-- Deborah Cohen covers small business for Reuters.com. She can be reached at firstname.lastname@example.org --
By Deborah L. Cohen
CHICAGO (Reuters.com) - Labor Finders is a closely held franchise operation specializing in the placement of blue-collar industrial workers in temporary assignments. The family-run business supports 275 offices in 32 states, primarily in smaller markets. It competes with the likes of public companies such as Labor Ready and Manpower, as well as a host of regional rivals. Most of its 40 franchisees operate multiple locations.
The business provides an average of 16,000 jobs each day, logging over 23 million hours of work a year for customers in manufacturing, warehousing, construction, hospitality and related industries.
Reuters.com spoke with President and CEO Jeffrey Burnett about the company's outlook for industrial staffing in the recessionary economy.
Q: Do you see any upside to industrial staffing during a recessionary economy?
A: We've been having conversations about pockets of certain states that have been doing okay and we're trying to figure out why. There is definitely a correlation between what has been happening with the energy side of the business in Oklahoma and Florida and the propped up price of oil per barrel. It's definitely helping all other businesses that are doing business in those states. It will be interesting to see how things go in the next quarter in those two states to see if they start to feel some drop off as a result of the price of oil coming down.
Q: What opportunities in industrial staffing do you see going forward?
A: A good lesson for us to learn in this economy was to diversity and to look for other types of business. We have a new franchisee that joined up that has been in the coal-mining business. Energy seems like a very promising sector of the economy for the next five to 10 years. When you look at the public works stuff that's coming real soon on infrastructure - that is our sweet spot, providing people to do industrial-type jobs in infrastructure projects, whether it's roads, bridges … building hospitals, building schools.
Q: What kind of investment does someone need to make to start a Labor Finders franchise and what qualifications do you look for?
A: $150,000 to $200,000. Generally speaking, it's somebody that's serious about building their own business and has substantial net worth. We'll talk to somebody and get a sense of their drive and ambition. We'll have multiple conversations about what their desire is to expand. Are they willing to assume an expansion plan that is fairly aggressive? You need to be a hands-on owner operator. We're not looking for passive investors.
Q: What's the difference between Labor Finders and the competition?
A: It's not really that much of a mystery. We've been successful because we have locally owned and operated businesses. That's the key. When you put us up against businesses that are corporate-owned, there's not that sort of oversight at the street level. (We're) much more intimate with the business than if you had a regional manger overseeing 10, 12, 20 offices in a territory. We give somebody the opportunity to expand into multiple cities.
Q: Is the business still growing in this environment?
A: We had been very aggressive with our franchise growth up until about 18 months ago. We were adding 25, maybe 30 locations a year. When you're adding 15 percent or more to your base of locations a year, that's pretty significant. Nobody's opening up new offices at the moment. We are having some success with new franchisees coming on board. We're not dissatisfied with the stream of inquiries that we're getting.
Q: What are your biggest concerns as we head into the New Year and prepare for a new presidency?
A: Workers' compensation is our second biggest expense. For the insurance market to be healthy is important for the sustainability for our industry long term. Second, what's going on in immigration? If you didn't have this (immigrant) workforce in this economy, you would have a problem. Immigration is very big on the list and it'll be interesting to see how things get addressed by the new administration.