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Reality Check: US Uniform Rental Demand Up as Employment Rises

NEW YORK, Jan 11 (MNI) – U.S. demand for uniform rentals is on a gentle rise as more Americans are going back to work and employers are willing to spend again, according to U.S. uniform suppliers.

Uniform company executives said service-sector demand for work clothing is trendinghigher, from food service and healthcare to private security and retail delivery. Some employers that hadn’t had a uniform program in place are now instituting one, and others are looking at redesigning and replacing their uniforms. Uniform companies describe customers’ hiring activity as modest but ongoing since 2011, and they see that continuing unless election-year uncertainties or European economic woes stall job creation.

Garment dry cleaners also reported indications of an improving job environment, but they said their business is still largely on the defensive amid persistent consumer frugality. Demand for clothing restoration and repair remains elevated, however, as customers seek to extend the life of their existing wardrobe rather than purchase new
items.

A uniform manufacturer that sells directly to employers and to uniform rental companies nationwide reported steadily growing demand beginning in early 2011.

“We see a lot of favorable signs,” said Michael Benstock, chief executive of Superior Uniform Group, headquartered in Seminole, Florida. “Unemployment seems to be moving in the right direction.”

Healthcare, private security and food service are strong sectors for Superior, while government and lodging are two of its weakest customer verticals just now.

“Food service is hiring, and I think that will continue,” he said. “That wasn’t just through the holiday period. People are eating out and spending money in food service.”

In retail, supermarkets are hiring, Benstock said, but employee turnover has slowed dramatically since before the recession. Customers in this segment are providing their now-longer-term employees with more uniforms, which has helped offset the effect of employee longevity on Superior’s business, he said.

While customers remain cost-conscious, since mid-2011 they’ve been open to spending on rebranding, including redesigned uniforms, he said. “We hear more people talking about refreshing their uniform programs already this year.”

But Benstock said U.S. hiring momentum may be interrupted this year by the distractions of the presidential election process and the unknowns of federal tax policy going forward. Contagion in the U.S. economy from Europe’s sovereign debt crisis and potential recession may also thwart the current employment trend, he said.

A uniform rental company in Pennsylvania described a “slight increase” in existing accounts over the last six months amid cautious hiring.

“We are seeing an uptick in add-men,” said Rich Roeberg, vice president of National Uniform, in Reading, an area where manufacturing has been slashed in recent years. The company also operates 10 dry cleaning locations throughout the surrounding county. “It’s just starting to turn on the uniform side, but not so on the dry cleaning side.”

The smaller employers that National serves are carefully bringing payrolls back toward pre-recession levels, and they’re beginning to spend again on other items, like mat rentals, he said. Service providers, including food, plumbing, durable goods repair and retail delivery, are adding one or two staff members, he said. Manufacturing
hiring, however, is dormant.

A relatively new business line for National, food service linens, has been faring well, Roeberg said, as consumers ramp up their away-from-home food spending.

National’s dry cleaning commerce, meanwhile, has been stung by area white-collar job loss. The company shuttered eight of its dry cleaning locations during the recession and cut about half of its total workforce. Its dry cleaning business has improved just a little in the last few months, but only in a context of heavy promotions, via Groupon
and Facebook, and shrinking profit margins, Roeberg said.

National expects to see 2% to 5% revenue growth this year, following a gain of about 4% in 2011, which was the company’s first increase in several years, he said.

Cintas, the Cincinnati-based uniform rental giant, described rising employer spending through most of calendar year 2011, even though hiring was subdued.

“About 60% of our new business comes from customers that have not had a uniform rental program, and in fiscal years 2009 and 2010 we saw that number drop to about 50%,” said Mike Hansen, Cintas’s vice president and treasurer. “Not many prospects were willing to take on an
investment.”

He said customers’ pace of hiring in 2011 was “very modest,” but outlays on uniforms and other products and services, from mat rentals to hygiene product sales, firmed.

In garment dry cleaning, business is still generally tough, according to Alan Spielvogel, director of technical services at the National Cleaners Association, a New York based trade group with a membership of about 3,500 independent and chain dry cleaners.

“Dry cleaning dollars are down, and a lot of it has to do with the unemployment rate,” Spielvogel said, and added that an increasing portion of the labor force is working from home. “Our business depends on people getting dressed and going to work in white-collar jobs.”

He estimates that members’ revenues are off 15% to 20% vs. five years ago. For many, business is still slipping. Any rising revenues come from acquisitions, he said.

“What we have seen is an upturn in the repair end of the industry,” Spielvogel said. “People are holding on to their garments, and that doesn’t seem to be letting up.”

Debra Kravet, NCA president and owner of Apthorp Cleaners, on Manhattan’s Upper West Side, said her garment dry cleaning commerce has yet to see a turnaround.

“It’s stagnant,” Kravet said. “And we see very little tailoring of new garments. We see mostly older clothes coming in for refurbishing and modernizing.”

Kravet said that some customers’ households in which two people were employed before the recession now have just one at work. And even though it seems that more customers are employed now than a year ago, recession habits die hard.

“The truth of the matter is some people consider dry cleaning a luxury.”

Kravet said NCA members’ business is, in general, still on a downtrend. Unemploymentcontinues to hit garment dry cleaning volumes, but alterations are keeping many busy. In the Northeast, a warm winter has diminished the usual seasonal increase, she said.

A dry cleaner with two stores in Southern Oregon said business is severely challenged, but there are early signs this year of a small uptick.

“It looks like we’re getting a little busier,” said Jack Anchick, owner of Towne and Country Cleaners in White City and Ashland, where the dominant timber industry remains hobbled.

“Maybe people are getting their jobs back and getting their hours back, but I can’t tell for sure,” he said. “I’ve been getting new customers, too.”

The mood is dramatically different in Miami Beach, an affluent community where people are employed again and spending on high-end couture garment care, according to Jason Loeb, owner of Sudsies Dry Cleaners and Laundry and chairman of the Miami Beach Chamber of Commerce.

His garment dry cleaning and laundering volumes are back to pre-recession levels, and new-garment tailoring is also up.

“The more people are going to work, the more that people are cleaning,” Loeb said. “They’re not washing and drying their shirts themselves anymore.”

Tourists are staying longer and spending more than they were during the downturn, he said.

“It seems like the disposable dollars have increased.”

Aggressive acquisitions and sales strategies yielded revenue growth for Loeb throughout the recession. And as usage fell in 2008 and 2009, he launched a couture cleaning service done by hand. The new market segment has done exceedingly well for him, he said.

The Labor Dept. is scheduled to release January employment figures on Feb. 3 at 8.30 a.m. ET.

Editor’s Note: Reality Check stories survey sentiment among business people and trade associations. They are intended to complement and anticipate economic data and to provide a view into specific sectors of the economy.

By Claudia Hirsch
14:30 ET 01/11/12

** Market News International New York Bureau: 212-669-6430 **