Service and systems

Challenging is the word to use to describe the European market for detergents and hygiene services.

It is not distinguished by rapid growth and there are a large number of suppliers competing for business. Recent years have seen continuing consolidation and price pressure. However, despite the adverse trading conditions, the US-German company, Henkel-Ecolab, has increased its sales and outperformed market expectations.

Opportunities

Vern Donker, corporate communications manager based at Henkel-Ecolab’s Dusseldorf headquarters, explained the company’s approach to winning in a tough market.

“We make Henkel-Ecolab different from its competitors by offering better service and better systems. We do spend money on research and developing new products but the key to winning, and to keeping, customers, is service.

“It is also possible to take advantage of the opportunities presented by cross-divisional marketing. We offer such a wide variety of hygiene and cleaning services that once we have a customer, say for detergents in a hospital laundry, it is natural that we will also offer a floor-cleaning service, toilet supplies and so on. We are the experts in hygiene and claim that we can protect our customers’ brands, image and reputation.” Henkel-Ecolab is a relatively new company, nine years old, and a joint venture between two well-established businesses. The German partner, Henkel, founded in 1876, is a specialist in applied chemistry whereas Ecolab, a US cleaning company dates back to 1923. Where Henkel is strong on products and branding, Ecolab grew to be a world player through market-led cleaning services and systems.

The partnership gives Ecolab access to European markets and to Henkel’s strong brand products. Henkel-Ecolab serves industrial and institutional sites such as can be found in the food, pharmaceutical and cosmetic sectors. It has a specialist division focused on textile hygiene.

Global

It is perhaps typical of the current global consolidation that the two companies thought it necessary to collaborate to gain market share. There was certainly plenty of scope for mistakes in a joint venture between an American company and a long-established, family-owned European business. However, to give the senior managers credit, the best of both cultures has been developed to produce a relaxed but efficient, product and service-oriented company that employs scientists and technicians who listen to their marketing team.

Henkel-Ecolab has not been slow to exploit the growing markets of East and Central Europe and already 13% of its business comes from this region. The company splits its business into five regions. The largest, with 28% is the Central division which operates exclusively within Germany. West includes France and the Benelux countries and accounts for 26% of the business, North is the UK and Scandinavia at 17% and South is the division that includes the Mediterranean countries from Spain to Turkey (16%). These five divisions with a staff of 4800 cover 27 countries.

Success

Textile hygiene accounts for 13% of Henkel-Ecolab’s turnover. Bill Conley, the American director of marketing for the textile hygiene division, points out that there are three types of competitor: the cost leader, who will always offer the cheapest products and services; the product leader, who competes on best quality at high prices and Henkel-Ecolab, a company that works alongside its customers providing solutions and delivering services when and where they are needed.

“We offer the sort of service that will enhance the customer’s bottom line, allow them to concentrate on their core business and let them feel confident that nothing nasty is going to happen,” he said.

At the Dusseldorf site, which covers 150 hectares and contains Henkel’s tank farm, power plant, rail yards and chemical processing factories, the Textile Hygiene division has its own laundry. The tunnel washer and open-pocket extractors are used to test new products and develop laundry processes.

It is used by Henkel employees and the local community but is essentially a test bed for the company’s chemists and technicians.

Branding

The textile cleaning business is as much about products as it is about systems and service. The company’s brands are well known and include Compacta paste detergents, Dermasil for hospital textiles and Triplex for workwear, but water and energy management is becoming increasingly important.

Henkel-Ecolab offers two water management systems, HERO and Aquamiser. HERO uses a reverse osmosis plant to reduce water consumption on tunnel washers, and Aquamiser is a simpler filtration system that takes out lint and solids down to 25µ.

“The largest contributor to the industry is hospital laundry” explained Bill Conley. “Every year in Germany 500 000 tons of hospital laundry is washed and the need for hygiene is obvious. It is a market for highly-qualified and specialised professionals with large washing capacities. There are also hotels, industry and catering to be considered. The market is not a statistical model. It changes continuously.” (see table 1.) There are 10 000 commercial laundries throughout Europe: roughly 600 textile leasing laundries, 1400 larger commercial laundries, 2000 larger OPLs with over 500kg of daily textiles (hotels and hospitals) and 6000 smaller laundries and launderettes (without drycleaning).

As a company, Henkel-Ecolab puts great emphasis on customer training. It holds on-site training courses and the occasional four-day training course at Dusseldorf which it runs for its customers and own employees.

The course tutors are practical chemists who seem to come in the tradition of Henkel’s founder, Fritz Henkel. He was a practical and inventive man who was responsible for formulating and marketing Persil.

He came up with his first product, a ‘Universal detergent”, in 1876 and followed it with ‘Henkel’s Bleaching Soda’. This was the period of intensive industrialisation and bleaching powders were popular with housewives trying to get the oil and soot out of their husband’s work clothes. By 1907 he had a detergent made from Perborate Silicate (Persil) which he manufactured, and more unusual for the time, marketed as a brand. Persil was not only the first detergent on the German market, it was the first brand with a specific advertising campaign and a slogan, “Washing, wash yourself.”