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Firms Draw More Applicants Than There are Jobs

The staffing industry has seen better days. With the financial slowdown, budget cuts and layoffs are restricting recruitment and staffing firms are dealing with a growing number of job applicants and fewer jobs to place them. Staffing firms now have to think outside the box, target new business and adopt new techniques to weather the downturn. On the upside, opportunities for great hires are better than they have been in years and in the San Fernando Valley staffing companies remain optimistic that business will improve. “We’ve been through downturns before, we will pick up again,” said Emily Serebryany president of the Nursing Division of Mediscan, a staffing firm that places healthcare workers in temporary and permanent medical jobs at major facilities and hospitals. The company, with an office in Woodland Hills, has seen a decline in business in recent months. Hospitals and other clients affected by budget cuts are trying to fill their employee needs in house first, rather than going directly through Mediscan. “Although we’re probably in a better situation than other staffing companies because people will always need healthcare, business is not what it used to be, we’re having difficulty getting more orders,” Serebryany said. To keep business flowing, Mediscan is adapting. “We’re trying to be flexible and work to customize the needs of our clients. For example our contracts used to be set at 40 hours a week but now if a client needs a worker for 32 hours a week, we customize the contract,” said Kathy LaManna, vice president of sales for Mediscan. Deeper impact Smaller staffing companies are being more adversely affected by the recession as they depend on high margins to ensure profitability. Perfecto Staffing in Sherman Oaks, a company that specializes in placing workers in manufacturing, entertainment and logistics jobs, reported a drop in company revenues from $6 million in 2007 to $5 million in 2008, and has continued to lose revenue in 2009. “We’re absolutely being affected by the economy, there’s no doubt business has dropped tremendously since last year, but especially in the last three months. People are afraid to spend money and make orders. Production is down as spending is down, but nerves are up,” said founder and CFO Deborah Shapiro. In recent months the company has been especially hard hit, Shapiro said, as the economy triggers a vicious cycle that affects temporary placement jobs, particularly in the manufacturing industry. “When people are not buying products, there’s nothing for workers to produce,” she said. Nonetheless, Shapiro remains confident her company will weather the financial crisis, and once the economy starts recovering, “the opportunity for growth in the San Fernando Valley is huge,” she said. Nancy Rose, manager of sales and marketing at Exact Staff, which has its headquarters in Woodland Hills, said the industry is now facing the challenges that come as recruiters and companies are faced with more selection. This includes sorting through a higher number of resumes and upping the screening process as employers, in the current climate, are being extremely cautious about whom they hire. “If they find it in their budget to hire, they’re really looking for the best of the best,” Rose said. On the flip side The recession has given companies like Exact Staff the opportunity to gather a larger pool of high quality employees. And while temporary workers are usually the first to go when the economy is bad, they’re also among the first to be employed again as the economy picks up, which will make the number of orders for workers at staffing companies go up significantly. “As the economy recovers, there’s going to be a kind of ‘hire as you go mentality’ as employers will start moving forward with caution,” said Lee Fossey, Los Angeles regional director for Manpower, an international staffing company that reported revenues of $22.7 billion in 2008. “And the need for staffing companies will never go away,” he added. “It doesn’t make sense for a company to go through 2,000 resumes and waste time and resources, when we can screen those resumes and present them with five candidates that meet their needs.” While the staffing industry as a whole has been hit fairly hard by the economy, Fossey’s Manpower branch in Encino is showing considerable growth. “We’re performing well over the market,” he said. The reasons for this success, he said, have to do with the fact that, in the current economic climate, organizations “are looking to bigger players in search of stability” to handle their staffing needs. It also has to do with the quality of benefits Manpower offers their associates and their clients, he said. However smaller companies like Exact Staff are also seeing signs of recovery. Although revenue has been down, Rose, the company’s manager of sales and marketing, said business seems to be picking up going into the second quarter of 2009. The American Staffing Association also reported good news for the industry. According to the ASA Staffing Index, which measures the number of people employed in temporary and contract work on a weekly bases, the industry began to show signs of stabilization from the months of February to March of this year. During the last week of 2008 the index was at 69 down from 90 at the beginning of November. A month ago, the index was at 73. It dipped to 71 one week, and has stayed at 72 for the last two weeks. (The baseline value for the ASA Staffing Index, was set at 100 in June 2006). According to ASA, staffing industry employment dropped by 19.5% in the fourth quarter of last year from the same quarter the previous year – the most dramatic year-to-year quarterly decline in 16 years – slightly exceeding the 18.4% decline in the third quarter of 2001.

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