By Joan Rogers-Harrington, Research CMM Online
From the March 2000 edition of Cleaning & Maintenance Management magazine.
Over the past few years, the percent of an in-house cleaning operations cleaning budget spent on paper products has remained relatively constant.
Cleaning & Maintenance Management's In-House Surveys since 1996 have shown in-house facility managers reported spending between 2.5 and 3.2 percent of their annual cleaning budget on paper products.
These figures could change drastically in the near future as pulp prices begin to rise, thereby increasing the cost of paper. In the last year, pulp prices have risen approximately 28 percent. (See related story on page XX) Eventually, this cost will have to be passed along to the end-user.
According to the 1999 Cleaning & Maintenance Management In-House Survey, facilities spent an average of $33,800 on paper products, or 3.1 percent of their budget. An increase of 28 percent would mean facilities would spend more than $43,000 on paper, or 3.3 percent of their 1999 budget.
While the percentage increase may not seem like much, the dollar impact could be substantial for some facilities. Limited budgets may force cutbacks in other areas. For example, the average starting worker earns $7.78 per hour. Working a 40-hour week, the average starting employee earns just over $16,000 per year. If paper costs were increased by nearly $10,000, a facility may have to cut back by nearly one employee.
Facilities with higher than average paper expenses could be hardest hit. For example, hospitals and nursing homes had the highest average per-square-foot expenditures on paper products in the 1999 survey, near or equal to twice the national average. Based on 1999 figures of average expenses and average square footage, increasing the price of paper by 28 percent would increase a hospitals paper expenses by nearly 5 cents per square foot.
The smallest facilities may also have the toughest time buying in bulk in an effort to decrease their costs. Small facilities may not have the storage space for the volume of purchases required for big price breaks.
In addition, hospitals and nursing homes offer the lowest average starting wage for cleaning workers. An increase in the price of their paper products could result in the elimination of close to 2 full-time employee positions. That is substantial, when you consider that the smallest facilities also tend to have the smallest cleaning staffs.
Facilities that cannot afford to cutback on personnel may have to find other ways of cutting costs. Some facilities may forego buying new equipment, which could ultimately affect productivity. The effect of the rising cost of pulp may not be immediately seen by facility managers. Distributors will likely phase in price increase in an effort to give customers time to adjust and keep customers happy. In the meantime, facility managers should explore the options available to them for dealing with price increases. Managers may need to request more money in the cleaning budget next year or perhaps make plans to clean the save amount of space with fewer employees in order to pay for the price increases.