Returning confidence sparks a greater motivation to invest

Light is beginning to appear on the horizon in Spain, giving hope that the economic gloom that has been cast over the country in the last few years may be about to lift. GDP rose 1.4% in volume terms in 2014 compared to the previous year, according to Spain's national statistics agency, Instituto National de Estadística.
Employment was also up, by 2.4%, compared to the previous year. Accordingly, household consumption showed an annual increase of 3.4%, although government expenditure dropped 0.5% over the year.
"Currently, Spain is growing faster than its partners in the European Economic Community (EEC) due to severe reforms in all sectors made by the Spanish government during the past years, and we believe this trend will remain positive over the next two years," comments José Gutiérrez Garay, country manager, Spain for Alliance Laundry Systems. "Thanks to the measures taken in the labour market, such as modernising laws regarding the types of recruitment and flexible layoffs, we have seen the unemployment rate decrease over the past year, but not at desired levels. The expectation set at this point by the government for 2015 is to create over a million jobs."
One of the repercussions of the economic crisis has been a restriction on lending by banks, which has caused many businesses to close.
"The Spanish government in recent years has tried to remedy the situation, without much effectiveness, by helping to sustain national banks and savings due to the great debt that supported the same funds," Gutiérrez Garay says.
Financial assistance from the EC has helped the banks to reactivate their balance sheets and begin lending again, according to Gutiérrez Garay. Alliance has also responded by offering its Alliance Finance programme to the market in which it offered finance solutions not only to all existing customers but also to new entrepreneurs interested in starting up in the laundry business.
Jose Maria Boneu Simon, the owner of Drylav, the official distributor for Milnor in Spain, believes the Spanish market is in strong recovery. He expects this to continue throughout 2015 and a further increase for 2016. "There is lots willingness to invest. After five or six years of almost a total lack of funding, right now the banks are starting to give credit for what is expected be strong investment in the sector."
The laundry sector has passed the crisis with, effectively, less difficulty than other sectors. Some laundries have closed or been sold but there have also been additions and new laundries have been created with an eye on tourism, an area that plays an important part in the industry's turnover.
Boneu Simon says: "Our prospects are really very good, not only because of the end of the crisis but also, more importantly, because of the improvements applied across the range of our machines - enabling a high level of production and minimum consumption, allowing payback within a shorter timeframe.
Jensen is also optimistic about prospects for the country - in February this year it took over the business activities of its Spanish distributor Boaya and opened a sales and service centre, appointing Rafael Boeta Arp, son of Boaya founder Rafael Boeta Beraza, general manager of Jensen Spain.
"Banks have decided to offer credit again, which means they see future business to be real, and that has had an impact on our customers who are now more motivated to invest in new equipment. There is also some local assistance from the government to support investment," Boeta says.
One project in which Boaya and Jensen were involved was supplying and commissioning equipment for Indesa 2010, an industrial laundry created by the government of Álava as a centre for employment for people with disabilities. The centre, which processes laundry from hospitals, was inaugurated at a special ceremony in March 2013 by King Felipe VI and Queen Letizia.
Tourism is one area that did not suffer greatly during the economic crisis. While Spanish tourists may not have been as active during times of financial constraint, the number of international tourists continued to grow. In fact, 2014 was a record breaking year with more than 62 million tourists, a rise of 7.4% on the previous year.
As a result, the hotel sector has continued to expand, which has brought benefits to the laundry sector, in particular the big textile rental companies.
Healthcare, on the other hand, has suffered from big cuts in government spending. "Due to the crisis, the challenge for the laundry and rental business is that prices per washed kilos have decreased to where they were 10 years ago," says Carsten Oesingmann, manager of Kannegiesser España. "The laundry owners have very little negotiation power to increase these prices as they are afraid of losing business. At the same time, hotels are taking advantage of having the upper hand at the negotiation table and are extending payment terms."
Boeta Arp agrees: "Hospital laundries either don't invest or they externalise the service and the laundry groups who manage the tenders have seen their volume of linen to drop by 20-30%."
Fewer beds in public hospitals means fewer kilos washed by the laundries, Oesingmann explains, adding: "Also, the situation of payment terms of the local governments is a lot worse than in the hotel industry. The laundries that concentrated their business on healthcare have had the roughest time in the sector and many of them had to stop business due to a lack of liquidity and financing."
Cost efficiencies in the health sector included externalising services like cleaning, catering, laundry and management, although Boeta says institutions are looking at taking back more control by washing and processing their own linen in order to provide a service that meets each health centre's requirements.
Paulo Silva, professional director for Spain and Portugal at Miele, agrees. He describes the OPL market in Spain as 'an ongoing process'. "Some are looking at the opportunity to outsource the laundry totally or partially but some also see the advantages of an in-house laundry, such as better quality control, lower stock quantities of linen, towels, table linen, etc. It is important to ensure that the laundry process in the in-house laundry is optimised and that all the people involved in the process are well trained. The financial crisis has affected the market in the past, but we also see that Spain is well on the way to recovery so in the future we see good opportunities for the OPL sector."
The economic difficulties made customers much more concerned about operating costs with their equipment, so supplier focus has been on making their machines more efficient. This year, Miele launched a new generation of small, highly efficient ironers, which it says can fulfil the needs of restaurants and hotels.
"So even in the challenging area of ironing we have now completed our product portfolio from small rotary ironers up to the largest models with diameters of 600 and 800mm," Silva says.
The company is also promoting its latest range of suspended washer-extractors, the MWF-Series, in Spain, a range that promises to save labour, energy, water and linen replacement costs.
Domus has also been investing in technology and R&D, renewing its range of equipment and making its washer-extractors, tumble dryers and flatwork ironers more efficient, in order to satisfy the needs of the laundry owners.
"This translated into a very good 2014, despite the crisis in Spain, and it was also a very good year for us with regard to exports," says Albert Molist, national sales manager for Domus. The company presented its latest equipment at ExpoDetergo last October, garnering interest from a range of new companies.
And opportunities are growing. Currently, the workwear market in Spain is very small, but several laundries are pushing the market in order to generate more demand. However, one sector that is expanding significantly is coin-op, especially over the past few months, according to Molist.
"There was never a tendency in Spain to take the clothes to a coin-op laundry, but now people are starting to do that - and more people are becoming encouraged to invest in this business," he comments.

Opportunities in the coin-op sector
Girbau has also found opportunities in the growth in the number of coin-op laundries. "A lot of laundries opened over last two years and Girbau equipped most of them. We believe that the business will keep on growing but more slowly and the time to differentiate will arrive," says Carles Solé, product manager of Girbau's Commercial Laundry Division.
In February 2014 Girbau launched ProfitPlus Control in Spain, a system for vended washer designed to give the end user more washing options (customised washing) and, at the same time, increase laundry profitability.
The company has also developed new features and equipment focused on energy and water savings. "We have the most reliable and durable equipment in the industry, combined with competitive pricing" Solé claims.
Wetcleaning is also becoming an alternative for drycleaners - and, Solé says: "Girbau has the washer (HS Series) and dryer (ED Series) suitable for that."
The growth of coin-op laundries has had a significant impact on the drycleaning sector, according to Marco Niccolini, general sales and marketing manager for Renzacci. "Coin-op used to be almost non-existent, located near student accommodation, military barracks and hospitals. Now it has expanded to include everyone."
The competition from coin-ops has contributed to the closure of many traditional drycleaning shops that, instead of having their own washer-extractors, sent customers' laundry out to centralised laundries. The higher charges they then had to pass on to their customers could not compete with coin-op prices.
Another trend is a decline in drycleaning franchises - the increased costs from fees and royalties have meant that some shops found it hard to compete. To prevent their brands from disappearing completely from certain parts of the country, some of the bigger players have been forced to buy back some of their shops, Niccolini says, running them as their own businesses rather than as franchises.
Renzacci has responded to the changes by investing in the coin-op sector with Spanish partner Domotic & Clean, providing washer-extractors and tumble dryers to the sector, as well as developing the Domotic system for monitoring and managing coin-op laundry processes, including real-time turnover, campaigning and marketing, promotions through iPads and iPhones, etc.
In addition, for the drycleaning sector, Renzacci is investing in promoting the benefits of the new solvents and the Bio Clean concept and supporting the opening of new drycleaning shops. At the end of last year, the company also introduced its campus training programme to Spain, where those who invest in machines with the new solvents are not only trained in how to use the machine but also spend time in a drycleaning shop appointed as a 'campus' to get a more in-depth insight into what they can do and the best cleaning techniques.

Alternative solvents, a work in progress
However, the use of alternative solvents is still a work in progress in Spain. The lack of investment funding, and the lack of stringent enforcement of environmental regulations, means that the changeover from perc is not as advanced in Spain as it has been in some other countries.
The economic situation has also not helped, slowing down not only sales of new drycleaning machines but also the introduction of new solvents. "Perc is the main solvent in Spain and drycleaners are very conservative. It is difficult to convince them to change to alternative solvents," comments Ivan Colombo from Pony. However, some are turning to hydrocarbon solvents. "I would say that less of the half of the new machines are for perc and the rest are for hydrocarbon or other alternative solvents," Colombo adds.
"In Spain there is no express prohibition on the use of perc," explains Josepa Moral, sales manager of Servi Seco - Unisec. There is interest in alternative solvents from professional drycleaners, and when they need to renew their drycleaning equipment, they think very seriously about opting for this type of solvent, but there is no law that requires them to." Moral says knowledge about how rules are changing in other countries are leading drycleaners to opt for alternative solvents, in order to prevent their equipment from becoming outdated in a few years. And Unisec has responded with new models of suitable machinery for alternative solvents and with different capacities.
The company demonstrated its latest innovations at last year's ExpoDetergo in Milan and said there was much interest in what it had to offer. Moral is optimistic about the future of drycleaning in Spain and a year which will bring increased activity in the sector.
Colombo agrees. "2015 is a year of elections, where local, regional and national governments may change," he says. "This can produce some instability, but we believe that the growth of the economy is strong - and only a disaster can change that."

Supporting laundry and drycleaning standards
Spain's trade associations are regionally based. Antonio Puértolas Campo, the president of Gremi de Tintorers I Bugaders de Barcelona (the Laundry and Drycleaning Guild of Barcelona), says there are several initiatives the association is taking to help support the industry.
In the last 15 years, Gremi de Tintorers I Bugaders de Barcelona has aimed to educate and inform its members. It is the only entity at state level that has a training school approved and certified by ISO 9001: 2008. In it, training has been developed on a majority of the issues related to the sector:
- new technologies - processes and products
- optimisation of resources and energy saving
- prevention of occupational hazards and health surveillance
- environment, waste and emissions
The Guild, with the collaboration of suppliers and government, has worked for the past few years on a plan for re-energising the sector, focused primarily on drycleaners and small laundries - with excellent results, he says. "Investments in companies associated with our industry have exceeded usual investment by €3 million," he says. "Companies signed up to this renewal plan have survived the economic crisis better than the other establishments."
The Guild is studying a project for the total reuse of water used in the washing process, developed by companies specialising in the treatment and purification of water and the chemistry faculty of the University of Barcelona. It is a technology composed of separation and advanced oxidation with a purification yield of over 95%."

MARKET FINANCE: Alliance Laundry Systems has introduced the Speed Queen concept store in Barcelona