NEWS COVERAGE

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STEVEN DREXEL WEIGHS IN
ON ECONOPLAY'S APRIL OUTLOOK

Houston, TX - April 28, 2008 - Steven Drexel, president and CEO of CORESTAFF Services, provides commentary to Gary Rosenberger's 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 outlook for April.

Non-Farm Payrolls:
Recruiters: Job Market Retreats Further in April;
a Slow Spring Ramp-up

• Client Feedback: Little Enthusiasm for Hiring in Uncertain Times
• Lingering Bright Lights in Government, Energy, Agribusiness, Commodities
• With Wages Flat to Down, Workers Face Lonely Battle with Inflation

By Gary Rosenberger

NEW YORK (EconoPlay) April 25 – Job orders continued to decline in April – layed low by an unpredictable business climate addled by inflation scares, jittery consumers, tight-fisted lenders and bad publicity all around, staffing executives say.

In what is being described as a listless and disappointing spring ramp-up, the staffing industry has turned its focus from finding applicants to beating the bushes for orders – and getting a “lukewarm” response for its troubles.

Wages are flat or down, leaving workers to fight a lonely and precarious battle against the forces of inflation that all but government surveyors seem to be spotting these days.

Amid the gloom, there were refulgent rays emanating from energy, agribusiness, education, healthcare, government, and any manufacturer with an eye to exports.

Technology was a mixed bag but probably down from March, while financial services continued to bleed – but nothing like the death spiral being advertised in some quarters.

“April is slowing considerably, particularly in office support,” said Scott Leighton, controller at Helpmates Staffing Services in Irvine, California.

The problem isn’t so much that the economy is down but that it’ entirely unreadable. “You can’t look at the last recession for guidance. It’s playing out differently this time,” he said.

Pure Uncertainty Out There

“There’s pure uncertainty out there. In the past it was clearer. You could just feel which way it was going,” Leighton said. “This recession is so muddled that no one knows how to react. We’re hearing that same uncertainty from our clients.”

Many of his clients are doing just fine. “But they’re reading that everything around them is in trouble, so they take action based on what they read,” he said. “If you’re not careful, it becomes self-fulfilling.”

Distributors and manufacturers have advised Leighton that business should pick up again in the next quarter but so far, it’s all talk. “We’re not seeing firm orders from them,” he said.

And with the candidate pool getting larger and business prospects dimming, his focus has changed from “finding applicants to finding orders.”

The curious thing is that despite all that negativity, perm placement remains strong. “It’s counterintuitive. I can’t really say why, but there appears to be lingering demand for highly skilled accounting and finance people,” he said.

Also providing ballast are chronic skill shortages and impending retirements that force companies on an ever-elusive search for talent, he said

Todd Grossman, who owns the Express Employment Professionals franchise in Evansville, Indiana, described a good month even as he faces a growing tempest.

“We’re a newer office and when you start at a low number, you have nowhere to go but up,” he said. “We had a pickup in March and it carried into the first three weeks in April.”

Part of it has to do with his own hard work in an increasingly hostile climate. He spends much of his time outside the office pounding the pavement for new clients. “But the feedback that I get in the marketplace is lukewarm,” Grossman said.

Evansville is almost evenly divided between industrial (Toyota and Whirlpool) on one side and financial services and insurance on the other – and both sides are exposed. “There have been plenty of layoffs and people tell me they can’t even think of bringing in a temp until they hire the people back that they let go,” he said.

“There is definitely an oversupply of unemployed and an undersupply of need in Evansville,” he noted. “Whirlpool shifted 50 percent of production to Mexico and took some preferred suppliers with it. Toyota also has a plant here, but it shifted more work to its new Texas plant. Everybody here is at or below equilibrium.”

A "Bothersome" Seasonal Pickup

“It got worse in April,” said Steve Drexel, CEO of Corestaff Services in Houston, with more than 100 branches in most metropolitan markets nationwide.

Some of it was a calendar quirk. He suspects the Easter shift into March may have slowed retail distribution in April and toughened comparisons to last year – thus the spring ramp-up stumbled right at the gate.

“I’m not seeing a sequential decline, but last year I saw more of a seasonal pickup in spring. The fact that I’m not seeing the seasonal pickup is bothersome,” Drexel said. “There’s a kind of a downshift in the branches that were really booming a year ago.”

Surprising enough, however, financial services is holding firm in New York and other financial centers. “Even companies with billions and billions of write-offs are still using us,” Drexel said. But places exposed to mortgage lending are basically gone. “That’s just a huge hole compared to last year.”

His hometown of Houston is aglow because of energy. “If every city was Houston, I wouldn’t have a worry in the world,” Drexel said.

“It’s slowing, but it’s not a death spiral,” said an executive for a national staffing firm.

“If your clients are in energy, agribusiness, aerospace, mining and technology, you’re probably saying, ‘what recession?’ But they’re part of the global infrastructure and commodity boom,” the source said.

“I just visited a client in Denver whose business is natural gas. He asked me, how many technology workers can you get us and how quickly?” the executive said. “But if your client footprint is in major financial centers, you are no doubt feeling some pain right now.”

His main problem is that uncertainty about the economy has a way of slowing down the hiring process. “People want to look at more candidates to be sure they’re getting a perfect match,” he said. But the supply of available candidates has only “increased slightly.”

Charles Sigrist, president of Stivers Staffing Services in Chicago, with 30 branches in 12 states, said order activity declined in April when it should have been up.

“Our order activity went down in the last couple of weeks compared to February and March, and that’s something I don’t like to see,” said Sigrist, whose specialty is officer clerical.

That’s a problem because, in administration, orders might last an average of three or four weeks, and future billings quickly recede if fresh orders don’t keep pace.

Sigrist looks to the coming weeks with some trepidation. He suspects there’ll be less summer work for students and for everyone else outside of the old standbys of cutting grass and caddying at golf clubs.

The Decline is Accelerating

“It looks pretty bad to me. Everything I’m picking up says the decline is accelerating,” said Greg Palmer, president of Palmer Consulting and former CEO of Remedy Staffing. “Nothing looks good except maybe healthcare and education. The only other guys holding up are those serving the exporters.”

Palmer is not clear on why education and healthcare are holding up so well. It might be a case of favorable demographics – echo boomers sending kids off to school and an aging population in need of medical care – that say little about underlying economic conditions.

He also suspects that education could be getting a marginal lift from folks losing their jobs and going back to school for retraining.

“April will be the best month of our year. Is it exactly where we forecast it to be? It’s a slower ramp-up than I would have expected, but I see nothing alarming,” said Steven List, chief operating officer at Global Employment Solutions, a national provider of professional and commercial staffing services near Denver.

“All of our businesses continue to perform. I can’t tell you they’re performing the best they can,” he added. “But compared to what I hear is happening outside, I’d say we’re hanging on and doing our job – even if we’re not necessarily hitting it out of the ballpark.”

He sees the jobs slowdown as “highly concentrated” in a few industries, like mortgage banking, where he has relatively little exposure. And with the Bear Stearns fade-out also comes “a good flow of candidates for other places,” he said.

Perm hiring continues to perform well in highly skilled niches, but even that’s no longer what it was last fall. “I’m seeing good candidate flow on the perm side, but it’s not like it was six months ago when we had an overabundance of perm orders,” List said.

Light industrial is fractured by region. “We’re seeing jobs move from the Northeast and Midwest to down South. I do believe there are a lot of multinational businesses building factories in the U.S., but they’re building them in the South where there’s a lower cost for labor.”

Demand in commercial construction, a bastion of strength during the housing slump, is also turning in a southerly direction, according to Bill Stynetski, president of HardHatJobs in Dallas, specializing in commercial construction executive search.

The first quarter “started with a bang” and hiring continued at a record pace. “But the finish-out for retail and consumer-driven projects has slowed considerably, and developers have put off starting new projects,” he said.

Hospital, education, infrastructure, road, bridge and highway work “are still strong,” however.

Employers are trying to hold down labor costs as construction costs skyrocket from record fuel and steel prices. “A big part of our effort goes to holding the salary line as dictated by the contractor. However, we do have to advise them if their compensation package is too low and offer guidelines or remedies,” he said.

Contractors, like almost everyone else, are learning to do more with less. “For example on-line project management software saves contractors thousands of man-hour dollars,” he said.

A Mixed Bag for Technology

Technology was a mixed bag in April with some signs of renewal late into the month, according to Marjie Peterson, president of Macrostaff in Bellevue, Washington, specializing in technology staffing.

“We placed more people marginally than we did in March. Orders were down, but I had a lot of back orders to fill and we slowly whittled them down,” she said.

Late last week, new orders started to flow again. “Budgets aren’t being pulled,” she said. “We placed a lot in government, including education, and also in high tech. We’re also drawing orders from medium-sized financial institutions that didn’t get hit by the subprime problems.”

Government orders fueled an April resurgence for Mike Ziman, president of Global Commerce & Information, an I/T consulting and staffing firm in Columbia, Maryland. “We have been busy and prospects going forward are very good,” he said. “The commercial side has been quieter.”/p>

Rising energy costs mean candidates are requesting shorter commutes, with many willing to relocate to businesses closer to home as a way of managing personal energy costs, he added.

Technology employment ran hot and cold, depending on location, averaging out to “steady,” according to Sapphire Technologies, an I/T staffing firm with 40 branches in the U.S., based in Woburn, Massachusetts.

Mick Siktar, the Pittsburgh branch manager, said merger activity locally was responsible for a mini-boom in technology hiring. “We had a record number of job orders and deals in March and April is also very good. It was only off because March was so fabulous,” he said.

Erik Fleischman, branch manager in Sacramento, saw business slowing in the first two weeks of April but “last week and this week have been much busier. The healthcare industry is very hot right now,” he said.

He does see employers responding to recession talk and putting projects on hold. “Many of my reps are hearing from clients that are on hold or downsizing due to the market. This has become more prevalent over the past two months or so,” he said.

“Business over the past three months has been consistently steady – placements per week have only deviated plus or minus five percent,” said Chris Mader, Sapphire Technologies’ national accounts director. “Reading the paper you would think that our demand is down, but our job orders increased by 12 percent from February to April.”

But he does see employers as “more gun shy” on hiring. “Project Managers are being asked ‘to do more with less,’ and are looking for ways to bring their overall labor costs down.”

“We are doing great, but it’s probably specific to us,” said Todd Palmer, president of Diversified Industrial Staffing in Detroit. “We’re up 30 percent in the last five weeks. I’ve got 40 open orders right now and I can’t find the people to fill them.”

Wages are a little lower than candidates are looking for, but they’re accepting them because jobs aren’t available in Michigan – and jobs that normally pay around $15 to $18 are down to $12 and $14, he said.

“Michigan is investing heavily into an entrepreneurial culture but it still has a lot of those big companies that people want to work for. Anyone resisting the new culture is in trouble,” Palmer said. “A lot of people still won’t take a job outside of the Ford plant, and they’ll be waiting for a very long time.”

Ironically, striking American Axle workers are going to him for work. “The union is trying to save salaries, benefits and perks that might total $65 an hour. You can’t compete in the world market paying salaries like that,” he said.

Curiously, workers are taking those $12 jobs even as their union fights to preserve pay that is exponentially higher, he said.

The troubled jobs economy finally is hitting the top ranks, according to Chris Clarke, president of Boyden Global Executive Search in Hawthorne, New York.

“Yes, things have changed. Finally executive search is slowing in the U.S. though growth is still there over last year,” Clarke said, noting that U.S. executive search was down 5% from the prior month even as it continued to grow globally.

Clarke saw “a big” decline in financial services with other sectors – autos, retail, and construction – looking soft. “Consumer demand, gas prices, and difficulties raising funds is scaring CEOs,” he said. “Some are talking of hiring freezes.”

The U.S. Department of Labor is scheduled to release employment data for April on Friday, May 2 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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