TRSA, the North American Association for Linen, Uniform and Facility Services, has tracked Covid-19 impacts on the industry in North America through its Business Pulse surveys, taken seven times since lockdowns stifled the economy beginning in March 2020. TRSA also supports investment analyst Robert W. Baird & Co’s quarterly survey of industrial laundries and linen suppliers and reports on this research to its members. The two have been consistent in their portrayal of the industry’s recovery: some operators are back or close to pre-pandemic turnover levels, largely because of the types of businesses they serve; most are yet to reach their potential because of difficulty recruiting employees and getting supplies.

TRSA has shared anecdotal evidence supporting these findings through its Reopening Tour: staff excursions to U.S. regions consisting of visits to members’ facilities for information exchange on TRSA developments and theirs regarding the industry’s progress in the pandemic recovery. Members have shared experience with each other through virtual roundtable discussions focused on regions or key business sectors that generate demand for the industry’s services: F&B (restaurant), hospitality (hotel), healthcare (hospitals and nonacute) and industrial (workwear).

The latest iteration of TRSA’s Business Pulse Survey was conducted in May, with a total of 57 respondents to the online questionnaire. The survey addressed topics ranging from a company’s financial outlook to recruiting and retention of staff and Covid-19 vaccination rates among employees.

A total of 44% of respondents described their revenue (turnover) trend as near expectations, with 26% noting it as slightly above expectations. In the previous survey released in the first quarter of 2021, 37% said theirs were near expectations, with only 12% slightly above. Additionally, in the May survey, 19% said theirs were slightly below, a significant drop compared to 28% in the first quarter of 2021.

An overwhelming majority – 93% – said they were struggling to hire and retain employees. The following employees were the most difficult in this respect:

■ Production Staff, 89%

■ Route Drivers, 62%

■ Engineering/Maintenance, 45%

Vaccination was well underway. Some 46% of respondents indicated that more than 50% of their employees had been innoculated.

The previous Business Pulse survey, taken in January, revealed the status of US federal support to the industry. More than 70% of respondents to the survey said they had taken advantage of the initial round of stimulus, including the Paycheck Protection Program (PPP), Employee Retention Tax Credit (ERTC) and/or other programs introduced in early 2020. This contrasted with the number of businesses indicating participation in the stimulus legislation signed into law in December 2020 as only 44% of survey respondents said they would take advantage of it.

Labour supply problems would mount, however. A total of 53% of survey respondents said they had at least one instance of attempting to rehire or hire new employees who turned down the opportunity.

Several questions pertained to the Covid-19 vaccine currently being rolled out nationwide –69% of survey respondents said that none of their employees had received the Covid vaccine, while three-fourths (75%) indicated that they didn’t plan to make the vaccination mandatory at their place of business. Only 35% of survey respondents had contacted customers, such as healthcare and other essential service providers, for assistance prioritising their laundry employees to receive the vaccination.

The survey provided a snapshot of revenues lost between March and December 2020 by market sector:

Acute Healthcare: 37% of survey respondents lost between 11-20% of revenues; 32%, 21-30%; and 16%, less than 10%.

Non-Acute Healthcare: 67%, 21-30%; 33%, 11-20%.

F&B/Restaurant: 25%, 51-60%; 25%, 31- 40%; 19%, 21-30%.

Hospitality/Hotel: 43%, 61-70%; 29%, 71-80%; 15%, 51-60%; 15%, 41-50%.

Industrial/Uniform/Workwear: 50%, 11- 20%; 44%, less than 10%; 6%, 81-90%.

Mixed-Plant Operators: 29%, 21-30%; 21%, less than 10%; 14%, 31-40%; and 14%, 61-70%.

For the quarter ending in May, 25% of Baird’s Industrial/Uniform/Workwear respondents said they fell short of internal revenue projections for the quarter, compared to 30% beating expectations, the first positive spread since March 2020. On the linen supply side (operators largely in F&B, Healthcare and Hospitality), 25% of respondents fell below expectations with 25% near and 50% above. This is the first positive spread of outperformance post-Covid.

Other key Baird measures:

Add/Stops. Baird’s index for employment-driven expansion at existing Industrial/ Uniform/Workwear accounts (Add/Stop Diffusion Index) improved to 65.0 in June, its best post-Covid reading since March 2020. This reading was a bit better than expected as US employment grew only modestly.

No-Programmers. The Baird index measuring new uniform rental customer growth further rebounded from its fourth quarter 2020 trough by reaching 62.5, up from 57.5 in February. Importantly, this metric has only been negative three times in the past 10 years (twice in 2020). No-programmer interest in linen supply held stable at a neutral 50.0 reading, similar to the prior quarter. Like uniform rental, this index has consistently been in expansionary (50+) territory, with exception of COVID.

Growth Outlook. The Industrial/Uniform/ Workwear respondent consensus points to ~4.2% organic growth over the next 12-months, nearly double last quarter’s 2.4% outlook, but short of the 4-5% range pre-COVID. Pricing appears to be a significant driver. On the linen side, the forecast 12-month outlook improved to 5.5%, well above last quarter’s 2.8% and, reflecting the comeback from the steep COVID-driven decline, the highest since Baird began surveying linen suppliers in December 2015.

Face to Face

The face-to-face Tour meetings and virtual Roundtable discussions put the ‘why’ behind the ‘what’ of these recovery research findings.

The first leg of the Reopening Tour saw staff traveling from the TRSA headquarters in Alexandria, Virginia, through Charlotte, North Carolina; Birmingham, Alabama; and Memphis, Nashville, and Knoxville, Tennessee, over the course of 10 days, the Tour traveled nearly 2,600 miles, across seven states and 22 operator and supplier-partner facilities. TRSA representatives on the Tour were Joseph Ricci, president & CEO; Tom Newell, vice president of operations; Kevin Schwalb, vice president of government relations; and intern Ryan Kiernan.

“It was great to be back in plants and meeting with members again,” Ricci said. “Business is coming back and we highlighted the reopening throughout the Tour. Every member was excited about the economy bouncing back but concerned about worker shortages and supply-chain issues not only for themselves but also for their customers, and the negative impact it may have on the recovery.”

The Tour included stops at large, national members and regional independent operators, as well as supplier partners, all essential services supporting critical infrastructure from healthcare to food processing, manufacturing, logistics and other services.

Over the course of the trip, it was evident that the industry is coming back stronger based on efforts to diversify markets and introduce new services, nearing pre-pandemic volumes. While healthcare remains steady at about 90% of pre-pandemic volumes including a surge in reusable personal protective equipment (PPE), other sectors such as restaurants, hotels and other hospitality were only starting to rebound, primarily with weekend tourism. As restrictions continue to ease and people increase elective surgeries, doctor visits, dining out and traveling, especially business travel, the linen, uniform and facility services industry will continue to recover.

While recovery was apparent, there was widespread concern about labour shortages, supply chain and logistics, particularly for products manufactured overseas, including steel. These labour shortages are impacting production requiring overtime and additional shifts to push products through the plant. They are also limiting reopening. For example, Nashville was sold out during TRSA’s visit to the city, with thousands of hotels rooms and restaurants packed but services were limited more by the inability to hire personnel than by Covid restrictions. A linen provider to properties mentioned that hotels could run at capacity only because they don’t change linens during guests’ stays. Rooms were empty by Monday so they couldn’t all be turned until then, delaying shipping of soiled linen to their laundries until Wednesday.

Competition, access to daycare, fear and other factors are impacting labour shortages, but most Tour stop hosts pointed out that increased unemployment benefits are paying nearly $15 an hour for people to not work. They hope labour returns when the subsidies end in September.

Employee and retention woes

By late June, when the next leg of the Reopening Tour took Newell, Ricci and Schwalb another 2,500 miles, most members continued to report new employee recruiting and retention woes. Some had mitigated these, however, by raising starting wages up to 20%.

Others in some U.S. states were expecting relief before September as those in which they operate were beginning to roll back unemployment compensation before the federal deadline. In addition to the rollbacks, others were considering providing incentives for workers to return to the workforce.

Still, as the TRSA contingent continued across the US Midwest region, meeting with representatives of 27 member companies, only a few operators and supplier partners indicated they had returned to near full employment.