Laundry, Brexit, Carillion and Preston
21 February 2018
The public sector is a key market for any supplier of commercial laundry equipment and at Goodman Sparks we are no different. Hospitals, schools and colleges, universities, social housing, residential care, prisons, respite centres, are all institutions that are likely to need laundry equipment supplied and serviced to a commercial standard. We are lucky at Goodman Sparks that we have relationships with these local institutions built up over nearly fifty years of trading. It is though a very competitive market place and with public sector budgets under constant pressure it is becoming harder to compete against the larger national suppliers who have the buying power to undercut us on price. We were the provider of student laundries to the University of Sheffield for 35 years but lost the contract to a national company who dominate that market.
So it was with interest I recently read an article about Preston and the initiatives from the local council. In 2011 the town was at a real low point when a £700m redevelopment of the city centre collapsed as a result of the overall economic downturn and banking crisis. To help the local economy off its knees the council persuaded the main local public sector institutions to source as much as possible from local suppliers. Help and advice was given to local businesses on how to bid for tenders and procurement officers were encouraged to break down larger tenders in to smaller chunks making them more accessible to local companies.
As a result the public sector spend in Preston in 2017 increased from 5% to 18% of the total budget, and in Lancashire it increased from 39% to 79%. In cash terms that is an additional £75m spent in Preston rather than with building firms located in London or global catering companies. And that injection in to the local economy is against a council budget cut of £134m. It is estimated that 63p out of every pound spent locally stays within the local economy compared to 40p when spent with a larger or national company.
Of course EU law prevents “protectionism” policies being enforced but maybe Brexit gives a chance to address this. This is not about retreating to a mythical past where Little Englanders refuse anything from the outside world. It’s about preferring to use a local supplier to build the new housing estate, or the local laundry engineers who might cost a little more but will take on two new apprentices from the local college.
The collapse of Carillion demonstrates the type of world that these venture capital owned conglomerates work in. The world does need them but we also need to humanise our own towns and communities.
The Preston initiative demonstrates how local economies can thrive under adverse economic conditions and I would encourage anyone involved in the public sector to monitor their progress. And of course think about the after sales service. With a whole team of local engineers at Goodman Sparks we are able to respond quickly and efficiently. Please do give us a ring if you would like to discuss any aspects of local sourcing and commercial laundry. Our local team are always available to meet face to face rather than a global call centre.
(source of data quoted is The Economist Oct 2017)