Terrorist threat to tourism revival

ourism is important to France and the French economy.

The country has more than 17,500 hotels, inns and motels, and serving these is one of the hopes for future growth in the textile care industry.

Yet the hospitality sector has had its setbacks and slowdowns, the loss of the Olympic bid, even the fears of international terrorism, though France stayed out of the Iraq war.

France in the middle of this decade presents a challenge to most industries. Most observers see it as a country that has fallen on hard times since the 1990s. Between 1994 and 1998 gross domestic product grew by an average of 2% a year. By 2000 growth had reached 3%.

Millennium malaise

However, a malaise has set in since the millennium, and growth has crawled to a standstill. The Socialists, who ruled in the 1990s, would attribute the good growth to their policies. The right wing now in power would say the 1990s growth had been bought at a price and that today’s stagnation is the result.

Even though the West is suffering at the moment, it is especially hard for France as the third largest economy in Europe after Germany and the UK, and the second largest trading nation after Germany.

Agriculture, of course, has always been the mainstay of the French economy. First impressions after crossing the Channel and travelling by road or rail from Calais to Reims bear witness to a large agricultural sector. Yet the lion’s share of French economic activity now belongs to the services market. Figures vary but 75% is not unrealistic.

Nevertheless, France is blighted by an unemployment level as high as Germany’s. The overall figure is between 10-11%, but it touches 30% among men in their twenties. Hence the back-to-work pledge and determination of the new Prime Minister, Dominique de Villepin.

The Prime Minister’s supporters point to the softer approach of the 1990s as the cause of high unemployment. While the economy thrived the working week was cut from 39 to 35 hours and welfare benefits appeared easier to get. It became too easy to claim sickness and unemployment benefits, say the Socialists’ detractors, and the legacy remains.

The government is now intent on selling off its holdings in the utilities and other industries as part of its toughening-up policy but there are fears that privatised enterprises will trim workforces and add to the jobless figure.

Tourism benefits

So perhaps it is just as well that the French can rely upon its established tourism industry. For despite the benefits that the package holiday has brought to Spain and the widely publicised beauties of Italy, France remains Europe’s most popular country for tourism.

The romance of Paris, the beaches of the Riviera and skiing in the Alps all mean business for shops, restaurants and hotels.

Girbau, the Spanish-owned laundry equipment producer, regards France as one of its most important markets.

There is no doubt that while tourism remains the big earner, this has to be put into context. The September 11 atrocities and a poor economic performance in much of Europe have affected the market, and business in Paris hotels in particular has been hit.

The good news for the equipment manufacturers is that, whether the hotels in France are full or not, they need a laundry service and most of them have this on the premises. They find it cheaper this way and it is a scenario that has worked for the equipment supplier Ipso-LSG.

The company has worked with a French distributor for 14 years, and business has increased steadily from day one. “It was a good option,” says Carine Derez, the group’s commercial director.

The hotel business is good too for Schulthess, the Switzerland-based manufacturer. The company has concentrated on the niche market of smaller hotels and guest houses. Hans Peter Stamm, the sales and marketing director, believes Schulthess has been successful here because these establishments are eager to save money in the present circumstances and it is cheaper to launder on the spot.

However, Stamm adds that business could be better if the prevailing economic conditions allowed more re-investment. Hairdressing salons and care homes also proved to be good sectors for the company.

These are notable achievements in a market which the manufacturers are finding tough. Jerome Guéné, Girbau’s France director, admits: “The competition is very hard. All the biggest laundry equipment manufacturers are in the French market.” Nevertheless, Girbau is pleased with its success in the diverse French market.

If the tourism trade is a touch sluggish, there is another sector in France that is promising for some manufacturers. It is the direct result of government policy to reorganise public hospital laundries.

In 2003 the health ministry introduced a scheme for grouping neighbouring hospitals together to share a new laundry, replacing the present on-premises facility.

The new laundry would at the same time meet new standards of hygiene and productivity.

Under this arrangement, several hospitals find a financial partner and buy land for the new laundry. An independent team builds the laundry and buys in the equipment, but the hospital runs the facility using its own staff.

In some cases the building accommodates other services, such as a kitchen, as well.

After 18 years the hospitals will be offered the opportunity to buy the laundry.

The first hospital laundry of this kind, for which the Jensen group supplied the machinery, was built at Le Havre, Normandy.

Jensen is now putting the equipment into three or four of these laundries every year. Each one costs about 120million (£13.5million) but the government sees the scheme as a long-term money-saver, partly because it reduces staff numbers and therefore cuts the payroll figure.

Jensen’s other main market is rental laundries. The head of Jensen’s French operation, Clément Silvaggio, says: “This is relatively good business, but not booming.”

Still in the healthcare area Derez says care homes in France have provided Ipso-LSG with welcome business. Barrier machines, with the new emphasis on hygiene, are in great demand, and Ipso-LSG is now working on a smaller version to meet the needs of care homes.

One of the chief reasons for the growth of this industry is, of course, the higher life expectancy that is now a feature of life in the West thanks to better nutrition and medical services. Many of these new homes are smaller, but all need laundry equipment.

Two “fantastic years” in France are reported by Christeyns, the chemicals and industrial laundry specialists. Charlie Betteridge, the company’s European marketing director, has found pessimism around the French hotel and restaurant industry, but concentrating on the hospital sector has paid off.

Betteridge says: “Hospitals have picked up on risk analysis and on bio-contamination control. The washing process is being better documented.”

In a climate in which money savings have become important Betteridge says his company’s methods have cut water and energy costs by between 30 and 40%.

Another company that has experienced a business boom thanks to developments in French hospitals is Datamars, a Swiss enterprise that makes the equipment that tracks garments through laundries. “We have had very big increases in sales this year and in 2004,” says international sales manager Giuseppe Vitale.

Drycleaning regulations

The picture is perhaps not so optimistic in the drycleaning sector. New environmental and safety regulations were introduced in 2001, yet many operators have not updated their equipment to meet these standards.

“Everyone in France waits to the last minute,” says Marty Brucato, a drycleaner with experience of the USA and French markets. He is vice president of operations and technology for Impressing Retail Network (IRN), which is launching GreenEarth drycleaning solvent in France this year. “It is classic French behaviour. Some of them say they will wait even a little longer than the last minute.”

Although the French government has been slow to push the drycleaners to sharpen up their act – the right-wingers say this is because of the Socialist legacy – the inspectors are now calling and giving ultimatums.

Another obstacle to good business in the drycleaning market is cultural. The French are reluctant to take anything to the cleaners if they can wash it themselves.

This may change. More garments in France now require wet washing – and the drycleaners are installing wet washers alongside their traditional equipment. The environmental regulations may force some operators to close down because they cannot afford the new equipment, while others will thrive on the increased business in wet-wash garments.

On the laundry side the next few years must bring considerable reinvestment, says Jensen’s Silvaggio. He predicts more consolidation in the market. Until they are taken over businesses will not buy new equipment, but the new owners will want to update, he says.

Betteridge predicts a gradual increase in workwear laundering, which could mean a proportionate increase in demand for equipment, and Derez at Ipso-LSG thinks more hotels and laundries will rent their machinery, rather than buying it.

The trend has already started, according to Derez, who says: “It is an expanding area.”