Strong worker demand drives temp agencies

Temporary staffing agencies in Orange County have seen robust revenue growth and strong demand for workers in the past year, according to this week's Business Journal list. But just like their employer clients, the agencies are finding they need to get creative to attract people and maintain a steady

Overall, the 19 agencies on the list reported revenue of $580.4 million for the 12 months ended June 30, up 20% from the year-ago period. The number of employee placements by the 17 companies grew 14%, or by 74,389, to 538,712. The agencies grew their own employment 12% to 1,461 people.

The list ranks agencies based or operating in OC by their locally generated revenue. Melville, N.Y.-based Adecco Inc., a unit of Switzerland's Adecco SA, topped the list. With 18 OC offices, Adecco posted $94.8 million in OC revenue for the period, a 7% increase from a year ago.

Much of the gain came by way of Adecco's acquisition of Melville-based Olsten Staffing Corp., according to vice president Ian Salzman. Olsten had had offices in Anaheim and elsewhere in OC.

"Our strategy has been to have as many dots on the map as possible to male sure that we're visible and accessible to our temporary hires," Salzman said

Adecco's average hourly wage paid in OC fell 5% to $11.40 because of expanded hiring in the relatively low-wage light industrial sector, according to Salzman. He said the company's biggest placement increases were in customer service and light electronics production.

The agency's own OC employment fell sharply, by 47% to 84. Salzman attributed this drop to Adecco's closing of its Irvine service center and the consolidation of some office functions at its Melville headquarters.

In OC, Salzman said, agencies are experiencing increased competition along with higher expectations from companies using temporary agency services to find workers.

"Companies are expecting top-notch service from any employment provider," he said. "And at a more competitive rate."

All of this is taking place in an extremely tight labor market.

"Recruiting is getting harder and harder," said Karen Kerr, general manager of No. 10 Minneapolis-based Pro Staff Personnel Services' OC office in Seal Beach. "The labor force is thinning out. Everybody's working, and it's getting much harder to find good people."

Pro Staff saw its local revenue increase by 17% to $35 million in the past year, while the agency placed 3,740 workers, a 17% increase from a year ago.

A tight labor supply also means lower worker loyalty and higher turnover for employers, which are more dependent on agencies to find workers.

"The demand for our services has increased substantially," said Sue Foigelman, area manager of No. 6 Milwaukee-based Manpower Inc.'s OC headquarters in Irvine. "Companies are having a tougher time filling positions."

Manpower grew revenue by 22% to $55 million for the 12 months ended June 30. Foigelman said she attributed the company's growth to busier current customers and to new clients needing customer service, data entry, production line and electronic assembly workers.

But scarce labor also means harder work for temporary agencies in finding people to fill positions.

"People are getting hired very quickly," Foigelman said. "What we're finding is people will make an appointment to come in and see us, and even before they've come in for the appointment, they've already got a job."

No. 2 Orange-based Volt Service Group made one of the biggest moves up the List, jumping six places from No. 8 with $84.2 million in revenue, a 57% increase from a year ago.

AppleOne Employment Services, the Glendale-based agency at No. 9 on the list, recorded 95,856 placements in OC, the second-largest number on this year's list, behind Adecco. The company, with county headquarters in Huntington $each, grew OC revenue 14% to $42 million.

In terms of employment at the agencies themselves, Pro Staff Personnel Service recorded the biggest percentage drop in OC jobs, trimming by nine to 31. The company shifted its OC payroll center to Minneapolis, resulting in a drop in the number of county jobs, according to general manager Ken.

New to the list is No. 15 Checkmate Staffing Inc. The Orange-based firm saw revenue increase by an astonishing 1,727% to $4.7 million. The firm also grew its number of OC employees dramatically, by 100% to 200, the biggest percentage increase in OC employees on this year's list. The company was one of three on the list to provide a statement from an independent accounting agency verifying its OC numbers.

Checkmate Chief Executive Lou Perez attributed the company's growth to positive word-of-mouth referrals among placements, as well as high labor demand growth.

"We give a lot to the people we place, including benefits like vacation pay and health insurance coverage," Perez said.

Checkmate President Javier Chavolla projects OC revenue for the 12 months ending next June 30 to reach $11 million. The 14-year-old company plans to open seven new offices in the next year to bring its total number of OC offices to 10, he said. It also plans to move more aggressively into technology.

Also new to the list is No. 14 Irvine-based Zebra Net Technical Solutions Network Inc., a company that focuses solely on technology placements. The company's revenue increased 8% to $5.1 million for the period.

Company officials attributed the revenue growth to high demand for tech professionals, as well as to the sector's low unemployment rate. Zebra reported the highest average hourly wage on the list at $70, compared with $16 for all the companies on the list.

The list also reflects growing consolidation in the industry. Along with Adecco, No. 15 Spherion of Ft. Lauderdale, Fla., formerly Interim Services Inc., also has been busy buying other players nationwide.

Still, industry deal making is slowing, according to De Bellas & Co., a Houstonbased investment bank. About 107 staffing companies were acquired during the first nine months this year, down 50% against the first nine months last year.

"Deal activity continues to be down in the staffing industry, but not because of a lack of companies willing to sell their businesses," said De Bellas & Co. managing director John Niehaus. "Rather, deals are not happening because of a shortage of interested buyers with the cash resources necessary to close transactions."