A year and a half ago, executives at Hartford-based FM Facilities Maintenance predicted revenue at the company could grow from $10 million in 2007 to as much as $400 million in 2009.
That was a bold prediction in a poor economy. But where others panicked in a crisis, FM officials seized opportunity.
And they had a plan.
As companies scrambled to cut costs in tough financial times, they would accelerate a trend in the burgeoning facilities maintenance industry. Instead of relying on full-time, in-house employees to provide preventative maintenance and repairs, companies would seek outside providers such as FM as a way to contain costs without sacrificing expertise.
FM officials wouldn’t release their 2009 revenues, but it seems likely the company turned the counter from eight digits to nine. That’s still a long way from the lofty target. Still, that $400-million target may be attainable in the foreseeable future since revenues grew 200 percent over the past two years.
“There is an untapped market out there,” said Jim Reavey, FM CEO and president. “And we have a track record of delivering on our commitments.”
On April 6, FM announced a new maintenance contract with rent-to-own specialist Rent-A-Center, which was the fourth major deal signed in the past year. The others were 7-Eleven, Friendly’s Ice Cream, and OSI Restaurant Partners, which manages restaurants such as Outback Steakhouse, Bonefish Grill and Carrabba’s Italian Grill.
With the new contracts, FM now maintains 30,000 locations for 20 major clients across the U.S. and Canada, specializing in 40 trades ranging from HVAC to plumbing to signage to audio visual equipment and communication.
Since signing with FM in January, 7-Eleven officials said their savings on maintenance are in the millions. FM excels at preventative care, so there’s the additional financial benefit of having 7-Eleven stores fully operational at all times, said Joe Albanese, 7-Eleven senior director of facilities.
“Any time you can keep a machine from breaking down, you have the ability to drive up sales,” Albanese said. “We don’t want the stores to worry about maintenance. We want the stores to grow their sales.”
During an 18-month, 30-company search for a contractor, 7-Eleven scoured the nation for a provider capable of handling its 6,000 locations and an understanding of its 24-hour, seven-day-per-week needs.
“FM fit these bills very well. They were a company that wanted to grow. They were a company that wasn’t afraid to put its money where its mouth was,” Albanese said.
As a bonus, Albanese said, FM’s model of utilizing local vendors rather than full-time employees to provide services for customers meant former 7-Eleven maintenance workers could join FM’s vendor roster.
This same model enables FM to handle its rapid expansion with ease, said Joe Leyden, FM senior vice president and chief sales and marketing officer. When the company signs a new client such as 7-Eleven, FM doesn’t scramble to hire new employees for the increased workload, but instead relies on its vendors to service the new needs.
The company employs 300 people — about 70 percent of those are in Hartford. But the key to the business model is finding local contractors to address client needs whenever they arise. FM already has local vendors in every county in the nation; as the company adds more clients, it simply can partner with more local vendors.
FM’s revenue could grow to $1 billion, and the workload wouldn’t be a problem, Leyden said. “That is one of the things that really distinguishes us from other companies,” he said.
The possibility for greater expansion remains, Leyden said, as FM is in discussions with five more major companies to provide outsourced maintenance. FM’s now focuses on signing more clients and selling more services to existing clients.
With the opportunities in the industry and the economy, FM revamped its executive team for maximum advantage in the marketplace. Former CEO and president Jim Barnes, who originally purchased the company out of Enron bankruptcy in 2004, stepped into the chairman position to make room for Reavey in January 2009.
“We have brought in new people that have track records of successfully running businesses with over $1 billion in revenue,” said Reavey, who before joining FM was general manager of Johnson Controls, a $34.5 billion company specializing in building efficiency and power solution.
In February, FM added a new chief operating officer in Trevor Foster, who specialized in building automation and property and facility management at CB Richard Ellis, a real estate services firm.
In March, FM brought on Leyden as senior vice president and its chief sales and marketing officer. Before joining FM, he was the top sales and marketing officer for Allied Waste, the second largest waste management company in the country.
Beyond signing new clients, Reavey said, FM’s long-term strategy for growth includes expansion into South America, Europe and Asia as well as signing non-traditional clients such as grocery stores, assisted living care centers and perhaps large-scale companies with multiple large facilities like General Motors.
There’s also room for expansion in the services FM provides to clients. Beyond its 40 core trades, FM is searching for innovative ways to use new technologies in big spend areas such as sustainability, Reavey said.
“A lot of our clients, their big expense is energy,” Reavey said. “They ask us for ways to help reduce their energy costs.”
FM already helps its clients buy and use energy more efficiently, but in the future, FM hopes to help clients generate their own energy.
In March 2009, FM inked a partnership with Dallas-based BroadStar Wind Systems, which patented a small wind turbine that can be placed on roofs. No FM client has installed the equipment yet as the technology isn’t ready to be cost-effective, Leyden said, but FM wants to be ready as their clients want alternative energy to be part of their future.
“We are listening to our customers, and we want to lead where our clients ask us to go,” Leyden said.
