Italy is firmly in its fourth recession since 2001. This is confirmed by statistics released at the beginning of June, which showed that the economy retracted by 0.8% in the first quarter of 2012.

The situation is not expected to improve in the short term. The Bank of Italy forecasts that the economy will decline by a further 1.5% this year.

Following the resignation of Silvio Berlusconi in November 2011, Mario Monti’s interim government put in place drastic measures to fill empty state coffers.

These included an increase in taxation and Alessandro Rolli director general of Kannegiesser Italia, says this had a bad effect on competitiveness.

The slowdown in investment was compounded by a repeal of the Tremonti law, introduced by the Berlusconi government, which provided a tax exemption on re-invested profits.

Rolli says that the debt ratio is currently one of the highest in the EU and taxes are weakening, rendering the economic system hardly competitive,

He adds that companies working with public authorities are meeting serious problems. Public administration customers have great difficulty in paying on time although the EU directive clearly sets the time limits at 30 and/or a maximum of 60 days.

According to Davide Rotondi from Rotondi Group, the state can take up to a year to pay its bills and this particularly affects laundries that serve the hospital sector. “Hospitals are suffering as they can’t get paid by the state `and as a result, they cannot invest.

“Big laundries covering a region are doing well – unless they are working for the state.”

Rotondi’s main sales are heavy-duty washers and dryers for processing loads of over 100kg and finishing equipment for trousers for workwear.

“The main problem is cash,” says Livio Bassan, manager of Christeyns Italia. He adds that this applies to all businesses not just laundries.

For example, hospitals take around 400 days to pay.

However, Bassan says that healthcare is the only stable part of the market. “Since at least 50% of the market is based on table linen and hotels, the potential volumes washed are shrinking. This is because families’ spending power is declining and restaurants are now using paper table cloths rather than linen, at least at lunchtime. .

“There could be potential business in workwear but the market in general is very fragmented,” comments Bassan.

At Kannegiesser Italy, Rolli notes that the industrial laundry market is fragmented into many small and medium-sized laundries. This leads to stiff competition in terms of sales prices, which noticeably impoverishes the sector. Regulations and restrictions on how to operate in the laundry business need to be controlled and monitored continuously by the local authorities to avoid unfair competition.

Rolli says that the hotel and restaurant market is almost entirely focussed on rental. The priorities are continual monitoring of processes to ensure good quality and optimising linen life through good management and gentle care in processing. High quality in textiles is also a must with a large percentage of 100% cotton being used. This means a high investment in textiles which can affect cash flow.

In the healthcare sector around 90% of laundry is processed by textile rental companies and only a small number of hospitals have their own laundries. The largest company serving the sector is Servizi Italia which has 11 laundries and an annual turnover of around €150millilon. The second largest is Servizi Ospedalieri with five laundries. There are also 15 big specialised laundries.

The hospitality sector is dominated by the Alsco group, which has six plants, and the French group Elis.

According to Gerda Jank from Jensen, this market is not as developed as it is in northern Europe but it has potential for growth.

“In general, we see the number of laundries slowly declining and a certain increase in consolidation,” she adds.

“The Italian market is based on small companies that are undercapitalised,” comments Vera Simon from GMP, the ironer specialist manufacturer, which is based in northern Italy. She says that small companies have been particularly affected by the credit crunch and this has put the brakes on any potential investment in new technology.

However, the OPL market is growing, although only slightly, and GMP sees some growth in sales of small- to medium-size machines for this market.

Girbau’s main sales are also to the OPL sector where machines range from 13 – 60kg but it also sells a lot of small (8 and 13kg) washers and dryers for the coin-op sector.

“Italy is the most important coin-op sector in Europe,” says Massimo Scatto, director general for Girbau Italia. He explains that all Italian cities, even very small cities, will have at least one self-service laundry.

Imesa has also seen an increase in sales of coin-op machines. Its bestseller is TANDEM, a washer and dryer stack that fits into one square metre.

Chiara Ronchiato says Imesa is also combatting the recession by broadening the markets it serves. The company is still gaining new market share because it sells to markets that are not usually considered. For example, Imesa produces special washing machines for a cleaning company and for riding stables.

“We are also proposing innovative solutions for hospitals and retirement homes and are strongly investing in research and development.”

Automation is becoming a watchword for the Italian laundry market. According to Jank at Jensen, those who can afford to invest are upgrading to a higher level of automation. This applies especially to parts of the laundry that are labour intensive such as soiled linen sorting platforms, decentralised automatic flatwork feeding, or collecting and transporting linen stacks at the end of the ironer line.

In addition, Jensen sees increased interest in moving from steam-heated equipment to gas-heated machines.

Drycleaning trends

Italy’s drycleaning market is still dominated by small, family-owned shops and these are suffering from a decline in demand for their services.

“The number of drycleaners in Italy is still very high compared to the population, so most cleaners do not have a large enough clientele to progress,” says Corinna Mapelli at the finishing equipment specialist Trevil. She adds that drycleaners that would like to invest in expanding or in renewing equipment are unable to get finance because most cannot meet the banks’ very strict criteria.

Bologna-based drycleaning machine manufacturer Italclean says that 95% of its business is outside of Italy and export manager Eugenio Boni expects this percentage to increase.

“People are reluctant to invest and banks are not lending money,” he says. In addition, the volume of cleaned garments is decreasing. Many shops are closing so those that do survive face less competition.

Despite the fall in demand for drycleaning services in the country, Renzacci’s Marco Niccolini believes there are still people interested in opening drycleaning shops – particularly unemployed young people and middle aged people who have lost their jobs.

However, he says the inconsistent way in which legislation is applied is getting in the way of this. For example, local authorities are responsible for authorising the establishment of new businesses but while one may issue temporary authorisation, another may delay authorisation until the owner has been trained, so confusion arises.

Niccolini adds that a person who wants to open a new drycleaning business needs to demonstrate either that they have the knowledge and experience or that they have attended training. But even if they know they need training, the type of training they should take is unclear.

He describes it as a typically Italian problem. However, it is not just restricted to drycleaning. Alessandro Rolli says that one reason why only a small number of foreign investors have entered the laundry sector is that labour regulation policies for such companies are unattractive.

Environmental regulations have not been as strictly enforced in Italy they are in some other European countries. Still interest in alternative solvents is growing, albeit slowly. Of the alternatives to perc, hydrocarbon solvents are the most popular.

Niccolini says Renzacci is promoting the use of Solvon K4 and other alternative solvents as more cost effective solutions. He that the use of perc will continue to decline yearly.

Eugenio Boni confirms the growth in interest in drycleaning machines that work with alternative solvents, saying that Italclean’s Drytec hydrocarbon series has proved popular.

Environmental regulation has also increased interest in wetcleaning. Andrea Corazza, sales manager Italy for Electrolux, agrees that wetcleaning is becoming more popular. In the commercial sector consumers are becoming more environmentally aware and this is confirmed by interest in the Lagoon wetcleaning system.

He adds that customers are paying more attention to equipment that reduces consumption.

For Trevil, the best selling lines are shirt finishers, such as the Trevistar and the new Presto hot plate shirt finisher, and trouser machines such as Trevil’s Pantastar. “There is a trend for consolidation,” Mapelli says and she explains that as some cleaners become larger they acquire small shops down town and turn them into delivery points, while production is based in a larger, out of town plant.

The growing number of shopping centres is also affecting the structure of the drycleaning market, according to Marco Mallegni from Ilsa. “Drycleaning is a well established part of Italian culture,” he comments. “Of course, the world has changed and so have many aspects of our lives but drycleaning is still a relevant part of daily life in Italy.”

Despite the economy and the devastation of the recent earthquake in the north of the country, Mallegni is optimistic.“Italians have special skills in reacting to difficult situations. I’m sure we will recover soon, thanks to our creativity and proficiency.”