Content about Business

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.

WINTER HAVEN, Fla. — When looking to renovate an existing laundry or building a brand-new facility, there are many questions to ask before the process begins and while the process is ongoing.

David Chadsey, the managing director for Laundry-Consulting.com, addressed the issue during a recent webinar, 10 Things You Should Know Before Building or Renovating a Laundry, sponsored by the Association for Linen Management.

While Chadsey focused on 10 questions to ask, he emphasized that for each application, there may be more than or fewer than 10 items, and that the list is not intended to all inclusive.

6. OPERATIONAL METRICS

The sixth point in Chadsey’s 10-point plan is for a project team to anticipate key operational metrics. Focus on the actual figures for the cost of labor, utilities and maintenance. These are extremely important aspects of running a laundry, he says. There should be project goals for each, and everything needs to be in writing.

“Projected goals for operational costs should be in writing,” Chadsey says, “and be confirmed by the consultant, the laundry manager, and the equipment vendors.”

The figures will also help with return-on-investment projections for the finance member of the team.

7. AUTOMATION AND YOU

“Automation will be more popular as labor costs continue to increase,” Chadsey says.

A polling question asked during the webinar indicated that 89% of participants would be open to upgrade if they were supported by strong ROI research, while 11% were all about the upgrades. Chadsey theorized that the 11% had seen first-hand the advantages of automated upgrades.

He did enter a note of caution at this point: “Just because they build it, it doesn’t mean it’s right for your operation.”

During the planning process for a new or renovated laundry, consider automation options for soil sorting, soil rail (there are multiple levels of automation for this step), wash aisle, dryer loading/unloading, clean rail, dry fold, flatwork-finishing options, material-handling options, and product tracking.

For soil sorting, a number of automated options are already available, from inexpensive systems to those that will cost millions, but all will have a positive impact on ROI. There are also multiple levels of automation when it comes to sorting rails.

Wash-aisle options have become more popular in the last decade, Chadsey says. Tunnel washers are better in most instances, the automation is better, they load better, process better, and include a number of options on the back side, he says.

Product tracking is the hottest thing, he says. RFID (radio-frequency identification) can help an operation not only track items within the plant, it can also track items in other locations, such as a customer’s storage areas. As long as a sensor is placed in the area, the RFID chips can be read anytime, anywhere. This offers another advantage in customer support, offering something the customer can’t get anywhere else.

His advice? Go through all the options before you start.

8. FINANCIAL BALANCE

The project team, the owners and the managerial staff for a renovated laundry, as well as for a new facility, will need to understand the relationship between capital costs, operational costs and automation costs. Most people will understand that spending more money on automation upfront will translate into lower operational costs down the road.

Keep in mind that upfront costs will probably be higher than anticipated. And that if the finance member of the team says the projected costs are too high, some adjustments will need to be made, Chadsey says.

Initial interest in automation oftentimes is abandoned as project capital costs are formally evaluated.

“You have to understand what that automation is going to do for you, and you also have to understand that if you’re doing a full plant, if you take part of that automation out, that is going to affect the operation,” Chadsey says.

He advises double-checking the operational metrics to gain a great understanding of what is going to happen going forward with the project.

9, TRANSITIONS

A timeline with contingency plans is essential for transitioning an operation from old to new.

Break down the timeline into days, and specify what will happen on what day. Have a contingency plan in place before everything starts, so you know what’s going to happen if a step is not completed on time and how the project will catch up.

Plan for production to be affected during the transition period. Will the water supply or electricity be cut off for a time? Will workers be in the way of other workers, blocking ingress and egress from a particular area? Work it out and understand what is going to be affected and what measures will be effective in minimizing the chaos.

At the end of a project, everyone is usually in a hurry to finish up and get production started, Chadsey says. “You have to have time to train operators and engineering, and you may want to build in a soft start date.” Plan for the transition, he says.

10. PROJECT SUCCESS

Chadsey, in his last step, reiterated that 10 steps may not be all that is needed in any given project. Some will take fewer steps, others will require many more than 10.

To complete a project successfully, members of the team—the project coordinator and the consultant, in particular—will need to consider what can give during a project and what can’t. Is there leeway in the budget? Is time a major consideration? Is there built-in time for the facility to be inactive in order to work out the glitches in the process or equipment? Will the transition and training be a major issue?

Chadsey is confident that these 10 steps will help you complete a project successfully and start operations off on the right foot.

CHARLOTTESVILLE, Va. — Running a business can be a daunting responsibility, and perhaps at the core of this duty is strategizing the company’s move toward growth.

David Bernstein, senior vice president at Turn-Key Industrial Engineering Services, recently presented an Association for Linen Management (ALM) webinar titled Growing Your Business, during which he laid out key strategies and considerations for business owners ready to develop and grow their company.

Bernstein’s strategy first calls for owners to think of “SMART” goal setting: to be Specific about their company’s goals; set Measurable, Attainable and Relevant goals; and create a Time frame for accomplishing those goals.

“If you say [you] want to increase [your] business, you need to start thinking about what business is it that [you] want to increase,” says Bernstein. “What is it exactly that you want to do [and] what do you want to accomplish? And then make it measurable.”

Think of establishing key performance indicators that will not only enable owners to track the company’s progress, but also in an objective manner. Goals should ultimately be attainable by the company.

“A lot of times [owners] will really shoot very far into the stratosphere,” he says. “When you challenge your team […] are you giving them a goal that is attainable or have you given them a stretch goal? Make sure that you’re realistic with them about it.”

“Everyone thinks that they can do many things and add a lot to their plate,” he added. “But at a certain point, you start adding so much that you’re not doing anything very well.”

Another factor is determining whether a company has the physical means to sustain growth.

A clear understanding of the company’s production model, staffing requirements and equipment purchase projections are the key factors Bernstein pointed out when owners take stock of their capacity analysis.

“Make sure that you can […] live up to the promises that you’ve made to your customers […] while making sure that you’ve got the right amount of people [and] equipment [and that] you’re still caring for the equipment and the people in the way that they need to be.”

Regarding acquiring new equipment to boost capacity, Bernstein advises laundry owners to consider the various industries that many laundries service, and whether their company has the means to provide that service.

For example, if a hospitality laundry owner wants to start processing food and beverage goods, Bernstein suggests that they might look into purchasing a sorting and counting system to process smaller garments.

“If you’re strictly one or the other, moving to the one that you’re not can be quite an adjustment on your people and your process,” he says.

Taking on more accounts is one strategy to take to grow business. Another avenue Bernstein spoke about was the possibility of starting a direct sales/ancillary services department.

He cites several industrial, food and beverage, hospitality and healthcare laundries selling restroom services and cleaning supplies as part of their product line to existing customers.

“If you’re not offering these kinds of services, your competitors will,” he advises.

What strategies can owners take to develop and form new relationships with prospective customers? Bernstein admits that making cold calls can be a frightening ordeal, but there are other approaches owners can take.

A former customer, for example, may have become dissatisfied with your service. Consider calling them and addressing how your company has improved upon that specific service or product.

He also suggests using referrals, which allows barriers to come down because of the familiarity between contacts.

In addition to working with colleagues in scouting for new business, Bernstein suggests partnering with others in the industry who sell complementary products.

But no matter what approach business owners take, Bernstein recommends owners go out themselves and “make periodic visits” to customers.

“Remind them why they bought from you […] Remind them what you promised and that you delivered,” he says.

“It never hurts to ask them, ‘What could we do better?’ You may learn something,” he adds.

Bernstein suggests investing in services such as a customer relationship management (CRM) system—Zoho and Salesforce.com are examples—that will help employees organize, manage and automate a company’s business.

He also suggests the use of marketing automation software like Marketo.com or Constant Contact to keep in touch with customers on a digital scope, as well as prospect research tools like Hoovers and Manta to help owners learn more about prospective customers in their market.

With this foundation in place, according to Bernstein, business owners can begin to reach their growth objectives.

“These are the things that you need to be doing if you’re looking at growing your business and improving your sales.”

NORTH BERGEN, N.J. — The U.S. Department of Labor’s Occupational Safety and Health Administration (OSHA) has cited Prestige Industries LLC, doing business as Prestige, for safety violations found at its commercial laundry facility in North Bergen.

A complaint initiated OSHA’s October 2012 investigation and resulted in $219,000 in proposed penalties.

The agency identified four repeat violations, carrying a $185,500 penalty, based on the company’s alleged failure to protect workers from unguarded machinery, establish a lockout/tagout program and procedures for controlling energy sources, and provide energy control training for workers who perform maintenance on machines.

A repeat violation is issued when an employer previously has been cited for the same or a similar violation of a standard, regulation, rule or order at any other facility in federal enforcement states within the last five years. The same violations were cited in 2012 following a worker’s death after being caught in an unguarded machine at the company’s Bayshore, N.Y., facility, OSHA says.

The agency also noted five serious violations, with a $33,500 penalty, that were due to alleged electrical hazards; an inadequate confined-space program and failure to identify permit-required confined spaces; and no hazard communication program, training and material safety data sheets.

OSHA says a serious citation is issued when there is substantial probability that death or serious physical harm could result from a hazard about which the employer knew or should have known.

“The safety hazards present at this facility pose serious risks to workers and must be immediately corrected,” says Kris Hoffman, director of OSHA’s Parsippany Area Office. “OSHA will continue to hold employers legally accountable when they fail to provide safe workplaces.”

Prestige, based in Jersey City, has 15 business days from receipt of the citations to comply, request an informal conference with the OSHA area director, or contest the citations and proposed penalties before the independent Occupational Safety and Health Review Commission.

The citations can be viewed here.

Hotel/Motel/Resort Laundry: Charles Loelius, The Pierre New York, New York, N.Y.

Abraham Lincoln once said, “You can’t do business from an empty wagon.” Nothing has a greater impact on a laundry’s sales, service, operation, and reputation than an inadequate circulating linen inventory.

The lack of a sufficient amount of linen in circulation necessitates operating the plant longer hours than would otherwise be necessary. Labor, maintenance and utility costs increase, while both efficiency and morale plummet. Operating costs increase without the benefit of added revenue.

Laundering the linen more frequently than would otherwise be necessary shortens its life, resulting in higher depletion and additional replenishment cost.

Equally important, insufficient circulating linen results in decreased fill rates. The inability to provide complete orders negatively impacts both revenue and customer confidence.

The first step in managing circulating linen inventory is to recognize that linen loss will occur. The next step is to ascertain where this loss is prone to occur, and develop policies and programs to prevent unnecessary depletion.

How linen is processed, distributed, utilized, returned and monitored will have a direct bearing on both linen loss and replenishment costs.

Planned losses, such as discards and rag-outs, are the result of quality control programs. Planned depletion, along with a corresponding linen replenishment program, is necessary to maintain a viable circulating linen inventory.

At my hotel, I budget annual rooms linen replacement cost at $2.50 per occupied room; annual food-and-beverage linen replacement cost is budgeted at 20 cents per cover.

Consequently, I am able to completely turn over the circulating linen inventory every three years.

There are two types of linen depletion: actual and artificial. Actual loss represents a permanent depletion in circulating linen (the linen is not retrievable). This loss is the result of discard, abuse and theft, either deliberate or inadvertent. Artificial loss represents linen that, while not accessible to circulating inventory, is still retrievable. This loss is caused by linen being overstocked at the end-user location, which results in an under-utilized inventory.

In linen rental operations, overstocking at the customer not only renders linen inaccessible, it precludes generating additional rental revenue via “turning” the linen.

Conducting physical inventories on a regular basis will provide the information needed to determine if the amount of linen in circulation is sufficient for the operation. Physical inventories also help in the planning of future purchases, and are essential in determining linen loss.

Due to storage limitations typical at a Manhattan hotel, it is necessary to employ the practice of just-in-time ordering. Ordering less linen more often reduces the space needed for storage, but increases the reliance on accurate physical inventories. Like the carpenter’s credo of “measure twice cut once,” proper linen procurement relies on conducting exact physical inventories.

Conducting precise physical inventories will also serve as the basis for determining unexplained linen loss. This loss can be determined through this formula: Prior inventory – discards + linen injections – current inventory = unexplained loss.

Conducting physical inventories at the customer’s premises is a daunting task, but is necessary to properly gauge both linen loss and linen utilization. Complete inventories should be conducted at least annually. Salient information can also be gleaned from “informal” inventories, shelf counts, and linen abuse “spot checks” that can be conducted as part of sales, service, and goodwill calls.

Linen loss and abuse charges, as well as linen utilization fees, when implemented and enforced, can aid in reducing both actual and artificial linen losses.

There is the caveat, however, that enforcing these type charges, even if contractually stipulated, may result in strained relations with the customer.

Regardless of the laundry operation type, it is crucial to involve, educate and monitor the end-users, in properly controlling the linen at their disposal.

Chemicals Supply: Philip L. Bodner, Metro-Chem, Kearny, N.J.

One of the main challenges in purchasing new textiles is taking extra care to know exactly what it is you are being sold.

We are in a time of exciting new textiles and innovative, high-performance, high-quality fabrics, yet we are also in an era of low-cost outsourcing from places around the globe offering seemingly value-priced purchasing options that sometimes don’t perform to our standards and expectations.

Processing of “commercial level” quality textiles or an innovative new fabric is usually easy enough to accomplish. As always, make your purchasing considerations based on colors, sizes and fabric types. When placing your first order with a vendor, make sure to ask for a printed copy of the manufacturer’s laundering and processing recommendations.

Get all the info that’s available and then the correct laundering and finishing of these textiles becomes a matter of putting the manufacturer’s recommendations together with you and your trusted vendor’s experience to arrive at the correct processing routines. When handled properly, the mid- to higher-quality imported or domestic textile will stay in usable condition longer and will offer a good return on investment through its extended service life.

If you are buying large quantities of any textiles, or if you’re buying something new to your operation (or even trying to get a bargain), do two things to save yourself some potential grief. First, ask your distributor salesperson to let you speak to some customers who have purchased the same goods to get direct feedback on performance. Secondly, have an adequate quantity of sample products sent in advance to test-wash and finish to get a leg up on what to expect.

As far as how much linen inventory is enough, answers vary for each operation’s actual needs. One thing is sure: the same budgetary constraints we suffer today, the ones that send people bargain shopping, also tend to lead to inadequate par levels. This lack of linen—I call it “LoL”—can often leave a trail of major inefficiencies cascading down the line.

Both the planned and un-planned consequences of LoL are no laughing matter when they start costing you money. It starts the clock ticking on an investment that will surely wear out before it should. It’s just like wearing the same pair of shoes every day instead of alternating among a few pairs throughout the week. At the end of some shortened period of time, you will be reordering new replacement linens and those pesky invoices will start to play tag with accounts payable.

LoL also puts stress on everyone involved in your laundry or the laundry that provides your linen service. This can lead to processing shortcuts that can affect quality in laundering and finishing because nobody can take the time to do it right. Today’s soil is also today’s or tomorrow’s clean linens, so just get out of the way! We see this “hurry and scurry” approach played out over and over in many laundry operations.

LoL flies in the face of “green” initiatives. It’s carbon-intensive to burn all of that diesel fuel the linen service uses to drive back and forth seven days a week with the linen you absolutely have to have now. By adding par, you solve this, and may even put yourself in a better negotiating position when the next service contract is written. Your provider now only has to come rolling out to see your loading dock four times a week, which is a win-win situation for all except the oil companies.

Finally, it’s the unplanned consequences always lurking around that can and will affect you in not-so-pleasant ways. You have probably experienced some of these seat-clenching moments already.

Do you agree that laundry equipment never breaks, the delivery trucks always start in winter, it never snows, and everyone else’s workers always show up in force when needed just like yours do? If you don’t, then you’re a realist, and having that one or two extra par on hand in case of emergency is your buffer when reality hits. This option sure beats watching your employees stand around waiting for miracle linen to appear. Besides, the guests usually don’t stay humorous for long without clean sheets.

Having more par available keeps the goods looking better and lasting longer. More par means less stress and more time to get things done right. More par is more green. More par gives you breathing room when the best plans go awry. And we can all agree that having one less thing to worry about is always a good thing.

Updated April 30, 2013:

DALLAS — Industrial laundry equipment manufacturer Kannegiesser USA celebrated the 65^th anniversary of parent company Herbert Kannegiesser GmbH with a special dinner here Thursday night, during which it was announced that Kannegiesser USA President Michael Dreher will retire June 1 and Executive Vice President Phil Hart will assume that role.

Hart joined Grand Prairie, Texas-based Kannegiesser USA in 2004 as vice president of marketing, bringing with him more than a decade of industry and product experience. He was promoted to executive vice president in early 2012.

Dreher, who served as president for 13 years, will retain an advisory role that involves marketing the Kannegiesser brand in the Americas.

Kannegiesser GmbH President and CEO Martin Kannegiesser says both Dreher and Hart have demonstrated abilities in combining leadership and teamwork.

The two men thanked the staff and Kannegiesser for their support in making the U.S. market the company's third largest behind France and Germany.

Kannegiesser USA is planning to display several products new to the United States at the upcoming Clean Show.

ALEXANDRIA, Va. — Wages for entry-level positions in TRSA (Textile Rental Services Association) member companies’ laundry operations grew faster in 2012 than pay for Americans as a whole, ranging from 1.5% for lesser-skilled positions like folding, ironing and hangering to 4.3% for more complex tasks like load-building and pressing, according to the TRSA 2012 Plant Employee Compensation Report.

Hourly pay across the spectrum of U.S. jobs increased less than 1% (0.89%) from fourth quarter 2011 to the same time in 2012. Thus, entry-level laundry positions’ median wage growth was almost twice to five times the national average. The higher-skilled segment of this group of laundry and dry cleaning roles has outpaced the workforce as a whole in this metric since 2009, according to the federal Bureau of Labor Statistics’ (BLS’) most recent data compilations.

Thirty-seven companies reported their wage and benefit practices to TRSA for the report; roughly one-third were healthcare laundry specialists, one-third were equally divided between food/beverage/hospitality and industrial uniform specialists, and the remaining one-third were mixed.

Laundry production workers who had worked in the industry for one to four years earned the highest median wage from linen specialists: $10.40 to $11.70 per hour varying with job complexity. Mixed plants had the lowest such pay ($7.75 to $9.14).

The TRSA 2012 Plant Employee Compensation Report also reflected the importance to the industry of recruiting outstanding route service personnel and ensuring customer satisfaction. Hourly base rates for such personnel with one to four years experience ranged from $13.25 to $17.49. This compares favorably with the economy-wide average of $13.22 for driver sales personnel. With incentives, the range for such TRSA drivers rises to $18 to $23.21.

Laundry production workers (roughly 40% of them) receive incentives as well; those in the 1- to 4-year experience range had overall median compensation ranging from $8.45 to $11.95.

TRSA produces the Plant Employee Compensation Report to enable association members to benchmark their pay and benefits practices, and covers the range of strategies deployed by textile service companies to take care of their people. The survey enables industry operators to compare their practices with operations similar to theirs in line of business, number of locations and sales volume.

For each position in each classification of company, an average salary or wage is listed with incentive potential and the number of companies in the survey offering such incentives. Various approaches to providing fringes are described, such as percentage of premium paid by employer, deductible and co-pay amounts, and 401(k) matching.

Copies of the TRSA 2012 Plant Employee Compensation Report are free to participating TRSA members; non-participating members and participating non-members receive a discount; others pay full price.

Package pricing is available with the TRSA 2012 Industry Performance Report, another benchmarking tool. Visit the TRSA store to learn more about the association’s reports.

ARDMORE, Pa. — The so-called “fiscal cliff” tax package recently signed into law renewed more than 50 temporary tax breaks through 2013, saving individuals and businesses an estimated $76 billion. For the owners and operators of small- and medium-sized laundry businesses, there is good news and bad news contained in the fiscal cliff tax laws.

First, the good news: greater certainty in taxes. The owners and operators of laundry businesses have grown used to many longstanding tax breaks but they also have had to get used to the uncertainty of whether they will be renewed each year.

On the downside, in addition to a 3.8% Net Investment Income (NII) tax and a 0.9% Additional Medicare tax that, thanks to the Health Care and Education Reconciliation Act of 2010, began in 2013, many laundry owners discovered they are subject to new taxes. Single individuals with incomes above the $400,000 level and married couples with income higher than $450,000 will pay more in taxes in 2013.

TAXING IT ALONE

Single individuals with incomes above the $400,000 level and married couples with income higher than $450,000 will pay more because of a higher 39.6% income tax rate and a 20% maximum capital gains tax. Of course, for other individuals, the alternative minimum tax (AMT) has finally been indexed for inflation.

Ironically, the AMT was created to ensure that wealthy individuals, not middle-income households, would pay some kind of income tax. The new law increases the 2012 exemption amounts to $50,600 for unmarried individuals and $78,750 for couples filing jointly. For 2013, the AMT exemption amounts are predicted to be $80,750 for married couples filing jointly and $51,900 for single individuals.

ESTATE TAXES NEVER DIE

Always of significant interest to family-owned businesses, the estate tax has long been a bit of a mixed bag. The $5 million-per-person exemption was kept in place (and indexed for inflation). The top rate was increased, however, to 40% effective Jan. 1, 2013. This change is expected to increase government revenues from 2012 levels by $19 billion. Other good news for estate planning: portability is kept in place and estate and gift taxes remain unified, i.e., the $5 million stays in place for gift-tax purposes as well as estates. And, best of all, it is all permanent.

PLANNING OPPORTUNITIES ABOUND

The majority of laundry businesses operate as pass-through entities, such as partnerships and S corporations. Profits are passed through to their individual owners and therefore are taxed at individual income tax rates. Some business owners might be considering switching to a regular C corporation with its top rate of 35% rather than doing business through an S corporation, LLC, etc., subject to a top rate of 39.6% on the pass-through income.

But it’s important to look much deeper than the tax rates. With a pass-through entity, the shareholders are taxed only once on the income. With a regular C corporation, distributions would first be taxed at the corporate level and once again at the shareholder’s level for an additional 15-20%, plus the 3.8% net investment income tax.

That double taxation becomes even more significant on the sale of the laundry business. Although there are provisions in the tax law that allow all or a portion of the gain on the sale of a business to be excluded or ignored, they are limited.

Another consideration, particularly for small businesses, is that any expenses disallowed by an IRS auditor will only result in increased income to the pass-through entity. When doing business as a regular corporation, disallowed personal expenses increase the income of the corporation and are taxed as constructive dividends to the shareholders. The same is true for unreasonable compensation of shareholder/officers.

Keep in mind that if a switch from an S corporation to a regular C corporation is made, a switch back to an S corporation can’t be made for five years—unless permission is received from the IRS. If an LLC or partnership is incorporated, there can be expenses and potential tax consequences.

The increase in the top tax rates, the AMT relief provided for the 2012 tax year, and the hidden taxes all combine to make it possible for many small- and medium-sized businesses ineligible for business credits thanks to AMT limitations in 2011 to potentially be able to take advantage of these dozens of credits. It is, in essence, a back-door opportunity for small businesses, similar to when Congress expanded eligibility for credits for 2010.

Although it is not the grand bargain as envisioned by lawmakers, many popular but temporary tax extenders relating to businesses were included in the American Taxpayer Relief Act: the Code Section 179 small-business expensing, bonus depreciation, and the Work Opportunity Tax Credit. Unfortunately, the new law is effectively a stopgap measure designed expressly to prevent the onus of the expiration of the Bush-era tax cuts from falling on middle-income taxpayers. Congress must still address spending cuts and may even tackle tax “reform.”

The time is now for every laundry business owner to consult with their accountants and/or tax professionals to focus on the potential savings offered by these newly revised, extended and expanded business credits, deductions and tax write-offs.

Information in this article is provided for educational and reference purposes only. It is not intended to provide specific advice or individual recommendations. Consult a financial adviser for advice regarding your particular situation.

MARIETTA, Ga. — Sustainability, efficiency, and the bottom line are on the minds of every business owner in the current economy. Laundry operations, whether on-premise laundries or linen services, are no exception.

Technology advances are significantly changing business operations and the way services are delivered in every sector. In laundry rooms, they are helping equipment to run smarter and even to contribute useful data to the decision-making process. Improvements in laundry operations are leading to reduced labor costs, increased productivity, maximized energy efficiency, lower utility costs and enhanced linen life. Here is how these evolving machines enable these cost centers to take up a smaller part of the operating budget, while ensuring that the overall operation runs smoothly.

GETTING A JUMP ON THE DAY

Typically, when laundry operators punch in, the first thing they do is load linens, uniforms or other washables into the machines, start them up, and then enter a 35- to 45-minute “dead” period waiting for the first loads. This is no way to start the morning.

Thanks to an advanced-start function engineered into newer washer-extractors, today’s laundry crew could be greeted in the morning by a machine filled with freshly washed clothes and linens. The advanced-start function allows yesterday’s workers to load up the machines at the end of their shift and to program the washers to turn on the next morning about an hour before the morning shift arrives.

The loads will be just finishing and almost ready for the tumble dryer when the first shift comes onto the laundry room floor. This feature also shortens the previous day’s last shift. The time saved adds up to lower labor costs. In addition, having loads washed before the day starts ensures that parts of the operation that depend on laundry availability can be reliably supplied by mid-morning. More timely availability could enable a smaller inventory of linens and uniforms to handle daily demand for on-premise laundries.

MAY THE G-FORCE BE WITH YOU

The secret to efficient clothes drying is that tumble dryers should be asked to deal with as little water as possible. Low-G-force washer-extractors can leave significant amounts of water in the laundry, which means the tumble dryer has to work harder and longer. When operators run fabrics such as all-cotton terry cloth through a low-G-force washer, there can be as much as 90% water retention.

Water-heavy goods present potential ergonomic problems for workers who have to lift laundry and place it in the tumble dryer. It also requires extra drying time, which means more energy to heat the air. It also reduces throughput. High-G-force extraction removes more water from linens, leading to decreased drying times. This high-speed process can reduce the amount of moisture left in the linens by up to 47%, decreasing gas or electricity usage by as much as 35%.

CAN’T BEAT THE CLOCK

You can’t improve what you don’t measure. Using the advanced controls now available on laundry equipment is like having somebody in the laundry room with a notepad, recording information on every cycle run, monitoring machine performance and tracking maintenance history. This can be especially valuable for facilities that run more than one shift.

For example, a chemical company had a customer who complained about the quality of finished laundry. The control system that monitors the equipment in the laundry room downloaded the reports and pinpointed the problem. Reports found that operators on the 2 p.m. to 6 p.m. shift were advancing the machines, skipping the bleach step and skipping a rinse step.

The chemical company was able to show the customer that the problem was not with the chemicals but with how the workers were using the machines. Relying on the control system’s real-time clock, management can download reports and determine exactly what’s happening in the laundry room.

The reports provided by these control systems help administrators better understand and manage workloads and increase throughput. The information also helps determine whether they need to add more machines. Washer-extractors and tumble dryers equipped with advanced controls have a real-time clock telling the operator how long the machine has been sitting idle. Laundry operations paying overtime can check to see whether the extra hours are really necessary.

IN TOTAL CONTROL

The cost of water may not yet be a major issue where you are operating, but it will be a concern in many places before the end of this decade. For many operations, targeting water use is part of a sustainability program. Advanced washer equipment controls enable the operator to match each load with one of 30 different water levels for optimal water and chemical use without compromising cleanliness. This feature can help save thousands of gallons of water each year, which also reduces energy costs since less water is being heated.

Some new tumble dryers make use of moisture-sensing technology to prevent linens from being scratchy and to ensure longer life for linens and uniforms. Operators set the desired moisture level for the finished laundry, usually 4-5%.

Over-drying is one of the biggest wasters of utilities and labor in the laundry room. Impatient operators sometimes check to see whether clothes are dry by stopping the machine and sticking a hand in every now and then. Not only does this waste the operator’s time, stopping and starting the dryer also wastes energy. In addition, improved technology that prevents over-drying can reduce fiber loss by 31%.

MONEY NOT GOING DOWN THE DRAIN

One problem with technology is that sometimes management doesn’t want to invest in it. But that ignores real dollars-and-cents benefits. There is a big difference between lowest cost and lowest price. Whether a laundry service or an on-premise laundry, operations that resist upgrading or that choose a less expensive machine can spend $100 per month for the next 12 to 15 years on additional energy, water, and labor.

Break down the budget of a typical laundry operation. About half of every dollar spent in the laundry goes to labor. Another 10-12% goes to equipment, 10-12% to linen replacement, 8-12% to chemicals, and 10% to utilities. Equipment maintenance completes the cost schedule at 3%. Spending money wisely on equipment can affect the other pieces of the cost pie, reducing them while making better use of the laundry workforce by increasing productivity and throughput.

PATERSON, N.J. — The U.S. Department of Labor’s Occupational Safety and Health Administration (OSHA) has cited Brite Services Inc., doing business as Star Laundry, for 39 serious safety and health violations found at its commercial laundry facility in Paterson, the agency reports.

Inspectors were prompted by a complaint alleging the company would not allow workers to leave the building during an emergency. Proposed penalties total $164,700.

OSHA found electrical hazards and an obstructed and improperly marked exit route, the agency says. Some of the alleged violations include:

• Allowing employees to potentially be struck by traffic while transporting laundry bins from one building to another while crossing a public street.
• Failing to provide a cover and guardrails for open pits, and a handrail for the stairway.
• Failing to evaluate the workplace for permit-required confined spaces, to post signs informing workers of confined spaces, and to develop a written confined-space permit program.
• Failing to establish an energy control program for performing maintenance/servicing work.
• Failing to train power industrial truck operators, and to take powered industrial trucks in need of repair out of service
• Failing to insulate or cover steam pipes less than 7 feet from the floor
• Failing to properly guard machines, implement a hearing conservation program for workers exposed to noise levels at 88-89 decibels, ensure safety goggle usage, provide an unblocked eyewash station, develop a written hazard communication program, and provide hazard communication training.

“The vast number and range of safety and health hazards observed by OSHA at this facility indicates the lack of a functioning safety and health management system,” says Lisa Levy, director of OSHA’s area office in Hasbrouck Heights, N.J. “Each employer is responsible for ensuring a safe and healthful work environment, which Brite Services did not do. This company has the opportunity now to educate itself, correct these hazards and protect its workers.”

Brite Services has 15 business days from receipt of the citations to comply, request an informal conference with OSHA, or contest the citations and proposed penalties before the independent Occupational Safety and Health Review Commission.

The citations can be viewed here.

ALEXANDRIA, Va. — Ted Kruger, a longtime executive recruiter for the textile services industry, has announced to friends and colleagues that he’s leaving the industry due to illness, according to the Textile Rental Services Association (TRSA).

Kruger, who lives in California, is receiving round-the-clock medical care, gets regular visits from his two sons and two daughters, and is not in pain, TRSA reported in its association publication.

He told TRSA he was diagnosed in 2011 with cancer. After receiving extensive treatments, he felt well enough to accept job-placement assignments in the San Francisco area. The cancer returned a few weeks ago, and Kruger was given only a short time to live.

The Ted E. Kruger Recruiting website is now closed.

According to TRSA, friends and associates may contact Kruger at 760-731-7243. His address is 4650 Dulin Rd. #1, Fallbrook, CA 92028.