Recent increases in gas, oil and electrical costs have sent shock waves throughout the Industry.
As one of the Industry’s leading specialists in water and energy systems, we have been asked to survey numerous laundries in the UK and around the globe, all with a common dilemma. In most cases the increase in gas costs alone are sufficient to wipe out the entire bottom line profit of the business. Laundries who are already super efficient may escape actual loss making, but they are a small minority.
Even non-commercial premises such as health service laundries are facing the prospect of costs rising well above budgeted income, with equally undesirable consequences.
Sure, we specialise in systems to reduce utility consumption, but that alone is not enough to offset the cost increases. A multiple approach is needed, hopefully with all of these implemented we will see some light at the end of the tunnel.
Here’s a short list of steps that can be taken – indeed MUST be taken – to turn the tide and get back to surplus rather than loss:
- Top of the list – unpalatable though it may be – is price increases. With everyone in the same boat, there are signs that modest increases are being accepted, but not universally. There is always the risk of losing a customer, and this Industry is famous for the self inflicted damage that arises with price cutting as a way of winning business.
- Weeding out unprofitable business. We know at first hand from our early venture into laundry software that there are wide variations in the actual financial contribution made by different customers. With variations in selling price, quantities, product mix, costs of delivery and so on it is easy to lose sight of where the best income is derived. Very often we found in the past that it was the biggest volume customers who cost the most to support. Indeed we have sometimes advocated pruning volume down from 2 shifts to one by shedding the poorest performing accounts, and reducing running costs as an additional benefit.
- Apply the tried and tested methods used by Aquatherm to slash energy costs. By recovering 80% of the energy lost from the washing process, reducing drying and finishing costs from hot rinsing, and improving productivity from shortened cycle times it should be possible to offset as much as half of the increases.
- Put processes under the microscope. Are they too long? Using too much water? Too many stages? So called ‘cool chemistry’ is MORE expensive to operate than using temperature once heat recovery methods are in use. Shop around for chemicals, something that many laundries we have spoken to have not done for years.
- How efficiently is the steam boiler operating? Is flash steam being lost, or the reverse, is boiler feedwater temperature too low? For every 6 degrees Celsius that the feed water temperature is raised, there is a net 1% saving in gas or oil consumption BEFORE any steam is used by the plant.
We cannot advise on pricing or customer strategy, but when it comes to the technical operation of the plant we offer an expert resource without charge or commitment. A site survey with a detailed cost and output simulation is a good starting point for tackling the issues – contact us now! We wish you a healthy and successful year ahead.