Content about Social Issues

SALISBURY, Md. — By successfully serving small commercial accounts from one of his two coin-operated laundries, Mitch Wyatt nurtured a reputation that today has him handling the laundry needs of major hospitality, healthcare and food and beverage clients. Recently, to meet increasing production needs, Wyatt moved his commercial business into a newly constructed industrial laundry facility here.

The Quality Linen Services building turns out 1,700 laundry pounds per hour, using minimal labor, water and energy — giving Wyatt the opportunity to draw new clients and boost profits.

DEVELOPING COMMERCIAL ACCOUNTS FROM COIN LAUNDRY

“I serviced five hotels, two assisted-living facilities, one university, and two restaurants out of one washer at my coin laundry,” says Wyatt. “We used a 55-pound-capacity Continental E-Series Washer that would maintain a temperature of 140 degrees and stay at that temp. I was getting stuff so clean, my clients were amazed.”

Once cleaned, tablecloths, linens and napkins were pressed and finished using a Continental Flatwork Ironer. Wyatt’s staff then folded, stacked and delivered the items to clients.

PRODUCTION NEEDS SURGE

All went smoothly until Wyatt secured a five-year contract with a local hospital. “I knew I needed significant industrial equipment to fulfill growing production requirements,” he says.

So, he sought help from Operations Manager Doug Colonna, who holds 15 years of industrial laundry experience; Deke Sheller of Fowler Equipment, a laundry equipment distributor in Baltimore; and Joel Jorgensen, vice president of laundry equipment manufacturer Continental Girbau.

The 10,000-square-foot industrial facility required careful planning, a partnership of experts, and a mix of highly efficient industrial laundry equipment engineered for bolstered productivity, according to Wyatt.

DEVELOPING AN INDUSTRIAL LAUNDRY FROM SCRATCH

“We worked with the engineer constructing Quality Linen’s building and all elements of laundry design, construction and utilities,” says Jorgensen of the project. “We went on to define specific laundry production needs, the equipment mix, and solidified financing over an eight-month period.”

In the end, the new building featured a Girbau Industrial Continuous Batch Washing system capable of processing 13,600 pounds in an eight-hour shift.

The facility’s powerhouse is its seven-module Girbau Industrial TBS-50 Eco-Tunnel with four-stage water reclamation, water filtration and drain-water heat recovery. Complementing equipment includes a Girbau Industrial ICP3 Incline Loading Conveyor, SPR-50 Press, Dual-cake Delivery Shuttle, three ST-100 Dryers, a PSN 80 single-roll gas thermal ironer, FT-LITE Folder, AP LITE Stacker and an FT-MAXI triple-sort dry goods folder.

Two Continental Girbau CG-120 Dryers, and two Continental E-Series washer-extractors (55 pounds and 90 pounds, respectively) round out the lineup.

CONTINUOUS BATCH WASHING

The system not only boosts laundry productivity to 95,200 pounds per week using a single shift, according to Wyatt, it takes just one employee to operate and manage, is stingy on water, and produces high-quality results.

Key to Wyatt’s equipment decision was his need to properly manage and process laundry for a variety of accounts. “Unlike most of our competitors, we provide rental service, as well as service for clients with customer-owned goods,” he says. “We required equipment programmable by customer, so items would be properly cleaned according to each client’s unique needs.”

Check back Thursday for the conclusion!

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.

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.”

Healthcare Laundry: Judy Murphy, RN, BSN, CLLM, RLLD, North Mississippi Medical Center, Tupelo, Miss.

In a healthcare setting, the challenge of taking a physical inventory can be overwhelming. One must enlist the help of clinical staff and/or the customer to count linen, especially in surgery, critical care, and isolation or restricted areas. Developing a relationship with that end-user and working together to stress the importance of linen in the care of their patients increases the likelihood of success and provides an avenue for honest feedback that can be used for performance improvement.

Timing of the inventory process is critical. One must work with those involved to determine the date, time, etc. Asking overwhelmed employees to add more work to their already busy schedules can set the project up for failure. Working together will allow the team to forecast any “snags” or concerns and to make plans to address them. The manager will also have their buy-in up front.

Linen is somewhat a “moving” target. The process of supplying linen to our customers has several ongoing steps that are difficult to halt while the inventory count is being done. To complicate this further, linen is kept in multiple areas throughout the customer’s facility/unit, so establishing a starting and ending point can be a challenge. Recognizing and addressing any challenges up front will contribute significantly to the success of the inventory process.

In a market with decreasing reimbursements, increased production/process issues, dwindling capital funding, etc., maintaining an adequate budget for linens can pose a problem. History has shown that we continue to “expect to do more with less.”

The laundry manager faces an uphill battle in justifying the need for an adequate linen purchase/replacement budget. It is imperative that he/she has accurate data to forecast needs, and that planning is in place to address any increases or decreases in customer demands. This effort will assist the manager in decreasing the frequency of rush/panic orders and resulting increased delivery costs, thereby resulting in an overall savings opportunity.

The manager must seek every opportunity to keep costs at a minimum while maintaining an adequate number of linen par (turns) so that ample supply is available for the customer’s demands.

Too little linen results in shortages to customers (may result in hoarding), increased linen processing, decreased linen life, decreased customer satisfaction, increased stress on laundry personnel (must “hurry through” the processing steps), inefficient use of equipment and staff time, increased chemical costs, etc.

Too much linen can result in a decreased return on investment, storage issues, linen degradation, as well as possible contamination with lint, dust, or insect infestation.

Software that provides the manager with an actual daily/weekly/monthly/annual usage figure can be used to identify overages and shortages, which can be addressed with appropriate par-level adjustments. These figures should be reviewed with the customer and any changes determined together so that they won’t come as a surprise to anyone.

Though zero loss would be ideal, it is unrealistic. Even if proper processes are in place, and the security and utilization of linen is appropriate, the laundry manager must still take into consideration other variables, including type of operation (healthcare, hospitality, correctional), region of the country/world you’re serving, type of chemistry used, etc. In addition, each linen item will have a different loss rate.

There are benchmarks available that can be used for comparison. I recommend the manager check with his or her linen supplier, in that these vendors are excellent resources of information. One such source states that benchmarks can range from an overall linen replacement average of 78% (this would be considered “best practice”) to 113%.

This “stretch” goal is achievable. The manager must concentrate on driving consistent, accurate, and focused efforts to purchase, process, and inventory linen utilizing a team approach that involves those who have a vested interest.

Uniforms/Workwear Manufacturing: Scott Delin, Superior Uniform Group, Seminole, Fla.

When it comes to inventory control and securing textiles in today’s business environment, suppliers and laundries walk a fine line on a daily basis. As market conditions continue to change and become more competitive, it is important to maintain strong partnerships and solid communication with offshore manufacturing partners.

Sourcing, delivery times, and inventory control are impacted by power outages in plants, cotton shortages, rise in freight costs, and other unknown variables. In order to deal with many unknowns that can and will have a direct impact upon our ability to meet our customers’ demands, the implementation of “programs” has become an excellent way to efficiently and cost-effectively mitigate these challenges.

With a formal program, production can be forecast in a smarter way and supports the just-in-time inventory control principle.

Because of today’s competitive market environment, it is essential that inventory be available when our customers need it. When our inventory cannot fulfill our customers’ needs, we “open the door” and create opportunities for our competition.

Customer loyalty can no longer be taken for granted. Customers want to deal with suppliers and laundries that have product when they need it so they can service their clients or end-users as needed.

Not having adequate inventory can be detrimental to long-term business relationships and have a direct impact on the growth of your business. Insufficient inventory can damage a customer’s faith in his or her vendor and supplier to deliver goods when needed.

Equipment/Supply Distribution: Bill Bell, Steiner-Atlantic Corp., Miami, Fla.

Par: This word has many uses in the English language. For part-time golfers like me, this is a number we strive for. In the real world, it is used to establish inventory management and safety levels.

For many hotel operators, a par level of 3 has been a minimum and 4 has been a plus. In today’s economy, every extra dollar is being put to use in all aspects of operations. Just-in-time inventory has become more of a normal procedure than stocked inventory. Linen replacement averages 5-6% annually.

Under the just-in-time philosophy, OPLs must monitor inventory on a monthly or quarterly basis. Processes and procedures must be implemented to keep this percentage as low as possible. It is suggested that each station have a linen processing area with containers for each classification for linen type (mixed linen, torn linen and stained linen). Training all associates in the classification separation to be collected is important to the laundry’s success.

Working with your chemical provider to set up an aggressive, comprehensive stain formula in treating stained linen can help reduce or at least keep your linen replacement levels at 5-6%. A reclamation program to monitor and track discarded linen items will help with getting your correct items for inventory.

Benchmarking with other laundries—sharing problems or success stories—is a great idea. Different locations may face different challenges. For example, a laundry in Orlando, Fla., has to deal with suntan lotion stains, while a laundry in Boise, Idaho, may not have this problem.

Linen “misconduct” is another inventory issue. Washcloths, pool towels, robes, hospital blankets, and patient gowns tend to leave with the guest or patient. Educating nurses, housekeeping employees, patients and hotel customers is the most efficient way to control inventory being misplaced. There is not a foolproof way to control theft, but by pulling together we may deter the end-users from making poor choices.

In the end, without proper inventory control, the guest or patient experience is not going to be favorable. Consumers expect clean linen, and sometimes extra linen, at their disposal. It all leads back to saving par.

Check back tomorrow for the conclusion!

CHICAGO — More than 70% of respondents to this month’s American Laundry News Wire survey say they are OK with the Clean Show’s shortened three-day schedule this year, compared to the remaining 29.4% who are “indifferent about this change.”

One respondent proposed that the biennial convention be held “every five years,” but with a longer schedule. “Have mandatory attendance by all members, companies and organizations,” the respondent writes. “Have it for a full five-day week with...golf tournaments planned and social events for all in the evenings.”

In fact, a good number of respondents answered that the biggest factor in favor of visiting New Orleans for Clean was the “networking and socializing” opportunities (23.5%), while 11.8% favored the “exhibits of equipment and supplies.” Equal shares of 5.9% pointed to “educational sessions” and “combining business and pleasure.” The most popular response, however, was “all of the above” (52.9%).

The Association for Linen Management (ALM) and the Textile Rental Services Association (TRSA) are among the organizations hosting educational sessions during the June 20-22 show. Among ALM’s scheduled offerings, Reducing the Loss of Patient Linen and Scrubs and Standards and Regulations Affecting the Healthcare Laundry and Linen Industry have drawn the most pre-show interest among respondents. As for planned TRSA sessions, Textile Services Contracts and Negotiations and TRSA Clean Green and Hygienically Clean Certification Programs: Quantifying Your Commitment to Cleanliness and Sustainability are most anticipated.

More than one-third (35.3%) of those surveyed say they are planning to attend Clean, while 17.6% remain unsure. The remaining 47% aren’t planning to attend, with cost playing an important factor for some.

Among respondents who are not attending, about 45% “can’t afford the cost,” 27.3% “can’t spare the time,” and 27.3% said they “made other plans.”

“Employers do not give the time to attend seminars or trade shows,” writes one respondent. “We have to use vacation time to attend. In the past, employers would pay for employees to attend. Now, it comes out of our own pocket.”

While American Laundry News’ Wire survey presents a snapshot of the audience’s viewpoints at a particular moment, it should not be considered scientific. Subscribers to Wire e-mails—distributed twice weekly—are invited to participate in an industry survey each month. The survey is conducted online via a partner website, and is developed so it can be completed in less than 10 minutes.

All managers and administrators of institutional/OPL, cooperative, commercial and industrial laundries are encouraged to participate, as a greater number of responses will help to better define operator opinions and industry trends.

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.

SAN DIEGO — Commercial healthcare laundry Emerald Textiles has expanded its operation into Los Angeles, adding a service center there to provide even greater coverage and a larger physical presence for existing and prospective customers, the company reports.

“As we continue to expand in the Los Angeles market, this service center will increase our coverage in the greater Los Angeles area,” says Tom Gildred, Emerald Textiles CEO. “Our existing customers will benefit from this additional location and so will any new customers in the region.”

Emerald Textiles operates what it considers to be “the most technologically advanced and environmentally responsible commercial laundry facilities in the United States,” saving a reported 40 million gallons of water and more than 750,000 therms of natural gas annually.

San Diego Gas & Electric and the California Public Utilities Commission have recognized Emerald for its advanced design and energy efficiency.

ROANOKE, Va. — It seems that making the required adjustments in your laundry operation is a never-ending process. We must consider a number of variables as we make periodic adjustments to our operations. With this in mind, I have decided to discuss—over the course of the next several months—the factors and opportunities available to every manager in fine-tuning their operation.

First, let’s take a look at the soil-sort department. This area varies by laundry, and the quality of the process in this area can make a major impact on the overall operation. I guess the first decision to be made is whether we are going to sort the soiled linen or not.

It used to be a popular idea, both in Canada and the United States, to sort healthcare linen after it had been washed and decontaminated. I know of a number of laundries in both countries that have abandoned that idea in an effort to reduce chemical, labor and linen-replacement costs.

The purpose of sorting soiled linen is to remove trash and other foreign material before the linen is washed, and to facilitate the proper cleaning and handling of the linen through the laundry.

The larger the laundry, the greater the number of sorting classifications. Smaller laundries may mix all large dry items together, while large laundries will sort thermal blankets, bath blankets, knitted contour sheets and incontinent pads into separate classifications.

The more detailed the sort, the more the wash formula and the drying times can be customized for each individual product. (The ability to fine-tune a dryer formula will be considered in a future column.)

Ideally, linen should be handled as few as times as possible as it moves through the laundry. A thorough soil-sort process eliminates the need to sort the product after it has been washed and conditioned or dried.

For example, we use a soil-sort classification just for our white hospital bath towels. This allows the operator on the small-piece folder in the production area to quickly process the items without having to handle unrelated items. Once processed, the items are placed in stacks of 10 on a conveyor belt that moves through an automatic tie machine and then delivers the product to the cart make-up area.

Bath towels are only touched three times before they are ready to be packed for orders: during the soil-sort process, as they are fed into the small-piece folder and, finally, as they are put on the conveyor. This economy of effort leads to a highly efficient and effective laundry.

In reviewing the soil-sort area of the laundry, I will normally check the established classifications to determine if they still meet the needs of the laundry. I check to see how many times each must be handled before the product is ready to be placed in carts for delivery. This survey tells me if I need to add or subtract soil-sort classifications.

I will also review what percentage of my overall work volume is represented by each classification. I want to make sure that high-volume items receive the greatest amount of attention. I also use this information to make sure that all high-volume items are placed in appropriate positions along the soil-sort platform. Efficiency can be improved when high-volume items are placed in the best positions.

It is important to remember that the mix in your laundry will change over time. Your process requires periodic review to ensure that the underlying mix has not changed.

Review and re-evaluate production standards for this area during this fine-tuning process. Changes made in the number of classifications and the placement of each in the soil-sort area will impact an employee’s productivity. Being able to measure the impact of the changes and validate that you have improved your operation is a critical component in being a good manager.

Finally, assess the quality of your soil-sort process. How many items are showing up in the wrong category? A bath towel accidentally sorted into a load of white sheets will need to either be rewashed or gathered, dried and then routed to the appropriate finish area. The most economical way to process linen is to do it right the first time. Tracking the amount of linen that is incorrectly sorted can give you an ongoing measure of your soil-sort area’s effectiveness.

CONKLIN, Mich. — American Laundry News has learned of the recent death of Maurice “Jerry” Moore, the first executive director at West Michigan Shared Hospital Laundry (WMSHL), Grand Rapids, Mich.

Moore, of Conklin, died Feb. 21 after a brief illness. He was 81.

Duane Houvener, the current WMSHL director, wrote in a recent International Association for Healthcare Textile Management e-newsletter that Moore was hired before plans for the laundry were finalized and then oversaw the final plans and equipment requisition, plus set up and trained a new staff of laundry workers. Moore retired from WMSHL in 1996 after 23 years on the job.

Surviving Moore are his wife, Patricia; children, Paul, Karen, Dave and Linda; a brother, James; and 12 grandchildren.

Memorial contributions may be made to the St. Francis Xavier Catholic Church, Perpetual Care, in Conklin.

Equipment Manufacturing: Steve Hietpas, Maytag Commercial Laundry, St. Joseph, Mich.

Although not directly related to the manufacturing of commercial laundry equipment, for some of our customers this topic is a major concern. Professional laundry managers can do two things to help stem the flow of objects found in dirtied linens: an employee training program and, where applicable, conveniently placed containers for depositing razor-sharp objects.

In healthcare settings, a number of pointed objects—hypodermic needles, for example—are used on a regular basis. These needles, if left in soiled linens, are dangerous to professionals processing the laundry. By incorporating collection receptacles in or near every patient’s room, it makes disposing of these items properly more convenient and more likely. Coupled with a program to train staff of the importance of sharps disposal, laundry processing is much safer for all parties involved.

In the food and beverage industry, training again plays an integral role in reducing the amount of cutlery found within soiled linens. The awareness gleaned from training helps to protect those processing the linens and ensures the vast majority of utensils are available for patrons.

Textile/Uniform Rental: Tom Peplinski, Golden West, Oakland, Calif.

Sharp objects can be a safety concern to all those handling soiled linen. Each year, millions of workers suffer workplace injuries that could have been prevented. Approximately 30% of all workplace injuries involve cuts or lacerations, and about 70% of those injuries are to the hands or fingers.

Some practical steps can help minimize the risk of contact with sharp objects:

• Include the issue of sharp objects in your hazards safety meeting
• Post reminders that sharp objects may be present in soil area
• Be sure that gloves (puncture-resistant, when possible) are worn
• Be sure all personnel are trained in the procedures of handling soil
• Have a clear, written policy and procedure covering first aid
• Keep good housekeeping rules that include eliminating sharp objects and edges
• When sharp items are found in soil, try to identify customers from which they came and inform them of the issue.
• Post anti-sharp/anti-garbage posters at customer’s soil area
• Offer to speak at customer’s safety meeting to address the potential problem
• Inspect the area where the soil container is placed to see if there might be a safer area elsewhere
• Inform all service personnel when sharps are found so they are aware of the risk

Finally, review past incidents/injuries involving cuts and lacerations. Have participants discuss the cause of the injuries and possible solutions as to how the worker or employer could have prevented them. Apply suggestions for improvements to your “Cuts and Abrasion” policy and procedures.

Commercial Laundry: Richard Warren, Linen King, Conway, Ark.

Laundries don’t put the sharps into the linen stream, and we can’t keep them out.

I find that infection control staffs at hospitals are embarrassed about the issue, so we need to be sensitive in our approach. I find them quite willing to work with a laundry that maintains a professional attitude toward what they perceive as their own problem. We certainly can’t be heavy-handed when we discuss this issue.

We have done some things physically that have practically pushed this problem into extinction. We contact the infection control people, our point of contact in the linen department, and the linen committee to talk about how to keep the sharps out. They need to know where the offending item came from, so we help by taking a picture of the item. Sometimes it’s identifiable. If the discovery is made in the sorting department, we make note of the specific carts we are working with at the time. We e-mail all this information to personnel at the hospital so they have something to work with. Calling them to complain just keeps the adversarial relationship alive.

Not all hospitals recognize the urgency of the situation, but those that do have shown a dramatic decrease in incidents. We apply the same procedure to all manner of rogue hospital items, some of obvious value. Any customer would appreciate that attention.

There are commercially manufactured machines that “scan” the soiled laundry for foreign objects, and are used at the point of linen collection. I don’t have any first-hand knowledge regarding their effectiveness.

Consulting Services: David Bernstein, Turn-Key Industrial Engineering Services, Charlottesville, Va.

You owe a duty to your employees to ensure a safe work environment and to minimize or eliminate exposure to hazards on the job. At the same time, you have a duty to your customers to ensure their textiles are processed in an efficient, productive and timely manner.

Most people think of healthcare linen as the primary sharps concern because of the serious health issues that can arise from laundry workers being stuck by needles or cut by other sharp medical devices, but those of you who operate non-healthcare laundries should also be concerned with how the intrusion of these items can present a danger and affect the smooth flow of production through your plant.

Do all that you can to eliminate the intrusion of sharps into soiled linen before that linen reaches your loading dock. Your sales and service teams need to partner with customers to provide education for their management and employees so that they can put the proper controls in place. Taking the time when a new customer comes on board to provide training and education for their team can go a long way toward ensuring the safety of your workers and the uninterrupted flow of goods through your plant.

In the healthcare realm, work with your customers’ infection control and/or environmental departments to ensure that they are using safer medical devices with the latest engineering controls (e.g. sharps containers, needleless systems, self-sheathing needles, etc.). Some customers may initially resist adopting some of these devices based on cost, but having a frank conversation with them about the cost of each exposure may help them to come around.

Those of you processing industrial and non-healthcare linen should be having the same kind of ongoing dialogue with your customers, albeit from a slightly different angle. You may need to approach the topic from an economic perspective. Explain how a sharp knife can injure a production worker, how a fork can puncture the diaphragm of a press extractor and shut down your production (for hours or days), how a screwdriver can damage a washer-extractor or a dryer, etc.

Of course, any of you who run a laundry that processes food and beverage linen have also seen silverware and cooking tools end up in these facilities, and I would suggest that you explain how much money is being wasted on items that end up in your soil room rather than in their dishwashers.

Cultivate an attitude of zero tolerance toward the appearance of sharps in your customers’ soil. It has become common practice in healthcare laundries to, as a part of a written exposure plan, log the appearance of sharps and other foreign objects in soiled laundry and provide a monthly report to your customers. I would argue that you should take this practice further.

Work with your team and your customers’ risk management and infection control departments to develop a list of priority items that, if found among your linen, trigger an immediate call to the customer and an investigation into how the item got into your soil room.

Some laundries charge customers for each foreign item found among their soil, with higher amounts charged for more dangerous items. This type of negative reinforcement can turn a customer off of your service, so I recommend taking a more positive approach. Reward employees who find, report and properly handle sharps, and consider an annual award to those customers who eliminate or reduce the number of sharps and other foreign items sent to your laundry.

In many laundry processing facilities, soil-sort workers are considered the first line of defense against the intrusion of sharps and other foreign objects. With time, constant vigilance, strict monitoring of items that come into your laundry, and innovative partnering strategies, you should be able to achieve continuing reductions.

Uniforms/Workwear Manufacturing: Scott Delin, Superior Uniform Group, Seminole, Fla.

Numerous types of sicknesses can be contracted due to encounters with needles, surgical instruments, cutlery or more. Proactive communication between the laundry and healthcare facility is key to avoiding them.

Every time a laundry discovers sharps in the soiled linen, the occurrence should be documented and reported immediately to the healthcare facility. Prepare and present an incident report to the appropriate department. By physically showing the sharps that came back in the soiled linen, it might be possible to identify the specific department from where they came and prevent future occurrences.

Schedule ongoing educational sessions with individual departments as needed. In an effort to ensure that facilities properly dispose of sharps, laundries should provide their healthcare facilities with collection containers and proper signage at all collection points. These safety measures will result in a reduced amount of sharps coming back to laundry facilities in the soiled linen.

Check back Tuesday for the third and final part!

Healthcare Laundry: Judy Murphy, RN, BSN, CLLM, RLLD, North Mississippi Medical Center, Tupelo, Miss.

There is an increased risk of sharps exposure for laundry employees, especially for those who work in the soil-sort process. To help stem the flow of these items, and to keep the communication lines open with clinical staff, the laundry manager should meet regularly (at least quarterly) with nurse managers, surgery, emergency services, ambulance, etc., to help determine the root causes. This cooperative effort helps establish rapport with clinical staff while addressing legitimate concerns.

Most healthcare organizations have a PI (Performance Improvement) team and/or safety committee that looks at the various OSHA violations (both recordables and non-recordables). The laundry manager should volunteer to participate on this type of team so that these concerns can be voiced to the appropriate people and so that he/she can remain abreast of the efforts being made to address them.

Champion the use of safety devices and engineering controls designed to decrease the risk of employee exposure. Assist with the research and promotion of these efforts by utilizing resources (other laundry managers, industry standards, guidelines, etc.) to determine “best practice” policies and procedures that could be implemented in the facility.

There are circumstances (emergency “Code Blue” resuscitations, for example) that, due to their chaotic nature, increase the likelihood of sharps being lost in linens. Provide education/training to your laundry personnel in the proper shaking-out and separation of soiled linens. And be sure to include techniques on how to pick up sharps (i.e. utilizing tongs or other grasping devices) and dispose of them properly.

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

Finding foreign objects in linens is not an uncommon occurrence. Trash, glass, dishes and cutlery are sometimes mistakenly and carelessly mixed in with the soiled linens by the end-users when gathering the linen for reprocessing. Healthcare linen poses the additional threat of bacterial and viral contamination from needles and scalpels.

Although my laundry processes hospitality linens, we observe universal precautions when detecting and handling sharps. Sharps, in our case, consist of cutlery and broken glass sent down the laundry chute in error by our end-user, the room attendants.

All incidents are documented, and the appropriate people are notified. All soil sorters wear proper protective equipment, including masks and puncture-resistant gloves. Broken glass is picked up with tongs or brush and dustpan and placed in a medically approved sharps container. This container is disposed of when three-quarters full.

The laundry maintains a log according to OSHA guidelines that lists the date and location of the incident as well as the type of sharp.

We have weekly meetings with the room attendants to provide details of the prior week’s foreign objects found in the linen. We seek to educate them on the danger that sharp objects pose to their co-workers.

We also seek feedback from the housekeeping team on ways to reduce the instances of foreign objects, particularly glasses, dishes and cutlery, which pose a safety hazard.

In the end, we stress regular communications to achieve buy-in from our end-users to reduce the problem with sharps. At the same time, the processes are in place to minimize the safety hazard should these mistakes continue.

Equipment/Supply Distribution: Bill Bell, Steiner-Atlantic Corp., Miami, Fla.

I reached out to a few of my customers who are professional healthcare laundry managers and have decades of experience. They all shared that this problem never goes away. There are procedures in place to control exposure to sharps, but it is extremely difficult to eliminate them from making it to the laundry.

Metal detectors are too expensive and will not detect small needles in bulk linen. You would think that most instruments would be coming primarily from ambulance, emergency rooms and surgical, but that’s not the case. They simply come from everywhere in a facility.

By educating healthcare staff, the flow of sharps will significantly decrease. Most of the sharps on the patient care units have been eliminated or at least reduced by using tubing and needles with safety devices. Re-educating the infection control nurse at each property on a quarterly basis seems to work best.

Most healthcare laundry facilities operating under pool linen or COG programs monitor each facility’s goods upon receipt for control of linen shortages, damage, etc., so anything more intensive than that wouldn’t be cost-effective. So, it’s all about education, education, education!

Check back Thursday for Part 2!