Up and down in the Antipodes

The Australian economy saw its first evidence of decline this year, when the volume of economic activity in the September quarter dropped 0.5%, the first quarter of negative growth since the Queensland flood impacted on the economy in the March 2011 quarter, according to figures released by the Australian Bureau of Statistics (ABS) on 7 December 2016.

However, overall growth during the year remained positive, at 1.8%, thanks to positive growth in the previous three quarters.

GDP was impacted by a fall in private investment in new buildings and below-trend growth in other sectors including financial and insurance services and professional scientific and technical services. In addition, while mining maintained its historically high levels of production, it contributed no growth to the GDP result, the ABS reported.

“Australia’s economy relies in a large part on mining minerals and the prices for these have fallen in recent times, impacting on the budget and the number of people employed in this industry,” comments Filterfab’s Anthony Kingsley, treasurer of the recently formed Laundry Association Australia (LAA). “Labour in Australia is quite expensive compared to the rest of the world and this has impacted on investments in the latest cost-saving machinery, prompting a lot of replacement equipment in recent years.”

In addition, the industry has begun to consolidate. Big groups are getting bigger and private companies are taking over work previously done by publicly run laundries.

“The seven states and two territories within Australia had traditionally operated public health linen from individual hospitals but a decision to make group laundries or central linen services means there are now fewer than a third of the laundries operating across Australia,” explains Shirley Naylor, LAA board member and editor of The National, the Australian ‘National Drycleaner and Launderer’ magazine. “Victoria, for example, had a thriving association of hospital laundry managers, with a well-attended seminar. The group is now more social in nature, with only six potential members in the state and more life members than laundries.”

As the larger groups buy up the smaller laundries and implement automation and labour-saving innovations in their
premises, they have put been able to lower prices, putting more pressure across the board on pricing.

“Australia is a very competitive market, stimulated by tourism, an ageing population and student migration. That is why we have seen slight growth, especially in senior care, vended laundries and wetcleaning,” says Matthew Manterfield, regional sales manager – South Pacific for Alliance Laundry Systems, adding that 50% of its business is in vended laundries.

Although Australia has a lower number of coin-ops compared to countries like the US, growth in tourism is leading holiday sites such as caravan parks to upgrade from “water-guzzling top load coin-op washers to large front load washers,” says Sam Nolthenius, sales manager at Dependable Laundry Solutions, distributor for Maytag and Girbau laundry equipment in the Northern Territory and Western Australia, “giving the ‘grey nomads’ [people who travel around Australia in their caravans post-retirement] the ability to wash their sheets and blankets from their caravans and RVs, at the same time as cutting the park’s running costs”.

Nick Soteri, general manager of Jensen Australia, says growth in the retirement home sector, another outcome of the ageing population, has opened up opportunities for laundry infrastructure to support the numerous developments as demand grows.

Focus on water

One of the biggest challenges in Australia is water, Naylor says, because it is a ‘huge, dry continent’, alternating between drought and flooding rain. “For example, Adelaide is the end of the line for the Murray River water flow and upstream farms from three states take water. Adelaide laundries actually discharge water with less TDS than the water they pull from the system and bores, which many companies operate,” she explains. “Other areas may not have problems in sourcing water but they pay for it to source and to discharge. The laundry industry has been very proactive in taking on water-efficient tunnel washers.”

Sam Nolthenius, sales manager at Dependable Laundry Solutions, distributor for Maytag and Girbau laundry equipment in the Northern Territory and Western Australia, for one, has noticed an increase in demand for Girbau’s tunnel washer systems. And Nick Solteri, General Manager of Jensen Australia, has also seen customers choosing the Jensen Universal Tunnel Washer has a means of reducing water consumption.

In 2013, the Northern Territory government launched the Living Water Smart initiative in the hopes of saving 10,000 million litres of water over five years. “To do this they offer all business a free water use audit as well as rebates to upgrade from water wasting equipment to newer, high-efficiency systems, be it a new laundry or new irrigation systems,” says Nolthenius. 

In addition, he says, the Western Australian government is aiming to reduce household and business water usage by 15% by 2030 and 25% by 2060 through its Water Forever plan. “With rainfall declining by about 10% since the 1970s, the only way for the government to reach these water usage reductions is by enforcing restrictions and increasing pricing for the supply of water, forcing business to find ways to dramatically cut their water usage,” Nolthenius adds.

Another challenge is the size of the country and its sparsely populated regions. “Our service techs can fly for four hours over nothing but barren desert to be able to service our clients,” Nolthenius says. “These long distance and remote sites are why we offer service training schools at our warehouse, so we can train technicians around the state to ensure every machine we sell is backed up and running smoothly long term. Such remote areas also face difficulties with poor power supply, generally running of generators on site and having very dirty water that can cause issues on site.”

More than drycleaning

Drycleaners in Australia and New Zealand have a positive attitude to investment, according to Marco Niccolini, general sales and marketing manager for Renzacci. He says investment in alternative solvent and in wetcleaning is not just based on regulatory requirements (although these are strict) but also because shop owners are aware of current trends and the opportunities new technologies and solvents can offer to their businesses. And this is something that Renzacci is working to educate its customers about even more, including organising demonstrations of its machines that work with Dow-Safechem’s new Sensene solvent, unveiled at this year’s Texcare.

The average size of the shop is generally bigger than it is in Europe, allowing for a wider service offering – and they are often built on their own land rather in being in a shopping centre, so have control of their own logistics.

Drycleaners tend to offer a range of services, especially in big cities, Niccolini says – even extending as far as
disinfection and cleaning of motorcycle helmets and other items that are difficult to clean at home.

Alliance has been able to take advantage of the drycleaning sector’s interest in wetcleaning, driven by growing interest in sustainable processes. “There is renewed interest in our Softwash and Smart Clean products as consumers become more educated about perc,” Manterfield says.

However Kerryn Wollington, training and development manager for LDCT (Laundry Dry Cleaning Training) and a board member of the LAA, says: “Drycleaners are investing in new solvents but as we do not have regulations as rigid as those in the European Union, there is a lack of compliance to our Code of Practice, and some not so good practices with waste.”

She says the LAA has done a good job in encouraging good practice but there is still a way to go.

In both drycleaning and laundry, Wollington says there is also a need for more training. “Staffing is a huge issue. There are limited skilled employees and those that are there are near retirement,” she comments.However, she says: “We are getting new people coming into the industry with a totally different idea about business and training and these will grow as they embrace change.”

New Zealand: a bright spot

On the other side of the Tasman, the New Zealand economy grew 0.9% in the third quarter of 2016 – thanks to solid growth in the labour market and in retail sales, the New Zealand Treasury reported in November. At the time of the report, the impact nationally of the 14 November earthquake in Kaikoura was limited and the Treasury was predicting that it would remain minor and that growth in the second half of the year was expected to be similar to that of the first half.

“New Zealand is one of the few bright spots among industrialised economies,” comments Michael Bohnet, director of sales for Kannegiesser. “Loose monetary conditions, gains in real disposable income and solid growth in the construction, retail and tourism sectors have continued despite weak external demand, putting the economy on a solid footing. In Auckland alone there is significant growth on the horizon with forecasted increase in hotel rooms and the development of a brand new exhibition and conference venue. The opportunity is in the continued growth in tourism due to the clear understanding of New Zealand being a safe place to travel.” Ricky Brackfield, president of the Textile Care Federation of New Zealand, agrees: “Hospitality, fuelled by tourism, which is booming, is meaning that laundries dealing with linen are busy.”

The laundromat market has grown significantly over the past five years, with more than 60 sites opening, while OPLs are still in the minority.

As in Australia, most of the smaller operators are being bought up by larger entities. The commercial laundry market is dominated by 10-15 corporate entities and 25+ privately owned operators.

“There is a tendency to favour privatisation and opportunities are being capitalised on by investors and larger laundry customers,” Soteri adds. “New Zealand has a distinct advantage in encouraging development with less red tape.” However, one area where there is increased regulatory control is in the area of health and safety. A new Health and Safety at Work Act came into force in April 2016 and Brackfield says it has had a big impact on the sector, as councils get tougher on waste water discharge. Therefore technology that helps laundries meet the requirements of the regulations, including waste water heat recovery and water re-use, is making a difference in the industry. Purchases are helped by the strength of the New Zealand dollar.

However, water and discharge costs are rising, along with that of energy. “The focus of investments have therefore shifted to water recovery and technology that allows payback on the market,” Bohnet suggests, adding that this has resulted in increased interest in Kannegiesser’s batch washer technology and ironers.

To provide further support, Brackfield says the Textile Care Federation is also working with outside environmental businesses, to help its members meet the new standards and improve their businesses.

The laundry and drycleaning industries in Australia and New Zealand both have environmental challenges to face, but they also provide huge opportunity for further development and innovation.