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To Merge or Not to Merge?

For more than three decades TRSA and UTSA have discussed merging their two associations. Can the third and most recent attempt work? A merger expert offers his counsel on why 75% of all mergers don’t work.

Nearly 75% of all association mergers fail. That’s a grim statistic, but framed in those terms, the on-again, off-again nature of merger talks between the Textile Rental Services Association (TRSA) and Uniform Textile Service Association (UTSA) seems pretty average.

“The top factor that determines eventual success is the process through which the organizations are merged,” says merger consultant Dr. Mitchell Lee Marks in the November issue of Association Now magazine, published by the American Society of Association Executives (ASAE).

As an organizational psychologist and the head of Joining Forces.org based in San Francisco, Marks has been involved in more than 100 corporate mergers. He recently shared his experiences with ASAE members in the article, “Making Mergers Work.” In a nutshell, his findings:
  1. If there isn’t a great enough need, the merger won’t happen,
  2. Even with careful planning, us-versus-them dynamics flare in any merger,
  3. Making the merger process work requires commitment to planning and consensus building before, during and for years following the official merger date.

The Need for an TRSA/UTSA Merger
Time was when the majority of operators in the textile services industry were mom-and pop-companies. Linen suppliers started in the latter half of the 19th Century as “bobtailers” and delivered bar mops, aprons and linen from horse-drawn carts. The service evolved to include laundry-by-the-pound service for families, and then rental linens delivered via truck. In 1915, the Linen Supply Services Association (LSAA, later renamed TRSA) was formed. In the ensuing decades, some operators began to specialize in uniform and towel service to the industrial market sector. The Institute of Industrial Launderers (IIL, later renamed UTSA) was formed in 1933.

These associations were characterized by close fraternal relationships and provided professional development and representation in Washington, D.C. As an association, UTSA services focus primarily on uniforms, dust control and towels/wipers. TRSA services focus on linen supply, uniforms, healthcare and dust control.

Fast forward to 2005. Market forces have wrought decades of consolidation and national companies dominate much of the marketplace. Strong family-owned, independent companies are the exception, rather than the rule. What were clearly defined lines between industrial and linen providers have blurred long ago. Many allied member supplier companies have been forced to reinvent or merge in order to survive. The net sum is fewer operating and supplier companies in the industry—and a shrinking membership base for the two associations.

One thing that hasn’t shrunk, however, is the cost to operate both associations. Yet, while dues revenues have declined, there is more pressure than ever for both associations to continue to deliver high-quality programs and services to members.

Both associations publish magazines and hold annual conventions primarily supported by supplier funding. A biennial international exhibition relies on the same pool of supplier companies for funding. Both associations have an extensive committee structure that depends on member and supplier participation. The benefits of a merger become clear. The creation of one association could:

  1. Reduce operating expenses,
  2. Eliminate duplication of services,
  3. Save dual members time and money,
  4. Relieve suppliers of the financial burden of supporting two associations,
  5. Relieve the staffs of both associations from the continual stress of “potential merger” and allow them to focus more fully on serving the needs of members.

Us-Versus-Them Dynamics Inevitable
“Even with the most careful planning, us-versus-them dynamics flare in any merger,” says Marks.

UTSA and TRSA have not been exempt from this situation. Indeed, us-versus-them issues have arisen during each of the three significant merger attempts. That’s understandable given the two associations differing operating structures and cultures.

By most accounts, informal merger discussions first began at the 1970 LSAA convention in Honolulu. Allied members drafted a request for merger in the early 1980s. Here’s a brief review of formal merger attempts between TRSA and UTSA:

Summer 1998—First formal merger effort ends after TRSA member vote fails to win by 66% as required in association bylaws. “We came very close,” says TRSA’s Past President Bob Spence, who led merger talks for TRSA. “We had a majority of members vote for it, but missed the 66% mark by a few. It was an ideal time for the merger to happen—TRSA Executive Director John Contney was retiring and everyone agreed we should move our offices to Washington, D.C. from Hallandale, Fla.”

Fall 2003—Second merger attempt never makes it to member vote. The leadership of UTSA and TRSA are unable to come to terms on the proposed merger after 10 months and agree to continue operating as independent associations—with increased cooperation.

December 2005—Third time lucky? This attempt looks to be the closest the associations have come to reaching a true merger. A member vote for the merger was achieved in August. An executive committee for the combined association was selected and began meeting. A name for the new association was selected—UTRSA. However, with the Jan. 1 merger deadline fast approaching, and key elements lacking (such as a budget for the new association and a new president), on Nov. 18 the TRSA board asks to delay the merger one year till January 2007. Next steps? UTSA’s call.

Planning and Higher Purpose Leads to Merger Success
Merger guru Marks sites successfully merged associations as those who have allowed enough time for the planning and decision-making process. He also says it is critical to have a facilitator or leader who is vested in what is best for the industry rather than one whose interests are tied to a specific association.

TRSA and UTSA formed a combined executive committee to lead the merger last summer. Is six months enough time? TRSA says more time is needed and has detailed its concerns (see memo sidebar). As we go to press, UTSA has not yet responded to the TRSA memo but promises an announcement On Dec. 9. Both TRSA and UTSA leadership were contacted for this article, but no response was received prior to press time.

Earlier comments from UTSA leadership indicated that it had interpreted TRSA’s request for a delay as a suspension in merger efforts. And then there is the talk that UTSA really wants to acquire TRSA rather than merge. TRSA is the larger organization, but is UTSA superior?

Back to the most important point: Is there a strong enough need to merge TRSA and UTSA? For the majority of allied members, the answer is a definitive YES. As each association struggles to deliver services with shrinking revenues, more and more staff and operating members agree that merger makes sense. Financial realities have taken center stage. Yet, because of the strong cultural differences between the two associations and among those who consider themselves either linen supply or industrial operators, there is still a group of members who would rather stay independent.

So what should and what will happen? “The two groups need to stick with it and go forward,” says Mike Dineen, longtime allied member of both associations and currently vice president of Pellerin Milnor Corp., Kenner, La. “If they can’t get the merger done with the people they have now, they need to form a new team. And that team should include a supplier representative. We want a voice.”

ASAE spokesperson Chris Vest says many associations have found themselves in the same situation as UTSA and TRSA. “For those that don’t merge, they typically downsize the staff and the services provided to members,” Vest says. “And members may become disillusioned and drop their memberships or join other associations.”

Nancy Jenkins is the owner of Jenkins Integrated Marketing based in Fairway, KS. She served as managing editor of TRSA’s magazine, Textile Rental, from 1984 to 1990 before beginning her consulting career at Fleishman Hillard. She is the current editor for the American Reusable Textile Association (ARTA).

 

 

Quick Rinse - News From Around The World

A Gruesome Laundry Surprise

PHOENIX, Ariz. — A body in a bin was discovered by employees at a Sodexo commercial laundry facility. The body arrived on a delivery truck from medical facilities in Tucson. Team members who were unloading the bins first noticed blood on the sheets then discovered the body in one of the bins. The man, a transient, had previously slept in the laundry-bag area near the Tucson medical facility. It is believed that the man either died from a medical condition or was suffocated by the plastic bags. The body showed no signs of trauma or foul play.