Spotlight on Germany

Recovery picks up pace

30 September 2010



As Europe’s largest market regains some of the ground lost during the recession, Tony Vince discovers why manufacturers and suppliers are optimistic about the outlook in Germany


News that Germany, the world's second largest exporter, increased its exports in June this year was welcome, both at home and in the Eurozone as a whole.

The June figures showed a 3.8% rise over May 2010 and were 29% higher than in June 2009.

With more than 80million people, Germany is also Europe’s biggest market. This spring the European Commission’s Economic Forecast suggested that Germany’s recovery had lost momentum in 2009 as a result of weak domestic demand. Yet by July this year, the closely watched survey by the

Munich-based Ifo economics institute concluded that business confidence in Germany was at its highest since German reunification, boosted by optimism about exports.

Businesses reported considerably better trading than in the previous month and expectations for the coming half year were more optimistic than in June.

Manufacturing prospects have improved greatly. Firms see favourable opportunities for exports. Employment plans are more positive and indicate slight increases in staff levels.

Ifo says the retail sector has also brightened. An increasing number of retailers now assess the business situation as good.

In addition Germany’s central bank has said that the country’s economy is on the path to recovery. In its bi-annual outlook, the Bundesbank now forecasts that gross domestic product (GDP) will expand by 1.9% in 2010, compared with a previous prediction of 1.6%.

The central bank also predicts that the German economy will grow by 1.4% in 2011 rather than the 1.2% estimated previously.

The Bundesbank sees exports as the main driver of economic growth in the short term but believes that In the medium term, business investment will pick up and consumer spending is also likely to increase.

Better than forecast

The economic situation in Germany is much better than experts have forecasted, says Dr. Manfred Huppertz of Büfa Cleaning Systems. He explains that exports have risen, helped by a low currency exchange rate, whilst the drop in private spending wasn’t as great as that in other EU countries.

The unemployment rate has fallen but the level of household consumption remains static, partly because of continuing uncertainty and an announcement that health insurance costs will rise. “These have an important influence on services, like drycleaning,” he adds.

Rainer Leddin, marketing director of Stahl, the German manufacturer of heavy-duty washer-extractors and finishing equipment, says that Germany’s economy is recovering quickly from the 2009 downturn. “Exports were the first to recover. There is, however, also a marked increase in domestic demand.

“For our part, we can say that there has been a considerable increase of turnover on both markets simultaneously. ExpoDetergo in Milan will provide the ultimate boost for a successful business year.”

Kannegiesser, the German manufacturer, shares the optimistic outlook. It recently held a highly successful and well-attended exhibition for its customers. The company says the need to reduce costs and the greater environmental awareness now present the biggest opportunities in the marketplace.

The company says there are three forces spurring demand for laundry equipment: saving resources, logistics and automation. The healthcare sector is pin-pointed as another growth area.

This brighter outlook is encouraging new players to emerge. Lavatec Laundry Technology has started to develop, produce and distribute machines under the Lavatec brand at its Heilbronn factory.

The company acquired the assets of the insolvent Lavatec GmbH and Lavatec Wa¨schereimaschinen companies including the production site.

It will now manufacture specialist industrial washing machines and dryers for industrial laundries, hotels and hospitals, says Wolf-Peter Graeser, managing director of Lavatec Laundry Technology.

“The extremely positive reaction from our customers makes us very optimistic about the future of our company,” he says. “The quality of Lavatec products and the vast experience of our staff in the development and production of laundry machines gives us an excellent foundation.”

Another company using German expertise is the Jensen Group. The company developed its largest MaxiLine batch washer at its Harsum factory in Germany. The machines can handle larger batches in less time, so providing higher productivity and minimising energy and water consumption.

After several weeks of test runs at the Jensen production centre, the group delivered its first two MaxiLines to a large USA laundry earlier this year.

The outlook for the professional laundry business in Germany is good, says Huppertz of BÜFA Cleaning Systems.

The demand for equipment built to consume less water and energy has led to a surge in sales – more good news for manufacturers, he adds.

New washing methods and certificated disinfection processes, mean that wash temperatures are reduced from 90 – 95C to 60 – 70C, even in the healthcare sector.

This reduction is accompanied by lower water consumption during the washing and rinsing, without any loss of quality.

Girbau Deutschland, the German arm of the Spanish manufacturer, is experiencing growth in healthcare business even though the building of care homes is slowing.

Environmental protection has become an ongoing and common concern in Germany, says Stahl’s Leddin. This in turn poses a competitive challenge for the machine manufacturers.

“Stahl recognised this development early on and now has the technologies to put us at an advantage,” says Leddin.

He says that this applies to both water consumption and to energy consumption, which he describes as “ remarkably low.”

Huppertz of Büfa says that many hotels and catering services are using outside laundry services. “They also rent their textiles, so that the leasing business is increasing strongly.”

Stahl’s Leddin adds that: “The outsourcing of linen care has always been subjected to trends and counter-trends. This does not affect us very much, since we have designed our product range in such a way that we can serve both the heavy-duty laundry and the OPL.”

Workwear too is becoming more important for laundries. With special protective clothing now adopted across many sectors, – automotive, food, electronic, medical and medical service – the garments must be washed in a way that maintains their protective functions. Huppertz says: “It ensures a good future for small and bigger laundries in Germany.”

Drycleaning changes

Although the drycleaning industry faces a static future at best, there are opportunities for the more industrious and imaginative suppliers.

The German market is still declining but the pace has slowed, says Huppertz of Büfa.

John Balman at Alliance Laundry Systems agrees but adds that the decline in drycleaning has spurred the growth of wetcleaning as a partial substitute.”

Huppertz says that demand outside the main cities is too low to run a profitable drycleaning shop, whilst the current reluctance of German consumers to spend is another reason for the market’s continued stagnation.

Perc usage accounts for 70% of the German market followed by HC solvents with 25%. Together, liquid carbon dioxide and Cyclosiloxane D5 have a 5% share.

The drop in volumes means that some cleaners will sometimes seek to replace large-capacity perc machines with smaller and cheaper hydrocarbon machines, says Huppertz. He says there is potential in offering an individual, high-quality textile care service. A drycleaning plant should look to supply all kinds of textile care to businesses in its catchment area – from care homes for the elderly to independent hotels and restaurants.

The modern service package should include drycleaning of garments in solvents; wetcleaning of shirts and garments, bed linen and pillows; and laundering of hotel and kitchen articles, including curtains and upholstery.

DTV, the German textile care association teamed up with the European Research Association for Innovative Textile Care and four suppliers – Büfa, Kreussler, Seitz and ILSA Multimatic – to launch the Fashion Care Service Initiative. Supported by garment manufacturers, machine suppliers and textile care specialists, it allows drycleaners to “manage” their own quality using existing systems and have their standards monitored by external experts.

DTV is also active in the European E-DryClean training project for the industry. The E-DryClean project will be launched during next month’s Expo Detergo in Milan.




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