INDUSTRY SNAPSHOT

In 2002 shipment values in the commercial laundry, dry cleaning, and pressing machine manufacturing industry totaled $574 million. The largest product group in this industry was commercial drying tumblers, which accounted for $171 million, or 30 percent of the industry total, followed by commercial washers and extractors, with a shipment total of $142 million (25%). Parts and accessories was the third largest sector at $90 million (16%), followed by dry cleaning equipment, with $32 million in shipments (6%).

During the early 2000s the industry suffered from a recessive economy and a significant slowdown in commercial construction. As the economy began to rebound in the mid-2000s, manufacturers expected that business would improve as companies placed more money in capital investment projects to build new or upgrade existing facilities.

Hotels, hospitals, and contract laundry services that serve commercial and institutional customers were the biggest consumers of commercial laundry equipment in the mid-2000s. Dry cleaners represented approximately 15 percent of the market. Government institutions, including the armed services, prisons, schools, and hospitals, were among other major purchasers.

BACKGROUND AND DEVELOPMENT

Maytag Corporation introduced the first electric washing machine in 1907. However, it was not until the 1950s that commercial laundry equipment producers achieved widespread market penetration. The proliferation of hotels, hospitals, and government institutions during the post-World War II economic boom pushed industry revenues to almost $300 million per year by the end of the 1970s. Continued growth in demand during the 1980s, particularly in hotel and hospital markets, increased sales to $587 million by 1988.

The commercial laundry industry faltered in the late 1980s and early 1990s as recession gripped the U.S. economy. Sales plummeted to $480 million during 1989 and bobbed up to only $526 million in 1990. Commercial construction markets remained sluggish in the early and mid-1990s. However, increased sales to institutional consumers helped some manufacturers to stabilize their earnings. An increase in new construction in 1993 and 1994 partially renewed industry optimism.

In the mid-1990s manufacturers strove to boost profits by building machines that were more energy efficient, conserved water, and offered more features. Pellerin Milnor Corp., for example, introduced a valve that allowed commercial washing machines to reuse water. Speed Queen designed a line of commercial laundry machines that took more time, effort, and noise to steal. The machines also increased dryer airflow and allowed easier loading and servicing.

In both 2000 and 2001, the industry had $626 million in shipments, compared to $636 million in 1999. The cost of materials remained steady at $359 million in both 1999 and 2000. The number of employees fell from 4,204 in 1999 to 3,781 in 2000. Production workers in 2000 numbered 2,735, and they earned an average hourly wage of $14.29.

CURRENT CONDITIONS

In 2002 shipment values declined to $574 million as the industry felt the delayed effects of the recessive economy, which began after the terrorist attacks of September 11, 2001. Capital expenditures fell significantly, from more than $24.5 million in 2001 to $13.6 million in 2002—representing a 45 percent decline. This freeze in spending also is reflected in the declining workforce, which totaled 3,025 in 2002. The number of production workers fell to 2,081, down more than 25 percent from 2000.

During the mid-2000s industry leaders were expecting a sufficient rebound from the economic slowdown of the early 2000s to keep the industry on stable footing, despite the decline in revenues. The bulk of sales were for replacement units and replacement parts, and as the pace of the economy picked up, manufacturers anticipated increased sales of new, technologically advanced models, which sell at higher prices and thus boost revenues. Factors continually under review in the industry are improved efficiency, especially water use, and a reduction of environmental impact.

INDUSTRY LEADERS

In the mid-2000s, most of the businesses in this classification were medium-sized, and of the 58 U.S.-based companies involved in the industry, 50 establishments had less than 100 employees. However, these small- and medium-sized companies only accounted for 35 percent of the industry's total shipment value in 2002. Eight large companies garnered 65 percent of the market share.

Alliance Laundry Holdings Inc. was the largest U.S. distributor of commercial laundry equipment in 2003, with a 39 percent market share and $181.5 million in revenues. Alliance produces commercial equipment under the brand names Speedqueen, Uni Mac, Huebsch, and Ajax. Other leading U.S. companies primarily engaged in the production of commercial laundry equipment in the mid-2000s included Pellerin Milnor Corp. of Kenner Louisiana, with 2003 sales of $80.2 million and 600 workers; Cissell Manufacturing Company of Louisville, Kentucky, with revenues of about $56 million and 105 employees; and Thermopatch, with 2003 revenues of $33.4 million and 100 employees. Other major players included American Dryer Corporation of Massachusetts, with 2003 revenues of $26.7 million.