The world’s largest economy entered 2009 after a year marked by an escalating global financial crisis and massive government efforts to bail out banks and unblock frozen credit.

Consumer confidence plunged in December amidst the rapidly deepening recession – the USA’s 11th in the postwar era.

Manufacturing is now at a 28-year low, around one in 10 homeowners face the risk of repossession. In 2008, 2.6million workers lost their jobs, the highest number since the Second World War.

With the unemployment rate moving towards a predicted peak of 10%, it was not surprising that President Barack Obama used his first weekly presidential address to the nation to warn Americans that recovery would be neither easy nor quick. “No one policy or programme will solve the challenges we face right now, nor will this crisis recede in a short period of time,” he said.

The President is aggressively campaigning for his economic stimulus plan, which, at time of writing (February 2009) is expected to be $838billion. The White House says the goal is to create 4million new jobs. The approved version of the plan is split into 36% for tax cuts and 64% in spending and money for social programmes.

The US Senate gave its approval to the plan in February and tough negotiations were expected in order to reconcile the Senate bill with the House of Representatives’s version, approved one week earlier.

There was opposition – while the Democratic Party majority favours increased spending, the Republican minority wants greater emphasis on tax cuts.

The USA’s gross domestic product (GDP) – dropped by 6% in the fourth quarter of 2008, after falling by 0.5% in the third quarter.

The International Monetary Fund, in its latest economic update at the end of January, now forecasts that the USA will shrink by 1.6% this year and grow by only 1.6% in 2010 (GDP was US$13.8trillion in 2007).

The slowdown in the developed world will limit increases in the USA’s exports during 2009 according to the Economist Intelligence Unit. It predicts that after a slow recovery in 2010, economic growth will remain much weaker than during the height of the recent boom.

When researching its feature on the USA last year (published January 2008) LCNi found some optimism in the textile care sector, even though there were signs of a slowdown. Tom Medlin, USA sales manager for the Italian Realstar group said at the time that: “The American economy always comes back strong.”

However he believes that there is now a fear factor in place, which is not helped by the media.

While he continues to stand by his belief in the American economy, he now adds: “Clearly, the problems facing not only the USA but the entire world are at a level that no one could foresee. The USA economy will bounce back – but it will take longer than anyone could have predicted.”

Medlin continues: “There can be no doubt that this recession has had an impact on sales of equipment as many of our customers who have a real need for new and modern machines are holding off.”

Rick Kelly, vice president of sales and marketing at Pellerin Milnor says that capital expenditures in the sector are being affected by the lack of credit availability. However, he says that the healthcare sector still provides steady business.

“Hospital laundries have not been affected by the downturn as much as hotels and uniform rental plants.

“Thankfully, we are seeing signs the credit crisis is subsiding, which will help our customers to purchase our equipment,” he says. “ Such signs, coupled with President Obama’s promised stimulus package, mean that the American economy is expected to stabilise.”

At Milliken, napery sales director Alan Maness says that during economic downturns, laundry owners and managers will look for products and services that provide the most value. Milliken views downturns as an opportunity to strengthen its position and gain market share.

“Admittedly,” says Maness, “this is a tougher economic shift than we’ve seen in recent history, but our approach is the same.

“First, Milliken is always concerned about customers and is constantly addressing their needs. We learn how the economy is affecting them and then we work with them to offer solutions. This never changes for us, regardless of the state of the economy.

“Second, we work to find ways to make operations more efficient from planning to controlling costs.

“Third, we focus on our company’s value proposition and the factors that separate us from our competition – return on investment (ROI), product innovation and our service teams.

“Fourth, we concentrate on skill development and training in the latest technologies.”

“All of this helps us meet our ultimate goal in a down economy of preparing for the rebound when the economy picks-up again, which it will,” he adds.

Jeff Brothers is senior vice president of sales and marketing at Alliance Laundry Systems, the manufacturer of Speed Queen, UniMac, Huebsch, IPSO and Cissell commercial laundry equipment, is equally upbeat. “There’s little doubt of the effects of the global recession and its role in consumers’ spending, but we see this as a time of opportunity.”

He explains that while all businesses are trying to rein in costs, the laundry is an area where savings can add up. Retooling with more efficient equipment can help laundries make savings not only in their water and energy costs, but in their labour charges as well.”

He adds that Alliance remains dedicated both to producing quality equipment to help customers save money in these hard times and to delivering exemplary service. “We feel our worldwide network of factory-authorised, full-service distributors gives us a distinct advantage over the competition during these difficult economic times,” he says.

Randy Karn, national sales manager for Maytag/Whirlpool Commercial Laundry says the USA’s commercial laundry industry is holding strong. Eco-efficient equipment is in high demand because both consumers and customers realise that conservation is important for the environment and also save money.

“Investors are also looking to coin laundries as an alternative to a less secure stock market.”

Manufacturers are focussing on maximising savings for the customer, both in energy and water.

Brothers at Alliance says that up to now legislation has not had a big impact on the industry. He says that water-use guidelines have been given for small domestic-style front loading washers and the commercial top-loaders found in multi-housing laundry rooms. However, larger commercial machines have not been included in such guidance.

He adds that Alliance Laundry Systems has always made energy and water efficiency a priority in its product development. The company’s customers continue to strive for greater efficiency in their operations and as always, Alliance aims to meet their requirements.

Water consumption

Pellerin Milnor supports the Textile Rental Services Association’s Laundry Environmental Stewardship Program (ESP), which was established in 1999 to reduce the laundry industry’s environmental impact before a federal mandate.

“The ESP initiative also demonstrates to our federal government that we are able and committed to reduce water consumption, energy consumption, and wash chemistry in our wash processes,” says Milnor’s Rick Kelly.

He says the program has been quite successful, as seen in the significant reductions in chemical discharge, in water consumption, and energy consumption.

“To date, there has been no federal legislation mandated on these aspects of our industry.”

Pellerin Milnor has launched RinSave which can save one entire rinse step in a washer formula, ExactXtract washer-extractor high extract speed optimiser, PWR water-saving option for Milnor CBW Systems, and the Energy Saver Seal features, which are standard on Milnor’s large pass-through dryers.

At Milliken, Maness says that the USA market is taking a more pro-active approach in being “greener” when processing table linens.

The TRSA certification system for USA laundries, in partnership with the Occupational Health & Safety Administration (OHSA) and the Environmental Protection Agency (EPA), “is yielding results in a reduction in waste-water discharges, a decline in water use, cuts in energy use and a reduction of greenhouse gas emissions.”

He added that an operational study of hotels around the world, completed by Pertl & Alexander in July 2008, confirmed that a 500-room hotel using Signature Plus products could make savings of $43,745 annually.

Maness says that Signature Plus can be processed with temperatures ranging from 50 – 60C (120 –140F). This can generate significant energy savings.” He adds: “With its excellent soil release and colour consistency, it has fewer rejects which means fewer re-washes.

“That saves on water, labour, energy and chemicals. If you don’t have to re-wash that piece of linen, it is actually used and not cycled back through the laundry process.”

Randy Karn at Maytag/Whirlpool Commercial Laundry says that both owners of commercial laundries and consumers are becoming more and more knowledgeable about conserving water and energy. “Because they have a better understanding of how the products and services they buy and use affect the environment, they are demanding more from the laundry equipment they use. Resource savings is a major purchasing driver.”

He adds: “In the housing industry it’s been said that if you’re not building green right now, you’re not building. Pretty soon, the laundry industry will see a similar trend.

“Clean clothes and linens are always going to be in demand in any economy but without the right mix of performance and eco-efficiency, customers will go elsewhere.”

Drycleaning revenue

Sales of drycleaning machines using perc continue to decline in the USA, but the claim that many drycleaning businesses do not have enough revenue to be profitable is the biggest concern.

According to Bill Fisher of the Drycleaning and Laundry Institute (DLI), the USA industry association, the present number of drycleaning businesses in the USA – around 37,000 (±2,000) exceeds the number of garments to be drycleaned by 20 – 30 %. This is a nationwide problem, according to Fisher.

He adds: “We are already seeing a loss of smaller to medium-sized plants and this is likely to accelerate. At the same time, one-price cleaners have become a large force in several USA cities.”

Although the drycleaner numbers further declined in 2008, Medlin at Realstar adds that: “On a more positive note, sales and activity showed a marked improvement in December and that trend has carried forward into this year.”

He continues: “More and more cleaners are choosing alternative solvent machines in response to governmental legislation and the reluctance of landlords to have perc machines on their property.

“In 2008 we introduced our new Vision alternative solvent machine and it has been warmly received in the marketplace. This machine requires no water, no steam, is easy to install, simple to operate and economical to purchase.”

According to Marco Niccolini, general sales manager at Renzacci of Italy, there is little doubt that the USA market is experiencing an evolutionary phase. “The replacement of perc machines seems to be irreversible and unstoppable,” he says. He detects a strong preference for machines that work with solvents based on hydrocarbon, iso-paraffin and silicon, as well as other alternative solvents.

“Professionals are concentrating very much on the alternatives that will represent the future – and the machines that support this.”

“Sales are being maintained because replacement machines using hydrocarbons and other new solvents are needed as perc is phased out,” he says.

According to figures from the DLI, some 24,350 units presently use perc solvent, representing 70% of the total USA market sector.

The DLI says that even tougher restrictions will apply to the continued use of perc and the industry association now advises its members who are thinking of investing in a new drycleaning system to first consider alternative solvents and evaluate them against the difficulties of using perc today.

The carcinogenicity of perc has been a subject of much study and debate over the past 25 years.

Now a 20-member panel of scientists is conducting a peer review of the Environmental Protection Agency’s draft risk assessment for perc solvent. This is to update information for its Integrated Risk Information System (IRIS), a database of human health effects that could be caused by exposure to various substances.

The EPA draft suggests perc should be considered a likely human carcinogen, which would place it in the second highest of five categories under EPA’s cancer assessment guidelines, between the highest risk category “carcinogenic to humans,” and the third highest “suggestive evidence of carcinogenic potential”.

This peer review process by the EPA comes at a time when several states and cities continue to consider banning or phasing out perc.

“These governmental activities are clearly contributing to the growing interest in alternative technologies like Solvair and High Flash Hydrocarbon products like Df2000 fluid,” according to Solvair president Ross Beard.

The Solvair cleaning system currently operates in 11 locations.

All Solvair owners have reported a significant decrease in spotting due to their switch to Solvair, says Beard.

“Several Solvair owners are taking advantage of this cleaning performance to gain additional revenue streams,” he says. “For example, Eric DuBuisson, owner of STARC Cleaners in Slidell, Louisiana, is cleaning baseball caps. Parkers Custom Clothing Care in Toronto decided to test this after hearing of STARC’s success and they incorporated it into a promotion for customers.”

An extra dimension has been added to the market by the emergence of wetcleaning. Niccolini at Renzacci says that in certain states, such as California, the techniques of solvent-free cleaning have been suggested as an alternative to drycleaning, as if one method was supposed to automatically exclude the other.

He explains that experience has shown that wetcleaning should not be proposed as an “alternative ”, but rather as an important complementary method to allow cleaners to meet the demands created by the technical evolution of the fabrics and fashion industries and of the changing market.