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Chemical costs are to the carwash industry what fuel costs are to the transportation industry. Both industries are facing rising costs for the same reason: rising crude oil cost, benefit cost, and labor cost of their suppliers.
Of all the groups in the carwash industry, self-serve operators are best equipped to handle this crisis and may even be able to turn it into a positive.The cause
Chemical costs have been rising for the last two years. However, it has only been in the last year that carwash solution suppliers have been unable to hold back these increases from the operators.
What is causing the sudden and consistent rise in chemical costs?
There are many reasons. The two biggest are:
- Rising raw material costs; and
- Healthcare costs.
Ford and GM recently had their credit rating lowered to junk bond status. The reasons given were rising raw material prices and healthcare costs.
GM is one of the largest providers of healthcare benefits in the US. Their cost burden equates to $1500 of every car sold in the US.
The positive part of this problem is that self-serve operators don't have a lot of employees, therefore they will be able to better handle healthcare costs.
Except for last year, there hasn't been a significant price increase. If you did see a price increase, it wasn't due to increased chemical prices.
For the past year there has been a dramatic increase in demand for raw materials because of the industrial revolution in China coupled with a growing US economy.
This has created a demand for chemicals that US suppliers can't keep up with. For the past year, US chemical suppliers have shown some restraint by only selling 20 percent of their supply to China who is paying significant premiums.
The US companies are using this windfall to build manufacturing capacity. However, it won't be available for three to five years. China is also building capacity, so they won't be able to supply themselves for three to five years.Serious solutions
So what can self-serve owners do to address this dangerous problem? Deepen their understanding of chemicals.
The biggest opportunity for increasing the maturity of our industry is by increasing the chemical understanding of everyone involved in carwashing.
If we want to solve the problem, we need to become more aware and educated by attempting to understand the issue more specifically.
Over the last five years, the ICA has done an outstanding job of educating our industry in business techniques. The ICA has effectively moved the discussion, as it relates to business practices, to a more complex and involved place.
As a self-serve operator, you are a businessperson who provides a service through mechanical equipment and chemicals. If you've taken advantage of the ICA's resources, you've probably become an expert in equipment and business.
Yet, for most of us, our discussion of chemicals is elementary at best. In most cases we leave it up to our supplier.
In order for our industry to have a better understanding of soaps and waxes, we need to make the time and put forth the effort to learn the particulars about chemicals.
It's easy to see why chemicals are the last area addressed; chemicals are complicated and discussing them makes people uncomfortable.
However, the sooner we attempt to understand chemicals, the easier it will be to realize the full potential for our industry.Involvement
If you are willing to get more involved with the chemicals, there are opportunities for large cost savings.
A big part of what you pay for when you buy solutions is the lack of involvement. While this can be a huge plus for most segments of our industry, the self-serve operator is the most involved segment.
The majority of self-serve operators around the US are already blending products in one fashion or another.
Whether it is the powder product they are buying that is being blended with water, or the foam boost they are adding to select drums, or even the water they are adding to drums to dilute concentrates; these are all examples of operators blending their own chemicals.
Basically, additional savings can be obtained if these operators would just do more of the same.Blending basics
Subsection C of the Occupational Safety and Health Administration (OSHA) Standard 29 CFR 1910.1200 defines chemical manufacturing as the workplace where chemicals are:
- Blended or repackaged.
The key word here is "blended." Any carwash that currently takes powder or solid material and mixes it on site would be considered a chemical manufacturing site according to OSHA.
Each of these sites needs to have a hazardous communication program. This OSHA standard requires that information about the hazards of chemicals used in the workplace be communicated to the employees.
This hazard communication policy applies to each department whose workers are exposed to hazardous chemicals. This can be accomplished by labeling, making material safety data sheets (MSDS's) available in the workplaces, and conducting training.
Blending onsite will require you to create a hazardous communication program, but most self-serve operators need this any way.
Again, use industry associations and other available resources to learn more about this. It is not expensive or difficult to do.Customizing chemicals
If you've already begun blending, then it is not a big leap to try customizing your chemicals. This involves finding suppliers of chemicals in parts.
Whether it is:
- Foaming agents;
- Dyes; or
- Scents — several solution suppliers already provide these parts of the finished solutions.
Some formulas consist of over 25 raw materials and are designed to cover all the cleaning situations across the country.
Taking into account three water hardness conditions, three water temperatures, three fabric types and 20 stains, this works out to over 500 conditions.
While it seems like a great idea to cover over 500 conditions, realize that the average consumer only encounters less than 100 conditions. They are paying for ingredients to cover the other 400-plus conditions.
Some of the solutions you buy are designed the same way. When you turn up the usage, you are increasing the concentration of ingredients you need, but you are also increasing your usage of ingredients you don't need. What you need is flexibility in your solutions.
Look for suppliers that support and supply flexible products. Ultimately, the best answer is to find someone who will blend exactly what you need and not charge you for unnecessary raw materials.The challenge at hand
Challenge yourself to get a deeper understanding of the products used in your self-serve wash. Investigate the savings of customized products and lastly, get involved in putting the products together.
Now is the best time to determine how you will be involved in this crisis and how you can better understand the chemicals you use on daily basis.
John Lenhart works at R. Lewis Technologies, Inc. He has formulated products for Procter & Gamble, Dow Chemical, Dial Corp. and SC Johnson Wax. John can be contacted at firstname.lastname@example.org.