Aussies and Kiwis go into bat on a good wicket20 September 2023
The Australia and New Zealand textile care markets are set for growth this year as they keep their eyes on the ball, playing on a level pitch with plenty of bounce. Eugene Gerden reports
The textile care sector in Australia and New Zealand is rapidly developing this year, providing good opportunities for growth for major industry operators. The end of the Covid-19 pandemic and its consequences in the region have provided a significant impetus for growth in both Australia and New Zealand, as demand for the industry’s services has significantly increased.
This is confirmed by industry representatives such as Luke Simpkins, CEO of the Laundry Association Australia, who tells LCNi the commercial laundry sector employs around 13,500 people and generates in the vicinity of $1.2B AUD to the Australian economy, being one of its most important sectors.
According to Simpkins: “Laundry/linen hire is provided to health, aged care, tourism/accommodation, hospitality, industrial businesses and other sectors primarily by commercial laundries of various sizes, through to on-premise laundries (OPL). Demand remains strong and most accommodation/tourist/ hospitality markets have fully recovered to pre-Covid levels. The exception to this is Sydney which still has levels of demand of around 65% (pre-Covid). The health and aged care sector demand remains strong.”
He explains, however, that businesses are greatly challenged by significant cost increases in electricity and gas, fuel/ transport costs, textile import costs, and equipment cost increases/delays. “Government policies have also increased the cost of labour, which helps to create stronger demand in automation and robotics, and processes that focus on productivity. Labour shortages across large cities have mainly stabilised now, although businesses in regional areas remain challenged by labour shortages. The Australian unemployment rate is 3.5%, and the inflation rate is 6% over the last 12 months.”
In regard to the main problems which prevent more active development of the industry, according to Simpkins, these are mainly low prices, which are charged by and which have long provided a barrier to entry for new businesses, because of the unattractive return on investment (ROI).
Still, fortunately, he says, laundry businesses are increasingly demonstrating a better understanding of the true costs of their businesses, with prices now better reflecting those costs. “This has served to improve the ROI and is starting to lower barriers to entry. With government policies now increasing the cost of labour and more realistic prices now being seen across the market, there is now an increasing ability to pursue automation and AI opportunities. This has included importing technology, but also fostering locally developed innovation in these areas.”
In the meantime, the Australasia market has been traditionally within the interests of global players. One of them is Kannegiesser, which in recent years has significantly strengthened its position in the local market.
As Michael Bohnet, Kannegiesser’s sales manager for Australia and New Zealand explains, Kannegiesser Australia recently concluded an impressive venture in Sydney, introducing a state-of-the-art turn-key project. This privately-owned facility showcases advanced systems that prioritise energy efficiency, streamline labour requirements, and significantly increase production capacity.
“At the heart of this laundry is the largest continuous batch washer (CBW) in Australasia, the Kannegiesser PowerTrans PT Vario 110/16. With a throughput of 7000 kilograms per hour -and provision for future growth - this plant is primed to meet the growing demands of the hospitality sector in Greater Sydney. Furthermore, the facility has been designed with future developments in mind, including provisions for the integration of laundry robotics, which Kannegiesser will introduce in Australia in the near future».
In general, according to Bohnet, the year 2023 has been exceptionally successful thus far for the company, with several projects nearing completion and a robust pipeline of future endeavours for Kannegiesser Australia.
The company expects a stable demand for laundry and drycleaning services in the Australia and New Zealand, which is expected to be influenced by various factors, including population growth, urbanisation, changing consumer lifestyles, and economic conditions.
Bohnet continues: “With the projected population growth in Australia, it is reasonable to expect a certain level of growth in the demand for laundry services. In recent years, there has been a trend towards convenience and outsourcing of tasks, which has contributed to the growth of the laundry industry. Additionally, with an increasing focus on sustainability and environmental concerns, there will be a rise in demand for eco-friendly and efficient laundry services.”
Among the major challenges for the company when doing business in the region are primarily high level of competition with numerous local, national and international players vying for market share along with labour (as Australia faces its lowest unemployment rates in many years).
According to Kannegiesser and other operators, anticipated population growth due to relaxed immigration laws should see this problem alleviated somewhat in the coming 2-3 years.
Meanwhile, Lavatec continues to have a significant presence in the larger laundries as evidenced in the two photographs on this page.
In recent years the cost pressure on the companies operating in the region has tightened, while the industry faces cost pressures related to labour, energy, and raw materials.
Another problem relates to the high level of regulation and compliance, given that the industry is subject to various regulations and standards related to environmental impact, occupational health and safety, and waste management.
In the meantime, in regard to New Zealand, many of operators consider the market as important although with some specifics.
According to Michael Bohnet from Kannegiesser, the New Zealand market was one of the slowest to open its doors to international visitors doing so midway through 2022. As he also added the country’s laundry market needed time to understand what would happen next. The start of 2023 saw a realisation that continued investment was important especially due to low numbers of low skilled workers not visiting the Kiwi shores.In general, he reckons, the New Zealand Laundry Infrastructure seems undercooked for the market.
“Auckland, our main city and largest by population, has a boom of new hotels opening, the ongoing expansion of aundry capability will be a key factor in the coming decade without question. Drycleaning operators with latest processing equipment and providing high end services survive nicely, while those left behind will struggle in the present conditions,” he says.
At the same time another global player in the form of Jensen Group also has serious plans fthe or expansion in the region. As Nicolas Gostony, a spokesman for the company told LCNi: “The Jensen Group has been successful in Australia and New Zealand in 2023, with customer emphasis on automation for labour saving highlighted by the installation of innovative garment handling and sorting solutions solutions from our partner Inwatec - both in Australia and New Zealand. Along with automation, there is an ever-increasing requirement for energy efficient machines, placing Jensen at the forefront with its Cleantech solutions and industry leading efficient machinery.
According to Gostony, the demand for laundries will continue in both Australia and New Zealand especially if tourism continues to increase both domestically and internationally helped along with the weakened currency. The laundry industry continues to face its challenges with labour placement and major increases in utilities, like gas, power and water.
Picking up on Gostony’s comments on laundry challenges, Eric Brouwers, Christeyns operations director for Middle East - Africa - Asia – Pacific, says: “Christeyns Group is present in the region and will grow quickly through its sustainable concepts which are using green chemicals, which are helping laundries to process faster with less water, energy and chemicals.”
The Australasia market is also important for Miele Professional. Stephanie Ashcroft, marketing manager Australia/New Zealand business unit Miele Professional, told LCNi the company has recently completed the launch of its brand new Benchmark range which has already resulted in significant orders and interest from the aged care industry. She believes the demand for laundry and drycleaning services to continue to increase in the region.
“With energy-efficient and intuitive products such as the Benchmark range, businesses who have traditionally outsourced their laundry can now service their laundry requirements onsite – saving both time and money. Technology poses both a challenge and an opportunity in the self-service launderette space, as solutions are constantly changing and evolving based on customers’ needs and expectations,” she says.
Daniel Hays of Spencer Systems which has a strong history of of specialist servicing to drycleaning and laundry equipment in the region gives a snapshot of his perceptions over various sectors, saying: “Drycleaning continues to decline with discount drycleaners suffering the most. However, premium drycleaners remain strong and in some cases have growth.
“I am seeing an increase in demand for Foster Stephens gown boxes, this further supports the position of quality products and service having a place. In my opinion, we will see drycleaning become more and more a premium service. Suits and shirts counts are generally still down as return to the office is still sluggish.”
As for regional laundry performance, he comments: “Regional laundry is suffering with staff shortages and rising costs. Large laundries which previously ran trucks to regional areas have pulled back. As a result, many regional laundries have experienced growth. This has also aligned with an increase in regional travel during the pandemic.
“As for energy costs like most of the world, we have experienced massive increases in energy costs. This has put huge pressure on operating costs. Many businesses still do not completely understand how to reduce energy, such as water extraction, water temperature, exhaust energy recovery, dryer efficiency, and so on.
“Labour costs have increased significantly. Automation is now more important than ever. We have seen a increase in demand for items such as the Sankosha press free finisher,” says Hays.
Finally, Kreussler has plans to realise its potential in the region. As Thomas Zeck, commercial director of Kreussler Textile Care says he has particularly high hopes for the company expanding on its wetcleaning business in the region.
“Being the inventor of the technology is definitely a solid base for performance credibility. As Kreussler developed the original Lanadol wetcleaning 32 years ago, we keep it as the benchmark solution in the market: making wetcleaning the ideal solution both for the beginner as well for the pro in every country,” says Zeck.
“For New Zealand, we see drycleaning further diminishing, while wetcleaning and commercial laundry will continue to grow. Challenges not just limited to our market are stock supply issues – closely connected to availability of shipping space as well as shipping timeframes – and currency fluctuations. The sheer cost of operating so far from Europe and the US is definitely a general challenging factor.
“For Australia, we expect laundry services to continue to grow as local tourism increases. The same goes for the aged care market, due to an aging population. As more families move to dual income, there is also a growth in home services laundry. The drycleaning sector is continuing to change in Australia, too: shirt and suit volume is still down on pre- Covid levels. While the premium cleaners are becoming stronger, the discount cleaners are struggling to survive, with laundromats seeming to take up their market segment.”