Derrick Swerhone’s employees used to get W2s. Now they get 1099s. This is the way it is with so many small businesses getting by in the recession.
Employees and in-house ancillary services have been cut through layoffs and attrition. Work has to be done, but business owners can’t afford to have it done by full-time staffers with vacation and benefits.
So principals and CEOs are turning to their former employees, business contacts and temporary agencies to bridge the gap between having a full slate of workers and waiting for jobs to come in the door again.
Filling the right seat on the bus, temporarily
“It comes down to the relationship” when choosing contractors going forward, said Swerhone, principal of Vancouver-based Avalon Architecture.
“(Former employees) witnessed the struggle, they witnessed the demise of what was,” he said. “We are all in this together.”
Avalon, in business in Clark County since 2000, has worked on dozens of high profile projects, including the historic restoration of the current Columbian building, the Daybreak residential group home, Princeton Athletic Club and sites around Washington and Oregon.
Before the recession hit, most of Avalon’s work was in townhome projects with names like Cottage Homes, Hidden Homestead and Park View.
Swerhone used to offer in-house drafting and landscape design services; now he contracts out those services. The trick is getting the right people lined up at the right time on a project, he said.
With applications such as MyPC, which enables remote access to a computer from anywhere, and eFax, which is paperless faxing by email, working virtually and moving information is easy.
Scheduling is the problem.
“The challenging thing is that you are just one other obligation to (contractors),” he said. “You could be put on the back burner if something more lucrative came along.”
Swerhone’s story is not unique in this economy, said Lisa Nisenfeld, executive director of the Southwest Washington Workforce Development Council.
“The first to go are contract and temporary workers, then there are layoffs of regular people, then it starts to get challenging to get work out the door, so consultants and temps are brought back in,” she said.
Overall, “staffing firms are hurting right now,” Nisenfeld said. But, they are poised to fill seats with the right people as the economy rebounds.
Christopher Crongeyer is the Vancouver branch manager of Manpower, an international employment service.
When employers are in a growth mode, he said, “a third party like an employment service can provide services faster than their own human resources department … and can retain the knowledge of the most experienced staff by bringing them back through an agency.”
Companies don’t just have to go with who they know, or sign the contract on the contractor’s terms, necessarily, Crongeyer said.
“(Employment services) are knowledgeable about the different nuances in the local market, about skills and pay rates,” he said. “We have insight on what’s acceptable in the market.”
Where we are, where are we going?
Crongeyer said Pacific Northwest employment is likely to be the slowest to recover from the recession, and a recent Manpower Employment Outlook Survey of the western region echoed that.
Fifteen percent of employers surveyed said they were likely to increase staff in the second quarter, with an equal amount anticipating a decrease in staff, resulting in a net employment outlook of zero percent.
A 22 percent decrease was expected in construction, 16 percent in education and health services and 18 percent decrease in government, information and manufacturing. Leisure and hospitality is expected to see the most dramatic increase in hiring, according to the outlook survey.
March marked the 14th straight month of employment declines in the Vancouver-Portland metro area.
The latest reports from the State Employment Security Department put Clark County at an overall 12.5 unemployment rate, 1.4 points above the metro area.
Clark County lost 300 jobs in durable goods manufacturing, such as electronics, in March and 200 jobs in transportation equipment. Information services and financial services both lost 200 jobs in March in the metro region, but almost all of the damage was on the Oregon side.
Clark County, in line with the Manpower survey, was up slightly in leisure employment year over year, and the numbers were essentially unchanged in March.
Clark County construction employment fell by 100 jobs in March but Cowlitz County jumped by 400 jobs, and there is a continuing slump in new home construction.
Business as usual
Even with the bright spot in Cowlitz County, the metro area lost 800 construction-related jobs in March alone. The dismal outlook for construction doesn’t bode well for small housing sector-related firms like Avalon – or for any of Swerhone’s contractors who would like to see W2s again.
“Business as usual used to be that you really didn’t pay attention to how many copies you were using – you’d write off business development hours and not pay so much attention to where each and every dollar was going and where each and every dollar was coming from,” he said. “I never marketed. All my work has come in through word of mouth. Now, I’m chasing down leads to renovate somebody’s back porch.”
Swerhone recognizes that he only has the work to offer contractors that he has today and can’t make any promises about the future.
“If things do come back,” he said, “there’s no expectation on either side.”
Jessica Swanson can be contacted at jswanson@vbjusa.com
