What Cleaners Can Do

By Bill Fisher

Economists have said the current recession began in March of 2001. About that time I was warning industry leaders and our members of the current shakeout. Since March 2001, many members have reported bad news from the front lines, and we know we’re in the thick of thin times. As our industry moves through this part of its economic cycle, we will see a decrease in the number of plants operating in America.

That’s not bad news for everyone. Our industry has had too many businesses competing for an ever-diminishing market share for a long time. During times like these, we find out who the fittest are by who’s left standing when the economy bounces back and we move into a new era of prosperity.

Rising energy costs are becoming a deciding factor in plant survival. Make sure you’re not using more energy than you need to pay for. Watch your bottom line and keep your quality up. Historically, the poorly run operations fade away during times like these, and the businesses that provide decent cleaning and real service make it through. (The March 2001 issue of Fabricare offered ideas on conserving energy and saving money).

Here is what we know now and a few suggestions on how to get through it and come out a winner.

The pool of garments available for cleaning has become increasingly smaller over time. Casual dressing (and “home drycleaning” to a lesser extent) has taken market share away from cleaners. Some cleaners are capitalizing on casual dress, but too many are not actively getting these garments into their operations.

There are no signs of any significant return to more formal dressing in the U.S., but there are some changes starting to happen. When President Bush took office, he required his top aides to wear suits — a step up from the Clinton years. Let’s hope the rest of the country follows suit (pun intended) over the next couple of years.

There have been too many drycleaning plants, but that trend is now clearly reversing and a shakeout of plants is underway. Our industry works in an economic cycle. During my tenure with IFI I have witnessed three such cycles, and there are similarities between them.

More and more poorly managed plants are starting to go under. The rise in energy costs has turned out to be a deciding factor for many. When electricity and gas bills shot up to over 150 percent of their regular costs, the country lost a lot of small businesses. Many plants have been down anywhere from 8 to 25 percent (some more) over the past one to two years.

As these poorly managed plants close, more market share will shift back to the surviving plants. People will still need cleaning services, and the better-run plants are already starting to report slightly higher volumes.

One result of these plant closings is that there will be a surge of fairly new equipment into the market. As these plants go under, they will often liquidate their assets, and a hardly-used perc machine can go for a lot less than full price.

Distributors and other allied trades who have let receivables run up will be in for a tough time. In the past 20 years, several large allied trades suppliers have been forced to fold due to the strain on their finances. Why? Trying to be decent to their customers, they let receivables build too high and got stuck with them when plants went under. Write off too many bad debts this way and you can find yourself going under — and it has happened.

The first key to survival: Providing a consistent, decent level of quality (not necessarily top-notch), and focusing on customer service. Losing customers to poor quality or bad customer service could destroy your business right now. Work on these areas and make sure you’ve got the best customer service and quality on the block.

Sounds like the “same-old, same-old?” Ask yourself this, and give an honest answer: “How many of my customers are using me because I’m convenient, but aren’t totally satisfied? And if a plant opened up down the street, how many would I lose, and how many would I get back?” If the honest answers are 30 percent and 5 percent, you’re in trouble.

A second key to survival: Keeping the garments coming in…�and this includes aggressively going after “casual wear.” Are you doing everything you can to keep yourself afloat? Take a look at what you’re doing to bring business in. What more could you do?

A third key to survival: If possible, look into diversifications: uniform rental, linen supply, routes, coin-ops, etc. Whenever you’re going into a crisis, or even before a crisis, it’s nice to have other lines of business that may not be impacted or, in fact, may turn up when another side goes down. In the 1970s ApparelMaster, which was only several years old at the time, helped cleaners stay alive during one of the worst downturns we’ve had in this industry.

Some geographical areas do absolutely nothing to get casual wear clothing into the plant. Those areas are the worst hit right now.

Mid-Atlantic. This is one of the worst drycleaning markets in the country right now, particularly the D.C.-Baltimore area. The standard of dress is low, and generally cleaners are not aggressively pursuing casual wear items, such as khakis, jeans, and polos.

Northeast. New England is doing quite well. The Northeast was never impacted as much as the rest of the country by casual dressing because the standards of dress in the Northeast stayed better consistently than the rest of the country. Even at the 2000 NEFA convention, on a Saturday, a gentleman was walking to the hardware store wearing a blazer, white shirt, and slacks. Where else in the country, on a Saturday morning, do you see someone walking to the hardware store dressed like that?

South. The South has been blessed with traditional casual southern wear. Khakis and sport shirts: it’s a good look. In the Southwest, jeans have been wonderful. That’s something we don’t see a lot of cleaners in other areas pursuing.

Midwest. Conditions have been down and flat. From everyone I talk to, generally the Midwest region is only second to the Mid-Atlantic region in terms of depressed drycleaning volume.

West Coast. Some difficulty comes from the standard of dress and the type of dress in this area. The standard is higher than it is in the Mid-Atlantic area. The West Coast, particularly California, went through some of their downturn early. Four to six years ago, the poorly operated plants were weeded out and so the volume has been decent.

If your plant is participating in any public service projects, such as the Salt Lake 2002 Olympic Torch Relay, our Free Flag Cleaning Campaign, Coats for Kids drives, or anything else, you are eligible for publicity that money can’t buy. I know that the point of these activities is to better your community, but the press won’t hurt, especially now.

IFI members have an edge: They get the best information for surviving this shakeout. As your professional association it is our duty to gather information, evaluate it and correlate that with other information we’ve gathered. Using that information base, we evaluate the threats we see in the future and pass that information on as quickly as possible to you. We want to keep you moving in the right direction. Non-members can find their way through this slump in the dark or sink to the bottom and leave their slice of the pie to others.

Our staff’s jobs depend on your membership, so you could say we have a vested interest in seeing our members succeed. In fact, if we don’t succeed, the industry would probably go right down the toilet. Remember, this is a phase, it won’t just grind down to a complete halt. Home drycleaning kits failed miserably, and that only proves that people still need our services. There is some light at the end of the tunnel, too. After a certain number of poorly-run plants go under, the volume coming into the remaining plants will bring us back to a prosperous phase of the cycle.

The wheel is still in spin. Besides, if the recession began in March, and they say these things usually only go on for a year, we’re already more than halfway through it.