LCN Interview

Johnson Service Group

1 January 2009



Executive chairman John Talbot and Chris Sander, director of the textile rental division, talk to LCN editor Janet Taylor


In December 2007 John Talbot was brought into the Johnson Service Group to rescue the operation from its difficult financial situation, with falling share price and a profits warning.

The group placed its trust in Talbot’s 25 years’ experience of restructuring and turning round companies, but at the time the appointment was accepted to be an interim one.

However, Talbot decided to stay and in August this year, he accepted the position of executive chairman, taking over when the chairman Simon Sherrard retired.

Talbot explains that he was attracted by a group that still had profitable, market-leading divisions, which in his extensive experience was quite unusual.

As a result of Talbot’s strategies the group is smaller, but set on a much improved financial basis, and has returned to “what it does best,” with activities focussed on its three main divisions.

He explains that facilities management has been re-branded as SGP, in recognition of the company that Johnson had acquired and as this was the brand that was known in the marketplace. The division has two elements – maintenance of retail groups and the provision of electrical, engineering and fit-out services.

On the maintenance side it looks after 22% of high street retail outlets. With current economic pressures the retail sectors sees SGP as a way of saving costs. Although the business is tough, it’s a good one to be in and looking longer term, there are public contracts.

The drycleaning division has been the subject of industry speculation about its future. It had, after all, been put up for sale under a previous CEO, but did not find a buyer.

However, Talbot sees the drycleaning division as an important component of the restructured Johnson Service Group. He confirms this business is no longer for sale and that this applies to both Johnson Cleaners and Alex Reid.

Considering prospects for drycleaning, Talbot says it’s hard to see any business that’s immune from the current situation. Drycleaning suffered a downturn after the smoking ban, but now that the ban has been in place for over a year, the effect seems to have stopped. Post ban, like-for like comparisons of September and October figures indicate trading may get better.

Investing in locations

Looking at previous recessions, Talbot concludes that while drycleaning is not immune, the effects here have not been as dramatic as in other sectors. Customers may now spend more on maintaining clothes rather than buying new ones. The company is investing in more supermarket locations and in drive-in stores.

Additional services are being introduced, including ironing and wash ‘n fold, currently available in about half the stores.

Prospects in the textile rental service are also reasonable.

Chris Sander, who heads the division, was appointed to the main board in September, alongside the two other main division heads, Kevin Elliott, facilities management, and Paul Ogle, drycleaning.

Asked about his role in the group, Sander he says that he believes he will bring a level of knowledge, helping strategically wherever the direction lies.

Turning to his own division, which incorporates Stalbridge Linen Services and Johnsons’ Apparelmaster (JAM), he says “I believe that we’re a service company that generates a profit, not a profit company that provides a service.”

Knowledgeable loyal team

The mood at JAM remains confident and optimistic because it has knowledgeable, loyal and solid management teams.

The business has a large market share, with large volume and therefore a critical mass, in-depth purchasing power, sourcing expertise, training expertise, a strong in-house health and safety team, technical and environmental expertise and HR support. It is financially sound with a good brand that is well recognised in the market. These may sound like claims that are commonly made, but Sander backs them with examples.

David Kinson, who is responsible for training, has diligently pursued NVQs for his staff for some 12 years.

When NVQs were relaunched under the Skillfast initiative, Kinson worked with Bridgwater College to provide a template and Johnsons’ Apparelmaster was the first laundry company to have operatives qualified under the new system.

Sander says: “We have over 200 people registered and sitting for NVQs. Kinson’s efforts have helped Johnsons’ Apparelmaster to win the North West Business Awards, which spanned all industries. Every plant is rigorously audited for health and safety.” In terms of technical development, the Johnsons’ Apparelmaster £6million refurbishment of the Logix Park laundry in Hinckley, Leicester, illustrates the company’s ability to design a highly sophisticated plant.

On the environmental front, Johnsons is one of a number of industry companies helping the Textile Services Association produce the evidence it needs to negotiate a reduction in the Climate Change Levy for the laundry industry.

While Johnsons’ Apparelmaster has continued to perform well, its sister company in the textile division, Stalbridge Linen, has been less fortunate. It could have been a candidate for sale, but Johnson Service Group decided to retain it and turn the business round. Chris Sander says this was “absolutely the right decision.”

He adds that Stalbridge Linen is a very well respected brand, provides a good service and used to be profitable. But the company lost its way because it was neglected both from a strategical view and in terms of capital investment. It failed to recognise the need for staff training and development and also had a poorly managed computer system.

The turnround has involved disposing of high volume, low value hotel contracts, moving out of its Hinckley plant and consolidating its operations back into its Dorset laundry.

This transfer has reduced Stalbridge’s logistics costs. The company is also switching from the SAP IT system to a proprietary one developed in-house.

All computer systems moved to the Johnsons’ Apparelmaster Fulwood location in September and Stalbridge systems should be consolidated there by the last quarter of 2009.

Looking ahead, Sander summarises developments at Johnsons’ Apparelmaster. It is highly sophisticated in terms of data management and market intelligence and has introduced an online systems for its main clients.

The laundry industry has been seen as old fashioned, but it’s highly sophisticated.

“We clean our food service uniforms to a much higher standard than the health service provides for nurses’ uniforms”.

Although profitable, the company, like others, faces a difficult climate. Sander says that businesses must continually look for cost efficient means of production.

Over the past few months, it has followed a systematic programme of energy saving measures including installing heat-exchangers, water recycling equipment and stack economisers.

Summing up for the group, John Talbot says while there will definitely be challenges in the economy in the year ahead, there will also be opportunities for the group. He feels that now it is in a relatively strong position.

“We’ve gone through our pain,” he says. “We’ve reduced debt, established credit lines with the banks to the end of 2010, so we’re going to be looking at what we can add on to the group. There may be modest acquisitions.”

September’s interim statement was seen some as pessimistic. However John Talbot sees the group as well-placed, adding that it is aware of its obligations.


John Talbot John Talbot


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