Are We There Yet?

Nov. 1, 2009
Relying on just-in-time labor is not a post-recession comeback strategy.

Remember the license-plate game we all played as kids during long road trips? I still play that game, but the rules are a little bit different now. Instead of looking for states, I watch for positive integers. And we all know those are hard to come by these days.

I've been scoring a lot of points lately. The purchasing managers' index hit 55.7, indicating growth in manufacturing; the credit managers' index for manufacturing rose to 51.2, indicating growth in access to credit; and third-quarter GDP grew 3.5%. These positives follow a string of negatives that seemed to go on forever.

Another number has moved upward. However, in this case, positive is negative. It's the 10.2% unemployment rate, the highest since 1983. Are we in for a jobless recovery as some have suggested?

Yes and no. There will be jobs, but not in the traditional sense. According to several major staffing firms, more companies are using temporary workers to meet rising demand. And employers plan to continue using temps until the recessionary shell shock wears off.

Roy Krause, CEO of the Fortune 1000 staffing firm Spherion Corp., recently told the Wall Street Journal that companies in all industries are recruiting workers on a temporary or seasonal basis as a way to “try before you buy.”

On the surface, it seems practical. You avoid the costs associated with a full-time, permanent workforce yet retain the ability to handle increasing volumes. Should orders drop, it's easier to get rid of temporary workers.

Caution in uncertain times is sensible. And it's logical to use seasonal workers to manage demand peaks. But building a workforce ill-equipped for a turnaround doesn't make sense.

Temps, just like permanent employees, must be trained for specific tasks. You can avoid paying for benefits and administration, but you can't skimp on training, especially when safety is on the line. Even if your staffing firm trains applicants for material handling work, there's no substitute for on-site learning about hazards in the actual workplace and the intricacies of facility layout and product type. Training is an investment, and all investments carry risk.

It's like the risk you take with just-in-time inventory. As long as nothing breaks, you don't need safety stock. If a majority of jobs are temporary, you're unlikely to attract loyalty. If a better, higher-paying assignment comes along, your order picker, for example, is gone. And the employment agency has a database full of other manufacturers and distributors — some are your competitors — just waiting to take more order pickers off your hands.

Gun-shy businesses that cut to the bone over the last year ironically take on more risk by trying to avoid risk. The brave, on the other hand, have a chance to grab the cream of the crop from the 10.2%. Imagine ROI from a permanent, fully trained, dedicated staff.

I recently toured a DC run by a Fortune 500 company. The operations manager told me the company is getting ready for a round of hiring in early 2010. The way he sees it, if the big-picture statistics continue their upward climb but his workforce stays lean, the DC won't make it, plain and simple. And his new hires won't really be new. He plans to offer previously laid-off employees another chance at permanent employment.

Will you offer employees — and your material handling operation — another chance at success? Don't keep asking if we're there yet. Make the destination come to you.

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