Brokers carving out questionable niche

As part of a larger movement in property management, middle-men brokers like U.S. Maintenance, Dentco, and Genesis have sold their volume-buying idea as something that can add value instead of cost by delivering services in volume. They call contractors asking for sweeping bids, in many cases asking contractors to bid on properties they are already servicing direct. They have been known to request the bid under the false pretense of having the account nailed down, have been known to get the bid and measurements done, then chase the account, then give the business to contractors who did not do the leg work. Accounts are often gained through mass bids and/or reverse auctions, leading to a national bulk price that is not sustainable - among other issues. All of which leads to a largely, but not unanimous, distaste for brokers among contractors.

“The best contractor usually does not get business from brokers due to price,” says Dale McCaskill, Southco Maintenance. “Brokers add another mouth to feed, producing economic losses to the overall industry.” Corey Handley, WAC Corp., says his concerns are whether the bid request is legitimate and even if he will get paid. “I’m not sure how clients figure it’s less expensive because every hand it passes through has to keep a piece of it.”

All of which seems to make sense, but doesn’t change the fact the broker business is growing, in spite of some spectacular failures. “Customers have elected in many cases to consolidate their buying practices,” says Gerry Kesselring, Contract Sweepers & Equipment. “Working with brokers allows us the only opportunity to work with those customers.”

Thus the nuance that may be the root of the situation: Some retailers look at sweeping like they do a product, figuring if bought in bulk it can be bought at a lower price. But sweeping across a region or a nation is not at all analagous to buying widgets manufactured under one roof. One is quantitative and local; the other is qualitative and spread out. But there is some grudging recognition of the brokerage system in the industry, usually by the same contractors who know the problems. “There is a positive side because it is a supply of business,” says Handley. “When it works it is like an arm of our sales effort. And it does seem like a lot of clients are going this way.” Riley Crane, The Wright Group, says the worst part of the brokerage accounts he handles is paperwork. “They have systems set up to hire a bunch of tiny operators who can’t be trusted and they try to force performance with paper trails,” Crane says. “You usually deal with someone on the phone who doesn’t know anything about the property and this just adds time and costs to everything.”

So the broker system lurches forward, fraught with an uneasy tension of the brokers needing the very contractors who generally do not like or respect them, contractors accepting business they do not want over losing that business, and clients trying to convince themselves that one phone call to a company who owns not a single sweeper can make sweeping problems go away across 48 states. Is this sustainable? The jury is still out. For information on NAPSA visit www.napsaonline.com.

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