover of 8-10% in 2009, with the company hitting £500m turnover within five years. That seems particularly ambitious, first considering present sales of nearly £300m, and second because the country happens to be in the early throes of a recession, but "we've doubled in the past five years, so there's no reason why we can't do nearly the same over the following period," Cox insists.

Yet while Cox paints an impressive picture, something quite doesn't add up. Mediclean's speciality is in PFI contracts, yet these are diminishing to nothing in the healthcare arena.

"Much of our PFI expertise has been moved over to schools, where we can benefit from the knowledge gained there," admits Cox, who has responsibility at Mediclean for the whole of the public sector: education under ISS Caterhouse and the Ministry of Defence under ISS Defence, as well as hospitals.

Healthcare tenders

Then there's the fact that Mediclean appears to have pitched in for a tiny proportion of the 60 healthcare tenders that are on the market at present. "Oh, I must have missed them - damn," Cox jokes. That's a good way of dodging the question: are you actually in for them or not?

"We have good infrastructure and the resources to go for large contracts, don't worry."

He's still steering clear of a definite answer, and doing well at this game, but eventually Cox admits that the company has pitched for the trust hospital in Derby and King's College hospital in Camberwell, which, at two out of 60, is a start.

Yet at the same time Cox talks openly and keenly about extending "our education spread outside the company's heartland of Bristol and the South-east" and later about how "education is far, far less complex than healthcare". Essentially, Cox has to deliver regular year-on-year growth for Mediclean and while that may change in future, right now it's more likely to come from the schools sector than healthcare.

ISS Mediclean managing director Simon Cox: engineering graduate, boss of an £800m business, and an expert on sausages

Cox: "We've doubled in the past five years, so there's no reason why we can't do nearly the same over the following period"

Cox on…

Scotland and Wales

"They have their own, particular approach. We used to have contracts in Wales but we've lost all those in the past few years, the last one three years ago. There's no question that there was a policy in the Welsh Assembly to take facilities management back in house. Cleaning is a factor in hospital-acquired infection, but there are many other factors at play. Hand-washing by clinical staff as they move from one patient to another has an effect, for example. So saying that private contractors bring in germs and superbugs is a pretty weak argument."

The media

"We lost a contract three years ago and part of the reason was the intense pressure we were put under by a local paper. They sent us pictures of the hospital we were contracted for, wanting our comment on the apparent filth there. Our comment was: ‘Well, it looks like a well-maintained area because you can see the reflection of the fire extinguisher in the floor. However, it seems somebody has just walked past and dropped some chocolate papers, and you've taken the picture.' But we were pushed out.

"When anything goes wrong, the media love to launch into the NHS and we get sucked into that. The media portray contractors as providing cleaning services throughout the NHS, as if it's 100% in private hands. In fact that figure is 35%. But any stories surrounding hospital-acquired infection or cleanliness get promoted by the trade union movement with vested interests into headlines against the private sector."

Impact of the downturn

"We're starting to see real signs of pressure in terms of the requirements for cost improvement programmes. It's starting to gather pace, and the finance directors at our clients see the pressure mounting. We may be OK with the current budget for 2009-10, but we're anticipating real changes for the financial year 2010-11."

Lowdown on ISS

  • ISS (worldwide): £9b turnover, 470,000 employees
  • ISS UK operation (ISS Mediclean Ltd): £800m turnover, 42,000 employees
  • ISS Mediclean healthcare: £300m turnover, at approx 6.6% profit margin, 14,500 employees
  • Simon Cox's career at the helm
  • 1991 Becomes managing director, ISS Mediclean
  • 1989 Appointed head of Central Region for ISS Mediclean
  • 1984 Joins ISS Mediclean as a professional manager
  • 1981 Appointed factory manager at Unilever
  • 1972 Joins Unilever food manufacturing
  • 1971 Awarded BSc Engineering, Lanchester Polytechnic (now Coventry University) and Rolls-Royce, Bristol
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