Although a group hoping to reverse a decision by Health Sciences North to switch its laundry service provider says the move is an attempt to save $500,000 at the expense of 42 jobs (36 union jobs), an economic report by the City of Greater Sudbury paints a different picture.
Presented to city council on Feb. 28, the report by Liam McGill, a business development officer with the Greater Sudbury Development Corporation (GSDC), describes a business that needs millions in upgrades just to keep operating -- and even more investment to be competitive.
The amount Sudbury Hospital Services charges per kilogram of laundry is one of the highest in the industry, the main reason it can't attract new customers, the report found. Where once SHS provided laundry services to hospitals from North Bay, West Nipissing, Mattawa and Sudbury, by 2012 all save Sudbury declined to renew contracts with SHS.
The report from the GSDC says SHS needs $2.3 million in capital investments over the next five years ($1.2 million of it in the next year and a half) to stay in business. That's on top of the $1.5 million SHS has invested over the past five years to keep operating.
Further complicating things, SHS doesn't have the capacity to borrow money, the city report says, because of its poor financial position.
What's more, in an overall analysis of the laundry services sector, the city report found employment in dry cleaning, laundry and related occupations is falling due to increased mechanization and automation.
So, the report states, to be competitive SHS would need to make "a significant move towards increased automation and mechanization" in order to lower its rates. Ironically, this would make the business competitive, but also result in job losses.
The picture the report paints is of a failing business that is no longer competitive in a sector that is undergoing significant restructuring. Since losing practically its entire customer base, SHS can't offer the same service as a provider like Mohawk Shared Services for a competitive cost.
And while the Friends of the Sudbury Hospital Laundry Workers portrayed HSN's representation on the board as a conflict of interest, as a not-for-profit corporation, SHS is operated by a board of directors made of the member hospitals to which it provides services.
Because Health Sciences North is the only hospital still receiving laundry services, it is the only institution still represented on the board. Ninety per cent of SHS business comes directly from the Sudbury hospital.
In a statement, the hospital said the city's economic report "demonstrates that SHS in its current form is not a viable company."
“HSN has supported SHS as best we could, even when other customers left," the hospital said in a written statement. "Like you, we wanted to support this local business. We wanted to give them every opportunity to thrive and create a sustainable business."
While the hospital will continue to receive dishwashing services from SHS, which will also continue to transport hospital linens to the new supplier, Mohawk Shared Services, in Hamilton, HSN said rising costs and the capital investments needed make Sudbury Hospital Services unsustainable.
You can view Friday's press conference in its entirety below.
