Episode 45 – Industry Financials, Labor Issues & More

Welcome to the TRSA podcast. Providing interviews and insights from the linen, uniform, and facility services industry. Most Americans might not realize it, but they benefit at least once per week from the cleanliness and safety of laundered, reusable linens, uniforms, towels, mats, and other products provided by various businesses and organizations. TRSA represents the companies that supply, launder, and maintain linens and uniforms. And in this podcast, we will bring the thought leaders of the industry to you.

 

Welcome to another episode of the Linen Uniform and Facility Services podcast, interviews and insights by TRSA. I’m your host, Jason Risley. The association just held its 108th annual conference in sunny Carlsbad, California. The conference kicked off on October 19th with a welcome reception for attendees prior to 2 full days of industry specific professional development and networking on October 20th 21st. On the final day of the annual conference, Andrew Whitman, a senior research analyst at Robert w Baird and Company, briefed attendees on the industry’s financial performance.

 

Whitman joins the podcast to share his thoughts on the latest edition of the textile rental services survey, a collaborative effort with TRSA, as well as other issues impacting the industry, such as the ongoing labor shortage. Ad stops have been positive. So that should be the case. You would think in a in a recovery. New new account pricing trends.

 

New accounts. This was interesting. I I thought, like, pricing trends for existing accounts seems like people are successfully getting their price increases given the inflationary environment, which is great. But it seems like, at least as of the last survey data point, that new account pricing continues to be very competitive. That’s what we’re hearing.

 

You’re not gonna really get, a lot better price this year than you did, you know, last year or even last 6 months ago. That’s still new business seems to be very competitive. It’s kind of the punch line from that survey data point. This is the question on annual price increases. This is like, hey, man.

 

There’s a lot of inflation. I need to raise your price. And it it averaged out to 3.1%. You’re like, Andy, I feel like we’re probably I’m I’m what I’ve heard anecdotally from people is that it’s probably a little better than that, but but it averaged out to 3.1 a couple of months ago. But what I just say here is, you know, we’ve been doing the survey for a long time.

 

It’s the highest level of annual pricing gains that we’ve seen in the survey’s history. So I don’t look at the absolute number as much as I do the relative performance. And what I’m saying here is clearly, we’re getting record levels of price increases, which stands to reason given all the inflationary factors that are being faced, through the industry. I suspect it’s more like 4 or 5% for for many operators. And this is really interesting.

 

This is, we ask how much new business is out there in the marketplace to go sell. Any number better than 50 means, like, versus the prior quarter that there’s more business. And generally, like, there’s been more business and good new business all the time, global financial crisis notwithstanding COVID, you know, notwithstanding, but the last 3 quarters, since COVID, seems like there’s actually good new business out there to be had. Most people are saying, yep. We’re finding some prospects.

 

And so that’s really encouraging. And then we, you know, we always ask, hey. How fast do you think your business is gonna grow in the next 12 months? And we had a really nice average number there too. Came out to 5 a half percent.

 

Again, that’s kind of near record levels. So, there’s a big spread of data inside that. You know, we got some people saying flat. The most common category is 3 to 5%. Here’s 5 to 7%, 10%.

 

So you got everybody’s kinda positive, which is great news. You got a couple people that have got, you know, more than 9% here. It’s a decent percentage. So there’s people are finding growth, or expecting growth based on what they’re seeing. So Now for a brief message from TRSA.

 

Hi. I’m Sean Rhodes, an international expert in building high performing organizations, and I’m honored to be the keynote speaker at the 2021 Textile Rental Services Association 4th Annual Marketing and Sales Summit. Today I’m here to give you a preview of the 2021 summit and get you spun up on everything you’ll need to know in order to register. This year, the summit will be held at the renaissance Dallas at Plano Legacy West Hotel where more than 40 sales and marketing leaders will gather from the linen uniform and facility services industry. You won’t wanna miss this year’s program.

 

We are in person and ready for connecting and collaborating. You will learn from industry leaders about customer retention and how they keep their customers happy. You’ll get training tips on having route personnel turn into brand ambassadors. Have you had a great success this year? Well, submit your bragging rights best ideas and share with others during networking breaks.

 

I’ll be keynoting the event and sharing how to better utilize the tools and the lessons you and your sales people are learning every day so that you can remove hope from every aspect of your prospecting, outreach, meetings, and negotiations. We’ll be learning what we can adapt from teams that learn to replace hope with certainty in their missions and in their sales. Needless to say, as we prepare for the conference this November, myself and the staff of t r s a are excited about the experience we are building for you. This year we are fortunate to hold the marketing and sales summit at the beautiful Renaissance Dallas at Plano Legacy West Hotel on November 16th. This hotel is also within walking distance to top dining and shopping in Plano.

 

Registration is now open. If you have any questions, email the t r s a team at registration at trsa.org. I look forward to seeing you at the marketing and sales summit where we’ll learn how to make your sales bulletproof. Now back to the episode. So there’s a lot of speculation about the 4,000,000 people who left the labor force.

 

You know? People like, did they die from COVID? So, I mean, we we’ve lost 700,000 people to COVID in the United States of America. Most of them are over the age of 65. Some of them are not over the age of 65.

 

There’s, like, 200,000 people of working age, that have died from COVID. So that is in fact one reason for 4,000,000 4a half 1000000 people, 200,000 people were probably eligible in the workforce that are not. Other factors that are commonly cited are, people self selecting out of the workforce. They were not making enough money, and they don’t they didn’t have childcare, is commonly cited. Now more schools are actually in session right now, so I find this one a harder thing to believe.

 

So many schools are back in right now. Saw one day at a point that’s, like, 90 some percent of school are are mostly in person again. So that one’s harder to believe. The financial markets have been really strong. He solved my charts with up into the right for the S and P 500.

 

So the baby boomer generation is there at retirement age or have been for a couple of years and they’re still coming. And so the financial markets have been really good. So it’s like, well, I can retire now. They look at their 4 zero one k and they’re like, I’m out. Like, I’m good.

 

And so there’s this idea that a lot of people retire maybe that they wouldn’t have an accelerated, maybe pulled the financial market’s performance pulled forward retirements for the next few years. The the state the the entrance so then you can’t just have the negative. You gotta have the positive people turn 19, turn 22, and they graduate college. What that has been pretty steady demographic. So if you have accelerated retirements and a steady demographic coming into the workforce, yeah, there’s probably there’s probably some people there too.

 

Those are some of the most commonly cited one. There’s a couple other things, but often none of them for me, like, none of them really add up to 4a half 1000000 people. So oh, the other one is like, you you couldn’t get evicted for a year and a half, and you’re getting a lot of free money. So it’s like, why work? I mean, that’s a very common one that we all cite very easily.

 

And then you had enhanced unemployment through the 1st week in September. It’s only the middle of October right now, so it’s like, well, you had you couldn’t get evicted until August. You had an enhanced unemployment for most states through September. You’re probably still good today because you got enough to, like, pay the bills for your food. And so they’re like there’s this thought to, like, you know, cross your fingers maybe, like, in November or December, like, people are actually gonna go and have to start looking for work.

 

There hasn’t been any evidence of that through October 19th, a couple days ago. But, you know, everybody’s fingers anybody who owns a business, fingers are still crossed that maybe you get some help there. It stands to reason, but there’s no data to support that these people are coming back. So what we’re see what we definitely are seeing is white collar jobs being work from home and being a lot more flexible. You know, 2 years ago, we had 3.8% unemployment.

 

It’s a tight labor market. Most of the labor pressure was $20 an hour or less. It was where you couldn’t find people or and and, like, today, it’s a totally different game. And this was, like, a realization that hit me really hard, like, 2 or 3 months ago when I was talking to some, like, engineering companies that I do research on, and, like, they can’t find engineers. I I I’ve been covering engineering consulting companies for a really long time, and I always and I and I’ve got children.

 

I always told my kids, I’m like, you know, probably don’t wanna be a civil engineer. I think there’s too many civil engineers out there. Like, there’s there’s a there’s a there’s a surplus of just don’t, like, be something just don’t be a civil engineer. Like, now you can’t there there’s no civil engineers. Like, I never thought I would say that, but you’re seeing it in in accounting, in finance, in engineering consulting.

 

These are in industries that I come across a lot. They’re having a hell of a time. One of the engineering companies I cover is doing 4 times a year. This is professional services. They’re doing performance reviews and salary check ins 4 times a year to make sure that they’re competitive and they don’t wanna lose their engineers.

 

People are designing roads and highways and bridges and stuff like that. So it’s all parts of the labor market right now from what I what I can tell, but I do know that the labor pressures are really widespread way beyond just your plant labor. It’s a it’s a real challenge. The demographic issues have been a a big problem for a long time. You look at the economy like a major economy like Japan.

 

Very old economy, doesn’t have enough people. The economy hasn’t grown for, like, 30 years, basically, in any real sense in Japan. And the most commonly said reason for that is they just don’t have the demographics to support enough labor, human capital to grow the economy. So, yeah, these they they can be very structural factors. So so funny.

 

The automation has become such an important way to deal with all these labor shortages. Automation 5 years ago was I’m gonna save some money and today it’s like I can’t find the people. It’s a it’s a really it’s a really fast change in the in the US economy. In addition to the recent annual conference, TRSA plans to host 2 more in person events in 2021. TRSA’s 4th annual marketing and sales summit will take place on November 16th and the 10th annual healthcare conference is scheduled for November 17th 18th.

 

For more information on these events, visit www.trsa.org/events. Thanks again for tuning in to the podcast and please subscribe rate and review our show on Apple Itunes, Google Podcasts, and Stitcher. Additionally, for the latest industry news and updates follow t r s a on Facebook, Instagram, LinkedIn, and Twitter.