Thursday, July 19, 2012 | Edited by Daniel Moores
||Temporary Work Demand Rises as Companies Avoid Job Commitments
As orders from food makers have picked up during the past year, Create-A-Pack Foods Inc. turned to a staffing company, Kelly Services Inc., to add about 100 workers.
Hiring on a temporary basis saves money if an employee doesn't work out and expands recruiting beyond Create-A-Pack's Ixonia, Wisconsin, headquarters, Chief Executive Officer Glenn Cochrane said.
"You can build good crews with temp services," he said, noting that the company -- which packages products including sauces and icings in pouches, bottles and jars -- is seeking to fill another 28 positions.
Create-A-Pack is among a growing number of businesses turning to staffing companies for temporary workers, reflecting employer concern about the U.S. economic outlook. The number of people on the payrolls of temp-staffing businesses grew 10.7 percent in June to 2.5 million from a year earlier, the biggest increase since May 2011, based on data from the Labor Department.
Demand for temporary employees is gaining momentum as companies seek more flexible staffing arrangements, according to Tobey Sommer, director of equity research in Nashville at SunTrust Robinson Humphrey Inc. This has helped create a shift within the labor force, as a "not-easily-forgotten recession" has made many executives cautious about hiring, he said.
A so-called flex supercycle is driving business for Kforce Inc., as a "historically disproportionate" share of new jobs is coming from the temporary-staffing industry, said Michael Blackman, chief corporate development officer for the Tampa, Florida-based company. A shortage of highly skilled candidates in fields such as information technology and "extraordinary uncertainty among employers is leading them to utilize temp resources," he said.
The hiring environment reflects employer apprehension about costs associated with the health-care law upheld by the U.S. Supreme Court last month and future tax and regulatory policies, as well as economic risk from the federal budget deficit and recessions in Europe, Sommer said.
This is causing many customers of Kelly Services to use temp workers instead of expanding permanent headcount, said Carl Camden, president and chief executive officer of the Troy, Michigan-based company.
This trend was pointed out by the Federal Reserve, which noted that some of its contacts have "become more cautious in their hiring and investment decisions," according to the minutes of its June policy meeting released July 11.
While hiring among temp workers has historically foreshadowed gains in the broader job market, this time may be different as companies rely on temporary staff for a longer time, said Kforce's Blackman.
Employers are "looking for the minimum amount of expenditure on labor, the minimum amount of new hires you have to make to meet the pretty anemic GDP growth that we have right now," Camden said.
U.S. gross domestic product rose 1.9 percent in the first quarter, after expanding 3 percent in the period ended Dec. 31. Second-quarter GDP slowed to 1.5 percent, based on the median estimate of economists surveyed by Bloomberg News.
Increasing demand may boost staffing companies' financial results. Total revenue from continuing operations at Kforce will rise about 1 percent to $276.6 million in the period ended June 30 from a year ago, based on the consensus estimate of analysts surveyed by Bloomberg. Kforce is scheduled to report second-quarter earnings on July 31, with ManpowerGroup on July 20 and Kelly Services Aug. 10.
The Bloomberg U.S. Employment Services Index -- which includes these companies and 15 others -- has risen 3.3 percent so far this year, compared with the Russell 2000 Index's 7.9 percent gain.
Investor Jack Ablin at Harris Private Bank in Chicago will be looking for "bellwethers" in the earnings reports about the health of the labor market, he said. These data are "another way to triangulate" information released by the government, which shows that even though employers are opting for temporary help, at least they aren't downsizing, he said.
The number of hours worked by Kforce temporary staffers is a good proxy for this type of hiring, Sommer said. The total was up 3.4 percent to about 4.4 million hours in the three months ended March 31 from the prior quarter, he said, adding that a similar increase in the second quarter, after accounting for the number of billing days, "would demonstrate robust demand."
Robert Half International Inc.'s temporary-staffing business -- comprised of its Accountemps, OfficeTeam, Robert Half Technology and Robert Half Management Resources divisions -- also is an indicator of demand, Sommer said. If temporary-staff revenue were to grow more than 10 percent in the first three weeks of July -- which the Menlo Park, California-based company tends to provide on its earnings conference call -- this "would be a win, given 9 percent expected revenue growth in the third quarter," he said.
The portion of temporary workers relative to all employees on nonfarm payrolls -- the so-called temp-penetration rate -- was 1.9 percent in June, the highest in five years, Labor Department data show. That's close to a pre-recession peak of 1.96 in November 2005, said Sommer, who forecasts the ratio will return to this level by January 2013.
Republicans have attacked President Barack Obama's handling of the economy as part of campaigning for the November election, with emphasis on persistently high unemployment. Employers added 80,000 jobs in June, the fourth straight month that gains trailed the median estimate of economists surveyed by Bloomberg News. Payrolls in the temp-staffing industry expanded 25,200 last month, compared with a loss of 7,700 a year ago.
If demand remains sluggish and employer concerns about the economic and business climate worsen, companies may be forced to curtail temporary hiring. The unemployment rate remained at 8.2 percent in June -- marking 41 consecutive months above 8 percent -- as the total number of Americans on nonfarm payrolls lagged a January 2008 peak by more than 4.9 million.
For now, companies are focused on remaining agile, according to Jeffrey Joerres, chief executive officer of Milwaukee-based ManpowerGroup. There are "a lot of bad consequences when you get too bold without looking at these risks."
The same principles for other supply chains -- like just- in-time practices -- also can be applied to talent, said Teresa Carroll, senior vice president for Kelly Services.
"More and more work is being done on a project basis" with an employee having a job for the duration of the assignment, she said.
By turning to Kelly Services, Create-A-Pack reduced the amount of time it takes to get people on the floor of its facility to between one and four weeks compared with as many as 10 weeks, Cochrane said.
While temporary work isn't always a job seekers' first choice, Kimberly Smith, 43, said she would take this type of position as a bridge to a permanent post with higher pay and benefits.
"It is a good thing because at least you get your foot in the door and get a job," said Smith, of Riverdale, Georgia, who's been unemployed for a year after losing a job at a check-cashing company. "One you are there a period of time, if you are good, they will keep you."
Small companies aren't the only ones using temporary labor. Caterpillar Inc., the largest maker of construction and mining equipment, had 28,472 so-called flexible workers as of March 31, representing about 18 percent of total employment, according to data from the Peoria, Illinois-based company.
ManpowerGroup's Joerres hears a familiar theme "again and again" from customers: Until they have more information, executives are delaying hiring, he said. Otherwise, they say, "I'm going to be caught with too many people and it's painful, it's expensive, it hurts morale."
(Source: Bloomberg, 07/18/12)
||Pawn Shops Are Going Upscale for Affluent Clients
Maybe it's the original artwork displayed around the office or the soft lighting, paneled walls, Persian rugs and leather furniture. The receptionist adds to the aura, too. So does the TV screen turned to a financial-news channel.
Whatever the reason, Biltmore Loan and Jewelry feels more like a stock brokerage or private-banking office than a pawn shop.
Still, the Scottsdale, AZ, company makes loans collateralized on personal belongings. It thus fits the legal definition of a pawn shop and is regulated as one, despite the upscale touches.
"We want to give people a professional option with dignity," said David Goldstein, Biltmore's president and a veteran jewelry retailer. "We're private, quick and discreet."
Pawn-brokering might be associated more with dingy storefronts cluttered with junk and customers desperate to scrape up enough cash for groceries or rent. But the recession, credit crunch and slow economic recovery have hit Americans up and down the socio-economic ladder, and that has created an opportunity to serve a more high-end clientele for firms like Biltmore.
"We're seeing an increase in these kind of stores in Beverly Hills and other affluent neighborhoods," said Emmett Murphy, a spokesman for the National Pawnbrokers Association. "People in all walks of life are in need of short-term credit."
Reality-TV shows such as "Pawn Stars" also have helped to change the image of the industry, which is more euphemistically referred to as collateralized or secured lending. High prices for gold and other precious metals, meanwhile, have brought out more people as borrowers and sellers.
It's not just job losses and paltry yields on savings accounts that have decimated personal incomes, forcing more people to consider short-term financing. Another key factor has been the general reluctance of banks to lend money, while often making the process so onerous and time-consuming that traditional loans don't make sense for small, short-term cash needs.
Even some businesses are turning to pawn transactions to raise money in a pinch.
James Verbic, a Scottsdale resident who runs a firm that operates ATM machines, said he recently sought a loan from Biltmore for business needs. He turned to Biltmore after getting the runaround from several of the largest banks operating in Arizona. He pledged more than a dozen paintings as collateral.
"I spent six months dealing with banks and five days dealing with (Biltmore)," he said.
Indeed, banks typically aren't equipped to evaluate and make loans on the types of collateral that people bring to pawn stores, including artwork, sports memorabilia, other collectibles, gold coins, jewelry, watches, musical instruments, diamonds, expensive electronic equipment and even firearms.
"We're a Band-Aid to use until the government corrects the banking system," Goldstein said.
These services don't come cheap, however. Arizona, for instance, allows pawn establishments to charge interest rates of up to 8 percent a month for the first two months and 6 percent monthly thereafter. On a $100 loan, that works out to $22 in interest over a three-month period, though borrowers have the option of repaying loans earlier.
Rate ceilings are just the tip of the regulatory iceberg, as pawn operators must deal with many state, local and federal rules -- from the anti-laundering Patriot Act to Internal Revenue Service reporting requirements.
Among various regulations, shops must retain collateralized items on the premises and obtain proper identification from customers.
Because of the interest rates charged, the loans are more suitable for borrowings spanning a matter of months but not a year or more, said Irv Friedman, a semi-retired former pawn-store owner who now works part time at Scottsdale Loan Co., another upscale firm.
"Often around tax time, people will get kicked in the tail and need cash," he said, adding that small businesses for various reasons might require short-term help.
Those interest rates also reflect the fact that brokers accept some risk of not being able to sell unclaimed property for a good price when loans aren't repaid. For example, gold and silver have dropped significantly over the past year, so pawn businesses that bought a lot of metal back at the peak have lost money on their inventory. Losses also are possible on artwork, heirlooms, collectibles and more.
"We're shooting craps to a degree," Friedman said.
Nationally, loans typically are small and short-term, averaging $150 for three months, according to the National Pawnbrokers Association. Individuals who can't repay a debt will lose the items they pledged, though 85 percent of customers pay off the loans and reclaim their assets, the trade group reports.
If inclined, pawn businesses can extend much larger loans worth hundreds of thousands of dollars, or higher. They thus can cater to affluent individuals who find themselves asset rich but cash-flow poor.
"If you have a Monet on your wall and need money, we can help," Goldstein said. "For a lot of people, all they have left is stuff."
If you're thinking of applying for a loan, Murphy suggests shopping around, especially on more valuable items.
"There's a lot of competition for high-end loans, and you can negotiate below the interest-rate caps." He also recommends a website, pawnfyndr.com, to locate stores.
Areas of Expertise
Pawn shops sometimes specialize in or exclude certain types of assets. An upscale Atlanta firm called Chapes-JPL cites an expertise not just in diamonds, watches and jewelry but also in designer handbags and luggage. Expensive wine collections are another area of expertise, Murphy said.
Goldstein emphasizes diamonds and jewelry, among other items, but he doesn't deal in firearms or guitars. He and various other collateralized lenders also provide auto-title loans on lien-free vehicles. Goldstein calls the strong demand for this type of lending one of the surprises he has noticed since opening Biltmore (www.ifyouownitweloanonit.com) last year.
Although the interest charges can be stiff, there are advantages to working with a pawn establishment. Among them are speed, convenience, privacy and relatively little paperwork. In addition, credit checks aren't required. And if you can't repay a loan, that won't show up as a blotch on your credit history.
"If you default to a bank, your credit is murdered," Goldstein said. "If you default to us, there's no record."
Goldstein describes himself as a provider of liquidity and as a "market maker for products." He said he doesn't desire to take possession of items through default and often charges interest rates well below Arizona's statutory caps.
"I want people to feel comfortable (with the process) and for it to be private," he said. "I'm not here to take their last thing."
(Source: USA Today, 07/16/12)
||Last Month's Housing Starts Were Highest Since October 2008
U.S. builders broke ground on the most new homes and apartments in nearly four years last month, the latest evidence that the housing market is recovering.
The Commerce Department said Wednesday that housing starts rose 6.9 percent in June from May to a seasonally adjusted annual rate of 760,000. That's the highest since October 2008.
Single-family housing starts, which account for more than 70 percent of new residential construction, rose for the fourth straight month to a two-year high. Apartment starts, which can be volatile, increased after falling in May.
The number of permits to build homes, a sign of future construction, fell 3.7 percent to 755,000. But that's down from May's level, which was the highest since Sept. 2008.
And permits to build single-family homes edged up to the highest level since March 2010. Permits to build apartments declined.
"This was a good report overall," said Martin Schwerdtfeger, an economist at TD Bank. He noted that permits remain high, which "suggests that the momentum in building activity observed in recent months should carry forward."
Single-family housing starts rose in every region of the country last month. Total starts, which include apartments, jumped 37 percent in the West and 22 percent in the Northeast, while falling in the Midwest and South.
Despite the gains, the level of housing starts and permits are roughly half what economists consider healthy.
Still, the beleaguered housing market is showing modest gains while the rest of the economy has weakened. Federal Reserve Chairman Ben Bernanke highlighted the improvement in an otherwise gloomy report to Congress on the economy Tuesday.
Builder confidence has jumped since last fall in part because more people are expressing interest in buying a home. A measure of home builder confidence rose to a five-year high, the National Association of Home Builders said Tuesday.
Cheaper mortgages and lower home prices in many markets have made home buying more attractive. Many economists believe that housing construction could contribute to overall economic growth this year for the first time since 2005.
New home sales rose in May to the fastest pace in more than two years. And while sales of previously occupied homes dipped in May, they were nearly 10 percent higher than a year earlier.
More home building also pushed up construction spending in May by the largest amount in five months.
Many people still have difficulty qualifying for home loans or can't afford larger down payments required by banks. That's holding back home sales.
The economy is growing only modestly and job creation has slowed sharply in the past three months. U.S. employers added an average of 75,000 jobs in that time, down from a pace of 226,000 in the first three months of the year.
Though new homes represent just 20 percent of the overall home market, they have an outsize impact on the economy. Each home built creates an average of three jobs for a year and generates about $90,000 in taxes, according to data from the home builders association.
(Source: The Associated Press, 07/18/12)
Daily Sales Tip: Keys to Prospecting Success
If you really want to be a successful prospector, here are six keys:
The foundation that underpins sales prospecting success is the strength of your list and the precision of your targeting. Salespeople often call too low in the organization and try to start a groundswell by working their way up. Reach high to the decision-makers. Make sure that your list is clean and ready to go before you start, or you'll find that your day is lost in fits and starts.
2. Value in Every Touch
When you sell, no one wants to hear your capability pitch, your history, or your life story right off the bat. They're looking to find out how their lives can be enriched by working with you.
When you think about providing value, don't just think about the value you will eventually provide when they buy from you. Think about the value they'll get just from speaking with you. Eventually you'll sell your company, your offering, and yourself. At first, sell the idea that the prospects' time will be well-spent if they elect to speak with you.
3. The Right Offer
Your ultimate offer might be a particular type of software, technical instrument, building materials, financial product, operations plan, marketing tactic, etc. But the interim offers -- the offers you make and they accept before they buy from you -- must be crafted with the utmost care.
4. No Tricks
Plenty of business success awaits you with your high-integrity approach. There is no need to use tricks, bend the truth, or cut corners to generate an initial conversation. Anything that you wouldn't feel comfortable telling your children about when you tuck them in bed at night, leave out of your sales prospecting techniques.
5. Multiple Touches
It takes more attempts than most people think to get through to top prospects. It can often take seven, eight, nine, or more touches to get through to someone. That number goes up and down across different industries and when you reach out to different titles. What's always true, though, is that it takes more attempts to get through to your targets than you think.
6. Variety of Touches
Cold calling works well alone, but it works even better with mail (yes, we are talking snail mail here) and e-mail touches. Use a variety of touches to reach out and warm up your prospects -- and make sure each touch has value in and of itself.
Adhere to these 6 keys and you'll be well on your way to prospecting success. At the very least, you'll be leaps and bounds ahead of the estimated 50% of salespeople who will not prospect at all.
Source: Sales trainer/author John Doerr