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.
What are the most common questions you receive from clients trying to decide between building a new laundry and upgrading an existing facility?
Doug Rose, business development manager, Turn-Key Industrial Engineering Services, Charlottesville, Va.
How much is this going to cost? What will it cost? This is going to cost how much? Other questions that are often asked, just not as commonly, include:
None of these questions have anything to do with actually helping them decide which project to pursue. What I feel is most important here are the questions we ask them.
The questions we ask our clients are what actually help them to decide between new and retrofit. We discuss together what they want to accomplish with the project. This discussion is our opportunity to learn what the client values most, where they need to be at the end of the project, where they want to go in the future, what limitations exist, and how much they want to spend. The exchange of information allows them to consider the options and evaluate our expertise. The question most every client eventually asks, and rightly so, is “Can you help me to make the best decision for my business?”
Glen Phillips, president and senior associate, Phillips & Associates, Minneapolis, Minn.
Invariably, the question comes down to two issues: What is the cost likely to be? How long is this project going to take? That’s why the impetus is to stress the need for tight planning on the front end, since planning solves myriad problems.
A constant question that arises during the planning process has to do with the equipment, dealers and various manufacturers. This is becoming a larger issue as many manufacturers are “right-sizing” and/or going out of business. A competent, knowledgeable laundry consultant can advise the planning team on the quality of machinery, the financial health of each company, any outstanding material litigation issues, a manufacturer’s engineering and service capabilities, and more. A project that runs into the millions of dollars needs to be assured that its suppliers will be around well into the future.
Matt Alexander, president, Pertl & Alexander, Jamesville, N.Y.
Clients want to understand the short-term and long-term financial impact of the alternatives, the amount of interruption to their operations and their customers, and the impact the alternatives may have on their labor force.
Elliot J. Mata, Laundry Division manager, ARCO/Murray National Construction Co., Oakbrook Terrace, Ill.
If new construction and retrofit are both viable options, in today’s economy, the most common question comes down to cost and return on investment. The laundry owner has put a value on the various factors that come along with either option, compares that value to the cost, evaluates how that affects their business model and income projections, then makes a smart business decision.
The second most common question concerns scheduling. How long will the new construction or retrofit take, and when can I start turning a profit? As stated previously, an average new-construction project takes about eight months from groundbreaking to completion, where as a retrofit takes around four months.
Gerard O’Neill, president/CEO, American Laundry Systems, Haverhill, Mass.
Most of the questions are cost-related. Also, the ability to keep a plant running while the project is ongoing (unique to operating facilities) is a pretty common question. With the right laundry consultant and an experienced laundry service company, any facility can be retrofitted.
If project cost were no object, would new construction be preferable in virtually every case? Is there any instance in which a retrofit would be better?
O’Neill: Project cost would win out in most situations. However, there are quite a few townships, etc., that are willing to play ball regarding existing buildings. They are offering low-interest loans, friendly lease agreements, and tax subsidies if an existing property is used to house the new laundry.
Mata: If project cost were no object, the only other element that could potentially make a new building less attractive than a retrofit is the schedule. Due to the nearly limitless ability to tailor the building to the end-user’s needs, a new construction project provides advantages in many areas. But schedule and up-front cost will almost always be in favor of a retrofit.
Phillips: American and Canadian cities are slowly running out of space in and around the inner core of the larger metropolitan areas. Finding land that can be zoned and built upon is the issue.
Some of the projects that Phillips & Associates planned and constructed 20 to 30 years ago now have no place to grow. Our strategy is to forecast the potential volume in five-year increments to project what the volume of the plant is likely to be. We then calculate how much land would be required to support that size building and that volume.
We recommend conducting a search for available land within a radius that covers the market area. Then, get a good industrial realtor on the team and lay out the project parameters. Once several sites have been identified and some preliminary cost estimates prepared, a decision can be made. From purely an operational perspective, a “blank sheet of paper” is the ideal situation.
Alexander: Although new construction generally provides the greatest flexibility from a design and planning perspective, and can most often be completed with the least interruption to existing operations, the availability of land or facilities in ideal locations may be limited. Retrofitting a facility may provide the best solution – even if project cost is no object.
Rose: You’re most often limited in new construction by the amount of money you’re willing to spend. Unlimited resources would change the game entirely. New construction will always be preferable under those circumstances, because it will yield greater efficiency and higher long-term ROI.
This is like asking, “What would I buy if I had all the money in the world?” The reality is project cost is always a factor. If you have the perfect location, great building, in the middle of your target market, with no other reason for relocation, then it may be better to spend a little in a small retrofit to make it utterly perfect.
Matt Alexander, Pertl & Alexander, can be reached at 888-419-3444, email@example.com.
Elliot J. Mata, ARCO/Murray National Construction Co., can be reached at 630-599-9100, firstname.lastname@example.org.
Gerard O’Neill, American Laundry Systems, can be reached at 978-373-1883, email@example.com.
Glen Phillips, Phillips & Associates, can be reached at 763-231-9950, firstname.lastname@example.org.
Doug Rose, Turn-Key Industrial Engineering Services, can be reached at 434-227-2613, email@example.com.