From near-bankruptcy seven years ago to a £210m turnover, Johnson Service Group can thank a boom in workplace hygiene, strong relationships with family businesses and good, old-fashioned business principles for its current clean bill of health. Here CEO Chris Sander explains why not “sticking with your knitting” doesn’t wash with him
Attack of the Hi-Vis Overalls isn’t a film that exists in the B-movie canon. But should any auteurs be seeking an outlandish monster for their next horror flick, they’d be advised to step inside Johnson Service Group’s (JSG) new £8.5m Leeds workwear facility.
Everywhere you look, battalions of bright orange overalls drift past on rails in a ghostly, seemingly aimless march. This disembodied army is made even more eerie given the fact that they have no heads and come bearing name-tags of the workers who usually wear them – Ian from Ford, Chris from M&D Motors,
Phil the mechanic. Above, coat hangers hover like vultures. To the left, abattoir workers’ smocks. To the right, giant washing machines whirr and clatter away. And you’d better duck – a fleet of Sainsbury’s Deli aprons is now heading in your direction.
Mooch around this workspace, which isn’t really sinister thanks to its chirpy, hair-netted staff and pervasive mum’s-fresh-laundry smell, and it becomes apparent: there’s little in our everyday lives that hasn’t been processed by Johnson Group. From the hotel linen you woke up in this morning, to your lunchtime salad, through to the roller towels you dried your hands with in the office loos, the chances are it’s been washed or maintained by JSG or prepared by somebody wearing one of its rented garments.
Customers span the prosaic (JSG processes 80,000 dust mats a week) to royalty (thanks to Prince Charles-favouring dry-cleaners Jeeves of Belgravia, which JSG purchased in 2003). Every week, an estimated 1.35 million people are provided with clean uniforms from JSG, found everywhere from F1 racetracks to the House of Commons.
“Our philosophy has always been ‘stick to your knitting – do what you’re good at’,” says CEO Chris Sander, who has been at Johnson Group since 1984 and in the laundry trade even longer, having started as an eight-year-old ‘vanboy’.
‘Sticking to their knitting’ was something Johnson Group did very well for the best part of two centuries, with the silk-dyeing company created by the Johnson brothers in Liverpool in 1817 rising to become the UK’s largest dry-cleaning firm. However, anybody thinking JSG consists solely of the green-liveried high-street store where they get their suit iron-pressed, is sorely mistaken.
Today, dry-cleaning represents less than 10 per cent of JSG’s profit, with the mainstay being its textile renting arm, which encompasses workwear (Johnsons Apparelmaster), restaurants and catering (chef’s wear, napkins) and hotel linen (it provides two million pieces of linen to hotels every week). As a result, JSG’s turnover currently ticks over nicely to the tune of £210.4m a year.
Back in 2007, it was a different story. The firm was nearly bankrupt and mired in £183.9m of debt. It was a particularly painful time for Sander (then Johnsons Apparelmaster MD) who describes it as “watching a family bereavement or divorce”. The market cap was £13m (today it’s £294m) while the share price was at one point trading at a lowly 5p (around 89p at the time Director went to press).
Johnson Group’s textile renting success has benefited from recession-proof regulation in the workplace. The Health and Safety (Offences) Act 2008 means there’s been increasing demand for JSG’s overalls, tabards and jackets, while growth has also been boosted by rising food hygiene standards.
“The level of hygiene today is phenomenal,” says Sander, who despite his 40-year-long tenure, still speaks with the unbridled passion you’d expect from younger entrepreneurs. “In my lifetime, I’ve seen food factories where people changed overalls once a week – wearing the same garment for five days. Today, staff change twice a day, while in some factories, it’s every time they enter the production unit.
“Every ready meal or pre-packed salad you buy, we provide garments to make sure no foreign bodies enter the food – even for dog biscuits,” he adds. When such vigilance is breached – as with a recent newspaper exposé on workers making sandwiches with bare hands at a Nottinghamshire factory – it causes a media sensation. Sander senses there’s plenty of opportunity, especially in healthcare. “The UK is one of the few countries where nurses take uniforms home for cleaning,” he notes.
Sander estimates that JSG deals with 375,000 different styles of protective workwear boasting “more designs than any high-street retailer”, often creating bespoke designs for larger organisations.
The Apparelmaster business has its origins in the 1960s, as the Johnson business was left with empty factories when advanced dry-cleaning machines meant clothes could now be washed within four hours at a high-street store (rather than taking a fortnight to be delivered to factories). Inspired by a US firm that rented out overalls, Apparelmaster was born.
By the mid-1990s, there were signs this B2B enterprise would eventually overtake its better-known dry-cleaning forefather. “In revenue terms, it was 50-50, but in profits [textile rentals] were probably double,” recalls Sander. “The margins in textile rental have always been strong. Even when I was working in hotel laundry in the Lake District during the 1970s, where my company owned sheets and customers rented them, I could see it would overtake…”
This burgeoning B2B venture, combined with the confusion of “trading under 12 different family names”, prompted a 1995 restructuring, with the company dividing into two: Johnson Cleaners and Apparelmaster. A 2000 acquisition of main rivals Semara Group effectively doubled the textile rental market share, while it was becoming increasingly apparent the dry-cleaning division wasn’t performing as well.
The 2007 smoking ban meant consumers had less need to get clothes professionally cleaned as they were no longer contaminated with stale smoke. Combined with trends for cheaper clothing, a decline in business people wearing suits, plus JSG’s knitting-deviating diversification – branching into marquee-hire (“disastrous”, reckons Sander) – this all prompted the slowdown in the dry-cleaning trade.
Drastic action was needed, best summed up by another Sander aphorism: “If you’ve got frostbite in your finger, the best thing is to sever it to save your arm… You have to make decisions to keep your business fit and healthy.”
These decisions resulted in Johnson Group “divesting of all non-core businesses”, or store closures. In 2012, the group closed over 100 stores, followed by a further cull of 109 stores (more than a third of its high-street outlets) in January this year.
Many of these, says Sander, were down to leases expiring: “We had this opportunity to gaze into the future and say… ‘would we commit to a 10-year lease and are we confident they’ll still be profitable in 10 years’ time? If the answer’s ‘no’, then this is a wonderful opportunity to do something about it’.”
Instead, Johnson Group is refocusing on setting up dry cleaning outlets in car-friendly locations such as petrol stations and supermarkets, with the company having recently struck a deal with Waitrose. The January store closures came exactly one year after Sander became Johnson Group CEO. “If you asked me back in 1976, when I started as a trainee manager on £2,000 a year, if one day I would become CEO of the Johnson Group, I’d say, ‘no way’.”
One thing has remained constant throughout Sander’s career: the age-old Johnson policy of buying family-owned businesses, allowing them to continue trading underneath their own name. In May, it purchased third-generation London Linen for £65.4m, which supplies chef-wear, napkins and tablecloths to 1,600 restaurants in the capital.
Small business principles
Sander believes the traditional small-business principles of honesty, loyalty and listening to customers resonates with JSG’s own ethos. “If you’re polite and deliver what customers want, guess what, they will also pay bills on time,” he says, noting this shared vision is helpful when family businesses want to sell.
Such old-fashioned values could explain JSG’s high staff retention rates. Around a quarter of the workforce has been there for 10 years or longer, while one 96-year-old former-employee still turns up to AGMs. “If you’ve worked here less than 15 years, you’re still considered a newbie,” says Sander.
Company perks include an annual day-trip to a theme park for all staff, plus a Save As You Earn scheme which can result in employees doubling their money within three years. In the Leeds facility, computers are dotted around, so older workers can get to grips with new technology during breaks.
With adjusted pre-tax profits up nearly 50 per cent in 2014 (to £20m), there could soon be a different kind of Attack of the Hi-Vis Overalls: the company’s expansion. “I’m confident that if we continue with a number of good, old-fashioned things in business, such as treating everybody properly and listening to customers, then we’ll continue to be successful,” says Sander. “There’s lots of rhetoric about the customer being king and people being valuable assets… For this company, we mean it. Disbelieve it at your peril.”
Johnsons Service Group vital stats
Founded 1817 but the company traces its history back to 1780
HQ Runcorn, Cheshire
High point JSG’s recent, as CEO Chris Sander terms it, “resurrection from the ashes” and high turnover, largely attributable to its textile rental service
Low point Being “virtually bankrupt” with £183.9m of debt in 2007
Did you know? The most difficult stain to remove is “concrete marks”, according to Sander.
To find out more about Johnson Service Group, visit jsg.com
Chris Sander is a Fellow of the IoD and a member of IoD Bristol