CHICAGO — Drycleaners across the country cut payrolls as sales continued to drop in February, according to a recent AmericanDrycleaner.com StatShot survey. Drycleaners in the West continue to experience the worst declines, and in response, they’ve cut payrolls the most of the four regions polled.
Labor is typically a drycleaning plant’s biggest cost. When asked if they had increased or decreased payroll costs since this time last year, drycleaners in the West reported an average cut of 13.48%. Survey respondents in the Northeast followed closely with payroll cuts of 11.08%. In the South, drycleaners reported an average 8.89% payroll cut, and in the Midwest, they reported an average 5.1% decrease.
When comparing February 2009 to the same month last year, drycleaners in the West reported an average 15.39% decrease in sales — even worse than the 13.96% drop reported for the region in January 2009 vs. January 2008. The Northeast followed with an average 12.8% decrease. In the South, drycleaners reported an average 9.82% decrease, and in the Midwest, they reported an average 4.9% decrease.
Comments from drycleaners in the West reflected the seriousness of the situation, with one cleaner saying, “‘Depressing’ would be an improvement,” and another saying, “No more payroll left to cut!”
Many plants, rather than cut wages, have cut back on hours to save cash. “[We] only work four days a week,” according to one cleaner. “[The counter is] open on Wednesday, but no production.”
In addition, some owners are “taking one for the team,” cutting their own wages for the sake of the company. One cleaner in the South says, “Payroll has decreased because my wife and I don’t get a paycheck about two weeks out of five. That is the first time we have had to do that since 1989.”
Some survey respondents are beginning to see signs of the end of the current economic downturn, however, with one cleaner in the Northeast saying, “Our sales seem to be evening out compared to last year. This is the first month since October 2008 that our sales compare closely to the same month in the previous year.”
In the Midwest, where sales are down the least, “it continues to be a difficult environment. We are seeing monthly declines less than annual moving average declines,” one respondent says. “If this trend continues to hold, it would indicate a bottom to the market.”
“We watch every penny, and I feel good about the company’s survival,” says another. “My wife and I have over 56 years’ combined experience. New people in this industry are in for a rude awakening. The strong will survive and will enjoy a larger piece of a shrinking pie.”
AmericanDrycleaner.com’s StatShot includes information on sales, wages, costs and other financial data based on anonymous survey information provided by industry operators. Subscribers to American Drycleaner’s Wire e-mails are invited to participate in these unscientific surveys, which are conducted online via a partner website, on a regular basis. Readers are encouraged to participate, as a greater number of responses will help to better define industry trends.
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