Tumult, troubles, tribulations and triumphs27 May 2021
The USA, despite Covid-19 and other setbacks, still has an economy with bounce in it and there is still plenty of room for growth in the textile services market. Canada, too, can look forward to growth but maybe a little more slowly. Penny Wilson writes an encouraging tale of upbeat attitudes overcoming adversity
What a tumultuous year for the United States. But as it waved a dramatic farewell to Donald Trump, ushered in new president Joe Biden and counted the eye-watering costs of Covid-19, it didn’t hang around contemplating its navel for long. The mighty North American trade association TRSA (Textile Rental Services Association) used the eerily quiet pandemic days wisely and worked with the Economist Intelligence Unit to release the Global Textile Services Market Analysis. This digs deep into the textile services industry and its future across 13 countries. But let’s focus on the United States itself and its nearly $40 billion linen, uniform and facility services industry.
The EIU analysis - just revealed - says whilst USA textile services were initially knocked to their knees by the pandemic, many are finding their feet and future compound annual growth will be steady, if not breath-taking, at 1.53% through to 2024.
The textile services market has reached around 70% penetration in North America already. Is there any fertile ground left in which to grow? Yes, say the EIU report experts - healthcare and elder/long-term care all offer hope, plus construction, manufacturing, some untapped food and beverage outlets and processing plants. That’s until hospitality rebounds in 2022 (budget hotels are expected to recover first) and throws another lifeline. Thirteen countries worldwide will spend a whopping US$8.1 trillion on healthcare provision by 2024, and the US is forecast to cumulatively spend 53% of that. In other words, there are rich pickings to be had in healthcare. The construction industry, however, is slower than expected, kicked by trade uncertainty, project delays and labour shortages. It too offers big textile care opportunities in workwear but beware, for construction firms are heavily investing in automation to reduce reliance on labour and workwear tends to be employee-owned. The energy sector also beckons business. It has grown a bit although plunging oil prices and stock accumulation is likely to lead to job losses and drive down workwear demand. Then there is US manufacturing, now inching up the productivity charts although its workwear demand has fallen amidst reduced production, escalating global trade tensions and pandemic restrictions. Yet manufacturing is busy revitalising its labour pools. Stylish workwear is one way of attracting much-needed youngsters. Overall though, its clear that textile service operators have to diversify away from hotels. They’ll have to consolidate more, invest big time in operational management and technology and keep up with the growing demand for facility services and new products, says the EIU report. Industry turnover in 2019 (source Baird) was an estimated US$38.8b. Of that linen supply was 19%, uniform rental and others 27%, cleaning and sanitation supply 34% and direct sales 20%.
The USA outlook is far from dismal. Textile services may still be in the recovery ward but with a fair wind, a renewed emphasis on hygiene and sustainability, a circular economy and a solid supply chain, it will stay alive and kicking, says the TRSA. The ultimate challenge is to rebuild revenues lost from Covid and to operate profitably whilst customers return to health again. The other is recruiting employees to handle workloads when recovery happens. The US linen, uniform and facility services industry is struggling with staff issues. It cannot re-hire former employees or hire replacements and unemployment compensation extensions and cash payments to all families by the Biden government has resulted in many furloughed laundry workers hesitant to return to laundry work. Federal legislation to increase the minimum wage to $15 an hour country-wide was recently defeated in Congress but there are fears it will re-emerge as a priority in the next year. President Joe Biden marked his first day in office by signing 17 new executive actions. There’s a new law including tax provisions that could take a bite out of large company’s bottom lines. The question on most peoples’ lips is: what punches will the new administration pull in the tricky times ahead? In addition to addressing Covid impacts, the TRSA says it continues to proactively pursue every opportunity to fulfil its mission to expand, protect and professionalise the textile care industry. Its legal file is already bulging.
Labour, says president of Kannegiesser ETECH Phil Hart, is the elephant in the room. Operators are under great pressure to hold their prices of delivering services to end users and labour is one of the three top costs to any laundry. “I do not feel that there are any actions that have been initiated by the new (Biden) administration that are ‘directly beneficial’ to the textile care industry,” he says. And while he welcomes as “a lifeline” the $1.9 trillion federal stimulus programme recently passed by Congress as additional loans to business affected by the pandemic, as well as direct payments to individuals and families which pumped much needed liquidity into the economy, there’s a downside. Many people, says Hart, are using the extra cash for domestic travel during the Spring Break season, hopefully driving demand in hospitality outlets. A net positive. But, Hart adds, some people are delaying returning to the workforce and depressing the labour pool. “Simply put, availability and costs of direct labour are driving innovation in automation of laundry processes,” he states.
The US market size, measured by revenue, of the commercial washing machine manufacturing industry is projected to be $658.7m in 2021 (source Ibis World). One concern to commercial laundry equipment manufacturers in the US is increasing costs over the past year of raw materials, such as steel. Still, says Hart, Kannegiesser’s supply chains have remained intact throughout the pandemic. No-one sat on their laurels. US brand Lavatec, for example, launched the new LAVACascade drying system which it says delivers 50% energy savings.
Jensen USA completed among others the installation of new flatwork finishing, garment sortation and folding equipment, and an Inwatec stack storage system in a new “ground-up” healthcare linen facility, HandCraft Linen in Wilson, NC. It also installed an Inwatec robotic garment sortation system at Clean Uniforms and More in New Bedford, Massachusetts. Kannegiesser reported among its most “interesting projects” the renovation of the washroom of Sterile Processing Services of America (SPSA) in Long Beach, California, with three Kannegiesser PowerSwing 300 washer extractors, an automated shuttle and three PowerDry D-175 dryers. SPSA processes reusable garments used almost exclusively in operating theatres and must maintain impermeable barrier properties. Milnor added a CBW system to Linen King’s Columbia plant to help accommodate an unexpected 453,000 metric tonnes (10m pounds) of extra laundry business mid pandemic. Linen King, with seven plants processing about 52,000 metric tonnes (115 pounds) a year of healthcare laundry across Oklahoma, Arkansas, Kansas, Missouri and Tennessee, bailed out a regional hospital system in Missouri which had been using a state prison for its outsourced laundry. That simply shut down without notice as Coronavirus infections spiked. Piles of soiled linen formed a mountainous problem about to become a regional crisis. Then Linen King stepped in.
Meanwhile on the self-service side, IBIS World reports revenue for the laundromat industry has decreased at an annualized rate of 0.4% to $5.2 billion over the five years to 2020, including a decline of 5.0% last year alone.
Then there is reportedly declining demand for professional dry cleaning services amidst unfavorable shifts in consumer preferences and increasing competition from household washing machines. IBISWorld expects industry revenue to continue declining over the five years to 2024, despite better disposable household incomes. The ‘Work from Home’ trend is not expected to help matters. Some pundits say if a drycleaner used to run 500 items daily, they are likely working with 50 pieces today.
Well yeah, but there are plenty of smart US operators bucking the negativity.
Check out the sixth America’s Best Cleaners Leadership Forum for starters (https://www.americasbestcleaners.com/ contact/) which in February showcased the US drycleaning industry’s brightest young beings. Watch out for Nicole Kirby of SPOT Business Systems along with Monika Manter, vice president of Balfurd Inc. Mark Hatch; general manager of French Cleaners Inc is another mover/shaker, plus Joel Lyons, president of Lyons Cleaners and Evans Garment Restoration. Last but not least is Nathaniel Dubasik, project director at Metalprogetti.
More women are making waves too and they’re injecting fashion and style into a once staid market segment. The German-born founders of Celsious in Brooklyn, New York, Theresa and Corinna Williams, have cut a dash in the likes of Vogue, the New York Times and the Wall Street Journal. They have created a space where customers would want to hang out, grab some fancy iced coffee, do some yoga, meet friends and oh yes - get their laundry done to add to the fun. The sisters aimed to create New York’s chicest and most energy efficient laundromat and boy, is it that. The café is organic, the food is sourced locally, the washers and dryers use ultra-energy efficient technology, and the employees even wear aprons designed by Inga-Lena, the German-born designer behind the Inga-Lena fashion brand. For the uninitiated, Inga-Lena is a New York local and makes sustainable womenswear. The Williams sisters, who themselves could have just stepped off a catwalk, come from engineering and design backgrounds. Celsious sells its own brand products. If it is a sign of things to come, drycleaners and laundromats have a colourful future… It’s good, though, to see sturdy, established laundries still standing tall. Regent Apparel South San Francisco, California, is busy celebrating its centennial year of serving the linen, uniform and facility services industry. Now in its fourth generation of family management, it is the oldest uniform supplier to the industry that has remained under continuous family ownership throughout its 100- year history. John Miller, the founder’s grandson and Regent’s current CEO said of its survival through the Great Depression, World War II, the Great Recession and now the Covid pandemic: “Our integrated supply chain has allowed us to maintain flexibility and adaptiveness to meet our customers’ needs, which is especially important in an uncertain global economy.” Brothers John and Isadore Miller started the family business renting uniforms to San Francisco’s restaurants out of a single laundry cart.
There’s no shortage of expansion among laundries serving healthcare either. Westport Linen Services recently injected $5.8 million into its operations with an additional processing facility in Greenville, MS. The project creates 75 new jobs and retains 75 existing ones. Westport Linen works with the city of Greenville, Washington County and the Mississippi Development Authority (MDA), says CEO Eddie Lefeaux. Based in Baton Rouge, the company purchased Broadway Linen Services in Greenville and will modernise the facility with three new manufacturing lines, allowing the company to process larger volumes of healthcare linens. The Greenville location allows for greater optimisation of Westport Linen’s supply chain network, reaching into Arkansas, northern Alabama and southwest Tennessee. Westport Linen currently serves healthcare providers in Alabama, Louisiana, Mississippi and Texas through three modern plants, capable of processing more than 37,000 metric tonnes (82 million pounds) of healthcare linen a year.
NOVO Health Services recently acquired a laundry processing facility in Rockmart, GA, from Angelica in January, adding a 12th laundry facility, and up to 60 million additional pounds of processing capacity, to NOVO’s network of facilities serving 19 states in the southeast, northeast and midwest. The Rockmart plant currently serves 150 healthcare facilities in three states.
Back to Celsious and the innovative Williamses who say the US textile care industry is “absurdly dominated by men”. Hopefully, changes are afoot. For starters, the TRSA has a Diversity, Equity and Inclusion (DEI) committee and in March, it parked pandemic issues to participate in International Women’s Day with a #ChooseToChallenge campaign. Designed to call out against gender bias and inequality, participants posed in selfies and hit the TRSA’s social media channels in droves. TRSA has its first-ever female chair. Noël Hammer Richardson, president, CEO and owner of Shasta Linen Supply Incorporated, Sacramento, California, was elected for 2020-2022 during the TRSA’s 107th Annual Conference in Alexandria, Virginia late last year. No doubt she will make her mark in a whole new era.