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How much new technology is there in laundry? Gritty old economy commercial volume linen & uniform laundry services especially.

Well, to an entrepreneur, lots.

AmeriPride Services is driving its annualized productivity gains to their highest level since 1983. It is doing so by having every garment and piece of linen that passes through its giant plant tagged with an RF transponder. This dramatically reduces sort time, accuracy & labor – thus costs. Sewing these $0.75 tags into every garment is well worth the investment. They report being able to reduce 3 of 31 sorters on incoming and 6 of 14 on clean out going clothes. Since business is so good though, they have not actually let anyone go but rather reassigned them within the plant. In today's tight labor market, good workers are too valuable to loose.

Labor Department revised figures show productivity rose at a startling 5.7% annual rate in April, May & June. This represents an increase over initial estimates of 5.3%. For the previous 12 months to June productivity rose at its highest rate in 17 years. Even though businesses paid their workers more, productivity increases negated that to the tune that labor costs actually dropped 0.4%. Now that is a metric that Greenspan likes to see. This negates “any chance that rising worker pay will touch off a bout of inflation.” Says Ian Shepherdson, an economist at High Frequency Economics.

This is a very good sign. How often have you heard that these type gains are confined to only new technology companies? These and many other examples are exactly why the Fed has not raised rates further. Robust productivity increases help ward off inflation and allow the economy to run even faster without over heating. Offsetting labor costs in a tight labor market is so crucial and significant that Greenspan singled the phenomenon out at the Fed retreat in Wyoming last month. He said: “it is still difficult to find credible evidence in the US that the rate of structural productivity growth has stopped increasing”.

Economists predict a slow down of productivity gains from 5.2% year over year ending in June to around 3.3% by December. But technology to many a company and process like AmeriPride can bring vast further improvements. It is a question of willingness and cost. With 61 plants in the US and Canada, AmeriPride is already optimizing pick up and deliveries with special software too. Says Larry Steiner, AmeriPrides chairman: “Adopting new technologies isn't optional. I'm convinced if we don't do it, we'll be out of business. Other people will. We'll get left behind the curve and it'll be impossible to catch up.”

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