TEMPORARY REPRIEVE
Temp Agencies Stem Last Year’s Steep Revenue Decline
By CHRIS CZIBORR
Temporary staffing agencies in Orange County have stopped the bleeding.
The 20 companies on this week’s Business Journal list saw revenue from their OC offices fall 1% to $738 million for the 12 months through June 30.
That marks improvement considering the 20 companies on last year’s list saw revenue plunge 11% as employers cut back on temporary workers amid the economic slowdown. In 2001, the companies on the list saw a 6% rise in revenue.
The list ranks agencies based in OC or with offices here by their locally generated revenue.
This year’s group is weightier than last year’s, thanks to some new discoveries.
Three new entries account for nearly $100 million in revenue, versus just $10 million for three companies that were on last year’s list but didn’t make the cutoff this time around.
As a result, this year’s group has 14% more revenue than the 20 companies on last year’s list, which counted $646 million in revenue for the 12 months through June 2002.
Eleven companies on this year’s list reported higher revenue. Five reported lower revenue.
The list includes four Business Journal estimates for companies that declined to disclose numbers. Without estimates, the 16 other companies still saw a 1% drop in revenue to $632 million.
Temp agencies can be a leading indicator of economic trends, with companies cutting temps first in a downturn and hiring them when things start to ramp up again.
“Our industry is one of the first ones to see the effects of economic recovery,” said Lou Perez, chairman and chief executive of No. 9 Orange-based Checkmate Staffing Inc.
But the agencies still swam against the tide in the past year. The number of worker placements by the 20 companies fell 5% to 368,512.
The number of people employed directly by the agencies grew by 4% to 1,195 people in the past year, likely in anticipation of more demand this year and next.
Melville, N.Y.-based Adecco Employment Services, part of Switzerland’s Adecco SA, tops the list again this year.
With 20 OC offices, including a regional headquarters in Laguna Hills, Adecco posted $117.9 million in revenue, up 1% from a year earlier.
No. 2 Orange-based Volt Services Group also held its rank from a year ago, despite seeing revenue fall 1% to $71.3 million.
Moving up two spots to No. 3, the Irvine office of Milwaukee-based Manpower Inc. grew local revenue 15% to $69 million.
“We’ve been gaining market share,” Manpower area manager Sue Foigelman said. “For us, July and August have been 30% to 40% over the same months last year.”
Foigelman said she expects revenue to continue picking up through year’s end.
“The temp sector is doing OK,there are pockets of activity out there,” she said. “We’re entering a very busy time of year, prior to the holidays. Manufacturing is ramping up, and customer service divisions are getting busier.”
Debuting at No. 6, the Irvine office of Spherion Corp. saw revenue fall 13% to $64.2 million.
“Most of our industry has been impacted by the economy in the first part of the past fiscal year,” said Lisa Pierson, Spherion group vice president.
But Pierson said she is seeing an uptick.
“We are seeing some really positive signs in the economy,we’ve increased revenue every month for the past three months,” she said. “Our customers are starting to open their doors again. I’m looking forward to a nice trend through the end of this year.”
No. 7 Irvine-based Kimco Staffing Services Inc. held on to its position from last year’s list, growing revenue 16% to $48.2 million.
“We’re grabbing market share,” said Kimco President Kim Megonigal. “Sales are up but margins are down. With cost pressures like workers’ comp, we have to do 10% more in sales volume just to stay even.”
Megonigal said Kimco hasn’t yet benefited from the economic recovery now under way.
“Hiring is not up,we just haven’t seen a turn in this economy yet,” he said. “We seem to be hearing vibes that things are starting to pick up. But I haven’t seen it in my numbers yet. Companies are very cautious right now, trying to maintain productivity and costs.”
Slipping five spots to No. 11, Santa Ana-based Abbott Resource Group Inc. saw revenue drop 51% to $21.7 million.
The drop came after Abbott said it sold off an unprofitable nonstaffing unit in 2001.
Karen Powers, president of Abbott, said she expects to see revenue growth this year.
“We’re definitely seeing an uptick on the horizon,we’re considerably ahead of where we were at this time last year,” Powers said. “We’re seeing a gradual increase in number of orders over the past two to three months.”
Falling six spots to No. 16, the Irvine office of Carlsbad-based Omni Express Personnel Inc. saw revenue drop 23% to $13.5 million.
“We exited the industrial business over a year ago because of high workers’ comp costs,” said Thomas Porter, Omni’s chief executive. “We decided to be more selective about the accounts we went after. Our bottom line is much better now,even though revenue growth is down, because our costs like workers’ comp are now much lower.”
Omni now is focusing more on placing clerical workers, as well as accounting and financial services staff, Porter said.
Repeating at No. 17, the Santa Ana office of Philadelphia-based CDI Corp. grew revenue 28% to $12 million.
“We’ve seen a real uptick in hiring from defense and aerospace firms around here,” CDI regional sales manager Robert Steuernagel said.
Debuting at No. 17, New York-based Headway Corporate Staffing Services Inc., which has a local office in Newport Beach, saw revenue drop 14% to $12 million.
Linda Elder, Headway senior vice president, said she expects a rosier year ahead.
“We’re already seeing a turn for the better,” Elder said. “We’re as busy as we can be right now.”
The three companies on last year’s list that didn’t make this year’s cutoff: The Irvine office of Los Angeles-based PDQ Personnel Services Inc., last year’s No. 18; Anaheim-based ABS Personnel Services, which tied for the No. 18 spot last year; and Irvine-based Zebra Net Technical Solutions, last year’s No. 20.
