Launderers must grapple with change

1 December 1998



Nicholas Marshall reports on the recently held Textile Services Association’s Commercial Services Section Conference.


The textile rental sector needs to cope with change in a much more determined manner if it is to achieve satisfactory levels of profitability.

This was made clear at the conference, as was how the sector’s prices had lagged behind those of other industries and services. Theme of the event was “The Challenge of Change.” David Stevens, joint managing director of Paragon Laundry, presented a paper entitled the “Changing life of a laundry” with gusto and humour. He warned he might offend, but his speech was acclaimed as accurately focusing on home truths in the textile rental market.

From the 1970s to 1990s there had been little product development in the rental sector, he contended. A sheet was still a sheet, a shirt was still a shirt, and a boiler suit was still a boiler suit. The development as far as prices were concerned, was a negative one.

A car costing £2200 in the 1970s would cost £16 000 today although the current cost would only have been £7300 if inflation indexed. A hotel room costing £15 then would cost £90 now, £58 if inflation indexed. The equivalents for a meal out were £7, £55 and £27.

The price of a rented sheet, however, was 14p in 1978 and 22p in 1998. With inflation indexing taken into account, the 1998 price should have been 55p.

The boiler suit rental price had risen from 90p to £2.80 (£3.54), the cabinet towel price from £1.30 to £3.44 (£5.11), and the dust control mat price from £1.54 to £2.98 (£6.05).

Against this background, Mr Stevens considered how profits could be maintained. There could be a move to cut costs, with pressure applied to suppliers. Productivity improvements could be aimed for, but the latest equipment technology was expensive.

Paragon had achieved cost reduction and sales growth but not the desirable level of price increase. With flatwork, it had been a case of “hello, pool stock” and “welcome to the rat race”.

The rental sector was unsuccessful in ensuring that customers paid appropriate prices. The sector was following a rationalisation path that involved high work volumes and low prices. If workwear prices went the same way as those of flatwork, Mr Stevens said, “we could face a very uncomfortable future”.

For the customers of laundries, the bitterness of poor quality and service remained long after the sweetness of the low price.

Twenty years ago, there were some 1400 laundry plants in the UK. Now, there are fewer than 400, including those of hospitals and prisons.

With a computerised graphic display, Mr Stevens showed, poignantly, “tombstones” of well-known laundry companies which had fallen prey to industry consolidation and other developments.

In 20 years, if the industry had continued to contract in a similar way, the TSA need only book a very small room for its commercial services section conference, he suggested.

Paragon had applied more pressure to its loyal staff at all levels and had recognised there was a risk of pushing personnel too far. It was also seen that insufficient thought had been given to the impact of a production drive on staff. The issue of staff well-being had been subsequently addressed, and Paragon management had structured a programme to ensure that there was direct dialogue with all personnel. Also important were management conferences and social occasions.

Two speakers gave the conference details of a TSA market research campaign which, at first, would determine hotel customers’ expectations of flatwork. The campaign is designed to help individual companies increase their textile rental business.

Ms Julie Smith, of Publicity Overload, which is organising the research, said an aim was to show hotels how textile rental services could be viewed as a source of revenue rather than as a drain on resources.

The research would involve telephone interviews, with participating hotel customers being questioned on areas including table linen, the daily change of bed linen on a multi-night stay, the number of pillows provided, and the provision of towels and bathrobes in the bathroom. It had already been recognised that hotel customers were particularly eager to talk about bathroom items.

In due course, the rental areas of workwear and cotton towels would be subjects for similar research.

Mr Chris Ducker, of Ducker UK and a member of the TSA’s auxiliary members’ committee, said that if a hotel spent an extra 80p per night per guest on cotton table napkins and larger bathroom towels, the revenue generated could be £5.

The TSA would arrange special training for textile rental company sales personnel who would be able to take positive messages stemming from research findings into the hotel marketplace.

According to Murray Simpson, TSA chief executive, the association had evolved to become much more closely geared to the needs of its members. “We sometimes call ourselves the New TSA,” he said.

The association was focused on providing the right basket of services to members, and on continuing to develop as a business partner for them.

There was a need to build membership—this would increase the association’s legitimacy and effectiveness. Additionally, there was a requirement to increase the active participation of members in the association’s activities.

Mr Simpson said representation in government was viewed as an association key role. At national and European levels, it was crucial to secure involvement in decision making processes before opinions were firmly formed. Involvement in working on standards affecting the sector was also highly important. Standards should be viewed as not just having to be contended with but as actively helping to promote aspects of business.

Alan Stephens, of Saracen Computer Systems, described the need to have a contingency plan for problems that might arise from computerised equipment and systems not Year 2000 compatible. It was extremely important to leave sufficient time to resolve unforeseen issues, he said.

The dangers of non-compliance should be recognised and a company’s Year 2000 project should command attention at senior management level.

Suppliers of computerised equipment and systems should be contacted to see if these were date driven. For date driven, non-complying equipment and systems, it was necessary to ascertain if conversion to facilitate compliance was possible and, if so, at what cost and how quickly.

More than just information technology elements had to be considered, Mr Stephens said. There were implications relating to health and safety, finance/accounting, legal considerations, insurance and environmental protection.

John Contney, who is executive director of the Textile Rental Services Association of America and who is retiring at the end of December, gave the conference an insight into the potential the US laundry market could strive for.

Textile care growth in the hotel sector would come from laundry companies forming strategic alliances with customers. There was “phenomenal” potential with dust control mats provision—indeed the mat market had been identified as having the capability of growing to 200 times its current size.

Textile rental companies needed to sell an “experience” to customers. With this, customers had to feel cared for and their requirements anticipated. The renter would, for example, be proactive in ensuring that extra linen was arranged for a customer before the Christmas holiday period.

In the healthcare context, the renter would liaise with a hospital to determine the surgery programme and thus make sure that the right levels of special classifications would be supplied.

The “experience” concept should mean that relationships with customers were improved. The renter would be a reliable, expert, advisor.

Looking worldwide, the future for the laundry industry looked extremely promising, Mr Contney said, pointing out that it still served only a small percentage of large and growing market areas.

Renters should adopt a positive attitude to change. Sitting still while the world moved forwards was risky. Currently, those businesses without a web site could be missing out.

Robotics Mr Contney predicted that the industry would see further automation, including the use of robotics, and additional attention given to inventory and loss control.

“Participatory” management—staff involvement in management decisions—would further gain ground, and launderers should strive to provide good workplace environments. “Would you like to work in your own laundry?” Mr Contney asked.

Robert Stevens, joint managing director of Paragon, looked at the subject of open book costing and why it could be required.

With open book costing, a supplier provided a detailed explanation of the components of cost.

At the outset, the supplier and the customer had to agree a profit margin that was accepted as reasonable to both parties. If agreement was not possible, the advice was to “walk away”.

Cost could be broken down by £1.00 of turnover or broken down per item.

Advantages of open book costing included the capability to increase prices smoothly, the assurance that pricing would always allow for a profit, and avoidance of the possibility of later being involved in a tendering exercise.

In a type of chat show environment, Ernie Pymm, chairman of the TSA’s commercial services section, interviewed Michael Watson, who formerly ran the workwear manufacturer CCM and who emphasised the importance of ethics in business.

Ethics and profitability could go together, Mr Watson said, adding: “Be straight with customers.” Looking after personnel properly was vital he stressed, stating: “If you have an unhappy workforce, you won’t survive.” Mr Watson said a supply operation could be seen to be like a three-legged stool—the legs being price, service and quality. If there was a flaw with any one, “the stool fell over”.

Mr Watson was asked why CCM was sold to Sketchley. He reflected how there had been many flattering offers for the company over the years, and how a point had arrived when CCM needed a company with greater resources than those of its own to move it forwards.

Grahame Robb, of management consultants Grahame Robb Associates, asked delegates a series of searching questions, and set in train thoughts as to whether certain lifestyles and working patterns should be moved away from.

Did delegates want more balance in their lives? Would they take a cut in salary to achieve a better balance? Did they want to work harder than they already did? Were they too tired to keep running? Were they too scared to stop? Too many people were absorbed by work, Mr Robb said, and, as a consequence, could lose the ability to be positive in other areas of their lives, and even have something of their personality disappear.

It was important to set aside time to talk about the future and plan.

“Manage your destiny” and commit a plan to paper, sharing the details “with someone who matters to you,” advised Mr Robb. Useful was listing aspects that were wanted and not wanted, and identifying priorities.

On the personnel front, Mr Robb considered it good practice to “communicate with staff even when there is nothing to communicate.” It was better to state there was nothing to communicate than for staff to be left to think otherwise.

Balance Mr Robb said the balance between support and challenge in the working environment needed to be monitored, both on a personal basis and for the protection of staff.

If there was a low level of support and of challenge, the individual would not be “stretched” and performance would be likely to diminish. High support and low challenge could lead to complacency with performance flattening and falling away.

A low support and high challenge combination provided the “death quadrant” which, as its name suggested, was highly dangerous and in which performance declined.

High support and high challenge produced the “growth quadrant”.

Mr Robb advised that a watch should be kept on people in the “death quadrant”, and that individuals who did not have the right support/challenge balance should receive coaching.

Managers needed to know how to delegate effectively. Flexibility was a key aspect of delegation—it was necessary to understand personnel, diagnosing their competence and commitment and using a flexible approach in delegating to them.

David Cam, director, Blackpool Pleasure Beach, described how the entertainment centre had evolved. The attraction had maintained its family appeal and its main product was “atmosphere”.

He stressed the importance of knowing what customers wanted, and what competitors’ activity involved.



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