Moving ahead by offering more

Textile care sector operators in the Benelux region are continuing to pursue better margins, open up new business avenues, and deliver higher value service to their customers.

Launderers are contending with cost increases which threaten to reduce the positive impact made by the introduction of price structures that allow improved profitability. Drycleaners, who are striving to maintain and build volumes through consistently providing high standards of craftsmanship, are keeping a watchful eye on potential further environmental pressures.

Sectors focused on by launderers in Belgium continue to include general engineering and metal products, motor vehicle building, food processing, beverages, chemicals and textiles.

Private enterprise

The progressive, private enterprise economy makes the most of its central geographic location and the diversity which has arisen in both the industrial sector and the commercial market.

Prime customers of launderers in The Netherlands include the multinational companies which have found the country attractive because of its location, the flexible approach to labour relations and the educated, multilingual working population. Wealth generation in The Netherlands, which has scant natural resources, comes from the development and application of knowledge. Each year, some 4.6 billion euros are directed into research: 50% of this figure by the commercial/industrial sector, 25% by universities, and 25% by research institutes.

Economic system stability is maintained by close and regular contact in the Socio-Economic Council between trade unions, employers' organisations and independent government-appointed consultants. The government, though, interferes as little as possible in industrial relations. The two sides of industry also have permanent contact in the Labour Foundation.

There has been an indication that the introduction of the euro is fuelling an increase in inflation. Attention has been drawn to how, for example, the money in the pockets of laundry workers in The Netherlands is buying less, leading to demands for new pay settlements beyond levels anticipated by employers.

Luxembourg's stable, high-income economy displays moderate growth, a low level of inflation and low unemployment. New opportunities for textile care companies have opened up with diversification in the industrial sector. The service sector, particularly banking, is noted as a growing proportion of the economy.

Costs associated with meeting the criteria of environmental regulation - with particular regard to energy consumption and waste generation - have for a long time been grappled with in The Netherlands, and there are signs that laundries throughout the rest of the Benelux region will be forced to catch up with measures that add further pressure to profitability maintenance.

In the past 20 years, plants in The Netherlands have steadily introduced extensive automation in order to stabilise or reduce the labour bill. Winning favour have been systems to cut the number of people at soiled work sort stations, in finishing lines, and in packing/despatch departments. Clearly evident in the circle of larger operations is how labour costs, higher prices for energy, and hefty transportation costs, continue to be a prime concern - there is focus on anticipating what new cost increases are likely in the medium term and how businesses can strategically adjust to cope.

Some strides forward are being made in The Netherlands to edge prices up to offset higher costs. It is taking time to argue the case for higher prices with some customer groups which have become comfortable with price levels that long ago ceased to relate to textile care sector costs.

Some plants in The Netherlands with ageing equipment have now come to the point at which replacement is the only option if profitability is not to be eroded through poor productivity. In market areas where work volumes are static, choosing what new equipment to buy, and when, is a daunting prospect for some managements.

Workwear

Not much change has recently occurred in The Netherlands' industrial workwear market segment in which two groups have, between them, secured a 75% stake.

Despite strides forward being made, the financial position of some segments of The Netherlands' hotel flatwork market remains held in a vice, with price-resistance pressure on one side and rising labour charges on the other.

In The Netherlands' healthcare laundering sector, some investment is being seen in new equipment, Leo Mastenbroek, of equipment supplier Landuwasco BV, affirms.

Industry observers note that particular interest is being shown in systems that allow plants to further automate processing streams. Also, there are encouraging instances of new plants being built to handle healthcare sector work.

In The Netherlands there is continuing focus on the establishing and running of multi-discipline medical and surgical centres. Minor procedures are increasingly being dealt with in clinic suites where patients remain for hours not days, and the number of days in-patients stay in wards is reducing. These factors are changing the linen supply patterns and, in some instances, the work volume increases significantly.

Of course, launderers welcome this but point out that in order to serve the market, there is a need for plants that have the production flexibility to meet output demands that may change daily or even hourly.

Some hospital authorities are extremely positive about the benefits of contracting out ward linen, theatre drapes and specialist clothing services. Fully managed services, supplied to the point of use, help the hospital authorities in determining, in advance, spending patterns.

The lengthy and determined period of acquisitions that has taken place in the Benelux textile care industry has slowed, with few significant developments having occurred in the past year, notes Karl Schubert of equipment manufacturer Milnor.

He points to figures indicating that over 30% of laundry companies in Belgium are encountering serious financial problems, and that a small number of large groups are making 90% of the profits. The economies of scale will mean that the vigour and reach of the large companies are almost certain to be further boosted in due course.

Philip Streitz, of equipment supplier Streitz NV, says that, in Belgium, bankruptcies among laundry companies are causing gaps in the market to arise. In some areas, this is leading to a service providers' market instead of a service buyers' one. Notably, laundries are taking a firmer stand on prices and there are cases of potential contracts being rejected if the work will not meet profitability objectives.

Mr Streitz adds that poor financial performance, sometimes leading to bankruptcies, is largely caused by increased labour costs. Industry observers have identified, in Belgium, further evidence of progressive operators buttressing high grade service provision which protects satisfactory margins.

Entrepreneur-led businesses find they can enhance performance through extending the processing day, concentrating on profitable classifications, and serving a local market for which transportation costs are not too great.

A year ago, industry experts were noting that the textile care giants in Belgium were, in the flatwork market segment, locked in a type of combat where price cutting was a commonplace weapon. While price remains at the top of the agenda when many contracts are being drawn up or reviewed, a growing emphasis on service reliability and value is a positive indicator.

Continuing is potential for widening the service remit to cover such items as personal care products and housekeeping supplies in addition to flatwork and workwear

Broad range.

To deliver a broad range of products to hotels and hospitals, textile care companies have to reinforce their ability to give consistent service reliability. Customers need to have a particularly high level of confidence in "one stop shop" suppliers.

The route to developing the right amount of confidence is being seen as being through service integration. Textile care company executives work closely with their customers, not only building up a precise knowledge of their businesses, but also helping them to anticipate changes in requirements for supplies and identifying opportunities for introducing new products that would be mutually beneficial.

Such working "partnerships" usefully bind the customers closer to the textile care operation - which may even have to consider changing to a name and description that reflects the wider scope of business,

High value

Rental of work apparel with high value continues to be a star in the non-flatwork side of some laundering operations. Bespoke services are often demanded, and personal protection products are robustly promoted alongside a comprehensive range of workwear.

The whole number of drycleaning shops in the Benelux region is small - as a result of trading and environmental pressures the figure is judged to be less than 1,200 now. Slightly more than half the region's shops are in The Netherlands, and slightly less than half in Belgium. Survey data indicates that there around 40 shops in Luxembourg. Drycleaning prices in Belgium have, in recent years, been slightly greater than those of The Netherlands. Luxembourg has been in third place but, in real terms, not far behind. Perc remains the major solvent although hydrocarbon has made modest but important inroads. Progress of wetcleaning has been most noticeable in Belgium.