Uniform Rental Industry Unwrinkled by Recession
Top-notch growth rate of '80s slides to respectable 8 percent in '90s
BOSTON — THE nation's uniform rental industry has been hit by the economic slowdown. But shed no tears - growth still runs 8 to 9 percent a year.
Prior to the 1990-92 recession, however, the uniform business was growing 15 to 20 percent a year. More and more of the nation's workers have been putting on rented pants and shirts, jeans, coveralls, lab coats, and even executive uniforms and flame-resistant garments.
"Our industry is enjoying an unusual position during this period," says Cliff Weller, manager of marketing of Textile Rental Services Association of America in Hallandale, Fla.
Revenues of the uniform industry have grown from $2 billion to $6 billion in the past 10 years, primarily because of the increase in service-related businesses from fast-food restaurants to banks, industry analysts say.
"Service companies whose employees meet the public face to face are trying to project an image," says Craig Peterson, chief financial officer of Unitog Company in Kansas City, Mo.
Well-dressed people, an industry study finds, are perceived as more hard-working and intelligent than those dressed poorly.
In 1992, Cintas Corporation, one of the largest uniform rental firms in the United States, enjoyed $401.5 million in sales. That was up 13.9 percent from 1991, but behind the 18 to 20 percent growth in the 1980s, says David Jeanmougin, senior vice president of finance at the Cincinnati-based company. Cintas provides 1 million uniforms for its 100,000 clients.
Uniform rental firms generally require customers to make three- to five-year contracts. That, analysts say, helps make the industry more recession proof.
In 1990 about 63 percent of all rental uniform wearers were blue-collar workers. But these traditional customers have been shrinking in number. Despite this, the industry has grown by winning customers from other industries, says Ken Koepper, spokesman for the Institute of Industrial Launderers, a trade group in Washington.
"We're seeing more and more people who have never before been in uniforms getting started in uniform programs," Mr. Peterson says. He says companies such as regional telecommunication firms have been renting uniforms to boost their corporate image and for security purposes.
Currently, more than 53 million workers wear some type of special clothing, such as a uniform or a protective garment. About 14 percent of them are wearing rental uniforms and 32 percent of them are wearing clothes purchased by their employers, according to Robert Isaacson, corporate marketing director of Unifirst Corporation, a Wilmington, Mass., company that rents and sells uniforms. The firm provides uniforms for Honda Motor Company, Meineke Muffler, and Smartfoods among others.
Uniform rental firms supply their clients on average with 11 sets of uniforms per employee for five working days. Eleven are needed because some are being cleaned at a given time. This costs $1.25 to $1.50 per day, Mr. Isaacson says. If a customer wants to buy a set of shirt and pants, it usually costs $26 to $30.
Even though it costs firms more to rent uniforms, most clients prefer to do so because they do not have to worry about upkeep or inventories, Mr. Koepper says. Analysts estimate 25 to 40 percent cost savings in the maintenance of uniforms with rental programs over doing it in-house.
Highly customized uniforms for flight attendants and pilots are often purchased by firms rather than rented.
Koepper says rental firms are "local market businesses." Even though there are several nationwide companies such as Cintas and Unifirst, the majority of firms operate on a regional basis. More than 750 rental firms now operate in 2,000 locations nationwide.
Some of the nation's largest companies are acquiring small regional firms to gain market share. For example, in the past two years, Cintas has acquired Rental Uniform Services in Greenville, S.C., and Maryatt Industries in Seattle. But G & K Services, which bought WorkWear Canada in 1990, had a 24 percent drop in net income last year because of the recession in Canada.
One growing market is health care. A recent ruling by the US Occupational Safety and Health Administration, requiring special protective clothing for some medical professionals, created a niche market, Weller says.
One area that concerns the industry is the increase in environmental regulations, says Isaacson of Unifirst. "We're one of the largest users of water.... We have spent millions of dollars for water treatment systems." But, according to Mr. Jeanmougin of Cintas, pressure to meet environmental requirements "is not an industry killer yet."
Jeanmougin expects that 1993 will be a better year as companies hire more workers. He adds, "If you are not in uniform, you're not dressed for business."