Who speaks up for SMEs when giants get bigger?

If you’ve travelled in a lift this week, the chances are that you did so without giving much thought to who built it.

Whether in an office block, shopping centre, car park or hospital, most of us use lifts but don’t consider the huge industry behind their operation.

And behind the scenes, one of the biggest industrial mergers of the year is reshaping the industry that keeps lifts moving.

Earlier this month, shareholders approved the proposed merger between KONE and TK Elevator, creating what will become the world's largest lift and escalator company.

While the deal itself sits within a specialist sector that many people will never think about, it raises a much bigger question that extends far beyond lifts: what happens when fewer and fewer large companies control more and more of a market?

The KONE-TK Elevator deal isn’t an event exclusive to the elevator industry.

Consolidation is a business phenomenon that naturally takes place across all commercial sectors, from construction to banking, telecoms and energy.

Companies merge to achieve economies of scale and strengthen their market position, and for shareholders there’s the prospect of larger revenue and increased returns.

But for SMEs and independent businesses, mergers between larger competitors mean new challenges to overcome, as well as new growth opportunities.

When markets become increasingly concentrated, competition inevitably changes.

Customers have fewer providers to choose from, supply chains become more dependent on a smaller number of major players and smaller firms can find themselves operating in markets dominated by a handful of organisations with significant influence over pricing, procurement and access.

This is not an argument against growth or ambition, because successful businesses should absolutely be encouraged to innovate, expand and invest.

Large organisations play a vital role in the economy and many mergers create genuine benefits for customers and shareholders alike.

The challenge is ensuring that, in the pursuit of scale, we do not lose the competitive diversity that helps markets remain healthy.

SMEs continue to form the backbone of the UK economy.

They account for the overwhelming majority of businesses, employ millions of people and contribute significantly to growth and innovation.

It’s undeniable that independent businesses are often closer to their customers, and their smaller size enables more agile decision-making and better positions them to respond quickly when market conditions and circumstances change.

In short, SMEs are valuable if our aim is a competitive and healthy market; we know competition is one of the most powerful drivers of improvement, and that businesses that have to earn customers’ loyalty tend to focus on delivering good service and good value, as they cannot rely on size or market dominance.

That is why customer choice matters so much.

Whether you're selecting a bank, an energy supplier, a contractor or a lift maintenance provider, having choice encourages higher standards across the board.

When competition thrives, businesses are forced to innovate, invest and improve.

When markets become concentrated, that pressure can gradually diminish.

History also shows bigger is not always better; large mergers can take years to integrate successfully.

Combining systems, processes, cultures and workforces is not always straightforward, and periods of significant change can create uncertainty for customers and employees alike.

During those moments, smaller and more agile businesses often have an opportunity to demonstrate the advantages of flexibility, personal service and local expertise.

As policymakers, regulators and business leaders consider the future of the UK economy, it is important we continue to champion environments where businesses of all sizes can thrive.

Large corporations will always have an important role to play, but so too will the independent firms that create jobs, invest in communities and provide the competition that keeps markets dynamic.

Kiran Fothergill is director of Pickerings Lifts and chair of Jobs Foundation North East

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