Temporary staffing agencies in Orange County reported some revenue growth and modest growth in demand for temporary workers during the 12 months ended June 30, according to this week’s Business Journal list. But much of that growth occurred in the last two quarters of 2000, company officials said in interviews. And the weakness in demand for temporary workers already apparent in high tech and telecom in the first half of this year seems to have spread across other sectors since then, they said.
“This past year the Orange County market had been strong until the last month or two,” said Bruce Flaxman, OC operations vice president for No. 17 PDQ Personnel Services Inc. “If you talk to 10 people in the temp sector you may get 10 different answers,but there’s no question the entire economy has been affected by the slowdown.”
Karen Kerr, OC manager for No. 11 Pro Staff Personnel Services, said temp agencies typically are a leading indicator for economic trends, with companies tending to cut temps first in a downturn and begin hiring temps first when things ramp back up.
Kerr said she believes most of what’s going on right on now is cyclical, and she thinks the downturn in OC will be shallow and short-lived.
“It’s not like the last recession where we had extremely high unemployment,we don’t have high unemployment right now,” she said, noting “we’re starting to see things pick up a little for temp hiring in the non-manufacturing sector.”
Still, she said, “we’re still seeing uncertainty in the telecom sector.”
Overall, the 19 agencies on the list reported an aggregate revenue of $746.1 million for the 12 months ended June 30, up 6% from the previous period. The number of employee placements by the 19 companies grew 2%, to 488,512. The agencies grew their own OC employment 10%, to 2,460.
The list ranks agencies based or operating in OC by their locally generated revenue. Melville, N.Y.-based Adecco Employment Services, a unit of Switzerland’s Adecco SA, topped the list. With 20 OC offices including a county headquarters in Laguna Hills, Adecco posted $107.0 million in OC revenue, a 13% increase from a year ago.
“We had a tremendous year with large account wins both nationally and locally,” said Adecco OC area manager Kristin Othman, “especially in electronics, automotive manufacturing and healthcare.”
Adecco’s average hourly wage in OC rose 14% to $13, which Othman attributed to “unprecedented” increases in market value for employees during the latter months of calendar year 2000.
“Companies were still dealing with incredibly low unemployment rates and huge cost-of-living increases,” she said. “Now we’re seeing companies laying off their full-time regular staff and supplementing their workforce with temporary employees,we’re also seeing a little more cost-consciousness as of late.”
The agency’s own OC employment rose 14% to 96.
No. 3 Tustin-based Abbot Resource Group Inc. made one of the biggest moves up the list, jumping four spots from No. 7 with a 59% increase in revenue to $81 million.
Another big gainer was No. 11 Orange-based Checkmate Staffing Inc., which, like Abbot, also moved up four spots from its year-ago ranking, chalking up $20 million in revenue (this is a Business Journal estimate; the firm declined to provide revenue figures).
Apart from placements, Checkmate posted the biggest gain in OC hiring for itself both numerically and as a percentage by far, adding 285 employees to bring its total county headcount to 1,310,a 28% increase over last year’s list figure.
In terms of its own staff, the company remains well ahead of everyone else on the list.
Pro Staff’s Seal Beach office fell a notch against last year, with OC revenue plummeting 43% to $20 million.
Pro Staff’s Kerr attributed the company’s drop in revenue to shrinkage in the electronic assembly and telecom sectors, even though the company reported a 34% increase in placements, or 1,256, to 4,996.
(There is little direct link between the number of placements and revenue, as the average length of placements can vary widely from firm to firm based on the terms of their largest contracts and the sectors they are most active in.)
“We had a single electronics client that hired around 700 people through us around the end of last year and then let everyone go within a few months,” Kerr said. “The manufacturing sector, including high tech, is being hit hard and their usage of temporary staffing has diminished.”
The company’s OC employee count also fell 28%, to 29.
The top debut on this year’s list was No. 15 Lake Forest-based Principal Technical Services Inc., which grew revenue 38% over its prior-year figure to reach $13.4 million.
Also debuting on this year’s list is the Irvine office PDQ, which grew revenue a whopping 52% to reach $3.5 million for the fiscal year ended June 30,the biggest percentage increase in revenue on the list.
PDQ’s Flaxman attributed the growth to a combination of commercial and government activities, especially for administrative tasks like call centers and collections. The company has a contract with the county of Orange.
Flaxman noted that government contracts are the last to go in any economic downturn.
“Government usually is hit a year or two after a slowdown since they already had budgets in place based on the previous year’s tax revenue,” Flaxman said. “The county of Orange is hiring and a lot of major municipalities here in the county are hiring as well.”
Also debuting on this year’s Business Journal list was No. 18 Anaheim-based ABS Personnel, which grew revenue 21% to $2.3 million.
ABS Executive Vice President Dwight Troutman attributed the gains to the company shifting its focus to small and medium-size businesses,away from the aerospace sector to petrochemical firms, municipalities and electronics and medical device makers.
“Apart from high tech, OC has been a fairly healthy market,” Troutman said. “But since Sept. 11 everything is up in the air and the next 30 to 60 days are going to make a tremendous difference as to what happens from here.” n
