National Clothesline

The Texcare trade show in Frankfurt, Germany, drew more exhibitors than the previous show four years ago and attendance topped 13,500, but the German drycleaning industry continue to struggle and contract.

The 252 exhibiting companies at the June 6-10 show was slightly higher than the 242 of four years ago while the overall size of the show was somewhat smaller. Nonetheless, organizers said they were pleased with the results and most exhibitors and visitors agreed. Plans to hold the show again in four years have already been announced.

The show attracted companies and attendees from around the world, with the lion’s share of exhibiting companies coming from Germany and Italy. For German drycleaner,s the show was a chance to see new developments that could help their struggling businesses.

In an address given during the show, Friedrich Habermeyer, president of the German Textile Dry Cleaning Association, said that the “economic circumstances and the conditions of the drycleaning sector in Germany have changed dramatically over recent years.”

“Far-reaching statutory regulations, international agreements and a variety of changes in customer behavior have all had an impact,” he said.

He noted a continued trend of plant closures and layoffs in the industry and declining revenues for drycleaning companies in general.

“Whereas a slight increase was recorded in the laundry segment, at least for the contract business, the development in the drycleaning segment was clearly negative,” Habermeyer said.

He said that about 3,500 drycleaning companies share total revenues of about $1 billion dollars.

Habermeyer noted a trend of concentration of the industry into larger companies, a process he expects will continue. About 90 percent of German companies have annual revenues of less than a half-million euro dollars, but they generate only about 30 percent of the industry’s total revenues.

Meanwhile, one percent of the companies produce more than a third of the sector’s revenues. The remaining companies, representing about 9 percent of the industry, account for around 30 percent of all revenues.

In 2003, overall revenues fell about 14 percent for German drycleaning companies while the number of companies declined by about four percent.

“As in previous years, the drycleaning industry as a whole is subject to great pressure on prices,” Habermeyer said.

Personnel costs, at approximately 50 percent of revenues, represent the greatest proportion of operating costs. In addition† the Ecological Tax, which the German government introduced in 1999, and other statutory regulations, continue to have a major impact on costs in the drycleaning sector, he added.

“It is difficult to pass on increasing costs for energy, materials, waste disposal, etc., to customers in the form of price increases,” Habermeyer said. “In the private-customer segment, the rate of price increases has often been less than the rate of inflation for many years.”

“The non-stop stream of new regulations affecting our sector makes the situation more difficult. The only solution is via increases in productivity. And this means the loss of jobs is pre-programmed for our sector, too.”

“In the future, the drycleaning sector will only have a chance if it succeeds in taking account of operational aspects of the relationship between costs and prices within the framework of the corporate decision-making process. Only then can we expect an improved development, especially in the private customer segment, for the future.”

Conditions on the laundry side are somewhat better, Habermeyer said. Approximately 2,400 laundries generated about 1.5 billion euro dollars in revenue.

“The market is developing in the field of textile hire (rental) services, especially for professional garments, working and protective clothes and in the health and hygiene sector. This development is being promoted by the increasing requirements in terms of work and health protection on the European plane. Individual and customer-related services dominate in this field.”

The government could play a further role in falling industry revenues, he noted.

“The cost-cutting policy of the government is likely to result in a further down-sizing of the budget for public-sector orders,” he noted. “At best, growth can only come from expanding sectors of trade and industry.”