5301 N. Ironwood Road
Milwaukee, Wisconsin 53217
Telephone: (414) 961-1000
Fax: (414) 961-7985
Web site: http://www.manpower.com
Sales: $14.9 billion (2004)
Stock Exchanges: New York
Ticker Symbol: MAN
NAIC: 561320 Temporary Help Services
Manpower Inc. has come a long way from its humble beginnings as a temp agency; it now provides employment opportunities for a wide range of professionals both in temporary and permanent positions from 4,300 offices in 68 countries worldwide. In addition to staffing needs, Manpower also offers consultations, training, and financial services to some 400,000 domestic and international clients. Its name, however, is a misnomer. Manpower's ranks have often been filled by more women than men in its almost six decades of operations.
Manpower was founded in 1948 by Elmer L. Winter and Aaron Scheinfeld, two partners in a Milwaukee law firm who saw the labor shortage following World War II as an opportunity to form a temporary agency. A year earlier, Kelly Services, Inc., which would become the second biggest temporary agency, had been formed in Detroit. By 1956 Manpower's reputation was established enough that franchising the company name became profitable. In order to set up a Manpower franchise, an investor paid an initial fee, attended a training course, then set up an office. The franchisee was responsible for recruiting and placement, as well as paying a percentage of his or her gross earnings to Manpower, while the company provided promotion and management guidance.
Under its founders' charge Manpower expanded during the 1960s, establishing franchises all over the world, most prominently in Europe, but also in South America, Africa, and Asia. In 1965 Mitchell S. Fromstein, whose small advertising agency had been handling the Manpower account, joined its board of directors. Fromstein's role in the company's development grew as the company expanded. Its acquisitions in the 1970s included Nationwide Income Tax Service, Detroit; Gilbert Lane Personnel, Inc. of Hartford, Connecticut; and Manpower Southampton Ltd., which had been one of its franchisees. All of these companies were later sold by Manpower.
In 1976 the Parker Pen Company acquired Manpower for $28.2 million. Like Manpower, Parker was a well-known, family-owned business based in Wisconsin. Where Manpower had enjoyed a meteoric rise in the 1950s and 1960s, Parker's sales began faltering in the late 1970s due to its failure to compete with inexpensive writing implements in the marketplace. With Scheinfeld dead and Winter eager to pursue other personal interests, a buyout of all stock was initiated by Fromstein and Parker's president, George S. Parker. Fromstein bought 20 percent of Manpower's stock and moved up to the position of president and chief executive.
When Manpower began, it had initially concentrated its efforts on industrial help. Fromstein made changes in this and many other respects. Practicing a managerial style he credited to Vince Lombardi, the legendary coach of football's Green Bay Packers, for whom he had written speeches, Fromstein was considered responsible for virtually all of the growth and development Manpower underwent during his tenure. His innovative approach to the temporary industry included shifting emphasis from the factory to the office, recognizing that automated equipment was revolutionizing the workplace, and revising the company's Employment Outlook Survey. The survey, initiated in 1962 to measure the hiring intentions of employers and published quarterly, was revised with the assistance of the Survey Research Center of the University of Michigan. Understanding of and sensitivity to its clients needs became hallmarks of Manpower under the guidance of Fromstein.
Above all, it was Fromstein's commitment to take responsibility for training temporary employees, rather than merely finding places for them to work, which accounted for Manpower's dominance in the industry. In his Alternative Staffing Strategies (Bureau of National Affairs, 1988), David Nye wrote, "Manpower is by no means the only 'temporary' firm involved in training and testing, but its approach is clearly the most extensive."
In 1978, when the prospect of a computer that would fit inside an office, let alone on top of a desk, seemed preposterous, Fromstein announced that Manpower would invest $15 million in a computer training program called Skillware. An interactive, self-paced program, Skillware enabled Manpower employees to develop competence in a variety of tasks. This approach made temporary employees more valuable to companies because they required less onsite training and made a greater contribution to productivity in a shorter time. Since its inception, Skillware expanded tremendously and became available for 160 software programs in nine languages.
The complexion of the job market in the United States and abroad contributed greatly to the ascendancy of the temporary industry in the 1980s. Because the cost of providing benefits rose faster than the cost of providing wages, employers began to view temporary hires as more economical than searching for, hiring, and training permanent workers. It also proved to be an effective way of testing potential permanent workers. Furthermore, the increase in dual-income families bolstered the appeal of temporary work to parents faced with the high cost of daycare. Under Fromstein, Manpower was positioned to capitalize on the situation more effectively than its closest competitors, Kelly and Olsten Corporation. Total sales reached $300 million in 1976 and would mushroom to the billions within little more than a decade.
Manpower's rapid growth meant it was drastically outpacing the pen sales at Parker. For a time, its profits made up for the pen company's losses but by February 1986 the imbalance had become too great, despite Parker's efforts at reducing its workforce and cutting back on the varieties of pens manufactured. The writing instruments division was sold to a group of investors for $100 million, and Manpower became the name of the parent company.
In 1987 Manpower engaged in an important affiliation with International Business Machines Corporation (IBM). Under the agreement, Manpower provided onsite training and support services (such as a hotline for computer questions) to buyers of IBM systems. IBM benefited from having its users more fully acquainted with its systems, and Manpower benefited from the awareness of these users that its temporary workers were computer literate.
In the same year, Manpower was the target of a hostile takeover in what turned out to be a tangled and complex affair. In August, Antony Berry's Blue Arrow Plc, a British employment-services firm with revenues only one-sixth the size of Manpower's, offered to buy Manpower at $75 per share for a total of $1.21 billion. Berry, well known in England from his days as a boxer, had terrific success with Blue Arrow since joining them in 1984, taking them from £410,000 ($725,000) in profits to £30 million ($55 million). Manpower stock had been at $62.38 at the time of the offer, but excitement over the bid drove the price up to $78, beating the $75 offered by Blue Arrow.
In the weeks that followed, Fromstein and Manpower contemplated a return bid on Blue Arrow, considered a joint venture with the Swiss employment firm Adia S.A., then threatened to refuse Blue Arrow unless they increased their bid to $90 per share. Manpower's board also publicly denounced Berry's plans for combining the companies, which included implementing an executive search program—a suggestion that infuriated Fromstein, who told the Wall Street Journal , "We aren't blind or deaf. If we thought it was an opportunity, we could have done it years ago." Manpower rejected the bid, prompting a shareholder lawsuit on charges that the directors' decision was financially irresponsible.
Three weeks after the initial offer was made, Manpower finally endorsed the Blue Arrow offer at $82.50 per share for a total of $1.3 billion. Under the terms of the sale, Manpower's operations in the United States would continue under the name "Manpower." Fromstein was allowed to stay on as Manpower president and CEO and one of a five-member Blue Arrow board, though by December 1987 he was fired from this position after a long simmering conflict with Berry became apparent.
Fromstein's separation from Manpower, however, was not long-lasting. In spite of his early successes, Berry proved to be an inept manager. His enthusiasm for sports led Blue Arrow into an expensive and unauthorized investment in a yacht for the America's Cup competition. The stock market crash of October 1987 brought Berry's most substantial impropriety to light. In order to create the funds necessary to purchase Manpower, Berry had secured a loan of $1.3 billion from the National Westminster Bank (NatWest) in England to be repaid from the proceeds of a stock issue.
Manpower Inc. (NYSE: MAN) is a world leader in the employment services industry, offering customers a continuum of services to meet their needs throughout the employment and business cycle. The company specializes in permanent, temporary, and contract recruitment; employee assessment; training; career transition; organizational consulting; and professional financial services. The focus of Manpower's work is on raising productivity through improved quality, efficiency, and cost-reduction, enabling customers to concentrate on their core business activities. In addition to the Manpower brand, the company operates under the brand names of Right Management Consultants, Jefferson Wells, Elan, and Brook Street.
With the bank as underwriter, 38 percent of the shares were purchased by existing Blue Arrow shareholders, leaving the bank the responsibility of selling the rest. According to an article in Financial World , potential buyers might have been scared away had they learned of this situation, so NatWest itself purchased 12 percent in order to boost the amount of sold shares to 50 percent, a more respectable figure. Such a purchase was legal, but the underwriters kept it a secret, and once revealed, this was contrued as a deliberate attempt to mislead potential investors. A criminal investigation was launched and by January 1989 top executives at the bank—most notably its chairman, Lord Boardman—were forced to resign and Berry was disgraced by his role in the deal and other financial improprieties.
Backed by Manpower's U.S. franchises, Fromstein mounted a successful campaign to regain control of Blue Arrow. Once back at the helm, his first three decisions were to change the name of Blue Arrow to Manpower, sell all businesses that had belonged to Blue Arrow, and to move the company's headquarters back to Milwaukee.
As promised, Fromstein sold most Blue Arrow businesses in 1990 and 1991 and Manpower became a U.S. corporation again in 1991. As the company began the decade, its major objectives were to stay current with technological advances in the workplace and to further international expansion into previously inaccessible regions like Eastern Europe.
Manpower succeeded in achieving most of its goals from the beginning of the decade: it recorded robust financial growth and exponentially increased its global staffing services. Manpower's revenue growth, which lifted systemwide sales past the $10 billion mark by the decade's conclusion, was propelled by the company's ever increasing expansion rate, particularly overseas—a primary goal when Fromstein led the company.
Most of the company's progress during the decade was achieved without the benefit of any major acquisitions, though its competitors could not make such a claim. The industry was rapidly consolidating, as rivals merged to form global powerhouses, quickly establishing worldwide networks of staffing offices. Nonetheless, by striking an independent pose, Manpower saw its lead over all worldwide rivals disappear. Its relegation to the number two position in the world, caused by the 1997 merger of Adia SA and Ecco SA, was symbolic of the company's progress during the 1990s. Manpower took giant strides forward during the decade, but as it did so the pace of rival firms and the changing dynamics of the temporary staffing industry sometimes passed the company by.
Midway through the decade Manpower's growth began to pick up speed. Coming off $4.3 billion in revenues and a record $83.9 million in net income in 1994, the company began establishing new offices at a frenetic pace, increasing the number of new offices it opened each year from 100 in 1994 to more than 400 by the late 1990s. The spate of new office openings brought Manpower into dozens of new markets, stretching from Milan to Moscow and into Latin America, Asia, and South America. Important alliances were formed as the company fleshed out its global network of offices, highlighted by two partnerships forged in 1996. Manpower signed an exclusive arrangement with Drake Beam Morin Inc., the world's largest executive outplacement company, and formed an alliance with Ameritech to provide call center and help desk agents. Manpower's 50th anniversary marked 50 consecutive years of revenue growth, but during the celebratory year, Adia SA and Ecco SA merged, usurping Manpower as the global leader in its industry.
One year after the merger that created Zurich-based Adecco S.A., Manpower reached an impressive financial milestone. Systemwide sales eclipsed $10 billion in 1998, double the revenues of five years earlier, but the towering growth did not silence all of the company's critics. The emergence of Adecco as the new international leader prompted some industry pundits to cite Adecco's successes as Manpower's failures, specifically Fromstein's belated entry into the fastest-growing segment of the staffing industry, information technology (IT). Adecco derived roughly 20 percent of its revenues from providing IT workers, nearly twice as much as Manpower. Manpower's perceived failure to assume a strong position in a market led Forbes magazine's Phyllis Berman and Adrienne Sanders to suggest Fromstein should step aside. Although it was doubtful such criticism materially affected Fromstein's mindset, he was quoted in the January 11, 1999 issue of Forbes as saying, "I'm putting pressure on myself to replace myself."
Fromstein retired in 1999 and Jeffrey Joerres was promoted to the posts of CEO and president. A Manpower executive since 1993, Joerres had been credited with spearheading the enormous growth of the company's global accounts, demonstrating a talent that would be instrumental in his efforts to shoulder past Adecco in the 21st century. As Manpower exited the 20th century, the company hoped to have a greater presence in the IT market, after establishing more than 200 offices devoted exclusively to serving technical and IT staffing needs. The company finished 1999 with revenues of just under $9.8 billion and operating profit of $230.6 million.
After a decade of little acquisitive growth, Manpower started off the new millennium by acquiring several companies. First was Elan Group, Ltd., a leading IT recruitment and services firm with 52 worldwide offices serving 16 European and Asian countries, for which Manpower paid $146 million in 2000. This was followed by a joint venture with the United Kingdom's SHL Group Plc., a human resources firm, and the formation of the Empower Group.
In 2001 Joerres was named chairman of the board in addition to his duties of president and chief executive. During the year, Manpower segued into the financial services sector with the acquisition of the Wisconsin-based Jefferson Wells International, Inc., an accounting firm, for about $174 million. Revenues for 2001 were a fraction higher than 2000's $10.8 billion, accounting for the new acquisitions and the disruptions caused by the terrorist attacks against the United States of September 11, 2001. The consequences of 9/11 continued to shadow corporate results in 2003, as Manpower brought in revenues of $10.6 billion, but operating profit climbed from the previous year's $234.8 million to $257.9 million.
In 2002 Manpower concentrated on expanding operations in the Middle East and Europe (other than France, its stronghold). The company's four operational divisions (U.S., United Kingdom, Other Europe, and Other Countries) were updated to reflect the company's growth: U.S., France, EMEA (Europe, Middle East, and Africa), and Other Operations. By the end of the year, France led revenues with $3.8 billion, EMEA brought in $3.4 billion, the U.S. topped $1.19 billion, and other miscellaneous operations claimed $1.4 billion.
Manpower went back on the acquisitions trail with the purchase of Right Management Consultants, Inc. (RMC) in January 2004, the world's largest career transition and human resources firm, based in Philadelphia, Pennsylvania, and with 300 offices in nearly three dozen countries. Buying RMC brought Manpower closer to achieving its objective of providing the world's best staffing and to offering its 2.5 million temporary workers the highest quality employment opportunities available. Revenues from services rose to $14.9 billion and operating profit leaped to $395.8 million from the previous year's $257.9 million on revenues of $12.2 billion.
As with the past several years, Manpower's operations in France continued to lead its revenues, bringing in $5.2 billion (up over 12 percent), followed closely by the EMEA segment at just under $5.1 billion. In terms of sheer growth, however, France was not Manpower's top performing segment—it was the EMEA unit with an increase of 29.7 percent in revenues and operating profits shooting from 2003's $51.7 million to $115.1 million. Manpower's U.S. operations had begun to perk up after declining revenues, climbing 4.9 percent for 2004 to revenues of just over $2.0 billion. Another possible rising star was a new joint venture with the government of China, one of the hottest labor markets in the world. Manpower already had over two dozen offices in China, though Joerres planned to open several more to train the burgeoning Chinese workforce.
As Manpower headed into the late 2000s the company was on solid ground—despite remaining the second largest staffing provider in the world. Though Manpower had made great strides in its international goals, rival Adecco continued to dominate the international and domestic employment sector and brought in revenues of $23.4 billion. Adecco's strong presence in the United States remained a thorn in the Milwaukee-based Manpower's side. While the worldwide staffing industry was certainly big enough for Adecco, Manpower, and rising star Vedior N.V. (with revenues of $8.8 billion for 2004), if Manpower hoped to topple the Swiss powerhouse, it needed to pay far greater attention to its North American operations and continue pursuing opportunities in the Chinese labor market.
Manpower AB; Manpower A.S.; Manpower France S.A.S.; Manpower GmbH und Company KG; Manpower Israel Ltd.; Manpower Team ETT SAU; Manpower UK Ltd.; Right Management Consultants, Inc.; Jefferson Wells International, Inc., Elan Group, Ltd., Brook Street Bureau Plc.
Adecco S.A.; Kelly Services, Inc.; Randstad Holding N.V.; Spherion Corporation; Vedior N.V.
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—updates: Jeffrey L. Covell;