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May 15, 2013
Exclusive: 2010-2011 Textile Care Processing Cost Benchmarks

CHICAGO — Data compiled from more than 470 domestic and international healthcare and hospitality laundry facilities

CHICAGO — Having received numerous requests for newly revised information on this subject, I have reviewed the volumes of information obtained from both healthcare and hospitality laundry operations worldwide for 2010-2011.

I did my best to convert foreign cost to U.S. cost—both were changing rapidly as of December 2011—and discovered that our foreign counterparts were, in most segments, slightly more cost-efficient and, due to exchange rates, getting more production for the money simply due to the value of certain currencies, lower fringe benefit cost and higher degrees of automation. (I am pleased to report that this gap is closing rapidly.)

There could be numerous explanations, of course, but the primary reason was the vast difference in labor and fringe benefit cost in our country vis-à-vis other foreign locations, primarily those in Europe, Russia and the Far East.

The basis for this analysis was to determine benchmark alignments once various currencies were adjusted to match the U.S. dollar. Both higher and lower extremes in costing for each element were evaluated for accuracy. A group of independent accounting specialists who volunteered its time was utilized to draw the various conclusions reached in the report. Foreign laundry experts assisted in the translation of some information.

Throughout the process of validating accuracy of the data provided and drawing comparisons, the identity of each facility remained confidential. Each facility was simply referred to as a number or letter, depending on the type of operation: healthcare or hospitality. For those with a combination of tasks, every effort was made to categorize each element.

Every facility that supplied information has done so every year since this periodic review began.

2011 FORECAST ON TARGET?

As consultants and various levels of internal management continue to overly complicate laundry operational cost scenarios, as well as depicting systems that may not prove cost-effective, it is apparent that laundry and facility managers, as well as top executives with a renewed interest, require a cost benchmarking rule of thumb that will assist them in selling their operations, i.e. justifying new systems or a new facility, obtaining new customers and, probably most important, comparing variable cost that should influence decisions to continue in-house operations or examine outsourced management, operations, linen rental, transportation, etc.

I remain amazed that folks who seem to be knowledgeable simply complicate data in such a form that it becomes extremely difficult if not impossible to interpret. The same situation applies when reviewing opportunities to automate and modernize operations. It is apparent in some cases that new operations with new systems are not as cost-effective as planned, mostly due to a misunderstanding of previous cost and the industry’s promises to improve on the status quo.

Institutions, general contractors and A/E’s that hire consultants to review laundry facility operations should also continue to rely on internal expertise and experience, I believe. The institutions should also ensure that the consultants and experts selected are experienced in reviewing all applicable operational elements. A consultant with expertise in energy management, for example, may not be qualified to review laundry production or linen distribution.

It is quite apparent that large laundry and linen-rental consortiums that deal specifically with healthcare markets are becoming more competitive. As business tends to escalate, and based on recent information, cost seems to be leveling out to some degree, with the exception of the impact of high cotton cost and, most recently, fuel cost.

My previous forecast that total cost of operations may reach $1.10 per pound processed/delivered by 2013 seems right on target. The rising cost of healthcare insurance benefits enacted as a result of healthcare reform could dramatically increase the cost of operations and associated product and equipment purchases in 2014.

A review of approximately 473 healthcare and hospitality laundry facilities located in the United States and 23 foreign countries with operations that process a combined 276 million pounds annually with varying degrees of efficiency reveal the following benchmark costs (in U.S. dollars) that should be deemed most efficient on the average, even though most every facility demonstrated opportunities to reduce cost, especially in labor-sensitive areas.

Most important to note in this analysis were the plans to reduce labor and utilities cost related to washing, drying, conveyance, and flatwork feeding and finishing. These facilities also reported that major efforts were under way to reduce textile-replacement cost through standardization efforts and by examining best value over lowest cost for an item. It’s unfortunate that the federal government seems to continue to focus on lowest cost rather than the impact of overall cost.

Other major components under review seem to drive at lowering chemical cost by conducting actual comparisons and focusing on the customer service element that is so critical to this facet of the operation.

The variables between healthcare and hospitality cost were certainly interesting. Hospitality was higher on the average, which was expected, with the average variance being between 6 and 7 cents per pound processed. This was mostly attributed to the higher quality/cost of textiles acquired, which is significant.

PRODUCTION COST BENCHMARKS

Processing Cost: Direct labor costs, including fringe benefits (health insurance, retirement, etc.), which are applicable to the receipt, sorting, washing, drying, ironing, conveying and preparing of textiles for delivery within a laundry processing facility. — 18-23 cents per pound processed

Administrative Cost: Covers personnel in laundry and textile product management, secretarial, contracting administration, general foreman and nonproduction employees/housekeeping (includes fringe benefit costs, such as union dues, health insurance, etc.). On average, fringe benefit costs were running at 24-32% of actual salary cost (in other words, add that percentage to base salary cost). — 3-5 cents per pound processed and delivered

Maintenance and Repair Cost: Labor cost and materials associated with routine maintenance of applicable systems, including processing and ancillary support equipment, carts, etc. — 7-11 cents per pound processed and delivered

Equipment Depreciation: Divide equipment value by 15 years. — 4-6 cents per pound processed

Depreciation of Property and Applicable Property Taxes: Divide aggregate cost of land and building plus annual taxes by 75 years. — 3-5 cents per pound processed and delivered

General Supply Cost: Includes leasing of office equipment, office supplies, covers, pads, hangers, thread, wax, patches, buttons, etc. — 2-4 cents per pound processed

Chemical Supply Cost: Laundry chemicals, water treatment, etc. — 3-5 cents per pound processed

Utility Cost: Electrical, steam, gas, water, oil, sewer, refuse removal, and solar. — 8-10 cents per pound processed

SUBTOTAL: For a most efficient operation, Production Cost should be 48-69 cents per pound processed.

TEXTILE DISTRIBUTION AND REPLACEMENT COST BENCHMARKS

Textile Distribution and Return Cost: Includes drivers, fees, tolls, leasing, fuel, vehicle maintenance/repair, linen room distribution (from cart assembly to end-user locations) labor and benefits, seamstress/repair/marking, uniform distribution, cart depreciation and replacement, and transportation to external customers. — 13-15 cents per pound processed (within this component, fuel cost was 4-5 cents per pound processed)

Textile Cost: Surgical, uniforms, general textiles, drapes and other textiles based on a seven-par maintenance value for healthcare or hospitality. — 17-21 cents per pound processed

SUBTOTAL: Textile Distribution and Replacement Costs should be 30-36 cents per pound processed and delivered.

TOTAL OPERATIONAL BENCHMARKS

The overall operational cost benchmark ranged in 2010-2011 from 78 cents to $1.05 per pound processed and delivered.

While the overall variance in cost ranges is certainly widespread, a manager must carefully and accurately calculate all costs associated with the actual operation—all are different.

A major failing on management’s part is the inability to calculate fringe-benefit cost and include it as part of the outcome. Calculating production cost while forgetting other costs simply raises additional questions. All costs depicted in this benchmark exercise are considered equally important; one without another would have painted an inaccurate picture.

If, for some reason, you think your costs are lower than the benchmark’s lowest range, I encourage you to re-examine and recalculate your numbers. More importantly, make sure you have included all costs so they parallel those listed in this report.

EXPECT COST INCREASES IN TEXTILE REPLACEMENT, TRANSPORTATION

As mentioned in my previous analysis, textile replacement cost and transportation cost for 2010-2011 did reflect marginal increases.

December 6, 2012
Purchasing Laundry Equipment: Buying New or Used?

CHICAGO — How does one go about deciding which choice is the best for his or her unique situation?

CHICAGO — When a laundry services operation is in the market for equipment, its administrator or manager can choose from among new, used, rebuilt/refurbished, or a combination, so it’s important to be able to compare options as far as total costs vs. benefits are concerned. How does one go about deciding which choice is the best?

American Laundry News has tackled this topic in depth at various times and in various ways over the years, but it never hurts to have a refresher. Given today’s give-me-the-highlights culture, we’ll summarize some basic guidelines for you to keep in mind when in the buying mood.

BUYING NEW

It’s easiest, but likely more expensive, to buy new. You’ll have the opportunity to examine the equipment closely and may even see it in operation at a manufacturing facility or distributor’s showroom, at a laundry that’s using the same type of equipment, or at a major trade show such as the Clean Show.

But seek out other laundries that have this equipment and learn what issues they may have experienced with it. You’ll know soon enough if it will fit your task.

New equipment will come with brochures, the owner’s manual, and a great deal of other documentation. You’ll receive assistance from the manufacturer and/or distributor regarding the equipment’s transportation and installation, staff training, replacement parts, and more. Everything is under warranty, and the manufacturer and/or distributor will make certain the equipment is working properly and that you’re satisfied.

By buying a new piece of equipment, you’ll know that the recommended preventive maintenance and repairs are carried out from the date of purchase. Your new equipment will invariably have the latest technological advances and safety devices, plus you’ll have the opportunity to add as many bells and whistles as you’re willing to pay for.

BUYING USED OR REBUILT/REFURBISHED

Previously owned machinery can work out quite well, and you can save money in the long run, but take care of the due diligence before signing on the bottom line.

There may be a good deal to be had if, for example, a laundry shuts down, relocates or expands and can no longer use a piece of equipment that’s in good shape. When considering used machinery, ask these questions:

  • When was the machine originally manufactured, and how long did it run? Was it used during multiple shifts? (The average life expectancy on well-maintained laundry equipment operating in a single-shift operation is about 15 years.)
  • Did the previous owner run constant, heavy-soil formulas, or light-soil formulas?
  • Was the machine maintained while in service, and are there any records to support this?
  • What is the availability of repair parts?
  • Why is the current owner willing to part with this equipment?

Ask for photos of the equipment, at a minimum. If you’re able, see the equipment in operation. If the used machine has been removed from service and can’t be hooked to power and air so you can see if it works, you won’t be able to fully evaluate its condition. You’ll be buying “as is.”

An alternative to buying used is buying a unit that has been rebuilt or refurbished, often to OEM standards.

Want to compare the costs vs. benefits of the different options? Try adding all the savings and benefits each year while subtracting all costs involved each year throughout the lifetime of both options.

Finally, no matter which choice is in front of you, you have to weigh it against your operation and its needs:

Return on Investment — How does it compare between the options you’re considering?

Financial Position — Can you pay cash for the purchase? If not, how will you finance it?

Efficiency — Which offers the greatest efficiency in terms of energy, processing capacity, chemical/water usage, etc.?

Environment — Which option is greenest?

Labor — How will the options reduce your labor needs?

Space — Which option offers the greatest production capacity for the least amount of space?

Installation — Which installation will disrupt your operation the least?

Vendor Reputation — How well known in the industry is the organization or business from whom you’re considering buying?

Morale/Image — Which option will have a more positive effect on employee morale and on your operation’s marketable image?

Every situation is unique, so be sure to research the equipment thoroughly. Determine how it might fit into your organization’s short- and long-term goals before buying anything, new or used.

November 21, 2012
Seek Balance Along with New Business (Part 2)

CHICAGO — Input from chemicals supply, linen supply, uniforms/workwear manufacturing, and healthcare laundry sectors

CHEMICALS SUPPLY: MARLENE WILLIAMS, ANDERSON CHEMICAL CO., LITCHFIELD, MINN.

Sound business sense requires a review of new-business cost vs. return on investment. The balance sheet for new textile services would include costs of marlene williamscustomer needs for equipment, level of service expertise, and frequency of service required to provide good-quality product and customer satisfaction. These costs should be balanced against the profits generated by anticipated product sales.

Other factors may enter into an unbalanced, but desirable equation. These would include anticipated increased future sales, entry into non-textile products offered by your company, transportation or delivery logistics, and numerous account-specific exceptions.

stephen marcqLINEN SUPPLY: STEPHEN MARCQ, GENERAL LINEN SERVICE, SOMERSWORTH, N.H.

I like to think of this as two separate questions, the “what” vs. the “where.” Does the account make sense on its own merits, and then does it make sense to send a truck there?

On the “what” side, consider the following:

  • Profitability/pricing — Does this account fit into your overall growth strategy?
  • Your target markets, and the account’s prominence in it. Name recognition can help your sales team’s ability to gain other business in that market segment.
  • Are the delivery and billing parameters compatible with your company requirements? If they are so different that they affect your ability to provide good quality and service, you may want to avoid it. Better to not start what you know you can’t do well.
  • If margins are low, are there other compelling reasons—name recognition, contribution to overhead, etc.—to do it? It can make sense to service accounts selectively that don’t make economic sense in and of themselves. Nothing occurs in a vacuum.
  • Consider the competitive ramifications of taking or not taking the new business, i.e. strategy over profitability. You may not want it, but that may be outweighed by how much you may want your competitor to not get it.

On the “where” side, a common concern comes up when you are presented with an opportunity to service an account in a more distant area, or one you are not in. I like to consider the following:

  • Estimated account revenue — The economics of traveling improve with account revenue, of course, but an unintended consideration is that you could become tied to it. Many companies would consider 10 $200 accounts to be better than one $2,000 account for this reason.
  • Evaluate growth potential in the area. Use a modeling approach for a quick and dirty analysis of your growth potential there, by comparing the number of accounts and/or total revenue per capita for the potential area vs. an existing, better developed one. If you service 30 accounts in a similarly sized town, that should give you an indication of the potential in the one you are considering.
  • Is there any connection between your existing business and this new business? There may be times when you have to service a location to keep an existing customer happy, and prevent any competitive intrusion.

There are definitely times when not serving a new account makes sense, but with new business so hard to come by, it’s better to look for creative ways to get it into the fold. Painful as it may be, if you know an account is just not going to be a good fit, don’t take the business and tell its principals why. Often, there are one or two things that are major concerns, and if the customer wants what you offer badly enough, it might be more willing to negotiate a better outcome.

UNIFORMS/WORKWEAR MANUFACTURING: STEVE KALLENBACH, AMERICAN DAWN, LOS ANGELES, CALIF.

steve kallenbachThere are basic and not-so-basic questions that need to be answered in the area of new business before the final sale. Companies need to decide if they are in a growth mode or a profit or maintenance mode.

Growth modes can drive sales with lower margins, as companies are willing to “buy” certain business to penetrate target markets. That being said, some companies may proactively decide to use low margin pricing in special targeted markets, while maintaining standard, more profitable pricing in other core markets.

Other key questions or criteria to settle when evaluating new, possibly marginally profitable business include:

  • Is the product already part of your core offering or are you adding it to your line? If it’s an additional product, your merchandise cost will be higher (by percentage) until you reach critical mass.
  • What is the customer’s quality/replacement expectation? Does it expect “first wash” perfect visual quality on every delivery, or is the market standard OK?
  • Based on pricing, does the return on investment (ROI) meet your normal standard? Can you get enough turns to pay for the merchandise and all related costs, and still make a profit? You’d be surprised how some pricing programs will analyze if you put them through a life-cycle assessment.
  • What is the contract length? Do you have enough time to “profitize” the account? Is the contract length the same as your other business, or shorter/longer?
  • What are the payment terms, and what is the credit history of the account? You can write the largest account on the planet, but if it doesn’t pay its bills on time, you don’t make money and actually incur hidden costs (carrying its money).
  • Does your plant need more volume in certain product(s) in order to make your operation more efficient? Let’s say you write a good-size account in non-standard new product. The account is great and pays its bill, and the price is decent, so you are making money. But the production and flow is not enough to run full loads, so you have hidden costs in special handling, inefficient loads, or even merchandise wear-out due to less-than-capacity mechanical action.
  • Are the new-business logistics within range of your current business, and can the route handle it efficiently? For instance, you can pick up a high-priced $100 account with standard product, but it’s an hour from any stop. The two-hour turnaround to service this account actually costs you revenue in opportunity loss.
  • Where is the competitor in this scenario? Does taking a piece of business at a lower price keep it out of the area? Does turning down a piece of business at a lower price send a signal to the market that you and your business are about sensible marketing? Does taking a piece of business at a lower price displace a competitor?
  • Are you taking the entire account, or is this piece of business just a portion? Does this smaller piece of business provide you an opportunity to wedge into a competitor’s account?
  • Will the account require normal maintenance or high maintenance, in terms of visitation, entertainment, service levels or other activities? All of these areas are generally overlooked cost drivers.

You should weigh these factors when going after any new business, much less new business with new products in new markets. This is all part of strategic marketing. Especially in new markets with new products, it is company leadership that needs to “run the numbers” to stay profitable.

Yes, there are times when it makes sense to buy business at lower prices, and other times when it’s best to turn and walk away.

HEALTHCARE LAUNDRY: SCOTT BEATON, KAISER PERMANENTE NORTHERN CALIFORNIA

scott beatonMany textile service linen companies use the same basic criteria when evaluating a potential customer relationship. The relationship needs to be fiduciary in order to provide a sustainable valued service to the customer while making a fair profit for the provider. There are a number of key factors to consider when conducting a profitability evaluation for new business including:

Transportation Cost — Due to increasing transportation costs, perhaps the greatest factor to consider is the distance of the client from the processing plant. A service radius should be established with concentric circles emanating for the plant. Special pricing and exceptions can be made for customers that accept fewer deliveries per week and or agree to store additional linen to lessen the “windshield” time involved to service them.

Volume of Potential New Business — How does the potential client fit with your current production flow and product mix? If you are a large COG (customer-owned goods) laundry, it may not be feasible to service smaller accounts due to soil-sort configuration, tunnel load sizes, physical layout, and finishing-equipment capabilities.

Available Product/Linen Inventory — Whether rental or COG, an adequate agreed-upon par level needs to be purchased and maintained.

Production Scheduling — It is vital to consider whether your laundry’s current operation can handle the additional pounds without increasing the number of employees and/or hours of operation. How does it fit into the current schedule? Can it be processed by acquiring additional, more efficient equipment or will you need to hire and train additional labor?

Product Mix — Does the potential client have specialty products and linens that will require more expensive processing and handling? Customers may require that linens be folded and packaged in a particular way. Ensure that the equipment you have can process the linen to the customer’s expectations and needs.

Retention/Satisfaction of Current Customers — There’s nothing wrong with looking at ways to expand your business, but not at the expense of losing existing customers. It is much cheaper to retain customers than to constantly turn them over.

Make sure that you are proactive and maintain the customer service to which your current customer base has become accustomed. When considering expansion and growth, take a long, hard look at your plant’s current operations. Additional volume may allow you to make improvements in equipment and processing, and this could increase your productivity and reduce labor hours in the long term.

Click here for Part 1!

September 4, 2012
10 Things You Should Know and Understand about the Laundry Industry

CHICAGO — Without water, you have nothing

Editor's Note: Ken Tyler is on break. AmericanLaundryNews.com is reposting a column that originally appeared on the site in July 2008.

CHICAGO — 1. No matter how much you would like to complicate the chemical process of laundering, water is the key element associated with it. Without water, you have nothing.

2. It has been proven that washing in low, controlled temperatures can produce textiles as hygienically clean as washing in high temperatures. Don’t forget that most laundered items reach high temperatures during drying, steam finishing or ironing.

3. The key to maintaining the quality of textile processing or cleaning is service. Don’t overcomplicate the laundry chemistry process — there is little difference between products that are available. Be careful about being oversold on products.

4. Really know your cost to operate. Purchasing/processing textiles through and out of a laundry are way past the 50 cents-per-pound scenario. Don’t forget about capital depreciation, fringe-benefit labor costs, and energy and transportation costs, along with the other costs that are part of the process.

5. Your operation can only be as good as the employees you hire, so treat them with respect and dignity. Walk the floor; know your people and the systems that make your operation run.

6. Don’t purchase any equipment without establishing a process to gauge production, potential cost savings, and ergonomic value — be able to ascertain the total cost, not just the net cost. In other words, determine the best value. Make sure that you purchase equipment from someone who can provide the service you need within a timely basis. Always specify the terms and conditions of the purchase — I recommend you pay 90% on delivery and 10% on acceptance. Always make sure you have a way to get new equipment in and out of your facility.

7. A sound maintenance program requires expertise, not just a handyman. Spend as much time training these folks as you do anyone else. Every manufacturer has a training program — make the investment. One of the most critical aspects of a successful laundry program is a sound routine and preventative maintenance program. Without such a program, you might as well shut your doors.

8. Never forget that you will learn something every day in this industry. Never think you know it all — no one does.

9. Never forget that the laundry is a production facility, not a warehouse. Get off the kick of quotas, give the customer whatever they want or even think they need, and don’t make our business more complicated than it is. Invest in a good textile management system, as well as a production management system that is not linked to in-house systems. Learn the importance or lack of importance of pounds per productive employee. Never forget that employees have little control over production, especially where machine design pretty much controls the process — you can’t get blood out of a turnip. Think incentives for production — those who have it out-produce those who don’t.

10. Become active in the industry, learn how to write performance specifications for equipment (I had to throw that in), and always invest in your future with the formal educational programs and seminars that are available.  

August 21, 2012
What Do We Do When the Power Goes Out? (Part 1 of 3)

CHICAGO — Input from commercial laundry, healthcare laundry and chemicals supply sectors

COMMERCIAL LAUNDRY: TOM GILDRED, EMERALD TEXTILES, SAN DIEGO, CALIF.

tom gildredA contingency plan for power outages should be comprehensive and encompass multiple areas within the operation. As a healthcare laundry, it is critical to deliver consistently and on time to customers. We employ a contingency plan outlined as follows:

  • Provide ample supply of par at customers’ facilities
  • Work in advance
  • Maintain an inventory of processed linen
  • Maintain an inventory of new linen
  • Prepare for emergency through redundancy and backup plans
  • Operate with reserve capacity

First, managing within The Joint Commission’s requirements to maintain a certain par, or number of days’ worth of laundry at customers’ facilities, and ensuring ample supply for the appropriate number of days is important. Second, working ahead in the plant, and having processed linen ready for delivery in advance aids readiness and consistent supply. Holding in reserve new linen at your own plant facilitates the availability of excess inventory in the case of emergency or power outage.

Securing additional power generation in case of emergency is important for successful contingency planning. Either owning your own backup power generator and maintaining it, or identifying suppliers and securing an agreement to lease a generator when needed is a proactive approach to ensure your laundry is in the front of the queue within hours of the request, at a time when demand may be high. Having agreements with backup processors in a geographically desirable radius of your service areas should be the final step in your contingency plan.

Finally, processing below actual capacity allows the operation to ramp up throughput and provide additional volume after an interruption. By operating below total capacity, a facility not only reduces wear and tear on equipment, it ensures its ability to respond quickly and “catch up” as needed in outage situations. Plant redundancy is a crucial aspect of capacity, and having a facility with extra machinery, boiler power and air compression allows for tremendous increase in throughput when needed.

We at Emerald Textiles tested our contingency plan on Sept. 8, 2011, when all of San Diego County and some neighboring cities were completely without power. Having a solid plan in place allowed us to maintain operations and deliveries seamlessly.

HEALTHCARE LAUNDRY: SCOTT BEATON, KAISER PERMANENTE NORTHERN CALIFORNIA

The definition of a good contingency plan is as follows:

scott beatonThe plan shall provide for the uninterrupted operations and services in the event of any occurrence potentially leading to the disruption of the provider’s operations. Such disruptions include, but are not limited to, loss of utilities, medical emergencies, natural and/or man-made disasters, fire, inclement weather, work stoppage, and/or major accidents.

A contingency plan should include the following components:

  • Plant and transportation contingency protocol
  • Key member re-call chain
  • Contact list of backup laundry facilities
  • Backup source of textiles on call

The provider should furnish a mechanism to inform. A step-by-step procedure should be in place in the event of an emergency and shall be available to supervisors, each of whom may be responsible for execution of the protocol.

All employees should be familiar with the major elements of the plants contingency protocol in the event of emergencies.

The pyramid re-call chain should be written, complete, current, and available to all supervisory personnel, so that timely and accurate contact can be made in case of an emergency.

A designated person should maintain the call chain and be responsible for updating it at least annually or when personnel changes occur, and distributing the list to personnel.

The facility should have written agreements with one or more alternate laundry providers that could cover the facility’s volume, detailing when and how these providers will process textiles in an emergency.

Such agreements shall be updated annually, signed and dated.

The provider should have adequate transportation capabilities with contingency planning.

The facility should have written agreements in place with one or more alternate textile suppliers, detailing the services and delivery times provided.

CHEMICALS SUPPLY: MARLENE WILLIAMS, ANDERSON CHEMICAL CO., LITCHFIELD, MINN.

Power outages tend to be regional—it is unlikely an entire city will be without power. As a contingency plan, have another laundry ready to take your work in marlene williamscase of a short-term power outage. This can be another institution in the same business you are, or a commercial laundry.

Have the agreements worked out in advance so that the switchover is as smooth as possible. There will have to be many accommodations made in your facility to get this done, and you need a contingency plan that everyone understands and agrees to.

The second thing you can do is to acquire a dedicated gas-powered generator that automatically comes on in the event of an emergency. Laundries can be “sinkholes” for power, however, so the best idea here if you have a large laundry is to maintain a dedicated generator with the ability to “dump” large quantities of power on demand. (A large washer going into extract can pull down an incredible amount of power in the first 30 seconds of start-up, so your generator system needs to be able to accommodate this huge spike in demand.)

These two actions, along with keeping adequate linen on hand (having a two-par inventory in locked storage would help if you are located in an area where power outages might be expected) are your options for addressing power outages.

It is far less likely that you will suffer a gas outage, but it is still a good idea to have a propane backup for the possible loss of natural gas (I’m thinking here of ground disturbances such as earthquakes). The changeover from natural gas to propane is relatively easy, and your maintenance team should be ready for this conversion at any time with the parts and know-how to get the job done quickly and with a minimum of disruption.

If you are in a zone where these ground disturbances are probable, get a large propane tank and prep your team for this contingency.

(Editor’s note: Williams received assistance from consultant John White in writing this month’s response.)

Check back tomorrow for Part 2!

June 14, 2012
Survey: Sizable Majority of Laundries Actively Seek Out New Business

CHICAGO — Variety of methods used to find more textile services work

CHICAGO — While the U.S. economy has shown signs of recovery, positioning a laundry as a valuable service to end-users or clients remains critically important. With that in mind, AmericanLaundryNews.com asked its Wire e-mail subscribers this month if they were actively seeking new business or were satisfied with standing pat.

A sizable majority of respondents — 78.6% — to the unscientific survey say they are seeking business. Among them, 50% say acquiring new business is vital to growing their operation, and 28.6% say they’re looking because they have additional processing capacity available. No one tied seeking business to a desire to eliminate competitors.

Approximately 14% who acknowledged not seeking business said it was because they were positioned to serve only their institution’s needs. Another 7.1% didn’t identify why they’re not seeking new business.

No one tied their position to having just the right amount of business, not being capable of taking on more work, or because upper management doesn’t favor prospecting.

Respondents say their institutions or businesses use a variety of methods to seek out new business, including direct sales, cold calling, participating in RFP process, trade shows, print/web advertising, corporate contracts, going door to door, and word of mouth.

Determining what customers want would seem to be a common-sense aspect of garnering new business, and 57.1% of respondents say they seek the opinions of their end-users or clients regularly. Nearly 29% say they occasionally seek their opinions. Equal shares of 7.1% either rarely seek or never seek such input.

If a laundry isn’t ready to attract new business now, it’s due to any number of reasons, including the need for more staff (41.7%); new or additional equipment (25%); better-trained employees (16.7%); better distribution/transportation capabilities (16.7%); “other,” including the addition of specific types of second-shift personnel and better maintenance (16.7%); or larger or renovated production space (8.3%), survey results show.

Roughly 42% of respondents say they’re ready for new business now.

While the Wire survey presents a snapshot of readers’ viewpoints at a particular moment, it should not be considered scientific.

Subscribers to Wire e-mails—distributed twice weekly—are invited to take a brief industry survey anonymously online each month. All managers and administrators of institutional/OPL, cooperative, commercial and industrial laundries are encouraged to participate, as a greater number of responses will help to better define operator opinions and industry trends.

To sign up for the Wire, click the “Subscriptions” button at the top right-hand corner of this page and follow the instructions.

December 13, 2011
Survey: 63% of Operators Say 2011 Throughput Better Than Expected

CHICAGO — More than 63% of respondents to American Laundry News’ final Wire survey for 2011 said their laundry’s poundage this year was “much higher” (5.3%) or “somewhat higher” (57.9%) in comparison to 2010 figures.

Approximately 11% reported processing “virtually the same amount,” 15.8% reported processing “somewhat less,” and the remaining 10.5% lamented processing “much less.”

Total estimated production for 2011 ranged by operation from 500,000 pounds to 10.5 million pounds, according to these anonymous responses.

Operators whose production rose attributed it primarily to gaining institutional business or increasing total accounts (83.3%). Adding more production workers (16.7%); adding, replacing or rebuilding production equipment (8.3%); improving transportation/distribution (8.3%); and redesigning workflow (8.3%) were other factors. (Respondents could choose any or all among several suggested factors or offer their own.)

The primary cause for falling short of annual goals or expectations this year, according to 80% of respondents who suffered such a setback, was a “slowing or loss of business due to economy.” Other causes cited were “other” (20%), maintenance efforts (10%), and staff productivity (10%).

No one blamed poor results on capabilities of equipment, marketing efforts, regulatory changes, or administrative indifference or lack of support.

Finally, respondents were asked how they thought their boss would grade their 2011 managerial performance. The majority believed they would receive a B (61.1%), while another one-third said they would receive an A. The remainder said they would receive a D (5.6%).

While the Wire survey presents a snapshot of readers’ viewpoints at a particular moment, it should not be considered scientific.

Subscribers to Wire e-mails—distributed twice weekly—are invited to take a brief industry survey anonymously online each month. All managers and administrators of institutional/OPL, cooperative, commercial and industrial laundries are encouraged to participate, as a greater number of responses will help to better define operator opinions and industry trends.

To sign up for the Wire, click the “Subscriptions” button at the top right-hand corner of this page and follow the instructions.

June 28, 2011
Exclusive: 2009-2010 Textile Care Processing Cost Benchmarks

CHICAGO — Having received numerous requests for newly revised information on this subject, I have reviewed the volumes of information obtained from both healthcare and hospitality laundry operations worldwide for 2009-2010.

I did my best to convert foreign cost to U.S. cost—both are changing rapidly—and discovered that our foreign counterparts were slightly more cost-efficient and, due to exchange rates, getting more production for the dollar simply due to the value of certain currencies.

There could be numerous explanations, of course, but the primary reason was the vast difference in labor and fringe benefit cost in our country vis-à-vis other foreign locations, primarily those in Europe, the Far East and Africa.

The basis for this analysis was to determine benchmark alignments once various currencies were adjusted to match the U.S. dollar. Both higher and lower extremes in costing for each element were evaluated for accuracy. A group of independent accounting specialists who volunteered its time was utilized to draw the various conclusions reached in the report. Foreign laundry experts assisted in the translation of some information.

Throughout the process of validating accuracy of the data provided and drawing comparisons, the identity of each facility remained confidential. Each facility was simply referred to as a number or letter, depending on the type of operation: healthcare or hospitality. For those with a combination of tasks, every effort was made to categorize each element.

Every facility that supplied information has done so every year since this review began 12 years ago.

2009 Forecast on Target?

As analysts, consultants and various levels of internal management continue to complicate laundry operational cost scenarios, it is apparent that laundry and facility managers, as well as top executives with a renewed interest, require a cost benchmarking rule of thumb that will assist them in selling their operations, i.e. justifying new systems or a new facility, obtaining new customers and, probably most important, comparing variable cost that should influence decisions to continue in-house operations or examine outsourced management, operations, linen rental, transportation, etc.

Institutions that hire consultants to review certain aspects of a facility’s operation should continue to rely on internal expertise and experience, I believe. The institutions should also ensure that the consultants selected are experienced in reviewing similar operational elements. A consultant with expertise in energy management, for example, may not be qualified to review laundry operations, production or textile distribution.

It is quite apparent that large laundry and linen-rental consortiums that deal specifically with healthcare markets are becoming more competitive. Based on recent information, cost seems to be leveling out to some degree, with the exception of the impact of high cotton and polyester costs and, most recently, fuel cost.

My 2009 forecast that total cost of operations may reach $1.10 per pound processed/delivered by 2011 seems to be on target. The rising cost of healthcare insurance benefits enacted as a result of healthcare reform will dramatically increase the cost of operations, i.e. internal cost and associated product (chemicals, textiles and laundry equipment purchases).

A review of more than 400 healthcare and hospitality laundry facilities located in the United States and 14 foreign countries with operations of varying degrees of efficiency reveal the following benchmark costs (in U.S. dollars) that should be deemed most efficient on the average, even though most every facility demonstrated opportunities to reduce cost, especially in labor-sensitive areas.

Most important to note in this analysis were the plans to reduce labor and utilities cost related to sorting, washing, drying, conveyance, and flatwork feeding and finishing. These facilities also reported that major efforts were under way to reduce textile-replacement cost through standardization and life-cycle determination efforts, i.e. examining best value over lowest cost for an item.

Other major components under review seem to drive at lowering chemical cost by conducting actual comparisons and focusing on the customer service elements and control systems that are so critical to this facet of the operation.

The primary variable between healthcare and hospitality cost was certainly interesting. Hospitality was higher on the average, which was expected, with the average variance being between 4 and 6 cents per pound processed. This was mostly attributed to the higher quality/cost of textiles acquired, which is significant. Other facets of discovery revealed that operational cost of healthcare and hospitality operations were similar in all other areas.

Production Cost Benchmarks

Processing Cost: Direct labor costs, including fringe benefits (health insurance, retirement, etc.), which are applicable to the receipt, sorting, washing, drying, ironing, conveying and preparing of textiles for delivery within a laundry processing facility.  Cost: 19-26 cents per pound processed.

Administrative Cost: Covers personnel in laundry and textile product management, secretarial, contracting administration, general foreman and nonproduction employees/housekeeping (includes fringe benefit costs, such as union dues, health insurance, etc.). On average, fringe benefit costs were running at 20-30% of actual salary cost (in other words, add that percentage to base salary cost). Cost: 5-7 cents per pound processed and delivered.

Maintenance and Repair Cost: Labor cost and materials associated with routine maintenance of applicable systems, including processing and ancillary support equipment, carts, etc. Cost: 6-8 cents per pound processed and delivered.

Equipment Depreciation: Divide equipment value by 15 years. Cost: 4-6 cents per pound processed.

Depreciation of Property and Applicable Property Taxes: Divide aggregate cost of land and structures plus annual taxes by 75 years. Cost: 2-4 cents per pound processed and delivered.

General Supply Cost: Includes leasing of office equipment, office supplies, covers, pads, hangers, thread, wax, patches, buttons, etc. Cost: 1-2 cents per pound processed.

Chemical Supply Cost: Laundry chemicals, water treatment, etc. Cost: 2-3 cents per pound processed.

Utility Cost: Electrical, steam, gas, water, oil, sewer, refuse removal, and solar. Cost: 7-8 cents per pound processed.

SUBTOTAL: For a most efficient operation, Production Cost should be 46-64 cents per pound processed and delivered.

Textile Distribution and Replacement Cost Benchmarks

Textile Distribution and Return Cost: Includes drivers, fees, tolls, leasing, fuel, vehicle maintenance/repair, linen room distribution (from cart assembly to end-user locations) labor and benefits, seamstress/repair/marking, uniform distribution, cart depreciation and replacement, and transportation to external customers. Cost: 11-16 cents per pound processed (within this component, fuel cost was 4-5 cents per pound).

Textile Cost: Surgical, uniforms, general linen, drapes and other textiles based on a seven-par maintenance value for healthcare or hospitality. Cost: 16-19 cents per pound processed.

SUBTOTAL: Textile Distribution and Replacement Costs should be 27-35 cents per pound processed and delivered.

Total Operational Benchmarks

The overall operational cost benchmark ranged in 2009-2010 from 73 cents to 99 cents per pound processed.

While the overall variance in cost ranges is certainly widespread, a manager must carefully and accurately calculate all costs associated with the actual operation—all are different.

A major failing on management’s part is the inability to calculate fringe-benefit cost and include it as part of the outcome. Calculating production cost while forgetting other costs simply raises additional questions. All costs depicted in this benchmark exercise are considered equally important; one without another would have painted an inaccurate picture.

If, for some reason, you think your costs are lower than the benchmark’s lowest range, I encourage you to re-examine and recalculate your numbers. More importantly, make sure you have included all costs so they parallel those listed in this report.

Expect Cost Increases from Cotton, Polyester, Fuel

Based on preliminary information as of this publication date and per discussions with those who regularly analyze costs, textile replacement cost and transportation cost for 2010-2011 (starting in June 2010) could reflect significant increases. Textile replacement could jump 10-20% due to cotton and polyester becoming more expensive, and managers could see a 5-12% hike in fuel depending on location.

The 2009-2010 survey only reflected minimal cost increases for reusable textiles when compared to 2008-2009. Many end-users, especially those in Europe and Asia, indicated they had purchased in large quantities in an effort to save resources, knowing what level the cotton-price increases could reach.

January 17, 2011
ARAMARK Uniform Services Introduces Hybrid Electric Vehicles Into Fleet

PHILADELPHIA — ARAMARK Uniform Services (AUS) is rolling out 25 hybrid electric vehicles (HEVs) into its national fleet and anticipates having 78 hybrid step vans motoring along its service routes in 28 states by spring.

ARAMARK says it is the first commercial uniform supplier to introduce HEVs. The launch was made possible by a $2.7 million grant from the U.S. Department of Energy and the Maryland Clean Cities Program, which is dedicated to stimulating alternative fuel and advanced technology in the transportation sector.

December 14, 2010
Survey: 50% of Operators Say 2010 Throughput Better Than Expected

CHICAGO — Fifty percent of respondents to American Laundry News’ final Wire survey for 2010 said their laundry’s poundage this year was “much higher” (7.7%) or “somewhat higher” (42.3%) in comparison to 2009 figures.

Approximately 23% reported processing “virtually the same amount,” 15.4% reported processing “somewhat less,” and the remaining 11.5% lamented processing “much less.”

October 26, 2010
DOT, EPA Propose Nation’s First Fuel-Efficiency Standards for Trucks, Vans

WASHINGTON – The U.S. Environmental Protection Agency (EPA) and the U.S. Department of Transportation (DOT) on Monday announced the first national standards to reduce greenhouse gas (GHG) emissions and improve fuel efficiency of heavy-duty trucks and buses, including delivery vans and trucks commonly used by laundry and textile rental services.

February 11, 2010
Danger Is Lurking Around Every Corner (Part 2 of 3)

“At what points during the laundering process are workers most vulnerable to injury or even death, and what precautions should be taken to minimize the risk? I want to make sure I am doing everything I can to protect my staff.”

Chemicals Supply: Matt Koloseike, Procter & Gamble Professional, Cincinnati, Ohio

December 15, 2009
Survey: 44% of Operators Say 2009 Throughput Better Than Expected

CHICAGO — Nearly 60% of respondents to American Laundry News’ final Wire survey for 2009 said their laundry’s poundage was “much higher” (25.9%) or “somewhat higher” (33.3%) in comparison to 2008 figures.

Approximately 22% reported processing “virtually the same amount,” 14.8% reported processing “somewhat less,” and the remaining 3.7% lamented processing “much less.”

December 1, 2009
ASHES Elects Nemetz 2010 President, Adds Two Board Representatives

CHICAGO — The American Society for Healthcare Environmental Services (ASHES) board of directors has elected Fiona Nemetz, CHESP, society president for 2010. Nemetz is serving as vice president, and her year-long term as president begins Jan. 1.

Nemetz is director of environmental services, patient transportation, safety, and parking at Saint Joseph’s Hospital of Atlanta. She has been an ASHES member since 1993 and has 25 years of environmental services experience. She began her career in 1982 in hospitality and transitioned to healthcare in 1993.

November 5, 2009
Plant Construction: New Vs. Retrofit (Part 1)

Your company is weighing its options for plant construction. Should you build new or retrofit?

American Laundry News recently invited several engineering, construction and consulting firms with laundry services expertise to respond to some questions about this debate, and identify some of the factors in making the decision.

July 21, 2009
Survey: Respondents Give Clean ’09 Mostly High Marks

CHICAGO — Nearly 91% of respondents to July’s unscientific Wire survey said they attended Clean ’09 in New Orleans, and nearly 70% of them reported being “fully satisfied” or “somewhat satisfied” with their experience as a whole.

April 21, 2009
Survey: Vast Majority of Wire Respondents Seeking Business in Trying Times

CHICAGO — During these difficult economic times, positioning a laundry as a valuable service to end-users or clients has never been more important. With that in mind, American Laundry News asked its Wire e-mail subscribers this month if they were actively seeking new business or were satisfied with maintaining the status quo.

December 31, 2008
Don’t Let Tough Economic Times Sway You into Taking On Ill-Fitting Accounts (Part 1 of 2)

“With the economy in the shape that it’s in, we’re looking for new business anywhere we can find it. But aren’t there times when serving certain accounts doesn’t make sound business sense? Can you suggest some criteria that I can use to weigh the pros and cons of providing textile services to a new account, whatever and wherever it may be?”

December 15, 2008
Survey: 2008 Throughput Exceeds Previous Year’s Total for Many

CHICAGO — When asked to compare their laundry’s poundage this year to its 2007 throughput, more than 60% of those who responded to the final Wire survey of 2008 said it was “much higher than anticipated” (12.9%) or “somewhat higher than anticipated” (48.4%).

Approximately 19% reported processing “somewhat less than anticipated,” 12.9% reported processing “virtually the same as anticipated,” and the remaining 6.5% lamented processing “much less than anticipated.”

November 24, 2008
MOD Spreads Tooling for Carts to Cut Delivery Costs

ASHTABULA, Ohio — Meese Orbitron Dunne Co. (MOD) has invested in multiple tools for key bulk laundry carts and trucks and spread them across the country at its West Coast, Midwest and East Coast facilities, allowing the company to manufacture its laundry carts as close to customers’ facilities as possible.

October 22, 2008
TRSA Seminar Examines Healthcare Opportunities

ALEXANDRIA, Va. — Growth in the healthcare market will only increase as baby boomers age, and the Textile Rental Services Association (TRSA) wants to help healthcare laundry operators learn how to capitalize on these burgeoning business opportunities.

The Westin Casuarina Las Vegas Hotel, Casino & Spa will host the Nov. 6-7 2008 Healthcare Seminar, presented by TRSA and the American Reusable Textile Association (ARTA).

January 14, 2008
State-of-the-Art Commercial Laundry Brings 20 Jobs to NC’s Northeast

EDENTON, N.C. — John Keenan knows that opening a full-service commercial laundry in Elizabeth City, some 35 miles northeast of here, makes good business sense.

The area’s first commercial laundry facility plans to open a new $2 million facility in the Pasquotank Commerce Park to provide linen service for the vacation market and to support local businesses in need of clean linens, according to Keenan, who owns Moneysworth Beach Home Equipment Rentals.

December 20, 2007
Survey: 2007 Throughput Virtually Same as 2006 for Most

CHICAGO — When asked to compare their laundry’s poundage this year to its 2006 throughput, nearly 70% of those who responded to the final Wire survey of 2007 said it was virtually the same amount.

No one reported processing a much higher than anticipated amount, but 23% did say the poundage was somewhat higher than anticipated. No one reported processing somewhat less than anticipated, and 7.7% lamented processing much less than anticipated.

November 5, 2007
Nonuniform Shelf Cart Styles Force One to Adapt

For years, various linen companies have irritated me by insisting on using their own color-coding system for scrubs, instead of a universal color code.

I realize one of the advantages to this system is that it makes it harder to switch business from one company to another. I learned a long time ago to live with this situation and actually had come to accept it as normal. A recent incident involving linen carts stirred my memory about this lack of standardization in the laundry industry.

July 19, 2007
Survey Respondents Give Clean 2007 Mostly High Marks

CHICAGO — More than 80% of respondents to this month’s Wire survey attended Clean ’07 last month in glitzy Las Vegas, and a similar percentage said they were either “satisfied” or “very satisfied” with their experience as a whole.

These attendees sought information about a variety of products and services, with more than 95% saying they had a specific plan for what they wanted to see at Clean or whom they wanted to visit while there.