Download the 2010 OC’s Top Employment Agencies list (pdf)
This year’s list of employment agencies is a reflection of a long and horrible 2009, but agencies are glad it’s over as many are seeing signs of a budding recovery with demand for temporary workers.
The 20 largest employment agencies with offices here posted a 19.7% decline in revenue to $623 million in 2009, according to this week’s Business Journal list, which is ranked by Orange County revenue.
The drop likely was steeper than our list indicates, as there are 13 Business Journal estimates for companies that declined to provide figures.
Of the seven companies that did report revenue, only one, No. 20 Tustin-based Structure Networks Inc., reported a rise.
Employment agencies’ dramatic drop in business may be slowing, as many are beginning to see some burgeoning signs of life.
“We’ve seen a bump in the first and second quarter,” said Kim Megonigal, chief executive of No. 7 Irvine-based Kimco Staffing Services Inc. “But I expect it to be a gradual climb for much of the year. The freefall appears to be over.”
Kimco saw $34 million in 2009 revenue, down 21% from a year earlier.
Employment agencies, which provide administrative, technical, industrial and other workers on a temporary and permanent basis, are seen as leading indicators of the local job market’s strength.
Expanding companies often turn to agencies to fill gaps during ramp-ups in demand. As things slow down, companies are quick to cut back on workers from their agencies, rather than full-time personnel.
Often the employment agencies are the first to be hit during a recession and the first to recover on the upswing.
“When employers get the OK to hire, they are conservative in this type of environment and look to contingent staffing first,” said Karen Tarca, regional director at No. 6 Milwaukee-based Manpower Inc., which has an Irvine office.
The company saw $39.4 million in revenue from its OC operations in 2009, down 14% from a year earlier.
“No one will see a record year, but at least contingent staffing is turning in the right direction,” Tarca said. “For sure, the worst is behind us.”
The company staffs all types of temporary workers but has seen stability in medical device manufacturing and healthcare positions.
The stability helped Manpower’s second-quarter 2009 revenue rise about 11% compared to a year earlier, according to Tarca, who declined to provide the specific figure.
“We’re looking at various long-term clients who we haven’t heard from in the last 12 months who are starting to call,” she said.
Still, some agencies haven’t yet seen much of a pickup in demand, even with the slowly recovering economy.
No. 10 Irvine-based Principal Technical Services Inc., which places temporary engineers who provide building and maintenance services for oil refiners and other energy companies, has seen demand drop dramatically.
“We see a very stagnate economy for technical people,” said Ron Stein, vice president of business development. “It might open up in the third or fourth quarter or even next year.”
The company has struggled largely because construction at oil refiners and energy companies has slowed.
“They are maintaining the facilities, but they aren’t doing any capital investments or upgrades,” Stein said.
The agency saw $25.4 million in 2009 revenue, down 38% from a year earlier.
Employment-wise, the staffing agencies here employ 739 people in OC, down 8% from a year earlier.
Many agencies cut workers or closed satellite offices.
“Last year, I had to cut deeper into my organization than I ever had to before,” Kimco’s Megonigal said.
The agency closed four of its satellite offices last year and cut 6% of its local staff to 59 workers.
“Last year was one of the hardest I’ve had to navigate,” he said.
Acquisitions
Any worker growth at employment agencies has been due to acquisitions rather than job growth, executives said.
“It’s not so much job growth, but in the opportunities that are created when our competitors go out of business or the delivery of service is lacking,” said Fred Flores, chief executive at No. 13 Brea-based Diverse Staffing Solutions Inc., which had an estimated $23 million in yearly revenue.
With many employment agencies shutting down or closing offices in the past few years, some local staffing firms have looked to gain market share.
“I’m looking to pick up more market share as many of our competitors are struggling and some are even going away,” said Patricia Cinkle, president of No. 11 Santa Ana-based Alar Staffing Corp.
Alar Staffing, which saw an estimated $25 million in revenue in 2009, is looking to open offices in Santa Fe Springs and Ontario this summer and another this fall in the San Gabriel Valley.
Alar provides light industrial workers to companies such as Foothill Ranch-based Oakley Inc. and Costa Mesa-based Rip Curl Inc.
The list’s top rankings aren’t entirely clear since No. 1 Switzerland’s Adecco Employment Services Inc. in Irvine, No. 3 Santa Barbara-based SelectRemedy in Anaheim and No. 5 Michigan-based Kelly Services Inc. in Orange declined to disclose their local figures.
These companies were conservatively estimated to be down about 25% but could have seen steeper declines.
One agency bucked the downward trend in 2009.
Newcomer No. 20 Structure Networks saw revenue grow 41.7% to $12.6 million in 2009.
It specializes in technology staffing and consulting and landed a number of new accounts last year.
While many agencies are optimistic about 2010 and beyond, competition still is fierce.
“We see a lot less competition, but we see more intense competition from the current player, particularly the larger companies,” Diverse Staffing’s Flores said.
