After three years of steady declines in employment data, enterprises of all stripes are beginning boost headcount as they prepare for an economic recovery. But some firms remain leery of adding full-time employees to the rolls. Temporary workers are stepping in to fill the gap. –The Editors

Reawakening

Recent data suggests that the US economy remains on an upward trajectory, continuing on the path of recovery set in 2010. The positive effects are finally being felt in the labor market, where the unemployment rate fell to 9.4 percent in December from 9.8 percent in November. ADP Employer Services also reported that private-sector employment grew by 297,000 in December, though analysts believe this figure may be influenced by seasonal factors. But the employment sector experiencing the greatest gains is temporary staffing.

It’s not unusual for temporary staffing to be the best-performing sector of the labor market in a post-recession environment. As economies improve, reeling consumers struggle to find their footing, leading to lumpy demand for goods and services. This translates into slow hiring. Employers often choose to hire temporary workers in such an environment because it saves costs until the economy builds a full head of steam.

TrueBlue (NYSE: TBI) is a Tacoma, WA-based temporary staffing company that focuses on blue-collar workers. Under the TrueBlue umbrella, the firm provides staffing services through five brands. Labor Ready focuses on the general labor market; Spartan Staffing provides workers in light industry; CLP Resources focuses on skilled trades; PlaneTechs offers aviation and diesel mechanics and technicians; and Centerline provides professional truck drivers on a temporary basis.

TrueBlue successfully navigated the downturn in the labor market and managed to post stronger earnings than many of its peers. Many expected the firm’s heavy emphasis on serving the construction sector would lead it to falter as the recession deepened. But after an initial stumble in earnings, TrueBlue’s management shifted its focus to meeting the needs of light industry, manufacturing and other blue-collar jobs. Despite being known for working with small and midsize companies, the firm aggressively expanded its relationships with larger employers. Additionally, TrueBlue moved aggressively to reduce its headcount and to close staffing offices that produced low business volumes.

Those moves have led to impressive growth in same-branch revenue–up 23 percent in the most recent quarter–as demand for temporary workers has soared, particularly in the manufacturing sector. Based on that strong improvement, the firm’s total revenue in 2010 should be just over $1.1 billion, and 2011 revenues–currently forecast at $1.2 billion–should surprise to the upside.

Several developments will benefit TrueBlue in 2011.

The company’s extensive relationships with small and midsize businesses–usually the first to hire as the economy improves- should help drive placements.

Additionally, tighter regulation of the trucking industry will take effect this year, including shorter work hours for drivers, which should benefit TrueBlue’s Centerline staffing brand. As the cost of maintaining a staff of full-time drivers rises, trucking companies will want to add more temporary drivers to their staffing mix.

Finally, the firm’s mix of blue-collar workers, lower-skilled workers and skilled laborers firmly positions TrueBlue at the epicenter of the economic recovery, just as American industrial activity reawakens. Look for strong growth in coming quarters. –Benjamin Shepherd