What business qualities make an SME successful? We’ve been visiting various businesses to bring you some insightful case studies. This month it is Armstrong Commercial Laundry Systems, a family business and number 20 in our SME 100 listing


Armstrong Laundry Systems: Set on a reliable trouble-free wash cycle


Newbury-based Armstrong Commercial Laundry Systems is 135-years old this year, yet it almost didn’t make its centenary.


This is the story of a family business that failed to change with the times and very nearly became a historical fact, rather than the thriving secure business that it is today. Armstrong’s story is one of survival and recovery; the ability to accept the need to change, then build again based on fresh solid foundations.


In 1878 the grandfather of Jeremy and Thomas Lowes set up an engineering works in London with James Armstrong. The company became an importer and manufacturer of the first mechanical washing devices from the USA.


Grandfather Lowes later developed the rotary ironing machine, which established the company's name for laundry equipment among Victorian commercial laundries and gradually hospitals and hotels, which helped create today’s multi-faceted On-Premise Laundry (OPL) market.


The company continued to import and manufacture its own laundry equipment but by the late 1970s Armstrong was struggling. “The UK economy was in a mess, but we were like much of British industry at that time. We’d under-invested, hadn’t kept up with the times and made the wrong assumptions about the laundry market,” explained marketing and sales director Thomas Lowes. “Then we got hit by the NHS and others consolidating their laundries. We had to change our business model to survive.”


In 1982, Armstrong stopped manufacturing, sold its Perivale site and moved to Newbury, under a new management team led by Jeremy Lowes. The OPL sector was targeted despite Armstrong’s strong links to traditional commercial laundries. (UK commercial laundry numbers have fallen dramatically in the past 35 years).


It was a calculated risk at the time, but today, OPL work accounts for 60% of Armstrong’s business, with spare parts, specialist equipment, and joint ventures with entrepreneurs (such as independent launderettes) broadening its income streams – and spreading its commercial risks.


“Now, we have several divisions firing on all SPONSORS


cylinders, and if one went down, we would still keep going,” explained Lowes.


Armstrong also created strong financial foundations, highlighted today by the company’s Dun & Bradstreet highest creditworthiness and minimum-risk rating, proudly announced within its marketing.


The company now acts successfully as a full line distributor of commercial laundry equipment for major manufacturers, supported by Armstrong’s own service and maintenance agreements. It operates in diverse sectors from defence to education, livery yards to nursing homes, hotels to healthcare – again spreading risk. No customer is worth more than 2% of Armstrong’s £9.45 million sales.


“It was a hard lesson, which we learned, and we don’t ever want to get caught again.”


Armstrong evolved its OPL offering into direct and trade sales divisions – operating similarly to the automotive sector with local UK dealerships supplementing corporate sales to national account clients.


“We have developed a very successful dealer network, but, with dealers getting squeezed by manufacturers’ direct sales, the task now is to maintain it.”


In 2001, Armstrong bought a French company, the main national distributor of its chief supplier, but astutely has kept the acquisition as a French corporate entity.


The Internet, through price-comparison, has intensified competition in the laundry equipment sector and blurred the line between domestic and industrial equipment – to end-users’ detriment, says Lowes. “Some clients are going down a completely wrong domestic procurement path.” Frankly, domestic machines are not built to handle industrial payloads.


“The world today is ‘over washing-machined’. People can get a ‘box’ cheaply, but probably don’t fully understand what they are buying, and unless it is correctly installed and maintained it is often not a cost-effective business purchase.”


Armstrong’s company performance, knowledge Thomas Lowes


and experience have become an integral part of its industry; well-known and respected by those insiders it works with and competes against.


A key operational strength is that Armstrong is “easy to deal with”, and maintains very close personal contacts with its clients and manufacturers. Armstrong recently developed the industry leading Amazon eco-friendly laundry machine with manufacturer Primus.


“We are now well set up and, although we are still cautious about what we do, as a family-owned business we can plan ahead long-term, yet also make quick decisions when required.”


The success of Armstrong‘s journey from the dark 1970s was highlighted by its performance through the recession. Justifiably proud, Lowes revealed: “In 2008 our sales went down 30% but we remained profitable and we didn’t make anyone redundant.”


While Armstrong views Internet development warily, it is also alert to ‘killer risks’ such as technological innovation producing self-cleaning materials. “We can’t discount the fact that the laundry process could become obsolete.”


The important thing here is that 35-years ago Armstrong would not have given consideration to such an unlikely threat.


SME-to-SME tips gained from Armstrong


• Ensure your house is in order. Focus on what you do best.


• Understand customer requirements and trends in the marketplace.


• Select and maintain your aim. “That’s one of the 10 principles of war and actually they are all relevant, because it’s a war out there at times.”


Details: www.armstrong-laundry.co.uk


THE BUSINESS MAGAZINE – THAMES VALLEY – JUNE 2013


www.businessmag.co.uk


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