Steiner Corporation (Alsco)

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Steiner Corporation (Alsco)

505 East South Temple
Salt Lake City, Utah 84102
U.S.A.
Telephone: (800) 408-0208
Fax: (801) 363-5680
Web site: http://www.alsco.com

Private Company
Incorporated: 1912 as American Linen Supply Co.
Employees: 12,000
Sales: $712 million (2001)
NAIC: 812330 Linen and Uniform Supply

Headquartered in Salt Lake City, Steiner Corporation is the holding company for Alsco, the acronym for the American Linen Supply Company. The company was founded in Lincoln, Nebraska, in 1889, by George A. Steiner and incorporated in 1912 under the original name American Linen. From its incarnation as a towel delivery service, American Linen quickly became a pioneer in the commercial and industrial laundry businesses, or textile services. Still true to its original motto, “It pays to keep clean,” Steiner remains a third generation, family-owned private company with some 70 facilities around the world.

The First Generation: 1889-1946

The linen supply industry did not yet exist in 1889 when George A. Steiner, at the age of 15, started his own part-time towel delivery service in Lincoln, Nebraska. In those days it was customary for a business to wring a wet towel through a wooden roller and hang it to dry for the next use; a change of linen was a rare luxury.

George Steiner made an initial investment of $50.80 to buy the towel delivery route from Lincoln Steam Laundry. Two years later he invited his younger brother, Frank M. Steiner, to join him in equal partnership, picking up clean towels from the laundry, delivering them to local businesses, and collecting dirty towels for return to the laundry. It was a watershed moment and became part of the American Linen legend when the Steiner brothers sold a grocery store clerk on the idea of receiving a crisp clean apron every morning in exchange for the work-soiled one he was wearing. After striking this groundbreaking deal, the Steiner brothers’ towel business soon became “Lincoln Towel and Apron Supply.” As the business grew, the boys continually upgraded their means of delivery, from hand-to bicycle- to horse-drawn cart.

The local economy of Lincoln was particularly affected by the economic depression of the 1890s. Steiner weathered three years of declining business before he decided in 1895 to reestablish his linen supply in Salt Lake City, where the economic conditions were more favorable. Inspired by his brother’s entrepreneurial spirit, Frank Steiner moved to Minneapolis in 1896 to start a towel business there. During these early years, both of the Steiner brothers funneled the majority of their earnings back into the company, and it grew steadily. George tended to excel in the role of office manager, while Frank’s talent was as the company salesman.

The company built its first industrial laundry plant in Salt Lake City in 1910 and was incorporated under the name American Linen Supply Company in 1912, with George Steiner as president and a listed value of $150,000. Branches in Ogden, Utah, Minneapolis and St. Paul, Minnesota, and Chicago were incorporated separately that same year. By this time American Linen was supplying linens to butcher shops, bars, restaurants, groceries, offices, barber shops, hotels, and stores.

In 1918, in response to increased pressure throughout the industry from health officials over the unsanitary conditions created by the public roller towel, 21-year-old Frank G. Steiner, George’s son, developed and patented his first original product, a continuous towel dispensed by a specialized cabinet. In 1922 the Steiner Sales Company was founded in Salt Lake City to manage the production and sales of the cabinets. The invention proved such a popular and effective improvement that by 1948 it was in use all across the United States and would continue to be used into the 21st century.

Following World War I the Steiner brothers dedicated themselves to the goal of bringing American Linen to national prominence. In 1930 the founding brothers recapitalized their Salt Lake City and Ogden corporations in order to publicly rectify the increased worth of the companies and to strengthen their borrowing power. The Salt Lake branch was now valued at $ 1.5 million. While the recapitalization positioned the company for accelerated expansion, the onset of the Great Depression limited this. Still, during these years the Steiners maintained their intensive sales efforts and, having entered the decade debt-free, the company endured the hard times with relative ease. Even in the lean years, expansion was not halted altogether: by the time World War II broke out, American Linen’s operations had proliferated to Los Angeles, Portland, Oregon, Milwaukee, and New York City.

Consolidation and Expansion: 1946-59

George A. Steiner died in 1946, less than seven years after his brother Frank. In 1948 the disparate American Linen branches were consolidated under a new name: on June 1st, American Linen Supply Company (Alsco) was incorporated in the state of Nevada. The action dissolved the disparate companies in Salt Lake City, Ogden, Los Angeles, Portland, Milwaukee, Chicago, Minneapolis, St. Paul, Hibbing, and New York, replacing American Linen’s multicorporate structure with one that was unified under a single name and the centralized leadership of the parent corporation’s president, F.G. Steiner. Chicago became the company’s national headquarters. With the merger, management hoped, American Linen would benefit from increased buying and borrowing power, better-leveraged sales efforts, and more fluid communication throughout the company. All of these improvements would facilitate the rapid expansion that was to follow.

In the ten years following the consolidation, the American Linen Supply Company opened 16 new branches and nearly tripled its sales. Some of the new branches were built from the ground up, but most were the result of acquisition and rebuilding—the purchase of modest, family-run linen supply and laundry businesses which were subsequently upgraded and equipped with the latest machinery and Steiner-proven business practices. Some of the company’s most ambitious expansion was forged in Canada, and in 1949 Alsco extended its reach beyond North America by establishing a branch in Rio de Janeiro, Brazil.

The Brazil plant was the result of F.G. Steiner’s tireless expansion efforts and his sense that there was limited business left to be gained in the United States after World War II. However, the fledgling operation in Brazil presented a significant cash drain for the company, and it was not soon profitable. In addition, Steiner had bought a large paper mill in Albany, New York, in order to manufacture paper for a new paper towel cabinet he had invented, and this operation also required seemingly endless infusions of the company’s resources. After a period of growing dissent over Steiner’s management decisions, the Alsco board became irreparably factionalized, and a decision was made in 1959 to split the business into two companies: George R. and Lawrence Mclvor, the sons of Frank M. Steiner, assumed control of 22 plants in the Midwest and Canada, with headquarters in Minneapolis; F.G. Steiner and his own son Richard stayed at the helm in Salt Lake City, retaining control of 19 western plants, those in Milwaukee and Chicago, plus the operation in Brazil and another international effort in Cologne, Germany. The Minneapolis faction continued to operate under the name American Linen Supply Company, while the Salt Lake group changed their name, effective January 1, 1960, to Steiner American Corporation. Richard, then still in his 30s, became president of Steiner American, with his father F.G. as chairman of the board.

Expansion and Diversification: 1960s-80s

After the split F.G. Steiner was more determined than ever to continue in the vigorous pursuit of expansion. To accomplish this the company maintained conservative fiscal policies and concentrated on building up its net working capital. Within five years father and son had tripled the volume of business Steiner American had started with in 1959; they built new plants, including five of industrial capacity, and established 17 new branches, 11 of them domestic and six international.

In anticipation of increased international business, a company was formed in Lausanne, Switzerland, in 1960, to hold all of Steiner American’s assets outside the United States and Canada. In the coming years Steiner would command enterprises in Brazil, Italy, Spain, Mexico, Argentina, Australia, and South Africa. Steiner’s international pursuits were threefold: in addition to the linen supply branches and plants that were run by the Foreign Linen Supply Division, the American Uniform Company (whose ownership was divided evenly between Salt Lake City and Minneapolis) was establishing plants to manufacture uniforms and other textile products; further, the Steiner Company Division, directed by Robert L. Steiner, was focused on international manufacturing and distribution of paper products and cloth-towel cabinets. In 1974 Steiner Company Lausanne was renamed Steiner Company International.

Company Perspectives:

At Alsco, our philosophy and commitment are to lead the textile services industry with the latest technology, equipment, and processes. Our innovation, quality, satisfied customer list and heritage have made us the premier textile services company in the world. Of course, our value to customers goes beyond simply cleaning and delivering napkins, tablecloths, kitchen uniforms, and hospital and health care garments. Our customer care representatives pride themselves on their unique ability to manage and control linen and uniform costs while upholding health, safety and the all-important image of our customers’ businesses. That’s how we can back our services with a 100% product and service satisfaction guarantee in every agreement.

In 1964 Steiner American moved to disentangle its industrial operations from linen supply by creating a wholly owned subsidiary, the American Industrial Service Company (AIS), to manage the five industrial plants. Alongside linen supply, Steiner American also continued to develop its paper interests. This facet of the business was led by F.G.’s son Richard. In November 1967, Steiner American opened new international headquarters in Salt Lake City, where the company would continue to reside more than 30 years later.

The years from 1965 to 1968 showed solid earnings for Steiner American, and the company’s financial base continued to strengthen. In addition to investing in geographic expansion, the company also used its capital to diversify its interests. And while the legacy of international expansion belonged to F.G. Steiner, the legacy of diversification would belong to son Richard. Diversification was becoming a trend in American business, and Steiner also perceived the need to guard against antitrust sentiments, as well as a possible slow-down in the linen supply industry. Under Richard Steiner’s leadership, then, Steiner American explored a range of other industries through acquisitions and investments: food processing, fiberglass manufacturing, equipment leasing, leveraged equipment leasing, real estate development, banking, and filter manufacturing. As quoted in From Small Beginnings, Richard Steiner remarked on his approach to diversification, “If there’s a good deal, we’ll take it regardless of the area. We’ll add to either our diversified or our linen supply interests if it’s profitable.” True to Richard’s vision, by 1989 fully one third of Steiner’s revenues came from businesses outside the linen supply industry.

In the years after the 1959 split, the Minneapolis contingent of American Linen also forged ahead and grew rapidly, tripling the number of branches it held in the United States and Canada by the 1970s. Under the leadership of George R. and Lawrence M. Steiner, Minneapolis American Linen also expanded internationally, establishing interests in Belgium and Puerto Rico. During these years, American Linen plant equipment was upgraded and new technology was introduced. In 1969 a Paper Division was created to distribute paper towels, napkins, and tissue in the Minneapolis area. In 1979 George R.’s son Larry became president and George R. became chairman of the board.

A Second Century of Business: 1990 and Beyond

In the 1990s and the early years of the 21st century, Alsco faced increased competition from big national companies who were seeking to gain a share of major textile service markets. These companies included Cintas Corp. of Cincinnati; Aramark Corp. of Philadelphia; G & K Services, Inc., of Minnetonka, Minnesota; Tartan Textile Services of Abilene, Texas; and Angelica Corp. of Chesterfield, Missouri. In the face of these challengers, Alsco felt increased pressure to offer the most competitive prices as well as to gain new and maintain existing accounts.

In 1997, according to Forbes magazine, Alsco achieved $585 million in sales. Over the next four years, this number would climb 22 percent, to $712 million, earning the company a position as the 430th largest private company in the United States according to Forbes’ 2002 rankings. At the Ogden, Utah, plant alone, Alsco was processing more than 20,000 pounds of laundry per day, or 4.5 million pounds per year, by 2002.

With decades of sustained growth, Alsco found that it had outgrown many of its operating facilities and needed to expand. Also, stricter environmental controls and increased consciousness over the polluting effects and heavy water usage of industrial laundry plants forced Alsco to upgrade its facilities to conserve water and recycle industrial solvents. Among other upgrades, Alsco doubled the size of a plant in Spokane, Washington, in 1993; in 2000, in Boise, Idaho, Alsco moved into a new building, tripling its operating space and adding new equipment, including a water re-use system. Further, in 2001 Alsco began construction of a $25.2 million state-of-the-art plant in Chicago.

In December 2000 77-year-old Richard R. Steiner stepped down from his positions as president and CEO of the Steiner Corporation, yielding control of the company to his two sons, Robert and Kevin. Though it was unusual for a company to have co-chief executives, Robert and Kevin, great grandsons of the founder, George Steiner, represented a unique leadership opportunity for the company: Robert was considered the adventurous one while Kevin had a meticulous mind for details. Both had been involved with the family business since the age of eight, when they began working in the linen plants, and their ability to work together was long-proven.

Key Dates:

1889:: 15-year-old George Steiner buys the delivery route of Lincoln Steam Laundry in Lincoln, Nebraska, for $50.80.
1895:: Steiner moves the business to Salt Lake City, Utah.
1896:: A second branch of the business is established in Minneapolis.
1912:: The company is incorporated under the name American Linen.
1918:: Steiner patents the first continuous roll towel cabinet to replace the condemned public roll towel.
1935:: Minneapolis Linen Supply Co. is established to manufacture uniforms.
1948:: All individual American Linen companies are consolidated under the American Linen Supply Company.
1960:: Company is renamed Steiner American Corporation.
1976:: Steiner American is renamed Steiner Corporation.
1988:: U.S. branches of Steiner Corporation revert to the original name, American Linen Supply.
2000:: Richard Steiner, Sr., steps down, yielding control of Steiner to his two sons, Robert and Kevin.
2002:: Alsco launches an international rebranding effort whereby American Linen, American Industrial, American Cleanroom Garments, and Servitex are all combined under the name Alsco.

By the beginning of the 21st century, Alsco employed some 12,000 workers in eight countries. Its offerings included everything from sheets, towels, and uniforms to dust control mop heads, reusable incontinence products, and numerous washroom and hygienic products. These extensive and diverse operations were carried on by different subsidiaries under a variety of names. Confusion often resulted from the lack of a single operating name, and some branches even experienced difficulty closing global contracts. To remedy this, Alsco launched an international rebranding effort in March, 2002, whereby American Linen, American Industrial, American Cleanroom Garments, and Servitex were all combined under the name Alsco. Under the umbrella of one name, Alsco hoped to build a globally integrated communications platform and to convey its long tradition of quality products at a global level, while continuing to operate as a network of local businesses able to relate to its customers as neighbors. Backed by over a century of success in an industry whose growth potential was seen as virtually unlimited, Alsco seemed to be taking the necessary steps to assure its continued dominance.