Cleaning Up Big Time
The OIO has approved CD&R Madison UK BidCo Ltd (USA 35.85%, Cayman Islands 10.42%, The Netherlands 7.99%, China 4.68%, Canada 4.34%, Singapore 4.10%, Hong Kong 4.01%, Kuwait 4%, Luxembourg 3.96%, Various 20.65%) acquiring 100% of the shares of OCS Group International Limited. It is owned by O.C.S. Group Limited (UK 83.54%, Canada 12.05%, Various 4.41%).
The OIO explains: “The Applicant CD&R Madison UK BidCo Limited is an investment vehicle of CD&R Fund XI which is a private equity fund managed by entities affiliated with CD&R, a private equity investment group based in USA. The Applicant proposes to acquire 100% of the issued share capital of OCS Group International Limited from the Vendors, OCS Group Limited (the Proposed Transaction)”.
“OCS Group International Limited and its subsidiaries provide a variety of facility services to a broad range of customers around the world. In New Zealand, these services include cleaning, soft facilities management services such as waste management, building and grounds maintenance, and hard facilities management services such as heating, ventilation and air conditioning installation and maintenance. The Proposed Transaction is part of a global transaction by CD&R Fund XI in order to create a global facilities management business with a strong presence in Europe and Asia-Pacific across cleaning, security, catering, and multi-technical services. Not a transaction of national interest”.
According to its Website: “Founded in 1978, Clayton, Dubilier & Rice is a private investment firm with a strategy predicated on building stronger, more profitable businesses. Since inception, CD&R has managed the investment of more than $US40 billion in more than 100 companies with an aggregate transaction value of more than $US175 billion. The Firm has offices in New York and London”. CD&R Madison is a special purpose vehicle incorporated in the UK in May 2022. So, another private equity global buyout of a transnational corporation, with NZ being among the bit players and crumbs.
However, the target of the buyout, OCS, is of interest to CAFCA and has cropped up in Watchdog before. Issue 133, August 2013 had an article entitled “An Unholy Alliance? Why One Union Is Teaming Up With The Face Of Overseas Capital”, by Alastair Duncan. “Cleaning is today dominated by three large operators, ISS: the local arm of a Danish conglomerate, Spotless Services: the Kiwi division of Australian equity firm PEP and OCS, the face of its parent UK owners. Between them these three and another UK company, Compass, effectively control the major cleaning and food services in NZ. Each has its own dark history. Most recently OCS was in the Court of Appeal over its treatment of staff at Massey University…”
In Watchdog 141 (April 2016), Alastair Duncan (“a CAFCA member with a day job at E Tū”) wrote a longer article “The Aussie, The Brit And The Dane. How Three Overseas Corporates Are Keeping A Lid On Cleaners’ Pay”. It is well worth reading the whole article. There is a subsection on OCS.
“British firm OCS, founded in the 1900s by the aptly named Frederick William Goodliffe (sic), turned up in this country when it took over the QSE Company which, in turn, has purchased/taken over the Government’s Internal Affairs cleaning service, a victim of the Rogernomics purges of the 1980s. In 2010 it was immersed in a bitter dispute at Massey University – a dispute in which Massey Chancellor Steve Maharey failed to actively support the workforce”.
“OCS’ branding is ‘Outsourced Client Solutions’ – an apt brand given their history. It employs 3,800 cleaners. OCS financials are not public but the pay rates are. Back in the 90s the margin between commercial cleaners’ pay and the minimum wage was 24%. Last year it was it was just 35 cents. If the 1999 margin had been maintained cleaners would be paid $19 – almost a living wage”.
OCS Says: “Essential Workers – What Have They Ever Done For Us?”
Come the pandemic lockdowns of 2020 and 21 and OCS was outed for its intention not to pay some of its workers at all. “Meanwhile cleaning company OCS has paused a proposal to not pay some staff at all. In an email leaked to 1 News on August 20th (2021), staff were told they would continue to be paid if their worksite remains open or if clients continued to pay for services, but other workers may not receive any wages at all. ‘If your worksite is closed and the client has indicated they will not be paying for services, we are seeking your views on the proposal not to pay you… until work can resume, on the basis that… you are not ‘ready, willing and able’ to work,” the email reads”.
“OCS says it’s now planning on paying staff their full wages until at least September 14th if the company receives the Government’s wage subsidy. ‘If OCS’ application is successful, the company proposes to pay you at 100% of your normal earnings for the period 1 September 2021 to 14 September 2021. This is also subject to you not declining any reasonable redeployment option provided to you by OCS,” Operations Director Gavin Upston told staff”.
“‘While we hope that any further wage subsidy arrangements can be utilised by OCS to support the ongoing payment of wages (at some level) for any applicable period beyond 14 September, we’re unable to confirm that’. Businesses facing a loss over lockdown can apply for the Government’s wage subsidy on the condition that they try to pay their staff at least 80% of their usual rate, but employment lawyer Susan Hornsby-Geluk says paying workers any less than what’s in their contract could see businesses end up in court” (1 News, 30/8/21). So much for looking after essential workers.