Fear of Commitment? Why Some Still Won't Hire

January 6, 2014   //   News

Until the economy picks up more momentum, businesses in certain sectors are keeping a tight lid on hiring and capital investment. That’s a vicious circle, of course, but they’re holding off as long as they can, given the unknown future cost of health insurance and the strength of the recovery, dysfunctional state and local finances, and other uncertainties.

“I don’t know of a single company that is overly optimistic about 2014,” says Bob Weidner, president and CEO of the Metals Service Center Institute, a trade group in Rolling Meadows that represents more than 400 mills and distributors of industrial metals. “They are not strapping on their seat belts and saying we are in for a ride.”

After hitting a low of 400,000 in April 2010, manufacturing jobs have slowly recovered to about 414,000 last year, virtually the same as in 2012. That’s down from nearly 549,000 jobs in 2002. But Moody’s sees no growth in Chicago-area manufacturing jobs in the year ahead.

“This isn’t the growth spurt we saw in previous years” after a downturn, says Tom Gimbel, founder and CEO of LaSalle Network, a temp staffing and recruiting agency in Chicago. “The disconnect is that people are looking for that to happen again. What I hear from CEOs and HR people is that it isn’t going to happen again.”

Cornell Forge Co., a third-generation maker of forged parts for the rail and energy industries, has been in business for 83 years. “We’ve ridden through the storm a couple of times,” says the founder’s grandson, CEO Bill Brewer.

Chicago-based Cornell didn’t retrench after the recession. “We stayed in the black, tightened our belts and made it through,” Mr. Brewer adds. In fact, the company invested in more capacity, and by 2012 it had doubled sales in three years. After that record year, sales were off 10 percent in 2013, and they aren’t shaping up any better this year.

“We’re a little nervous right now,” Mr. Brewer says. “January and February are booked (solid), but March is not as strong as we’d like it to be.”

As a result, Cornell has been “pretty cautious on hiring,” he adds. “We will try to stay the same until we see what’s happening. We use temps—it’s a good move for us on the low-skilled end of the business.”

That could change later this year, “but we would have to have good reason to do so,” Mr. Brewer says. “We would have to have confidence—we’re not going to speculate.”

“I don’t know of a single company that is overly optimistic about 2014.” – Bob Weidner, CEO, Metals Service Center Institute

HELP LACKING

For some firms, the converse is true. They want to hire but can’t find the kind of talent they need.

“Our biggest challenge has been finding people. That’s what has limited our growth,” says Bob Knott, president of SWC Technology Partners Inc., a computer services firm in Oak Brook. “That’s getting worse. There are not enough kids coming out of school with technical degrees.”

SWC hired 65 employees in 2012 but only 15 last year, and “I’m probably even more bullish than I was” in 2012, he adds. “We have the biggest pipeline we’ve ever had. There’s been a surge of activity in the last three months as people start to get ready” for the new year.

“People aren’t going crazy in terms of expansion, but they are actively growing their footprint and trying to get better people,” says Dan Weinfurter, managing partner of Chicago Growth Consultants LLC, a Chicago-based management consulting firm. Despite uncertainties about health care costs and other impediments, “people are saying, ‘Whatever it is, I’m going to go ahead and do things. I’m no longer going to wait.’ “

This article, “Fear of Commitment? Why Some Still Won’t Hire?” originally appeared online at Crain’s Chicago Business.