Light-Industrial Staffing Companies Can Weather Recessions By Diversifying

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Ron Hetrick is Senior Labor Economist and VP of Staffing Product at Lightcast and a leading expert in the US labor market.

The threat of an economic downturn has loomed large over the minds of business leaders throughout the first quarter of 2023. According to a survey from The Conference Board, 93% of all CEOs are concerned about a possible recession this year. We’re already seeing the impact of that caution as major tech companies trim workforces.

While the rest of the labor market has remained robust, eventually the more cautious environment will prompt more industries to scale back their hiring. This could put staffing companies in a bind.

When the economic cycle no longer works to the advantage of staffing companies, identifying and focusing on non-cyclical industries—ones that are less impacted by these shifts—can show the way forward.

Talent Demand Is Varied

Say you’re a staffing company that’s been riding the wave of logistics and supply chain jobs over the past two years. Fueled by pandemic relief payments and having few places to spend them other than at home, demand for consumer goods skyrocketed. In fact, Americans’ increased consumption of those items in the past two years equaled the increase of the previous nine years combined.

Employers were willing to do and pay anything to get materials to manufacturers and products to retailers, so staffing companies benefited from record-high demand for workers. But things have changed. Now that consumers can go out and buy services again, demand for workers in goods industries has declined. So what can you do?

Look for industries that react differently to economic conditions but require similar workers.

Move Into The Nondurable Goods Space

The pandemic boom was in durable goods—think items necessary for renovations, like building materials and large appliances. In sectors like shipping, logistics and manufacturing, durable goods faced chronic hiring problems. It led to competing for the same workers who were needed in retail and nondurable manufacturing sectors, which are non-cyclical fields of employment.

Nondurable manufacturers have around 290,000 unfilled positions nationwide—a huge opportunity for staffing. Because you already have experience recruiting those workers, you can keep working with them under these new conditions.

The food manufacturing and beverage manufacturing segments of nondurable goods are thriving with the highest-ever level of employment on record (around 1.9 million employees). From cultivation and processing to shipping and storage, America’s food supply is big business. On the production side alone, there are nearly 1 million workers, including machine operators, packagers and quality inspectors. Other nondurable goods industries you can look to include chemicals and pharmaceuticals, paper products, printing products and plastics.

Look Beyond Manufacturing Sectors

There are several non-cyclical industries outside of manufacturing that can also meet your need to diversify, employing many of the same types of workers that light-industrial staffing companies typically place.

For example, the utilities industry exists in every market and employs many maintenance workers and power plant operators. Heavy construction, part of the construction industry that builds highways and other large government projects, employs many large machine operators, skilled trades positions and material movers. Even healthcare is a large employer of groundskeepers, internal cleaning workers, maintenance and other skilled trades, and the field will only continue to grow as the large Boomer population continues to age.

Looking at an entirely different type of work, the widespread layoffs in the dynamic tech industry present new opportunities for similar tech jobs in less-volatile fields. For example, internal Lightcast data finds that manufacturers have posted over 30,000 IT job postings nationally and employ close to 300,000 IT workers in total. Finance and insurance face a similar need, with a near-record 30,000 postings in IT on top of half a million current IT workers. Educational institutions also face high demand for tech workers, employing over 220,000. So even as conventional tech faces layoffs, workers with those same skills are needed now more than ever.

When it comes to talent needs, looking at aggregate data can hide how specific sectors are moving, just like focusing only on big headlines can obscure what’s actually happening in an industry. Staffing companies need to stay on top of what’s really happening, especially as economic conditions change. Right now, an overall economic downturn might be bad news for some industries, but the need for their workers will persist. It’s just a matter of finding where demand has shifted and learning to adapt and diversify. This is how staffing will make it through this cycle stronger than ever.

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