More so than in any other skill segment, the largest industrial staffing firms, taken as a group, have shown a significant trend of market share growth over the past decade, according to Staffing Industry Analysts' Largest Industrial Staffing Firms in the United States: 2016 Update report. As shown in the accompanying graph, the market share of the five largest companies grew from 28% in 2007 to 33% last year while the market share of the 15 largest firms expanded from 43% in 2007 to 58% last year.
The largest industrial staffing firms have grown their market share via a combination of organic revenue growth and acquisitions. Major acquisitions since 2013 include the following. In 2013, Elwood Staffing acquired SOS Staffing Services, TrueBlue acquired MDT Personnel and EmployBridge acquired Employment Plus. In 2014, TrueBlue acquired Staff Management | SMX (The Seaton Companies). In 2015, EmployBridge combined with The Select Family of Staffing Companies and TrueBlue acquired SIMOS Insourcing Solutions.
But what exactly is driving this trend of market share consolidation? We offer some explanations below based on our own research and comments from several executives at large industrial staffing firms to whom we reached out.
1. Industrial staffing firms have been pursuing scale in order to enhance their service capabilities and achieve cost efficiencies. “The cost and complexity of attracting candidates has grown to a point that makes it harder for smaller staffing firms to compete,” said Dave Meyercord, senior VP at Elwood Staffing. “The resource burden of sustaining the required level of recruiting intensity is simply too high. Smaller players typically excel in customer service rather than recruitment.”
2. The continuing expansion of MSP and VMS use in industrial staffing has led to business growth among large staffing suppliers. “Our clients via MSP and VMS implementation are trying to work with fewer vendors and thus the larger staffing providers are preferred,” said Shawn Poole, president and CFO at EmployBridge.
3. Some large industrial staffing firms have benefited from faster growth among their large clients. “Large customers have grown faster than small customers over the last few years. This dynamic has favored larger staffing firms due to their ability to meet the diverse geographic and often complex service needs associated with this customer base,” said Derrek Gafford, executive VP and CFO at TrueBlue.
As 2016 draws to a close with the industrial staffing segment estimated to generate roughly $34 billion in revenue, a noticeable shift has occurred in the segment over this past economic cycle, with the largest 15 suppliers now accounting for a majority of the market.
For more details on the industrial staffing supplier competitive landscape, corporate members can access our report online.
