By: Ken Tyler, Sr. Laundry Industry Consultant
Below you will find my benchmarking cost textile care operations for 2021. The year 2021 was used because it takes several years to quantify and validate the results. I encourage other industry associations to partake in similar studies since this information is important to the members of our industry.
Benchmarking is an average of averages but there needs to be a protocol in place to conduct a survey. I used the protocol developed by the Department of Veterans Affairs in 1995-1996 | Field Laundry Advisory Group and the General Accounting Office (GAO) to attain the survey results.
For this benchmark survey participants came from 181 US facilities (83% healthcare), 9 facilities in Canada (80% healthcare) and 12 facilities in Europe (90 % healthcare).
Methodology
Criteria for this study include laundry facilities that process over 2,000,000 pounds of healthcare textiles annually using steam or gas operated systems, gas or steam dryers, CBWs and large capacity washer extractors.
Additionally, to qualify for this benchmark survey, the facility team members were legal tax payers and the facility offered health and retirement benefits.
PRODUCTION COSTS
Direct labor costs: .19-.26 cents per pound processed and delivered.
These costs include fringe benefits (health insurance, retirement etc.) that are applicable to the receipt, sorting, washing, drying, ironing, conveyance and preparing textiles for delivery within a laundry processing facility.
Administrative Cost: .05-.07 cents per pound processed and delivered.
These costs include wages for laundry and textile project management, secretarial, contract administration, general foreman housekeeping, and non-production employee wages.
Maintenance and Repair Cost: .06-.08 cents per pound processed and delivered.
These costs include processing and ancillary support equipment, carts, etc.
Depreciation of equipment: .04-.06 per pound processed and delivered.
This cost was determined by equipment value divided by 17 years. Seventeen years was used since that is the average life of laundry equipment.
Depreciation of property and applicable property taxes: .02-.04 cents per pound processed and delivered.
This amount was derived using land and building aggregate costs plus annual taxes divided by 75 years. Seventy-five years was used since that is the average life of a commercial laundry building.
General supply cost: .01-.02 cents per pound processed and delivered.
These costs include the leasing of office equipment, office supplies, covers, pads, hangers, thread, wax, patches, buttons, etc.
Chemical supply cost: .02-.03 cents per pound processed and delivered.
Includes the cost of laundry chemicals, water treatment etc.
Utility cost: .07-.08 per pound processed and delivered.
These costs include electric, steam, gas, water, oil sewage, refuse removal and solar.
Sub-total Production Costs:
.46-.64 cents per pound processed and delivered.
TEXTILE COSTS
Textile Distribution and Return costs: .12-16 cents per pound processed
This amount includes drivers, employee benefits, fees, tolls, lease cost, fuel, vehicle maintenance and repair cost linen room distribution (from cart assembly to end user locations – internal) labor and benefits Seamstress – Repair – Marking, Uniform distribution, cart replacement and systems depreciation, transportation to external customers.
Textile Replacement Cost: .16-.19 cents per pound processed.
Sub-total textile / textile distribution and replacement recurring costs:
.27-35 cents per pound processed.
BENCHMARKING RESULTS:
The total benchmark cost ranges from .73 – .99 cents per pound processed and distributed for the facilities surveyed.
Looking Ahead
As for projections of 2022 – 2023 I would expect fuel cost increases, cotton and polyester increases, healthcare and benefit cost for workers to increase and reliance on foreign made textiles to remain status quo.
If you would like to participate in the next benchmarking survey please contact me at Ken Tyler – tycorp1@aol.com.
About the Author: Ken Tyler has been active in laundry and textile programs for over 53 years. Between his position as Chief of the VA Laundry program and the Chief of Laundry Operations at the DOD he managed the modernization, and construction of over 100 healthcare laundry operations valued in excess of 200 million dollars. Tyler received numerous commendations including the GSA Excellence award, Department of Energy awards for energy conservation and the Presidential Award for Performance. During his time with VA, he was selected in the VA Leadership program and continues as a member of that Alumni program.
Tyler managed US Marine Corps and Department of the Navy laundry programs for 10 years, Department of Veterans Affairs textile care and laundry programs for 27 years and managed government programs for Encompass LLC for 16 years. He retired from the US Marine Corps after 30 years of service and received over 30 decorations for his military service.Tyler consults laundry manufacturers and textile/chemical groups. He is also the recipient of numerous industry and government awards and has served numerous organizations such as AHA, TRSA, JCAHO, ALM and ARTA.
