Two San Diego executives who made their names in the real estate and hospitality industries are getting into the laundry business.
Tom Gildred and Bob Payne say their new venture, Emerald Textiles, will create the most technologically advanced industrial laundry service in the region.
The service has nothing to do with the corner laundry where customers get their shirts and slacks cleaned.
Emerald is going after hospitals, medical clinics, and later, restaurants and hotels. All these facilities have linens, garments and other fabrics that require regular cleaning, and nearly all outsource the service.
“This will be the first new facility of its kind in San Diego in the last 30 years,” said Gildred, whose father, Phil, is cousin to Theodore Gildred, chairman of The Lomas Santa Fe Group and a former U.S. ambassador to Argentina.
Tom Gildred is on the board of The Gildred Cos., which owns and manages light industrial properties in Southern California.
Payne is the former owner of the Hanalei Hotel and Old Ox Restaurant (both of which were sold), and a major donor to San Diego State University. He was named Mr. San Diego by the San Diego Rotary Club last year.
“We have a state-of-the-art facility that will save a tremendous amount of water and costs for our customers,” Gildred said.
Emerald Textiles estimates the laundry facility will save 30 million to 40 million gallons of water annually when operating at full capacity as compared to traditional processes in San Diego.
Spinning Out New Facility
As of last week, the company had zero customers, but that should change shortly when Emerald’s new plant begins operating in September, Gildred said.
Located in a leased, 111,000-square-foot warehouse in Otay Mesa, Emerald Textiles has invested about $20 million in the business, mainly in new equipment. The machinery includes a seven-chambered “tunnel washer” that can handle about 5,000 pounds of laundry a minute.
The operation also features more automation that reduces labor costs and makes things much more efficient.
Gildred described a seven-stage process that uses a monorail or conveyor belt to move the linens through the plant. It starts with sorting all the soiled laundry, then moving it into the tunnel washers. After that, linens go through pressing machines to extract most of the water, before they’re delivered to dryers. From there, the linens go to ironing machines and finally to folding machines. Finally, the laundry is placed into carts and moved onto trucks that deliver the linens to the hospitals.
Sean Mageean, vice president of Nulin, the health care laundry division of Las Vegas-based Mission Industries, said not many new laundry plants have been built in recent years because of the heavy capital costs.
“Most companies are selling off their plants,” Mageean said.
Heavy-Duty Competition
One of the largest industrial laundry operations in the San Diego region, Angelica Corp., based in Alpharetta, Ga., dominates the market servicing 38 of the 41 primary hospitals from a facility near downtown San Diego. It has about 400 employees locally, and 5,500 in total. Last year’s sales were about $440 million.
Steve O’Hara, Angelica’s chief executive, said the $6 billion health care laundry market is highly competitive, with new startups forming all the time.
“We’ve never taken San Diego for granted and we don’t intend to now,” O’Hara said.
He said the company invests an average of $15 million into its plants annually, and recently installed energy-saving equipment in the San Diego plant.
Angelica was a public company until August 2008 when it was acquired by an affiliate of Lehman Bros. Merchant Banking for about $300 million. The subsequent bankruptcy of Lehman Bros. Holdings Inc., the largest corporate bankruptcy in the nation’s history, did not affect the sale to the affiliate, a renamed private equity group called Trilantic Capital Partners, O’Hara said.
Mageean, a former Angelica employee, said due to the Lehman bankruptcy and the subsequent liquidation of many of its assets, “there’s been a big scramble to go after much of that business.” He said since Nulin was launched this year, it picked up eight hospitals formerly doing business with Angelica.
Hospitals Size Up Newcomer
While Emerald has yet to line up any customers, Gildred said there’s been considerable interest among the major hospitals in the region, a group of about 20.
“There’s enough capacity in our plant to serve every hospital in San Diego,” he said.
In terms of staffing, the company expects to hire about 150 workers initially, and add another 100 more in the first year as the company picks up new business, Gildred said.
First year revenue is projected at $15 million to $18 million, he said.
Although neither Gildred nor Payne have any background in the laundry industry, they say they’re confident the new plant’s compelling high-tech equipment, lower costs, and efficiency will alter the marketplace.
“Bob and I saw a monopoly that existed here,” he said. “Basically, there’s only one provider, and it’s operating in an older facility. We saw the opportunity to come and compete.”