Mr. Clean

A decade ago, when Gordon Shaw first considered making the switch from his successful chemical-based dry-cleaning operation to a more environmentally friendly, pressurized liquid carbon dioxide (C02) cleaning system, virtually everyone told him he was crazy. "I'm a businessman first, but I've always been an environmentalist at heart," he says. "I wanted to do something that would make me feel better about my work, I wanted to make a difference in my lifetime, for both people and the planet. But everyone told me it would never work."

Shaw had used the chemical solvent perchloroethylene, better known as perc, since he started his San Diego dry-cleaning business in 1978. Perc has been the industry standard since the late 1930s, when Dow Chemical and other manufacturers introduced it as a replacement for the flammable hydrocarbon and smelly hydrocarbon solvents. But in the back of his mind he always wondered about the possible toxicity of perc, and at a dry-cleaning trade show in Orlando, Fla., in 1999, Shaw got his first look at a CO2 machine. It was love at first sight.

The machine was manufactured by a now-defunct North Carolina company called Micell Technologies, whose executives invited Shaw to their Wilmington, Del., headquarters after he showed an interest. Shaw accepted the invitation. But he didn't go alone. He brought along some of the dirtiest, smelliest laundry he could find, including some wool high-school-band uniforms, "the kind with that smell you just can't get out," he says. "I put that machine to the test." When the uniforms came out clean and odor-free, Shaw decided right then and there to sell his profitable perc business and pursue greener cleaning. "That was my epiphany," he says. "That day changed the direction of my life."

Shaw, 56, a former Naval officer and divorced father of two grown daughters, is an amiable but intense man. Describing himself as a passionate, competitive, detail-oriented perfectionist—and a workaholic—Shaw, who puts in at least 70 hours a week, is driven by a philosophy best summed up by a quote he believes he once heard from Malcolm Forbes: "Your adrenaline has to run. It is doing something better than it has ever been done before. This is how you build a business."

Shaw kept that creed in mind as he began building his new eco-friendly company. He knew the odds were against him. This was a virtually unknown business commodity; there were only a very small handful of commercial CO2 dry-cleaning operations in the country at the time, and the upfront costs were daunting. A CO2 machine costs about $100,000—three times more than a perc machine. But he didn't think he was going that far out on a limb. He was confident that if he chose the right location for his new store, and marketed it properly, the customers would come.

After choosing a spot for the first shop—an upscale new shopping center in the Mission Valley area in central San Diego—he took out a business loan for $486,000, purchased a CO2 franchise from Micell, then worked closely with the architect to design the inside of the store. Then he focused on "getting those dirty clothes through our front door." Thanks largely to an avalanche of local media, and praise from a variety of city and state pols and environmental groups (his shop won a San Diego County Clean Air Award), word of Shaw's unique business spread almost as soon as it opened, in April 2001.

Shaw's venture, Hangers Cleaners, has now expanded to four locations in San Diego County (two with machines, the other two are drop-off locations), and there are at least five more in the works. The company was recently named one of the 100 fastest-growing privately held businesses in San Diego by a local business publication. Shaw's CO2 machines will clean their one-millionth garment some time this coming spring (he keeps track of these things), and his operation enjoyed $1.648,000 in revenue in 2006 (December was estimated), up from $1,123,052 in 2005, $917,912 in 2004, $705,523 in 2003, $487,447 in 2002, and $212,982 in 2001.

Catering to upper-middle- and upper-class clients, Shaw, who has 28 employees making from $8 to $11 an hour, doesn't make as much profit as he made as a perc operator. Not yet. But, he says, "that's true for most cleaners now, as opposed to a few years ago. Dry cleaners can't increase pricing to keep pace with expenses, most notably labor. They're afraid to, because there are too many other dry cleaners who won't raise prices. It's not a thriving industry right now."

When Shaw decided to become a CO2 operator six years ago, he had one perc dry-cleaning location that was bringing in about $500,000. His rent was $5,000 instead of the $12,000 he pays now, and labor was in the range of $6 to $8 per hour.  Shaw looked carefully for the right location; it had to be in a higher-rent, upscale area where customers are willing to spend more for environmentally friendly cleaning. But Shaw fully expects his revenues will keep increasing to the point where one day soon they'll surpass what he was making back in his perc days.

But ever the perfectionist, Shaw expected even more. "I thought we'd have stores all over town," he notes. "I thought that San Diego especially would be really into it, because we tend to be environmentally conscious. It's slow, but it is the future. The mindset nationally is changing as well."

Six years after Shaw's store debuted, among the 35,000 dry-cleaning establishments in the United States there are still fewer than 40 CO2 plants. Several new CO2 store owners have failed across the country because they spent too much money on the new stores, and opened too many of them at once, before effectively evaluating their potential customer base in the area.  Obviously, some locations are more receptive than others to high-priced, environmentally friendly dry-cleaning operations.

Bill Fisher, executive director of the International Fabricare Association (IFI), the association for the dry-cleaning industry, calls Shaw a "crusader" who looked at CO2 machines very early on and liked what he saw. "It made sense for Gordon to make the switch," Fisher says. "He had the courage to put down a lot of money, and he's been successful with it. He provides a good service."

But the majority of dry cleaners still use perc, and Fisher notes that for perc operators who have less money in the bank than Shaw had, it isn't easy going green. Not only are the 20,000-pound, 10-feet-by-10-feet CO2 machines prohibitively expensive, but unlike with solar and some other eco-friendly options for businesses, there are no federal-tax or other incentives for dry cleaners to abandon perc.

Then there's the cost of the in-store upgrade. Because he charges more for dry cleaning than perc cleaners (as much as $2 more per item), Shaw's retail space has to have a correspndingly luxurious atmosphere. His stores feature special lighting, customized glass, graphics and porcelain-tile floors, waterfalls, high-tech counters that are shaped like ironing boards, blown-up, high-resolution color photos of local environmental scenes (reflecting whatever neighborhoods the stores are located in), and even touch-screen computers.

"It's all part of branding, which is very important for an upscale dry cleaner," says Shaw, adding that his curb appeal is high because he puts the futuristic-looking C02 machines right in the front window. When people walk or drive by, they stop and notice: "I get people stopping and looking at the machines every day. Some people think it's a micro-brewery. It's great for marketing."

Meanwhile, as Shaw's new business continues to grow, the national debate over perc simmers on.  Even though an increasing number of studies, including those by the National Cancer Institute (NCI),  the National Institute for Occupational Safety and Health (NIOSH) and others have concluded that perc is a toxic contaminant and potential human carcinogen, the dry-cleaning industry collectively still vigorously defends the use of the solvent.  "I have no quarrel with Gordon, but I don't agree with him completely about his feelings toward perc," says Fabricare's Bill Fisher. "Some studies suggest perc is a carcinogen, but probably an even greater amount suggest it isn't."

Despite all the bad press the old chemical methods have been getting,  it might be a surprise to learn that Shaw's customers aren't necessarily motivated by environmental issues. Most of his customers come, he says, because they don't like the smell of chemically treated clothes or because perc makes them itch or they have skin allergies. Others come, he says, because regular dry-cleaning machines treat their clothes at 120 degrees, while with CO2 it's 60 degrees, so the fabric doesn't break down as fast, and the clothes last longer and feel like new even after they're cleaned.

Shaw admits the really deep, greasy stains don't come out quite as well with CO2 process as they do with perc. But that isn't his customer base anyway. And that's why he says his employees work harder to get the stains out. "That's another reason we charge more, you get more individualized service and we work harder to make sure each item of clothing is clean," he says. "But your clothes are actually cleaner with my system because the germs are gone; there are no chemicals on your clothes when you pick them up."

Shaw, who since he made the switch has been the subject of numerous print and TV news stories, gets calls from as far away as Brazil and Sweden asking about his stores. He's enjoying the attention and seems comfortable in the role of pioneer. "I'm having the last laugh, but I don't rub anyone's face in it," he says. "But there is some vindication since so many people told me at first that I was crazy. Honestly? I hope perc is not a carcinogen. I worked with that chemical for 22 years, and still have friends who work with it. But people working with perc are dinosaurs, and they know it. I wish no misfortune on anyone, but it feels good to know I chose the right road."

In our next installment, we'll explore the debate over the toxicity of perc in the dry-cleaning industry and find out how other kinds of businesses have made the transition to more environmentally friendly methods.