NEWS COVERAGE

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STEVEN DREXEL WEIGHS IN
ON ECONOPLAY'S JULY OUTLOOK

Houston, TX - July 30, 2007 - Steven Drexel, president and CEO of CORESTAFF Services, provides commentary to Gary Rosenberger's July monthly payrolls outlook posted on www.econoplay.com. EconoPlay relies exclusively on the experiences of business professionals like Drexel who are in the trenches of economic activity.

The following is the July outlook.

Non-Farm Payrolls:
Recruiters:  A Lethargic Start to July Ends with Nice Head of Steam for Many

• On Average Most See A Modest July Upturn in Job Creation
• A West Coast Logistics Surge, Internet Hiring Strong; But Clerical Hiring Down
• Hiring Shift Continues Away From Residential and into Comercial Construction

By Gary Rosenberger

NEW YORK (EconoPlay) July 27 – July job orders began listlessly then picked up enough steam toward month’s end to quell fears about the lack of a holiday ramp-up this year – averaging out to a modest pickup in payrolls growth for the month, staffing executives say.

Opinions were divided between those in clerical/administrative, who saw softness throughout July, and those catering to manufacturing, distribution, and Internet retail – where activity took a positive turn around the middle of the month.

The shift from residential to commercial construction also showed signs of accelerating in July, while the only limit on professional services appears to be a shortage of skilled labor.

Direct hire seems to have slowed in July as employers seemed more willing to wait for ideal candidates – apparently a scarce resource these days – and others riding out the latest economic shocks by relying more on contract and temporary help that can readily be let go in a pinch.

Mega staffing firms appear to be at a competitive disadvantage with their exposure to Fortune 500 clients more intent on managing quarterly earnings reports than investing in future growth – leaving job creation to smaller, privately held firms more willing to take the economic bull by the horns, recruiters say.

"The Fourth of July holiday always comes with plant closings. It’s always a slow week and it usually carries into the following week," said Tom Bickes, CEO of EmployBridge in Atlanta, specializing in logistics, transportation, specialty manufacturing, finance and accounting, and high-end administration throughout the Sun Belt.

"But after that slow period, we rebounded nicely," he added. "Nothing too significant, but still positive. We will be up from June."

The month was mixed in other ways. Some of his larger clients associated with housing and Detroit automotive tightened up on contract and temporary labor. At the same time, he spotted a pickup in transportation and logistics.

Companies exposed to the more problematic elements of the U.S. economy are keeping overall wage pressures at bay, in part by squeezing vendors of temporary help. "From a wage standpoint, I see no significant pressure in either direction," Bickes said.

Bickes has noticed "some softening" on direct hire, which he thinks might be related to a scarcity of applicants, particularly in clerical and accounting.

Job Growth Driven By Small Companies

He has been thinking about the growing divide between the nation’s largest staffing firms, who uniformly have been reporting declines in job orders and revenues domestically, and the rest of his industry, where job orders are flat at worst.

He sees industry giants like Spherion, Kelly, Manpower and Randstad handcuffed by huge national accounts with Fortune 500 companies that are hunkering down. "All the job growth is in the smaller and mid-sized companies that form our client base," he said.

"I see a divergence between large and small staffing firms," agreed Greg Palmer, CEO of Palmer Consulting and the former CEO of Remedy Staffing. "What the big ones all have in common is those national contracts -- and that’s what’s holding them back."

Small staffing firms are growing because "that’s where all the new business is flowing from," Palmer said.

Scott Leighton, controller at Helpmates Staffing Services in Irvine, California, specializing in logistics, light industrial, and finance and accounting throughout southern California did see "a nice hop" that began around the third week of July.

"I’m now optimistic that we’ll have a good July," he said. "The first two weeks were slow, probably because of the holiday."

But now all his indicators point to the positive. "Our order activity is up, and the flow of applicants also is up. We’re not really sure where they’re all coming from or why, but we’re happy that they are coming because our biggest problem in the past has been unfilled orders."

A rush by Chinese exporters to beat new export taxes on July1 could account for the late surge in logistics hiring throughout the West Coast. "But all my stuff is up," Leighton said. "It’s not just distribution and warehouse work. My white collar and clerical businesses are also up."

Leighton, too, has seen a recent slowdown in direct hire. "The increase in temp and the fall off in direct hire seems to indicate that businesses are getting cautious. But it’s too early to read too much into it," he warned.

A Mid July Spike

"The second and third weeks of July have been the largest revenue weeks of the year for us," said Howard Brill, CEO of Global Employment Solutions, a national provider of professional and commercial staffing services, including temporary and contract staffing, permanent placement, human resource consulting and employee leasing services, based in Lone Tree, Colorado.

"The ramp-up into our biggest month, September, has begun," Brill added. "If the economy is sputtering the way people say it’s sputtering, we would have seen our business slow down."

Brill saw order activity improve across the board in manufacturing, professional staffing, information technology, and healthcare.

He also sees offsets to the slowdown in housing and Detroit automotive. In automotive, all tier suppliers to GM "are slow" while transplant suppliers "are still growing and strong."

Housing-related suppliers continue to produce sluggish orders for workers, while commercial construction is on a hiring spree. "We’re seeing electrical, plumbing and other trades may have shifted from residential to commercial construction, especially in the Southeast," Brill said.

Brill sees his Georgia-based commercial staffing operations as a reliable barometer of economic direction, and right now the pointers are positive despite that region’s notorious housing problems.

"That division is the first to see signs of recession or recovery. It saw the bottoming out in 2000 before anyone else did. We used to be run by a private equity firm, and whenever they had questions about the economy they would call our Georgia office for guidance," Brill said. "Right now, the president of that division feels the economy is strong and he feels pretty good about its overall direction."

In his view, wage pressures are "very contained," especially at entry-level manufacturing, "where labor supply seems to be adequate." There’s also a bit of an upward bounce in wages in technology, consulting, accounting and finance, where there’s not enough supply for the demand that’s out there. "I see people moving from company to company at higher and higher wages," Brill said.

"We’re up over 25 percent from last year and a slight up from June," said Allan Brown, president of Doherty Staffing Solutions in Minneapolis. "For us, July was strong."

All the manufacturing indexes he looks at show companies predicting "a decent fall" – and his own experience shows Internet shipping companies looking for an early and strong start to the holiday season.

There are other personal indicators that bode positively. About 40% of his job orders are food industry-related – and a fairly constant source of business.

But this is also a time of year when one of his clients, a major pizza manufacturer, steps back to make way for the grilling season. "This year, the pizza business stayed strong as the grilling side of the business saw its usual seasonal ramp up," Brown observed.

He too sees companies cutting back on direct hire this summer with his direct hire fees for July down sharply from the prior two months. "Companies often hire contract and temporary employees when they’re apprehensive about what the economy will do. At this point nobody knows where this economy is going," Brown said.

"It might also just be a function of not having a perfect candidate," Brown said. "The openings are there, but the ideal candidates are harder to find. Companies are counter-offering, raising wages and offering more flexible schedules to retain workers." With companies taking these extra measures, staffing firms resort to following "a more traditional headhunting track" to fill job orders.

Steady Is Not Where I Want to Be

Steven Drexel, CEO of Corestaff Services in Houston, with more than 100 branches in most metropolitan markets nationwide, saw an unremarkable July. "It’s just been flat," he said.

"We’ve been hoping desperately that activity would pick up. As you get to the final half, you expect a rebound – but we’re just holding our own," he said. "It’s steady. But this time of year steady is not where I want to be."

Yet he counts himself as lucky when he compares his pace of activity to that of the largest players who see declines. "So I suppose I should be happy with steady," Drexel said.

He thinks the problem with the mega staffing firms is their slant toward "public companies sensitive to earnings" or who are "just sitting back" until they get a positive economic signal.

"Smaller, private companies are more willing to ride this economy out and maintain their fighting shape in case the economy does bounce back," Drexel said. "Or if they made 10 million dollars last year, 9.5 million doesn’t look so bad this year."

"July hasn’t improved. For us, it’s flat," said Charles Sigrist, president of Stivers Staffing Services in Chicago, with 30 branches in 12 states. "Our commercial administrative business is just flat. Period."

With no positive news on the hiring front and no increase in order activity for July, there’s also "absolutely no pressure to increase wages," Sigrist said.

Sigrist is hoping that business will perk up in August when summer interns go back to school and companies return to staffing firms like his to fill vacant spots.

Meanwhile, the hiring boom in commercial construction continues unabated, said Daniel Conroy of Michael Latas & Associates in St. Louis, an executive search firm specializing in that industry.

"July continues to be strong in the commercial/institutional sectors. Hospital and retail are especially big with box retail leading the way," Conroy said. "Our Architectural & Engineering Group, generally considered a bellwether, continues to be strong."

Only his Highway/Bridge/Materials Group seems to have softened a bit, he said.

Construction company owners "are very aware" about escalating wages and are fighting tooth and nail to keep "A" and "B" employees from leaving. "Staffing is as tough as it’s ever been," Conroy said. "Large projects of over $50 million are particularly difficult to staff because of sheer numbers and the lack of qualified managers."”

On the other side of the coin is residential construction. "We are receiving résumés by the hundreds weekly from home builders. Single and multifamily projects continue on the decline," he said.

"July was a great month," said Bill Stynetski, CEO of HardHatJobs in Dallas, specializing in commercial construction. "From the end of the second quarter through the third quarter it’s just been a boom."

He has noticed a tilt toward mega projects nationally and locally, such as a new billion-dollar stadium for the Dallas Cowboys awaiting groundbreaking. "I counted 12 cranes in Dallas within a 10 mile radius, including a two new mixed-use high rises – that includes residential," he said.

In Wisconsin, they’re paying commercial construction workers an extra dollar an hour just for showing up on time. In Las Vegas crane operators are being whisked away by the competition directly from job sites – "right off the seat," Stynetski said.

Mike Ziman, president of Global Commerce & Information, an I/T consulting and staffing firm in Columbia, Maryland, saw every indication of fresh government hiring. "July was very strong for us," he said.

Ziman, who leans heavily on government contracting, said civil agencies like the Social Security Administration and the Centers for Medicare and Medicaid Services are on a hiring binge.

Darren Bakay, senior technical recruiting manager at Ajilon-Adecco in New York, which serves New York’s largest financial institutions, also saw a July I/T rebound with placements up for the month. "August is also looking pretty good," he added.

"We had an above average month in terms of job orders," said Brian Lockwood, an Express Personnel franchisee in Decatur, Illinois. "There was a lot more activity in our area, and higher hours contributed to our success."

Activity was up across the board, with no weak links, and manufacturing "probably the standout," he said. Yet few are clamoring for wage increases, despite higher food and fuel costs and difficulties in placing workers in outlying communities.

Pam Higdon, Express franchisee in Raleigh, North Carolina, saw an onrush of activity in July courtesy of a new logistics center now preparing for holiday retail. Other contributors were manufacturing, banking and project work.

Higdon said high gas prices have prompted applicants to demand more pay and shorter commutes. "I’ve had many applicants turn down jobs just because they were too far away," she said. One of her clients responded to energy inflation by raising wages by $2 an hour.

Chris Clarke, president of Boyden Global Executive Search in Hawthorne, New York, sees no stopping the robust hiring trends for top senior executives.

"Corporate hiring of senior executives is continuing the trend so far this year at 20 percent up on last year. The executive search industry will exceed its all time record of 2000, which was largely driven by the dotcom bubble," he said.

Among the drivers this time around are strong corporate earnings, worldwide economic growth, foreign money pouring into U.S. equities markets, and a weak dollar that makes U.S. companies more competitive globally, Clarke stated.

He looks at current automotive talks as a barometer of everything that has turned against the average working person. "The pay and benefits costs of Ford and GM are so much higher than those of the foreign manufacturers building in the U.S. that one of only two things can happen: unions hold out and hang on to their benefits for their current and retired employees or they cave in and these firms have a chance of survival. Either way the unions lose."

The U.S. Department of Labor is scheduled to release employment data for July on Friday, Aug 3 at 8:30 a.m. ET.

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About CORESTAFF Services

CORESTAFF Services is one of the largest national staffing firms in America, with offices in 20 states. CORESTAFF also operates as TeleSec CORESTAFF in the Washington, DC area and Leafstone Staffing Services in the New York City metropolitan area. CORESTAFF is not affiliated with Core Staffing Services, Inc., which operates in the New York Metro Area. CORESTAFF is headquartered in Houston, Texas.

Visit CORESTAFF Services on the Web at: www.corestaff.com.

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