The laundry and drycleaning sector in the USA is undergoing a radical shift but according to Bill Fisher, president of the Drycleaning and Laundry Institute (DLI), many of the problems in the drycleaning industry started well before the current economic crisis.

He says that the USA drycleaning market has been overcrowded for some time with around 25% too many drycleaners for the volume of clothes being drycleaned. This situation was affecting many businesses even before the economy nosedived. Fisher adds: “The economic crisis was a double whammy for them.”

However, according to statistics from the Bureau of Economic Analysis, published in the Financial Times on 23 November, there is some hope for an improvement in the economy in the future. Gross domestic product (GDP) rose by 2.5% in the third quarter of the year, more rapidly than was predicted. In addition, consumer spending rose by 2.6%, the fastest increase in four years.

Unfortunately, this improvement has not yet been reflected in the number of jobs on offer – unemployment had already risen to 9.6% and by November 2010 had climbed even further to 9.8%, according to the National Bureau of Labor Statistics.

Consumers have cut back on “discretionary expenditure” and many drycleaners have seen business decline by 30 – 40% as customers choose either to wash their own shirts or to wear suits and trousers for longer before taking them to be cleaned.

Many drycleaners have gone out of business and fewer businesses are starting but Fisher says the number of drycleaners needs to reduce still further.

The combination of an overcrowded market and declining economy has affected large businesses as well as small. Fisher cites the US Drycleaning Corporation which set up business about five years ago and intended to go national.

It eventually became a public company on the stock market and by June 2008, had 60 stores but in March 2010, it filed for voluntary petitions for relief under Chapter 11 in the US Bankruptcy Court.

But some businesses are still growing. Procter & Gamble has started a drycleaning franchise – Tide Dry Cleaners – trading both on the Tide brand and on P&G’s global reputation. There are now three Tide outlets in Kansas City and another in Mason, Ohio.

Another trend has been the proliferation of “one-price cleaners” in urban centres. These offer a no-frills, cash only service and are geared for volume. Fisher says that people are taking more clothes, including casual wear, into such businesses, but saving their best clothes for regular drycleaners.

Jeff Miller of Millers Fine Cleaning in Hendersonville, North Carolina says the industry is difficult even for well-established businesses. He is the third generation of his family to run the business and has been able to keep debt to a minimum. Nevertheless, he has begun to reduce the number of staff by not replacing those that leave.

Other businesses in the area have been less fortunate. Two out of the county’s six drycleaners have closed their doors although Miller says there were probably two more than the demand justified. One has been re-opened as a one-price cleaner.

Miller’s business has been particularly affected by the decline in customers from the real estate sector and also by those who are cutting discretionary spending. “Quite a few are doing their own shirts,” he says. “We used to do 600 shirts a day and now we do 400.”

Web marketing

Miller’s low debt burden puts him in a good position as does the business’s reputation in the community. He has also begun marketing on the internet, using social networking sites and Twitter.

Miller decided to stand for Congress in the recent USA elections as he felt there was too little experience from small business owners in government. “Small businesses drive the economy.” He says that these businesses understand regulations and taxes and how policies in these areas can affect business. Although Miller lost the election, it was a tight race and he was beaten by just a small margin.

Miller’s company includes a self-service laundry business which has also felt the brunt of the recession and in particular of the resulting decline in the construction industry. About 75% of the laundry’s customers were members of Hispanic families working in construction. With the decline in that source of work the families have left and Miller’s laundry has lost about 25 – 30% of its business.

Looking at the coin-op sector Jay McDonald from Alliance Laundry Systems says that many coin laundry owners have postponed buying equipment. The media urged people to delay big purchases until they were certain whether or not their business would be affected by the economy. McDonald says that this situation had created some pent-up demand for 2010.

However, he adds: “Many [coin-op] owners enjoyed higher operating margins as the economic downturn reduced utility costs and also rents. He believes that real estate vacancies and lower rental costs will provide opportunities for those wanting to open coin-operated laundries to negotiate good long-term deals.

Gary Perlson from Danielle Uniforms in Manhattan provides laundry and drycleaning services to hotels in New York City which, he says, continue to have over 90% occupancy. Such services included drycleaning uniforms and laundering bedroom, bathroom and restaurant linen.

According to Perlson, most New York hotels own their own linen and uniforms so do not want a textile rental service but they still send them out to be cleaned as on premise laundries are also fairly rare. To enhance his company’s service, Perlson recently negotiated a deal with Metal Progetti to supply automated uniform dispensing equipment to hotels with 350 employees or more. Garments are microchipped so they are automatically sorted when Danielle delivers them after they have been cleaned. Each employee has a card with the relevant uniform details so that uniforms can be issued at the swipe of a card and there is no need for staff to oversee the transaction. Perlson says this automated system can save hotels up to US$180,000 a year in labour costs.

About a year ago Danielle Uniforms launched a web-based pick-up and delivery laundry service that allows customers to request collections and arrange delivery times on their Blackberries or IPhones. He is also working with Metal Progetti on ideas for unstaffed kiosks in public places so commuters can drop-off or collect laundry.

Convenience matters

Such developments underline the importance of convenience for both business customers and consumers in the USA. Drive-in drycleaning services have also grown in popularity.

Pick-up and delivery services are also common and Jeff Miller says that some companies are expanding their routes as the local customer base shrinks. “One cleaner is coming in from out of state, about 45 minutes away.” Miller wonders if this is cost effective given that the population is so widespread.

The trends that are affecting consumer oriented sectors such as drycleaning are also impacting on the commercial and textile rental areas.

Rick Kelly is vice president at Pellerin Milnor, the laundry equipment manufacturer. He says that commercial laundries’ purchasing decisions have been influenced by several factors. In the past couple of years restrictions on borrowing have been severe. So the emphasis has been on projects that show a solid, calculated return on investment to persuade banks to lend the necessary capital.

A measurable reduction in labour costs is important in such calculations but Kelly also notes a definite move to focus strongly on lowering water and energy costs as utility costs in the United States continue to rise both as a result of inflation and of regulations.

Pellerin Milnor has addressed this trend with its PulseFlow technology CBW Washers. This system has received the Hohenstein Institute’s Certificate of Innovation stating the washer’s proven ability to wash and rinse without compromising quality while using only 2.5litre of fresh water/kg of linen.

Kelly has also observed growing interest in the “steamless” laundry concept and the company has supplied heavy-duty washing equipment to several laundries that have adopted this concept.

Many commercial laundries are curious about the steamless idea and are continuing to evaluate its effectiveness, viability and maintainability. The interest stems from factors such higher efficiency in the hot water delivery system, the availability of lower temperature chemistry and the possibility that it may avoid the need to employ an in-house certified boiler engineer, thus reducing overall overheads

The TRSA (Textile Rental Services Association of America) claims to be the USA’s largest trade association for operators and suppliers in the textile rental and commercial laundry markets.

President Joe Ricci says that the main growth in textile rental has been in the healthcare sector. Hospitals are looking more and more to outsourcing as a way of cutting costs when old equipment needs to be replaced.

He adds that the hotel/motel market now accounts for only 20 – 25% of textile rental. In view of the financial situation, the TRSA is working to help members cut costs. It is also working with the Environmental Protection Agency (EPA) on ways to use natural resources more efficiently through the Laundry Environmental Stewardship Program (ESP).

This includes the use of water, the disposal of solid waste and air emissions.

The TRSA is currently looking at launching a “clean, green” accreditation programme and recording measurements “so people can see we really are a green industry,” The organisation has also developed an agreement with the EPA to get rid of nonylphenol ethoxylates (NPEs) in detergents by 2014.

In the USA, individual states and cities have the authority to regulate on environmental issues, under the direction of the EPA.

So although local regulation generally follows the direction of the federal agency, there can be wide variations between states in the legislation and regulation governing laundry and drycleaning practices. For those whose businesses encompass a number of states, regulation compliance can be complex.

The regulation of perc in drycleaning provides a good example of this. The state of California has passed legislation requiring the use of perc to be phased out by 2023.

Similar proposals have been tabled in other states and cities, including Pennsylvania, New Jersey, Washington DC and Chicago but these have been withdrawn.

However, Bill Fisher at the DLI believes they may resurface and may even become more of a concern due to the media attention focussed on the use of perc.

Many states have also regulated the use of perc in businesses in residential locations and some drycleaning businesses are also finding it difficult to get agreement to set up in shopping centres. As a result the use of alternative solvents, in particular hydrocarbon, is growing. Tim Maxwell, president of GreenEarth Cleaning, says the use of Green Earth (a cyclosiloxane) is also growing and currently has around 5% of market share.

Procter & Gamble has partnered GreenEarth in its Tide Dry Cleaner franchises. GreenEarth’s largest affiliate in the USA, MW Cleaners, has over 100 GreenEarth machines.

To strengthen its position, GreenEarth has also recently acquired the USA distribution rights for Xeros, a “virtually waterless” laundering technology based on the idea of using polymer beads to absorb soiling, which is being developed by the same-name UK-based company. The system is expected to launch later this year.

Environmental legislation is also behind moves to encourage use of wetcleaning, the extremely gentle “washing” process that uses specially designed chemicals and programs. Some states have introduced incentive schemes for those cleaners that adopt this as an alternative to perc.

A few years ago, the DLI formed a partnership with Greenpeace in which it agreed to encourage its members to use more wetcleaning where possible. Bill Fisher thinks around 30 – 35% of all garments brought into a drycleaners could be wetcleaned.

However, both Fisher and Tim Maxwell agree that 100% wetcleaning, which has been promoted by some environmental campaigners, is not cost-effective and the method does not work on all garments. Maxwell says that many cleaners that have tried to rely solely on wetcleaning but have failed or have re-introduced drycleaning, this time using alternative solvents, and have reduced their use of wetcleaning to around 30%.

Another cleaning method that has been promoted as environmentally friendly is Solvair’s system. In October it received the 2010 Illinois Governor’s Sustainability Award, which is granted to businesses for their achievements in protecting the environment, helping to sustain the future and improving the economy.

However, the company says that the “green” aspect of its system has now become more of an added bonus than the main selling point to consumers.

Most consumers, while still seeking a green cleaning service, are equally concerned with the quality.