Floor Equipment: Cost Cutting In A Tough Economy
Corporations are laying employees off. Hotels have empty rooms. Hospitals can’t raise money to open new wings. Manufacturing plants are closing their doors for good. Even universities and public schools are downsizing. No matter the industry, times are tough. And when the economy is weak, housekeeping is often among the first departments asked to rein in spending.
“Housekeeping budgets are being curtailed,” says Norman Schmidt, president of Hopkins Sales Co., Inc. in Easton, Md. “And what’s the easiest thing to trim? The part nobody thinks about — the floors, ceilings and walls. People let these areas go.”
So it’s no surprise that sales of floor care equipment are down while repairs, rentals and leases are up. When a housekeeping manger must justify every expense to a board or building owner, pricey equipment is a tough sell.
“When it’s strictly a dollars issue, it’s tough to argue that a purchase is a good investment versus spending $250 to get the same old equipment fixed,” says Dan Ott, co-owner of Facility Supply Systems Inc. in Chicago. “Right now, the budget question is overriding everything else.”
Facility Supply Systems is repairing more equipment as customers try to hang on to scrubbers, burnishers and vacuums as long as possible. Likewise, Tahoe Supply Co., based in Carson City, Nev., is hiring additional staff for its service department to deal with the increased demand for equipment repairs. And Hopkins Sales has seen increased demand for rental and used equipment.
“When you have less money, you are less likely to spend on new equipment,” Schmidt says. “If a machine is operating, there’s reluctance to replace it. You aren’t going to upgrade if it’s not a total necessity.”
Unfortunately, smaller budgets don’t mean lowered expectations. Housekeeping managers are still under pressure to create clean and attractive spaces. In fact, the need for cleanliness and the appearance of clean goes up when the economy is down because consumers have more choices. For instance, if a hotel looks dirty, customers will just head down the street. If a commercial building is unattractive, potential clients will rent another space.
“It’s like you have two people on your shoulder — one saying, ‘save money,’ and the other saying, ‘it’s got to look good,’” Schmidt says. “You’re in a constant battle.”
In such uncertain times, deciding when a purchase is necessary (and — more importantly — justifiable) is easier said than done.
Keep Track Of Expenses
“Upgrading just to upgrade is something that just doesn’t happen anymore,” Schmidt says.
Today, housekeeping managers must justify every purchase, which leaves many in a buy-versus-repair dilemma. Making the decision, distributors say, boils down to two basic questions. Are maintenance costs higher than buying new? And could a new machine pay for itself through increased efficiency?
With enough repairs and replacement parts, janitorial equipment can last for many decades. The key is to identify the point of diminishing returns — when fixing a machine is no longer worth the performance it delivers.
“I have to admit that I sometimes scratch my head at some of the dinosaurs that we are asked to fix,” says Tahoe Supply Co. owner Nick Spallone. “I feel if the customer was actively evaluating the costs associated with each piece of equipment, they would see the value of replacing compared to repairing.”
Assessing the value of repairs is possible only when housekeeping managers keep track of costs. If you outsource repairs, the vendor can provide a history of expenses. If repairs are handled internally, create a spreadsheet to track parts and labor.
Armed with this information, a manager may be surprised to learn that he spends more money each month to keep an out-of-date machine operational than he would spend on a new machine purchased on a payment plan or acquired through a lease.
Remember Labor Costs
It is also important to document efficiencies associated with each piece of equipment. Sticking with an antiquated machine may actually cost more in the long run than the initial expense of a new, more efficient machine.
The single largest expense for any housekeeping department is labor. In difficult economic times, managers often try to save money by cutting back on chemical and equipment purchases, but they may overlook potential savings on manpower. Automating the cleaning operation can save big dollars on labor.
“Your people are the most expensive line item on the budget so let’s be sure we are using them as efficiently as possible,” Ott says. “The right equipment can help you do that. For example, if workers are spending a few hours a day with a mop and a bucket, consider an autoscrubber that can get the same area done in a half hour, freeing someone up to take care of other projects.”
Floor care equipment is continually evolving. Every year, manufacturers introduce new products and very often they include genuine innovations that improve efficiency. Buying a new scrubber just because it is orange or has a fancy gizmo is a bad move. Much smarter is replacing a walk-behind scrubber with a ride-on version that is 40 percent more efficient.
“A housekeeping budget is 75 to 85 percent labor,” says Ken Smith, sales manager of Renard Paper Co., Inc. in St. Louis. “Anything we can do to save on that makes economic sense. Even though a piece of equipment may cost $500 or $5,000, departments can make that money back through the increased efficiency.”
Conduct An Audit
Housekeeping managers can work with their distributors to get recommendations for machinery that will pay for itself. Ask for an equipment audit in which the distributor evaluates the facility’s square footage, types of flooring and traffic, and then writes a prescription for the most effective way to clean.
“Any equipment distributor worth its weight in salt should be able to perform a labor analysis and show an accurate return on investment on new equipment,” Spallone says. “Managers are being asked to do the same amount of work with less so finding the most cost-effective way to clean should be the goal of everyone involved.”
An audit should also include proposals for improving cleaning procedures to make the most of the equipment investment. For example, carpet sprinkles may wear out the bearings in a vacuum and destroy its efficacy, while walk-off mats can reduce how hard a machine works and extend its life.
“Many times we see cleaning departments using the same cleaning techniques that were used decades ago,” Spallone says. “Some of those techniques are still relevant but more often than not there is a better way that will improve results and lower costs.”
Most distributors will teach a class in best practices for their customers. Janitors can learn about things like when to spray buff or strip a floor, or how to establish a maintenance program that reduces the need for costly restorative cleaning. They can also see live demonstrations of the proper utilization of each piece of equipment, which will reduce unnecessary damage and improve productivity.
“There are a lot of variables that people need to be taught,” Schmidt says.
Ask for Assistance
Distributors can also help their customers with the financial end of purchasing to make new equipment a reality.
First, ask for help with budget forecasting. When a distributor performs repairs or provides replacement parts, ask for an honest assessment of the equipment’s future. How long before it is likely to need expensive repairs? Use that time to save up for new equipment.
Next, ask your distributor about financing options. In a recession, vendors are more willing to get creative with funding. Extended terms and pay-as-you-go options may make purchasing more viable.
“Distributors are in the same financial boat,” Spallone says. “Let your equipment partner know what road blocks are in the way of purchasing the tools that you need and they may find financial solutions that will benefit you.”
One option that’s attractive to some businesses is a leasing program. This method allows housekeeping managers to take possession of a machine while paying for it in monthly installments. The added expense in the form of interest may be worthwhile for businesses that simply don’t have enough money to buy new floor care equipment outright.
“The labor savings generated from the upgraded equipment can be used to pay for it,” Smith says. “They don’t have to come up with $20,000 in cash from capital expenses.”
Finally, discuss the pros and cons of a preventative maintenance plan for new equipment. By pre-paying for regular maintenance, you lock-in today’s labor rates.
Whether deciding to repair existing equipment, buying something new, or entering into a lease agreement, do the necessary homework.
“Don’t leap on the first offer,” Schmidt says. “Talk to other housekeeping managers and find out what worked or didn’t work for them. They have no interest in trying to separate you from your money. If you have a trusted distributor, ask them for more than one option. That’s what we do for a living.”
Becky Mollenkamp is a freelance writer based near DesMoines, Iowa.
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