PART 1
New
Markets Opening Right Now
No
one will disagree that the customer driving the industrial
laundry for the past 100 years has been the United States
(U.S.) manufacturer. Factory employees were the ideal user
for laundry service. But over the last few decades, the
manufacturing base in the U.S. has declined dramatically.
Companies such as Aramark faced significant growth challenges.
“Sometimes I read about our industry being a ‘mature’ industry,
and I don’t understand that,” says Thomas J.
Vozzo, President of Aramark Uniform & Career Apparel,
Inc. “The rental laundry industry, prior to the current
recession, had been growing in the textile rental services
area at a compounded growth rate of 6% annually over the
past decade. That far outperforms the gross domestic product
of this economy in North America .”
The Uniform and Career Apparel division of Aramark maintains
a level of approximately $1.4 billion dollars in annual
sales. Finding continued growth for the saturated (if not
being called mature) uniform market is something Aramark
leadership has considered and acted upon.
“We have a big focus on non-programmers, companies
that didn’t necessarily have a uniform program for
their employees in the past,” says Stephen M Donly,
President of the group called Aramark Uniform Services. “A
full 50% of the new business we are writing today is coming
from people who have never been in a uniform before. For
example, we’ve opened up a great market space with
companies that service residential customers. Honestly,
since 9/11 many people do not want to open the door to
just anybody. There is a lack of comfort. A branded apparel,
well-imaged employee puts that person and those concerns
at ease.”
Aramark also cites their attention to government regulations
as another area where new market space continues to emerge.
“The 70E regulations, which go to fire retardant
wear to protect workers involved in electrical work has
offered a huge growth opportunity for us,” says Vozzo. “We
made an effort to educate customers who didn’t think
they fell under that particular regulation. When they realize
they do, they become customers for Aramark in new protective
wear.”
Over
the last twelve months in particular Aramark has seen
activity in this emerging market segment. Customers range
from General Motors to utilities and others that one
wouldn’t think of that have this requirement. “At
Tyson Foods plants, for instance, they have electrical
workers. We are now providing a million dollars worth of
protective garments on a rental program for them,” says
Donly.
“Another new market example is we have a bank that
is a customer of Aramark,” says Michael Lowe, Group
Manager for Aramark Uniform Services
Through
its acquisitions over the past ten years, Aramark has
also seen markets develop that add value to their overall “one
source” solution approach for their customers. The
Galls division, for example, has pushed the company far
into the public safety and government agency market.
On the direct sale side of the uniform business, Aramark
has developed considerable casual and corporate apparel
programs.
“We provide uniforms for McDonalds, via our Crest
Division,” says Vozzo. “For Aramark to provide
a rental program for a company that has an employee base
which includes a high turn over of young people doesn’t
make sense. If we provide a beautifully designed knit shirt
that makes that crew member look good and is affordable,
that’s the best solution for that customer.”
Aramark also sees opportunity to provide a more fashionable
uniform, citing the fact that more women are in the workplace
than every before.
The bottom line for Aramark has become selling the right
solution no matter the service, and this has allowed the
company to continue expanding markets.
“Without a doubt there are still employers out
there who want to give their employees the right image,” says
Lowe. “And the right image in many cases is a laundered
uniform. It’s not just a soil issue. It’s an
issue of their employees being in fresh clean uniforms
everyday. And they portray the image the company wants
to be portrayed.”
“We think we’ve just scratched the surface
of offering uniform apparel solutions in North America
,” says Donly. “We love that good rental contract
revenue stream that helped build this company, but we also
have come to understand that we never fail when we provide
the best solution for the customer. So, we have a sales-force
that we’ve trained to be far more attentive to providing
the best solution.”
Vozzo
says, “The
uniform group at Aramark is going to look at every American
business with employees. Some part of the need is going
to rental and some part is going to be direct sale. Going
back to McDonalds, they may rent mats for the doorway,
which are laundered in this plant for example. (The new
plant at 43 rd and Halsted, see related article) For
uniforms, Crest provides the apparel as a direct sale,
but the managers for McDonalds have a laundry program
option as well.”
As
far as the changes in quotas from China are concerned,
Aramark will “wait and see” how
the quotas finally end up. If it goes as stated, clearly
more manufacturing will go to China , where Aramark is
already producing some apparel.
“Well over three-quarters of what all Aramark rental
customers wear we make ourselves. We own four factories
in Mexico . They are Aramark owned with Aramark employees,” says
Vozzo.
The facilities in Mexico have faced no issues related
to child labor or other such offshore employment issues.
Aramark leadership acknowledged however that while they
are committed to making their own product, they intend
to take advantage of global labor markets.
PART 2
$23 Million Aramark Plant Brings 350 Jobs To Former Site
Of Chicago International Amphitheatre
Chicago,
IL, August 31 -- Mayor Richard M. Daley joined community
leaders and company officials today in opening Aramark
Uniform and Career Apparel’s $23 million
state-of-the-art laundry facility at 4200 S. Halsted St.
on the site of the former International Amphitheatre.
The
125,000-square-foot plant, Aramark’s largest
in the United States, employs approximately 350 people.
“This is good news for the working men and women
of Chicago,” Daley said in a ceremony at the new
plant. “This type of redevelopment is happening all
across the city, as abandoned land is being returned to
productive use. This plant was built on a historic location
and it’s a good example of how a great city renews
itself to maintain its economic strength during changing
times.”
The International Amphitheatre was built in 1934 as a
showcase for the nearby Union Stock Yards. It hosted the
annual International Livestock Exposition and was the scene
of five national political conventions, as well as concerts
by entertainers including Frank Sinatra, Elvis Presley
and The Beatles.
The City acquired the deteriorated building in 1999, demolished
it and sold the 12-acre site to Aramark for $1. The City
invested $1 million in environmental remediation, while
Aramark spent $1.5 million to clear the site and remove
the old foundations. The company received a Class 6(b)
property tax incentive, which reduces the assessment for
a number of years.
Aramark chose the Chicago site over Rockford, Ill. and
Racine, Wis.
The site is adjacent to the Stockyards Industrial Corridor,
one of the most modern industrial areas in the country,
with more than 200 companies employing more than 17,500
people. The City recently reaffirmed its commitment to
protecting those jobs and creating new ones by establishing
the Stockyards Planned Manufacturing District.
Aramark has contributed to Chicago charitable organizations
for many years. As part of the project, Aramark will supply
uniforms for athletic programs at nearby Taylor-Laurdsen
Park.
Aramark,
the global leader in managed services, operates in all
50 states and 18 other countries, offering a broad range
of services to businesses of all sizes, including health
care institutions, universities, stadiums and arenas.
In 2004, Aramark was ranked among Fortune Magazine’s “ America’s
Most Admired Companies.”
For nearly 100 years, Aramark Uniform Services, a division
of parent company Aramark Uniform and Career Apparel Inc.,
has been the largest manufacturer and supplier of uniforms
and career apparel in Chicago, providing rental, purchase
and lease services to cover 4,000 locations in the Chicago
area.
PART 3
Aramark Reports Strong Growth in Sales and Improved
Earnings for Third Quarter Fiscal 2004
Philadelphia, PA, August 11, 2004 (Business Wire) -- Aramark Corporation, a world
leader in managed services, today reported sales of $2.6 billion for its third
quarter ended July 2, 2004, an 11 percent increase compared with the third quarter
of 2003. Organic sales growth (as defined and adjusted as set forth below) was
8 percent. Income from continuing operations for the quarter was $64.5 million
as compared to $63.9 million in the prior year quarter. For comparison purposes,
after adjusting for two non-operating items that occurred in the third quarter
of 2003, as described below, income from continuing operations increased 7 percent.
Diluted earnings per share from continuing operations were $0.33 versus $0.33
in the year ago quarter or $0.31, after adjusting for the two items noted below.
For the first nine months of fiscal 2004, sales increased
10 percent to $7.6 billion. Organic sales growth was 6
percent. Organic growth excludes the impact of acquisitions,
divestitures and foreign currency fluctuations. For the
third fiscal quarter and first nine months of fiscal 2004,
organic growth is also adjusted to reflect the impact of
a calendar shift that caused Aramark's domestic education
sector to have one less service week in both the third
quarter and the first nine months of fiscal 2004 compared
to the corresponding periods in fiscal 2003. Income from
continuing operations for the first nine months was $178.5
million as compared to $160.1 million in the prior year
period and diluted earnings per share were $0.92 as compared
to $0.81 in the prior year period. Excluding two non-operating
items for the third quarter of last year - a $4.7 million
debt extinguishment charge, net of tax, and the settlement
of certain open tax years that reduced the company's provision
for income taxes by approximately $8.4 million - year-to-date
income from continuing operations rose 14 percent and diluted
earnings per share increased 16 percent.
"Our performance for the third quarter, as well
as for the first nine months of fiscal 2004, clearly demonstrates
that we continue to execute well on our Mission One growth
strategy," said William Leonard, President and Chief
Executive Officer of Aramark. "While we are very pleased
with our strong organic growth across-the-board in both
economically sensitive and non-sensitive businesses, we
continue to feel the effects of start up costs and other
cost pressures for some healthcare contracts and increasing
labor-related expenses in all of our lines of business."
In Aramark's Uniform Career Apparel - Rental segment,
sales of $262 million for the third quarter were up 3 percent
compared with the same period in 2003. Organic sales growth
was 3 percent. Operating income of $29.1 million represented
a 1 percent increase over the prior year quarter. Productivity
improvements were more than offset by higher vehicle fuel
costs, sales force ramp up and labor-related expenses.
In Aramark's Direct Marketing segment, third quarter
sales increased 4 percent to $105 million. Organic growth
was also 4 percent. Operating income declined to $2.5 million
due to product mix and increased marketing and administrative
expenses.
In its fourth quarter of fiscal 2003, Aramark reported
diluted earnings per share of $0.54. These results included
insurance proceeds related to Aramark's operations at the
World Trade Center as well as a loss associated with the
disposal of a residual interest in the Company's Magazine
and Book operations. Adjusted for these items, earnings
per share in the fiscal fourth quarter of 2003 were $0.47.
In addition, 2003 was a 53-week year and the financial
impact of that extra week was entirely in last year's fiscal
fourth quarter. The extra week is estimated to have increased
fourth quarter 2003 diluted earnings per share by roughly
7 to 8 percent.
Aramark expects its fourth quarter 2004 earnings will
be affected by several factors including contract start-up
costs and other cost pressures in its healthcare business.
The Company also reduced its expectations for the parks
business as a result of the negative publicity surrounding
the drought in its western parks. In addition, the recent
Federal government investigation concerning export sales
at Galls and the resulting uncertainty's effect on Galls'
business has begun to have an adverse impact on the Uniform
- Direct Marketing segment.
For additional information, visit www.aramark.com
