Equipment distributors are still suffering from no sales
Dry cleaners are back up to 80% of pre-pandemic level but allied traders that supply products and services to them are still struggling with dismal pace of recovery. To make matters worse, machines and parts are sometimes hard to find, relegating them to service calls to keep afloat.
Mr. Ok Kim, the owner of Bestech Machinery in southern California said “nobody is really buying new equipment. Malls with supermarkets always had a dry cleaner coming in but not anymore.” He hasn’t seen a new plant construction for some time now.
Mr. Kim noticed that quite a few stores closed down without notice and more and more Korean stores are being replaced by other ethnic group. “I think Koreans now represent below 60% of the industry now,” said Mr. Kim.
He predicts there will be fewer equipment companies just like we now have fewer manufacturers. “We don’t have many repeat customers and every time I sell a dry cleaning machine, I have one less potential customer.”
Mr. Hwan Sohn who runs dryclean101.com in North Carolina agrees “Dry cleaners are up to 80% now but I don’t see that from my end,” noticed Mr. Sohn, complaining “fewer service calls are driving mechanics to a different industry.”
He is frustrated by the fact that some machines and parts are not adequately stocked, forcing him to lose a sale.
With new equipment sales all but disappeared, equipment distributors are relying on service calls to survive. Mr. Oh who runs Jae Engineering in NJ said “unless pressured by the landlord, people are not buying a new machine,” adding “I get many service calls since they are determined to hang on to what they have.”
“At the start of the pandemic, people still bought needed equipment thinking it won’t last too long,” according to Mr. Oh. With the pandemic going into its second year, equipment purchases simply disappeared.
Mr. Oh pointed out that “the current generation of cleaners are getting old but new blood is not coming in to replace them,” with fewer Koreans coming into the trade.
Mr. Young Kim, owner of YK Engineering in DC/MD/VA area, said that most of his customers are now running the machine 6 days a week and he is receiving steady stream of service calls. He said he gets 2, 3 calls on average.
He was hoping things will be better in the Falls but with corona cases surging again, his crystal ball became mirky.
Mr. Kim points out that cleaning business was mentioned in the Bible and will never go away so his immediate game plan is to persist.
A distributor who asked to remain anonymous said “dry cleaners are persisting with PPP and EIDL money but with sales returning to a near normal level, they still do not feel safe enough to make a large purchase.”
“I’ve been in this business for over 30 years but I still haven’t met a dry cleaner who boasted he had a lot of money.” This thought did put a little smile on his face.
Eastern Machinery in New Jersey specializes in servicing only boilers and this kind of special reputation has proven to be very beneficial during the pandemic. Mr. Jin Park said he was very surprised to have a very busy July and August. His customers are doing at 80% level and are all hoping for a better business down the road.
Mr. Park, an older brother of Mr. Jin Park, runs Han Mi Machinery and he is very busy these days. “My boiler sales are up to pre-pandemic level. I think people who have been putting off the purchase last year are finally making the move.”
With so many stores closing, some equipment companies are busy with taking out machines from a plant. A certain distributor in New York didn’t even receive many service calls so he is doing more and more removal work these days. He is getting more inquiries but he complains equipment removal is not that profitable.
Another equipment company that is surviving on equipment removal pointed out “sometimes I run into good used ones and that can be quite profitable.” But he couldn’t feign a smile when he said “I have been selling only the good machines so my customers don’t call me much for service.”
If the equipment side is suffering from poor sales, supply side is suffering a serious ‘supply’ problem. With a huge amount of back orders, hanger market is definitely suffering a shortage situation and price of a box of shirt hanger jumped to $40, with pants hanger approaching $70. Even at that price, suppliers do not have a stock to sell.
Mr. Jae Hong who runs CleanAir Supply in New Jersey explains the hanger shortage this way: Freight charges jumped from about $4000 to close to $8000, three or four months ago; many importers decided to wait until the freight came down but it kept climbing to over $20,000 now; with severe shortage of containers worldwide, factories can’t find containers to put hangers and even if they did, finding a spot on the ship is difficult.
Mr. Hong also pointed out that the price of steel wire went up 25% last July putting further pressure on hanger price.
Supply companies are also having a hard time with poly bags and chemicals. During the pandemic, production of base chemical material declined and with unfortunate fires at chemical factories, companies like R. R. Streets are having a hard time procuring raw material to make products.
Mr. Hong complained that an order he placed three months ago still hasn’t completed with a palate coming in sporadically.
The equipment market has become a perfect buyer’s market while the supply market, a perfect seller’s market.
With more than 6,000 cleaners gone out of business, the number of dry cleaners is back to pre-1980 level. With all the closing, the equipment market has been flooded with used machines, further stifling new machine sales. Unlike dry cleaners, equipment companies did not receive much PPP money and it is making their survival that much harder
One industry veteran noted “dry cleaners go golfing when things are slow but we can’t because we don’t know when the next service call is coming in.” He is hoping the perc ban that went into effect last December will eventually bring more new machine sales, saying “at least I won’t have as much competition then.”