Proactive Laundry Equipment Replacement Plan for Solid ROI (Part 1)

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Decision trees can help guide laundry and linen service management on equipment repair and replacement. (Image licensed by Ingram Publishing)

Matt Poe |

Experts say planning to replace worn machinery can increase efficiencies, save money

CHICAGO — TMI Hospitality, which manages nearly 200 hotel properties in 26 states, uses equipment built by Alliance Laundry Systems in its laundries, according to Sid Lien, vice president of procurement.

He says the company has found the equipment lasts 20 or more years. 

“The question we had to ask ourselves is, ‘Should we maintain equipment this long?’” Lien says.

RETURN ON INVESTMENT

“By designing products that help withstand daily rigors, each brand engineers its washers and dryers to perform optimally—providing the throughput and longevity expected in the marketplace,” says Rick Murphy, sales manager for Whirlpool Corp. Commercial Laundry.

“Lavatec has equipment that has been in operation for almost 30 years,” says Keith Ware, vice president of sales for Lavatec Laundry Technology Inc. “Most companies replace their equipment every 20 years or more, but at times many hold onto the operating performance of a piece of equipment that has gone beyond its useful life.” 

After some research, Lien says TMI Hospitality determined that the best return-on-investment (ROI) equation that considers ongoing maintenance costs and new-equipment efficiencies was to replace equipment when it reaches 12 to 15 years of age—depending on operating conditions and routine maintenance schedules.

Each laundry and linen service provider has to look at its own equipment, maintenance and efficiencies to determine when equipment needs to be replaced and how best to go about the changeover for maximum efficiency and minimum impact on day-to-day operations—to have a proactive plan in place.

Bill Brooks, North American sales manager for Alliance’s UniMac brand, recommends creating an asset list, which details the age of the machines at various properties, and applying a matrix to guide repair decisions. 

“If the machine is X years old, spend up to X dollars on repair. If the total repair is more, the guidance is to replace,” he says. “This is, by far, the most proactive way to plan for equipment replacement and guide when to repair.”

According to Ware, the two keys in replacement of current equipment are 1) the projected return on investment, and 2) the new equipment’s payback in terms of labor, utilities and maintenance.

“You should also consider if the current equipment is negatively affecting production, quality and service,” he says.

This varies by equipment. Ware says, as a general measure, after 15 years, if the repair cost is more than 40% of the value of the equipment, the laundry should consider replacement. 

“If a piece of equipment is much younger but the frame is damaged or cracked, repairing it may be futile,” he adds. “Often, older equipment is working but the performance of the equipment is affecting labor, utilities and downtime in the plant. If the ROI makes sense, it may be a better financial move to purchase or lease new equipment.”

Brooks says the proactive replacement conversation begins by knowing the overall efficiency and features of the equipment currently in service. 

“If your laundry is operating with low G-force washer-extractors and/or old tumble dryers without moisture-sensing, then no repair makes good fiscal sense,” he says. “Any major repair, such as bearings and seals on a 12-year-old machine, is a bad decision. Best case, you will get maybe five more years of life, but overall you are losing money, since it’s likely a low G-force model.

“With today’s advanced, moisture-sensing tumble dryers, efficiency is light years beyond what even a 6- or 8-year-old dryer could produce.”

He says the end result is that the ROI on new equipment purchases is much faster than laundry managers realize. 

Check back Thursday for the conclusion.

About the author

Matt Poe

American Trade Magazines

Editor

Matt Poe is editor of American Laundry News. He can be reached at mpoe@atmags.com or 866-942-5694.

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