Cautiously optimistic20 June 2017
The USA and Canada face broadly similar challenges and both are optimistic about the future of textile care in North America. In USA, a new POTUS promises to boost business and in Canada the economy is stable but closely tied with that of the USA. Kathleen Armstrong investigates
In January 2017, the Trump government took office in the US promising to boost American business and employment. However, as David Cotter, CEO of the Textile Care Allied Trades Association (TCATA), says: “It is too early to determine what impact the new administration in Washington will have on the textile care industry. President Trump has pledged – and has already initiated efforts – to reduce the regulatory burden on all businesses but the results remain to be seen.”
The American economy has been showing some signs of recovery over the past year. Unemployment fell to 4.5% in March, according to the Bureau of Labor Statistics, while the US government's Bureau of Economic Analysis' latest figures reveal that real GDP grew by 1.6% in 2016, although this was down from 2015's growth of 2.6%.
“All indications point to linen, uniform and facility services operations growing faster than the economy as a whole,” suggests Joseph Ricci, president and CEO of the Textile Rental Services Association (TRSA). “This is a tribute to our members finding 'sweet spots' in the economy to expand their services.”
In addition, Ricci says, launderers' interest is growing in third-party verification of their processes. He estimates that 150 plants will have received its Hygienically Clean Healthcare certification by the end of the year – particularly important after the queries that recently arose in the press about alleged contamination in the University of Washington hospital laundry and University of Pittsburgh hospitals which outsource their laundry. The TRSA helped to clarify what it says were unfair allegations. “We pointed to our Hygienically Clean laundry certifications' requirement for microbial testing of laundered linen to quantify its cleanliness,” Ricci explains.
TRSA certification is extending beyond healthcare and into other areas. Last year 15 laundries received Hygienically Clean Food Safety certification (for restaurants) and 25 are projected this year, and momentum is also building for Hygienically Clean Hospitality (hotels). The TRSA is also introducing an online and print Laundry and Operations and Management guide, which can be used to train recruits or act as a refresher for experienced employees.
Consolidation is a clear trend in the laundry sector with smaller organisations consolidating into bigger groups, a trend that began years ago but has accelerated in recent years, according to Cotter. “Rising labour costs, new laws mandating a rise in the minimum wage and concern about the availability of labour in light of the administration's possible actions on immigration have all contributed to this,” he explains.
“Healthcare is still going strong and there continues to be consolidation of small laundries into smaller organisations,” explains Keith Ware, vice president sales for Lavatec Laundry Technology. “In terms of hospitality, which is still small-market dominated, there has been some consolidation in Florida and Las Vegas but not much in the rest of the US.
A major development was the merger of workwear giants Cintas and G&K Services. The $2.2bn deal, which completed on 21 March 2017, sees G&K become a wholly owned subsidiary of Cintas. Analysts say the deal will increase Cintas' market share to more than 30% of the uniform rental market (from 25%) and 25% of the uniform sales market (from 20%). The impact of the Cintas/G&K merger on textile rental companies has yet to be seen.
Meanwhile, comments Ware: “Lavatec has been developing new plants with healthcare companies in the states, helping to provide turnkey projects by partnering with other companies to provide a full range of equipment.”
In 2017, the company will be installing equipment in Cintas' largest plant in the US, in New York. “We are also working with some large Las Vegas laundries to expand or develop new plants for the room growth that is coming to that city,” he adds.
Phil Hart, president and CEO of Kannegiesser ETECH, agrees that opportunities are growing for suppliers in the US, particularly in the healthcare, hospitality and industrial sectors. While industrial laundries have not shown much growth over the past decade, Hart says the strengthening economy is turning that around. “We are already seeing more investment within industrial laundries to improve their processes – for example, in automated garment sorting and folding systems, automation on the wash aisle, wash cloth bagging systems, mat rolling systems, etc.”
On 6 April 2017, Kannegiesser USA announced the acquisition of Minneapolis-based E-Tech, known for its eRail laundry handling and eVue software systems. “This acquisition allows Kannegiesser ETECH to provide fully integrated production processing solutions for the entire laundry,” Hart says. “One example of this is that Kannegiesser ETECH recently finalised the installation of a fully automated laundry for Blue Water Linen in Albuquerque, New Mexico. The nearly 30,000 sq ft facility is designed to service laundry for Heritage Resorts and other hotels in the Albuquerque regional market. The facility's initial start-up plan is designed to handle over 10 million pounds annually with room for growth.”
Alliance Laundry Systems has benefited from the healthy state of the on-premise laundry sector thanks to the boom in hospitality – with record numbers in occupancy rates and new construction projects not just in the US but also in Canada. “Banff Park Lodge, located within Banff National Park in Alberta, Canada, is one of the most recent properties in hospitality to select UniMac equipment and the TotalVue cloud-based laundry management system,” says president and CEO Mike Schoeb. “We are proud to be a part of this property's commitment to conserving resources.”
Schoeb also sees opportunities from consolidations in the multi-housing market. “What this does is offer a great opportunity to promote common laundry rooms [as an environmentally friendly alternative to in-unit washers and dryers], particularly in the Western region where they are coming off a period of unprecedented drought.” In addition, he suggests, the coin laundry market offers opportunities to promote equipment efficiency.
According to Rick Kelly, vice president of sales and marketing at Pellerin Milnor, the recent drought in California really brought the impact of water – its availability, its quality and the issue of wastewater discharge – into focus. “These areas for the most part have been regulated. But, as with many resources, when there is a supply matter, prices tend to go up. The increasing cost of water is forcing launderers to seek ways to reduce water usage, thus reducing cost,” he comments. “But wastewater limitations and regulations impact how to reuse water without adversely impacting water quality and wastewater discharge limits. Without any new means of measuring this, certain areas are bound to want to regulate those methods.”
While the commercial laundry industry has a good track record when it comes to sustainability, Kelly says, new issues will continue to arise, and one that is coming to the forefront is dryer emissions. “More areas will want to reduce the emissions resulting from dryer exhaust,” he predicts.
David Netusil, manager of sales support and marketing for Jensen USA, agrees that saving water is a top concern for laundry operators. He says municipalities are beginning to tell laundries they need to reduce their use of resources such as water and gas within a given period of time, but allowing them plenty of time to comply. “Municipalities usually offer some form of financial incentive to promote the reduction in resources,” he adds.
Jensen is forecasting double-digit growth in the US this year and in response has expanded capacity in its corporate headquarters and manufacturing facility in Panama City, Florida. The extra 20,000 sq ft of space will allow it to put further emphasis on the growth on its spare parts and service department. In addition, Netusil says, Jensen USA has been awarded several high-profile plant design-build installations across North America.
One of the key trends in equipment installations in the region is automation – and it is likely to feature strongly at Clean 2017, with technology that helps to improve energy efficiency, increase productivity and reduce labour costs, particularly with the current uncertainties about how future immigration policies will impact on the availability of labour. Lapauw, for example, will be showing its new high-productivity Ironmax gas-heated ironer at the show, which promises improved energy efficiency, better quality and higher throughput. It will also be showing the Ironpro, a high-quality solution for smaller laundries, the Mediwave barrier washer for healthcare and cleanroom, and a new small-piece folder, for which there is a 'great need' in North America, according to David Bernstein, president of Lapauw USA.
Taking automation a step further, robotics is making its way into the industry and here, Bernstein says, there is an interesting shift as some laundries are looking outside the traditional pool and turn to robotics companies outside the industry for solutions.
In addition, says Ware: “With the growth of what is being called 'the internet of things' (IoT), operators are looking to be able to manage the minute details of their operations. Lavatec is rolling out our osLaundry suite, which has the ability to allow operators to see their plant in real time, whether on site or sitting at the beach, as long as they have a connected smartphone or tablet.”
Canada: stable but prices rising
In Canada the situation is largely similar. The economy is stable but is closely tied with the US economy as well as with the price of oil and other commodities. Projections are for a decline in the Canadian dollar. “That will make the cost of importing equipment and many supplies,” Malcolm Caldwell, vice president of sales at Harco, Manny Sandhu, Harco Technical Rep, and drycleaning specialist Brian Hatt (who also serves on the boards of directors of the Ontario Fabricare Association (OFA) and the Canadian Laundry Allied Trades Association (CLATA)) tell LCNi. “We may see another slowdown in equipment replacement as the repair of equipment will be considered more affordable. This may cause pressure on plants using outdated equipment or hazardous solvents if they cannot compete with operations that are more efficient and not under such regulatory scrutiny as they use more modern, less hazardous solvents or processing procedures.”
Laundry processing for healthcare linen varies from province to province as they each have their own regulations. Some have completely privatised healthcare linen while others have 'health regions', each responsible for their own central laundry. They are publicly owned central laundry plants that service multiple locations within a region or a province.
As in the US, the cost of treating water is continuing to rise and regulations are becoming more rigorous.
In the drycleaning sector, consolidation is the watchword. “There are many small towns and cities across Canada that have seen the number of drycleaning plants drop by over 50% and some small towns are not served at all by a local plant – a central plant takes all the business from drop locations,” Caldwell, Sandhu and Hatt say. “This process has slowed and we believe it has stabilised, although well-capitalised operators can still make further impacts as smaller markets can be brought under their oversight.”
Alberta-based Chris Tebbs, executive director of the International Drycleaners Congress, says one area that has held its own is the restoration industry. “But this is limited to only a few operators who have sufficient capacity to deal with large volumes at one time,” he comments. “Of course, this area also thrives on the misfortunes of some and the massive fires in Fort McMurray last year generated quite a lot of work for some in Alberta.”
With regard to drycleaning solvents, federal environmental regulations were introduced in 2003 governing the use of perc and reviewed in 2011. “The only change has been that the Environment Agency is becoming more proactive on enforcement and now seems much more ready to actually prosecute for misdemeanours,” Tebbs says. “By 2005, all drycleaners were required to have new machines, although some changed while the regulations were being developed. What is noticeable is that when change does occur, it is unlikely to be a perc machine, but which alternative is chosen will very much depend on the supply available in the area.”
In Ontario, for example, there are more GreenEarth outlets, while in Alberta there are more K4 processes, although hydrocarbon solvents are the most common overall.
“No matter which solvent is used, the cost has increased as most is imported from the USA and the exchange rate has a major effect,” Tebbs adds.
Earlier this year, both Alberta and Ontario introduced a carbon tax on carbon dioxide emissions and the Trudeau government has said it intends to bring in a similar federal tax. However, Tebbs says: “We have yet to see what impact this will have on industry in general and ours specifically.”
Moving away from perc
In the US, regulation in the drycleaning industry is also strict with moves to ban perc in some states. But, says Marco Niccolini, general sales and marketing manager for Renzacci: “The new solvents have raised a lot of interest in the drycleaning industry. And now, more inspectors are familiar with the new solvents making it easier to communicate with them – there used to be problems in that area.”
Niccolini says it will be interesting to see how the environmental regulations are used under the new administration. “Issues like environmental protection are sometimes used to restrict foreign products – regulation can be used as a commercial barrier,” he suggests. “We will see what comes in the months to come.”
Nevertheless, Renzacci USA has recently expanded its capacity to service customers in the country with the opening of an advanced training centre in Florida. The centre will enable dealers and customers to learn how to get the most out of the latest laundry and drycleaning equipment and solvents. “Over the past year, it is our most significant achievement,” Niccolini says.
According to Mary Scalco, CEO and corporate secretary of the Drycleaning and Laundry Institute (DLI), the biggest issue affecting the drycleaning industry is the permanency of casual dressing. “As an industry, we have to work to attract this new market,” she says. “We have to position the industry as a 'matter of convenience', freeing consumers' time so they can do other activities more important to their lifestyle. I think the emergence of wash-dry-fold service will only increase.”
Also growing is the use of mobile apps that not only alert customers to the status of their orders but also enabling them to control when and how they deal with their drycleaner. “Again, this level of convenience and customer-centric engagement will only continue to grow,” Scalco adds.
The DLI is also using apps to support drycleaners. Scalco says the DLI International Analysis Laboratory is now available through its Garment Analysis App and at Clean 2017 it will showcase the Stain Removal App and Encyclopedia of Drycleaning App.
In addition, it has scheduled a special session of its Introduction to Drycleaning Course to coincide with the Clean Show. It will take place 12-16 June. “We understand many drycleaners will be visiting the US for Clean 2017, so we made a course available to them if they wish to extend their stay,” Scalco explains.