Finding diamonds in the dark

The Brits and the Irish are a resilient bunch. Historically, both nations have suffered worse than Covid-19. There may be no real winners in this pandemic yet, but there will be when we come out of it. As Jason Alexander, UK CEO of Renzacci puts it: “It has shaken the pot. Losers will be those who let the world pass them by. Winners will be those who’ve used the pandemic to increase collections/delivery, who use customer databases to develop, enhance or diversify their offerings, who embrace technology and apps to offer convenience.” Too right, concurs Adam Mansell, CEO of the UK Fashion & Textile Association (UKFT). Winners, he says, will be those “who’ve hit the reset button”. Above offering dry- and wetcleaning, alterations and clothing repair, winners will build strong communities and customer connections.

At the time of writing, the UK’s economy was not as bad as it could be. But economic recovery from Covid-19 havoc will take longer, warned the Bank of England in August. Easing of lockdown measures, more rapid consumer spending on clothing and household goods rebounded the economy earlier than assumed. Rising unemployment and troubled service sectors prompted a hold of 0.1% interest rates. Leisure and entertainment, accounting for a fifth of all consumer spend, remained subdued.

The Bank expects the UK economy to shrink by 9.5% this year – the biggest decline in 100 years, but not as steep as an initial estimate of a 14% contraction. Still, the Bank said, the UK faced its sharpest recession on record and the “largest quantum of uncertainty in a forecast” ever published by policymakers. The Irish economy is set to shrink 8.5% this year, forecasts the European Commission. Ironically, Ireland’s economy grew the most of any EU country in the first quarter of 2020 – up 1,2%. Predictions? The Bank of England expects the UK economy to grow by 9% in 2021, and 3.5% in 2022, with the economy forecast to get back to its pre-Covid size at the end of 2021. Back in May, growth estimates were 15% and 3% respectively. The EC says Irish GDP will grow by 6.1% in 2021. That’s all if the virus doesn’t resurge, if Brexit results in a free EU trade agreement beginning 2021 and if jobs furloughed under both government’s job retention schemes return under a recovery. And if inflation, expected to fall to nearly zero, gets back to its target 2% in both regions. A lot of ‘ifs’ spells industry wariness, especially since normally, 75% of commercial laundry workers operate within the UK’s hospitality laundry sector. More than three-quarters of hospitality businesses in the UK are now an insolvency risk within 12 months, says UK Hospitality. In Ireland, hospitality normally contributes E7.6b (US$9b) to the economy and up to 2.3% of GDP. It has been decimated, laying off over half its 180,000 workforce.

Last year the UK’s commercial laundry industry, with £1.2b (US$1.4b) turnover, enjoyed buoyancy and sector growth of plus 5%. Within a week of Covid-19 gripping the UK and Ireland, many already anecdotally reported 7-30% reductions in volumes. Irish statistics mirror that. Remember, a single hotel with 100 rooms typically uses around 750 pieces of linen daily. Revenue losses have been catastrophic.

Britain’s hospitality sector was responsible for 32.7% of the GDP losses in April. Total GDP in the UK fell by 20.4% in April, according to ONS figures. Still, by July, many hospitality businesses reopened, albeit with heavy government help and social distancing rules. By August they were stuttering, praying for a virus-free future. The Jensen Group said it expected many hospitality projects would postpone for several months. 2019 figures show hospitality accounting for roughly 25% of textile care revenues in the UK, healthcare around 16% and ‘other’ making up the rest. Around 98% small to medium sized enterprises (SMEs) dominated the landscape. The remaining slice comprised about 135 commercial laundries and a handful of larger organisations.

The giants both sides of the Irish Sea couldn’t escape pandemic disruption. Johnson Service Group, with 18 UK sites, saw its shares dipping 2.5% to 116p mid lockdown. Clean went quieter on hospitality but continued to service workwear. That sector normally garners over half of the UK’s textile service revenues from the processing of circa 53m items per week. A factory with a 1,000 staff usually uses 3,000 linen pieces daily.

Labour? It’s another bridge to cross. UK unemployment is expected to almost double from the current rate of 3.9% to 7.5% by the year end, Ireland to 7.4%, as government-funded support schemes halt. It’s ironic that labour shortages were a major industry issue pre-pandemic.

In Scotland, First Minister Nicola Sturgeon is under pressure to keep open NHS laundry services and provide employment. Half the sites serving hospitals north of the border were marked for closure. Should mainland Scotland be left with just four NHS laundries? Meanwhile the UK minimum wage changed on 1 April with an increase of £930 over the year for a full-time worker on the National Living Wage. National average pay scales show an operations manager earning £30,000, a maintenance engineer £29,000 and a service engineer £25,000.

David Stevens, CEO of the Textile Services Association, says early indicators are that over 50% of the staff currently fulltime employed (around 24,000 in the UK) will be retained but on flexible contracts when furlough schemes end in October. Pundits say many staff will get zero-hour contracts and thousands will be made redundant. Short term, Stevens says, labour pools will suffice but as business ramps up post pandemic, UK staff shortages will again become the industry’s biggest issue, not helped by the Government’s latest edict on migrant employment. It demanded a salary threshold of £25,600 for migrants – an unrealistic wage for manual labour. The UK’s textile care workforce pre- Brexit comprised 40% of non-UK EU nationals. ONS statistics indicate three in four migrants from Eastern Europe filled low-skill operative jobs. Many have returned to their home countries. Low skill drivers and engineers remain in short supply, partly because the industry has poor perception. A worried TSA has called on the Government to secure a transitional deal that prioritises a flexible immigration system, plus minimal import tariffs to allow access to labour, industrial equipment and cleaning chemicals. Stevens says Brexit issues have become irrelevant in the face of the pandemic. But they will resurface.

Triumph over Adversity

Enough negativity. Upbeat news includes Elis, dominant in both the UK and Ireland, which finally gained the blessing of Competition and Consumer Protection Commission (CCPC) in June for its purchase of Kings Laundry, supplying 50,000 hotel bedrooms with 2 million linen pieces a week and generating circa E35m in 2019. Elis has spent two years divesting some contracts to Linencare to fulfill CCPC rules and to fully complete the purchase.

Businesses are adapting to change and for some it is a positive move. Sarah Lancaster of small independent Total Laundry in Chichester, West Sussex, says: “Business has been hit considerably. We could have closed and thrown in the towel (freshly laundered of course) but as I see it, we are a now a new business that’s fully equipped, with fantastic experienced staff and a good customer base, so we had to pick ourselves up and start again, Total Laundry 2.

“We have from this week (mid-July), gone to full time hours and we have nearly all our staff back. We have even bought a new washer from WashCo, (they were really good!). So, it is onwards and upwards! I must say, the TSA has been brilliant in all this. I certainly didn’t feel alone, they have really backed up the industry.” And witness true entrepreneurship soaring mid-pandemic. The UK’s Bournemouth-based Barker Group, a large domestic laundry and specialist drycleaner delivers finished laundry to over 3,000 customers every week across Greater London and Southern England. It has launched a virtual ‘Barker Hotel’. Barker Room Service, includes a fine dining menu with restaurateur Mark Cribb, of Urban Guild, veteran sommelier Jonathan Charles, and its housekeeping department offers bed linen manufactured and sold under the Barker Collection label. It reports supreme customer loyalty. “I’ve experienced fire, flood and now a plague in my business. A bit of adversity drives innovation and ingenuity. I just need an earthquake and I should have the business cracked!” says MD Matt Barker., pictured left.

On-demand Laundrapp has targeted exhausted parents juggling home working, home-schooling and household management. Its app, owned by Inc & Co, launched a targeted campaign on Mumsnet, devised by Manchester-based digital shop Neon. It tells parents they can use the service via their phone or other device to get laundry safely collected from their doorstep without physical contact.

Oxwash, a space-age laundry and drycleaning startup, announced mid lockdown a £1.4m investment from Biz Stone (co-founder of Twitter), Paul Forster (founder of Indeed.com), and other angel investors. Founded by former NASA engineer Kyle Grant, now CEO, Oxwash uses ozone generation technology and delivery to provide Covid-19 disinfection for customers. Electric-cargo bikes adapted with portable ozone generators to sterilise items and dissolvable laundry bags to eliminate coronavirus transmission through fabric and clothing are a new generation winner. Launched in Oxford, Oxwash now graces Cambridge. Next destination? London and England’s south east.

Fast forward to Miele’s professional division which launched a smart technology app to streamline the use of laundry operations within communal laundry sites. Miele Professional GB’s director, Sam Bailey, says appWash allows those in student accommodation, holiday parks or complexes to reserve washing machines and dryers online and to pay without cash. Facilities managers and laundry operators receive digital invoices from registered users, significantly reducing administration costs. The operators get full transparency over equipment, enabling them to check which washing and drying machines are operating and the cost of each cycle.