Page last updated at 23:19 GMT, Monday, 30 June 2008 00:19 UK

Dry cleaners hit by rising costs

By Greg Wood
North America business correspondent, BBC News, New Jersey

Joe Hallak
Joe Hallak is concerned that many dry cleaners will go out of business

Joe Hallak's dry cleaning business faces the most severe test in its history.

Founded by his father in Hackensack, New Jersey, 42 years ago, it is one of the latest victims of record oil prices.

Dry cleaning businesses are going out of business at the fastest rate since the 1960s.

There's been a dramatic jump in the cost of the chemical solvents used in the dry cleaning process.

"We just got word today that the cost of our petroleum-based solvents is going up by 20%," Joe Hallak says.

It's not the first increase he's had to swallow over the past few months. But it's not his biggest headache.

I get word all the time that dry cleaners' takings are down about 20% this year
Joe Hallak, vice-president, Hallak Cleaners

Everything here, from the running costs of the dry cleaning machines and steam presses, to the plastic coat hangers and suit covers, has become much more expensive.

"The cost of solvent is not our biggest culprit here," he says.

"Because the newer machinery with the new technology gives us such good mileage per gallon. We're feeling it more on the cost of plastic [for hangers and clothes covers] which is going up 5 to 10 cents per pound per month.

"We're feeling it on fuel costs on our vehicles for pick up and delivery. That has tripled in the past three years from $1,000 (£500) a month to $3,000."

'Cutting back'

Joe Hallak says it's hitting his bottom line.

"Of course your profits become lower when all your petroleum based products are going up. We try to pass some of it off to the customers but in reality you can't pass it all off, so we absorb some of that hit. That way we're able to stay in business," he says.

Dry cleaning
The cost of chemical solvents used in dry cleaning has just risen 20%

Mr Hallak is protected to some extent because he runs a business catering to better off customers with more expensive clothes.

"We are a couture cleaner. We have a niche market, so we don't feel it as much as a smaller mom-and-pop shop.

"Their customers are cutting back a lot more than our customers are and I get word all the time that dry cleaners' takings are down about 20% this year," Mr Hallak says.

As a former president of the National Cleaning Association, Joe Hallak is worried about the ability of smaller operators to survive the current squeeze.

"My business will survive. It's the smaller shops that concern me. There's a life expectancy on dry cleaning machines and the smaller guy who has to spring $60,000 or $70,000 on a new machine may not be able to because his costs have increased so much," he says.

"His profit line has shrunk and there's only so much he can pass off to the consumer. So when that time comes for some of these guys, it could be make or break for their business," Mr Hallak says.

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