Multi faceted market with a positive outlook24 August 2017
Although conveniently lumped together under the Benelux label, the three countries have very different approaches in their textile care set ups, yet all are looking at growth over the next few years. Kathleen Armstrong reports
The outlook for the Benelux countries is positive, as the economies of each of the three countries continue to grow. In Belgium, GDP slowed in 2016, rising just 1.2%, compared to 1.5% in 2015 and 1.6% in 2014, according to the National Bank of Belgium. However the bank predicts a slightly more positive outlook for the future, with GDP projected to reach 1.4% in 2017, 1.6% in 2018 and 1.5% in 2019.
In Luxembourg it was a rosier result with GDP growth reaching 4.2% in 2016 and predictions of 4.8% expansion in 2017 and 2018, according to the country’s national statistics agency, STATEC.
With regard to the Netherlands: “The Dutch market for professional textile care is in a promising position after having had to deal with some difficult times,” says Léon Wennekes, secretary general of CINET. “GDP growth in 2017 is growing at 2.1% (compared to 2% in 2016) and the individual b2b customer segments are overall performing better as well.”
The professional textile care market in the Netherlands is estimated at €700 million, made up of around €550 million in the b2b customer segments and €150 million in retail.
One of the biggest challenges, according to Geert Braeckman, general manager of Jensen Benelux, is the cost of labour and general workforce availability. “All investments are made around these issues in the Benelux: they are looking save on the workforce; linen volumes are not increasing; margins are under severe pressure; and laundries are getting bigger – and when they get bigger, they improve their efficiency.”
Henk Robers, sales director Benelux for Kannegiesser, agrees: “All industries are looking for ways to save on costs and expenses. Investments are recovering slowly in the Belgian market [but] investments in the Netherlands are still on a very low level [and] the participation of private equity in the large businesses results in continuously lower price levels.”
In addition, he says, because investments have been postponed over the past 10 years, the level of depreciation is very low. Old machines lead to bad productivity levels, which results in low levels of cash flow.
“In the vended laundry market, banks are still continuing to view the business as one of high risk. As a result, it is difficult to secure financing,” comments Jean-Baptiste Van Damme, Western Europe sales director for Alliance Laundry Systems. “In the OPL sector, financing for equipment replacement and new construction is solid and available.”
One of the key trends in the region has been market consolidation. Recent moves include a joint venture between Initial and CWS and an agreement for Rentex Awe and Nedlin to operate under the Nedlin banner.
“Companies are being bought or – in the case of drycleaning – owners simply reach the age of retirement, sell as much they can and cease to exist,” Wennekes says. “For industrial laundries, the number of factories is going down and the processes are getting more specialised.”
This is certainly the case in healthcare in the Netherlands where laundries are looking for new solutions that fit in the decentralised policy of the government. “Synergy Health for example innovated one of its laundries for personal guest laundry by implementing a 100% RFID solution in each garment. With this new concept it won the innovation award in the Global Best Practices Awards of CINET at the Texcare show in Frankfurt June 2016,” Wennekes says.
However, Van Damme warns: “It is easy to view Benelux countries as similar in all facets, but the reality is quite different. The Netherlands maintains a culture of outsourcing, which explains the number of commercial laundry operations. Meanwhile, Belgium is significantly more diverse. That explains the popularity of coin laundries, on-premises laundries in hotels and nursing homes, and the rise of the ‘route’ operation concept serving holiday parks and multi-housing properties.”
The route concept, Van Damme says is quite new to Benelux, although in North America it is a mature business model. “LDL Group, an IPSO-brand partner in Belgium, has led the charge in introducing the ‘Meet & Wash’ concept, which integrates communal launderettes into businesses, apartments, student housing, and other locations. The company continues to expand the model, with hopes of having 8,000 machines installed by 2020,” he explains.
On the OPL side, the machine rental concept is gaining traction in small verticals such a gyms, hair salons and riding stables. Machines are often rented for a term of seven years and include a service contract. “There is [also] growth in midsize laundries that are processing two to three tons per day, but don’t want tunnels,” Van Damme adds. “The rise of this size laundry, catering to hotels, nursing homes and other facilities, is driving demand for washer-extractors of between 20 and 80 kg of capacity.”
Meanwhile, in the care sector, change is afoot in the Netherlands. “In the past two years, the government has decentralised big parts of the care segment,” comments Bas van Montfoort, head of Benelux cluster at Electrolux Professional. “As a result, the care segment has been driven much more towards small, on-premise laundry installations. There is also a trend towards keeping senior citizens longer in their home environment, because ‘elderly homes’ are turning to more ‘hospitalised care’. We expect this to lead to a model which provides more services to the elderly who stay at home, such as meals-on-wheels and pick-up laundry service.”
But the trend to ‘insourcing’ is not just limited to care homes. “We have seen interesting installations for hotels that want to be able to service their guests better with in-house laundry possibilities. We’ve also seen the first hospital to insource the laundry for the laundry of their surgery staff. This includes laundry installations with cleanroom specifications,” van Montfoort says.
In the fire protection sector, laundries are innovating to address the particular needs of firefighters, according to Maarten van Severen, committee president for the Belgian Federation of Textile Care (FBT): “Some companies have installed a new generation LCO2 machine. This is for the decontamination of firefighters’ clothing. Another laundry has developed a mobile laundry for fire brigades.”
Legislation to protect the environment has long been in force in the Benelux countries, but van Montfoort thinks the industry’s level of awareness with regard to environmental drivers is still quite low. While big commercial laundries will invest in environmentally friendly installations, the focus is often on general facilities such as energy and lighting, but not necessarily on equipment.
However, he says the ‘Green Key’ label for hotels and its equivalent for campsites has had a positive impact. And, in the Netherlands, the government continues to offer its tax deductibility scheme for investments with a low environmental footprint, known as the Energy Investment Allowance (EIA), for which environmentally efficient laundry equipment can qualify.
Further, the Dutch government is implementing a zero emissions policy for transport with a target date of 2025. “Bigger cities like Amsterdam and Rotterdam are increasingly putting their policies on zero emission vehicles (electric for example) with an objective to have a zero emission policy implemented for businesses by 2025,” Wennekes explains. “This subsequently impacts the operations of laundries and drycleaners, so pilots are being set up to distribute textiles and hygiene products with electrical vehicles. CWS recently announced its first 100% electrical distribution route in a northern Dutch city called Groningen.”
Water is also on the agenda. “There has always been legislation/regulation that has had influence on operating a laundry and laundries have been and are taking a lot of initiatives with regard to sustainability – for example, reducing water consumption and waste water filtering to protect the environment,” Robers says.
In Belgium, van Severen suggests: “The use of ‘deep ground water’ is being shut down. Every year the list of prohibited toxic agents in the waste water is getting longer. Also the price of water and wasting water is going up, and the calculations are becoming very complicated [although] some improvement in the future is expected. FBT has developed a water manual for laundries to help out its members.”
In addition, he says, FBT has started a working group on sustainability, focusing on two waste streams: plastics used for wrapping the washed laundry, and end-of-life textiles. The aim of the group is to find better ways of recycling/reusing them, in collaboration with research institutes (Centexbel – the Belgian Textile Research Centre), the government (OVAM – the Public Waste Agency of Flanders), textile suppliers and waste recyclers.
With regard to drycleaning, Steven Van de Walle, business development director for Cole&Wilson, Christeyns’ drycleaning and wetcleaning business, says that although the Benelux economies are slowly improving, there has not yet been a big wave of investment in the sector. Business remains pressured as the number of pieces treated is not really growing, mainly due to the trend for cheaper clothing that does not lend itself to professional cleaning.
The FBT, for example, has started reviewing the Belgian BATNEEC (best available techniques not entailing excessive costs) study on drycleaning and van Severen says issues sucha as perc emissions in the air will be on the agenda. “Soil problems are very severe as well, but 90% of all polluted soils are being cleaned up by VLABOTEX (the soil decontamination fund for drycleaners),” he adds.
With regard to solvent use, Van de Walle says: “All alternative solvents are available on the Benelux market and there we make good progress in convincing customers to work with our HiGlo solvent. Perc is still in use but under strain in the market for environmental and health issues.”
In addition, Marco Niccolini, general sales and marketing manager for Renzacci, says Dow’s Sensene has added an important additional push in the drycleaning sector, not only increasing interest in machines that use this solvent but also in drycleaning machines in general. Drycleaners have begun to offer additional services, such as cleaning women’s handbags and shoes. While these sorts of items used to need to be cleaned by hand, “with [Renzacci’s] Nebula and other machines using alternative solvents, they can be cleaned automatically, with zero added labour cost,” Niccolini explains.
The company has also seen increased interest in its iGenius cabinet for sanitising garments and other items.
Another trend Niccolini has observed in the Benelux is the use of apps. “Pick-up and delivery points are disappearing, because of their rental costs, and the internet is enabling customers to have their laundry picked up and delivered at home, directly from a central laundry service,” he explains. “Laundries that used to have 5-6 pick-up points in a city are now changing to apps with a van for pick-up and delivery.”
In the Netherlands, Bubble & Stitch, which is mainly active in Amsterdam, The Hague and Rotterdam, for example, began working to attract modern customers through digital applications a couple of years ago. “They work with the Droplocker software from the US, and have been using the locker model for several years,” Wennekes explains.
“Recently they’ve added a truly on-demand model, outsourcing the logistics to Post NL (one of the biggest logistical companies in the Netherlands). They ran a successful pilot in Amsterdam offering a value proposition where the laundry can be picked up within one hour. This type of business is expected to evolve rapidly in the Netherlands.”
Drycleaning chain 5àsec has also developed two new solutions which it says are more environmentally friendly. One is a new generation of solvent such as KWL and the other is a wetcleaning solution, named 5Aqua, developed by its R&D department. The company stopped using perc machines in its 18 shops in Luxembourg from 1 July 2016.In addition, 5àsec has launched options for customers to enable them to use their drycleaning services in a sustainable manner.
“We aim to reduce and end the use of plastics, by replacing them with reusable garment covers. All shops in Luxembourg already offer the cover for a price of €2.50 each. Belgium also introduced the 5àsec cover in two shops. In addition, both countries invite customers to bring back their metal hangers in order to recycle them and reduce the waste.”
Such moves will help to ensure the long-term viability of drycleaning and laundry businesses in the Benelux region.