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Supply Chain Management of Jackson Hewitt, Inc.

Supply Chain Management of Jackson Hewitt, Inc.

Discuss Supply Chain Management of Jackson Hewitt, Inc. within the Elements Of Logistics forums, part of the PUBLISH / UPLOAD PROJECT OR DOWNLOAD REFERENCE PROJECT category; JOULÉ Inc. is an Edison, New Jersey, regional staffing company, providing customers with a wide range of outsourcing solutions. The ...

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Supply Chain Management of Jackson Hewitt, Inc.
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Netra Shetty
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Supply Chain Management of Jackson Hewitt, Inc. - January 12th, 2011

JOULÉ Inc. is an Edison, New Jersey, regional staffing company, providing customers with a wide range of outsourcing solutions. The company's operations are divided between two business units: Staffing Services and Industrial Contracting. JOULÉ's Staffing Services unit provides temporary and temp-to-hire staffing as well as direct hire placement services. These services are generally handled on an hourly billing contract. The Industrial Contract Business unit, on the other hand, provides outsourcing on either a time and material or fixed price basis. JOULÉ's business is handled through 14 offices in New Jersey and Florida, operating under two trademarks: JOULÉ Staffing Services and JOULÉ Technical Staffing Services. The Professional "discipline" of Staffing Services provides accounting and executive and senior office professional staff. The Administrative discipline supplies secretarial, customer service, and office automation support. The Light Industrial/Manufacturing discipline provides warehouse staff, production personnel, equipment operators, and production supervisors. JOULÉ's technical staffing is where the company got its start and established its reputation, and the firm is considered the premiere staffing company in this regard throughout the Northeast, Mid-Atlantic, and Southeast regions. In the Scientific & Clinical discipline, JOULÉ provides chemists, biochemists, pharmacologists, drug safety specialists, clinical programmers, quality control specialists, chemical operators, laboratory technicians, and other specialists. Among the specialists provided by the Engineering discipline are engineers, designers, project managers, architects, CAD professionals, network engineers, and electronic technicians. In addition, this discipline handles construction professionals, as well as inspectors, schedulers, planners, purchasing specialists, and technical writers. The Craft Specialties discipline represents such skilled workers as carpenters, electricians, HVAC mechanics, insulators, machinists, millwrights, pipefitters, rigging specialists, and welders.

In addition to providing technical staff that works under the supervision of a client, JOULÉ also contracts to complete specific projects. The Industrial Contractors discipline completes capital projects, installs major equipment, and handles plant turnarounds and plant shutdowns. The Technical Services discipline performs such tasks as facilities maintenance and management, power plant operations, in-house maintenance programs, and shutdown support, in addition to providing supplemental craft labor. JOULÉ efforts to recruit skilled personnel include advertisements in trade journals and local media, visiting job fairs, and seeking referrals from current and former employees. To match up the company's pool of employees with the needs of their clients, JOULÉ maintains an extensive data base of information that all branch offices has access to on-line. Because of its success in serving clients, JOULÉ enjoys a large percentage of repeat business.

Roots of Temporary Staffing Industry and JOULÉ

Shortly before the dawn of the 20th century the foundation of the temporary staffing industry was laid. In Milwaukee, Wisconsin, D.J. Nugent was credited with launching the temp concept as an answer to a problem he faced in his Great Lakes shipping business. Because the waters were not navigable during the winter due to ice, Nugent began to arrange temporary factory jobs for his stevedores, the men who loaded and unloaded ships, in order to keep them around until he again needed them on the docks. Skilled workers in this era also began to find help in securing positions. Engineering Agency, now known as General Employment Enterprises, began to place engineers in 1893. After World War II, Manpower, Inc. was formed, as was William Russell Kelly's company that supplied temporary office help, which in the 1950s became known as the Kelly Girl Service. The temp industry continued its growth in the 1960s, becoming an important enough factor by the end of the decade that U.S. Bureau of Labor Statistics decided to measure the industry for the first time, discovering that nearly 185,000 temps worked each day on average, with an annual payroll of $547.5 million. By 1976 the industry would top $1 billion.

JOULÉ (a scientific term referring to a unit of energy) was established in 1965 by Emanuel N. Logothetis, the son of a Greek restaurateur. Logothetis was employed by a New Jersey engineering firm, and after losing his job turned to freelance engineering out of necessity. He specialized in building scale models of process plants, which were used to detect potential design flaws before construction was undertaken. He began to line up similar work for other engineers, and his burgeoning staffing company soon began to offer other contract services to aid in process plant design, followed by a move into maintenance and operations services. Logothetis expanded beyond the base of industrial customers to include the federal government, starting in 1972. Further diversification came four years later when JOULÉ moved into the office temporaries market, providing clerical, word processing, data entry, and graphic design help. It was also around this time that the company developed its data base of employee and client information, one of the first to create a central data base retrieval system on a mainframe computer.

Logothetis' entry into the temporary staffing industry proved to be fortuitous timing but, as he explained to the Wall Street Journal in a 1989 profile, he did not consider himself a visionary: "I rode the boom but did not recognize it when it was taking place." As the business grew, JOULÉ took on the management of major contracts, such as running a suborbital launching and track facility for NASA and performing maintenance projects for IBM. Logothetis' son, Nicholas, joined the company in 1980 and prepared to one day take over the business. During the next few years JOULÉ enjoyed exceptional growth, and in 1986 the company was reincorporated and taken public in order to raise funds to pay down debt, expand its computer system, and open new offices. The initial public offering netted approximately $2.35 million, and the Logothetis family still retained a two-thirds interest in the company.

In 1987 Emanuel Logothetis decided at the age of 57 to retire, buy a house in Florida, and turn over the reins to his 35-year-old son--at a time when the company was coming off a strong five-year run. During that time JOULÉ had seen its annual sales improve by 68 percent to $32.8 million, while income from continuing operations tripled, improving to $1.8 million. The temporary staffing industry was also on the rise. In 1984 it exceeded the $5 billion mark in annual payroll, with more than 622,000 temps employed on average each day. When Logothetis retired (although he remained chairman), the family stake in the business was worth close to $30 million. Two new offices, located in Trenton and Atlantic City, were opened to complement six other New Jersey operations and operations in the Philadelphia, Pennsylvania, area; Long Beach, California; and Jacksonville, Florida. Other New Jersey outlets were also in the works.

Logothetis' retirement, however, would last just a year, as a number of factors combined to push JOULÉ to the brink of ruin. According to the Wall Street Journal, "the company's costs began rising out of control. JOULÉ tried to expand into new markets as far away as South Florida while absorbing a 75 percent increase in premiums for its workers' compensation and liability insurance. At the same time, the company ran into big trouble collecting its bills, ... writing off $776,000 in receivables." As a result of these difficulties, JOULÉ posted a $390,000 loss for fiscal 1988 (which ended for the company on September 30) and continued to suffer in fiscal 1989, losing an additional $834,000 over the next nine months. In the meantime the falling price of the company's stock mirrored JOULÉ's decline. The value of the family stake in the business dropped from $30 million to just $6 million.

When Emanuel Logothetis came out retirement in August 1988 to help right the ship, his son promptly resigned, which according to a JOULÉ spokesperson came as a surprise to everyone. According to the Wall Street Journal account of situation, the younger Logthetis said that a major source of difficulty was an Army contract for work done on an New Jersey ocean terminal, a job that he said the military had grossly underestimated, leaving JOULÉ holding the bag on a $5.2 million invoice for unbudgeted work. In addition, the Journal reported that "a 'fundamental disagreement' between his father and himself over JOULÉ's future also was bothering him. While the younger Logothetis believed the company should pursue more specialized business with higher profit margins, his father chose instead to concentrate on the low-margin, high-volume, temporary-help field." Emanuel Logothetis offered a terse explanation for his son's departure: "Nick wanted to do his thing." Nicholas Logothetis subsequently took charge of a New Jersey company that subdivided and managed office space.

Emanuel Logothetis took immediate, and sometimes drastic, steps to turnaround JOULÉ, going so far as to use two of his homes to back loans to help shore up the company's finances. He also cut costs and focused the company's efforts geographically. On the maintenance and operations services side of the business, he chose to target a market that ran from New York State to Washington, D.C. As for the temporary-help sector, he retreated within the borders of New Jersey, where with a modest investment JOULÉ could "saturate the entire state," and as a result be in a position to underbid its rivals.

With Emanual Logothetis back in day-to-day control, the business began to recover, but it would not be until 1994--due in some measure to a recession that hurt the temporary staffing industry in general--that JOULÉ topped the $32.8 million in sales it posted before Logothetis' short-lived retirement. In fiscal 1994 JOULÉ generated sales of $36.2 million and record a profit of more than $710,000. The company had been strong enough, in the interim, to complete an acquisition, the January 1992 addition of Designeers Inc, a New Jersey engineering services business.

As the U.S. economy gathered momentum in the mid-1990s, JOULÉ grew with it. In 1995 the company continued its strategy of filling in the New Jersey market for temporary staffing services, extending its service area to Bridgewater, Union City, and Cherry Hill. Both Cherry Hill and Trenton, where JOULÉ saw its revenues double in 1995, were a stone's throw from the Philadelphia market, the company's next major target. While Staffing Services enjoyed a 29 percent increase in revenues over the prior year, Technical Staff experienced even stronger growth, improving sales by 37 percent over the previous year. Much of this increase activity was the result of the company's entry into a new niche market, research science and laboratory services. In fiscal 1995 JOULÉ recorded revenues of $43.6 million and net income of $938,000.

JOULÉ's rising fortunes continued in 1996, when the company posted sales of $48.4 million and net income reached $1 million. Their margins were increased even as the company invested in improvements to its infrastructure and operations, spending more to expand its training facilities and to install a new IT system that tied all of its branches together. In fiscal 1996 the company fine-tuned its focus, concentrating on staffing the technical areas of engineering, design, scientists, and lab technicians. JOULÉ was particularly successful in landing major contracts in the pharmaceutical, petroleum refining, and telecommunications industries. The ability of the regional company in 1996 to win the contract of a major pharmaceutical over a national competitor spoke to the strength of JOULÉ's business model.

JOULÉ saw several major contracts in the Commercial and Technical Staffing groups come to a close in 1996 and 1997, which led to a meager gain in sales in fiscal 1997, totaling $48.6 million, just $200,000 more than the prior year. Nevertheless, during the course of the year the company laid the groundwork for ongoing future growth, bolstering its position in markets beyond the confines of New Jersey, branching out into Pennsylvania, New York, Maryland, and Delaware. In addition, the company opened new facilities to support growth in the Florida market.

JOULÉ rebounded in fiscal 1998, with revenues increasing by 14 percent over 1997, topping the $55 million mark. During a period of consolidation in the industry that led to inflated earnings, JOULÉ was able to boast that its improvements to the balance sheet were entirely the result of organic growth--albeit the company benefited from an economy which at this point was performing at a peak level. To meet the demand for workers, JOULÉ beefed up its recruiting efforts. It also expanded its area of operation, during the course of the year opening four new Sales/Recruiting/Operations offices. Further, JOULÉ continued to add new services. In 1998, for instance, the Industrial Services Group installed equipment for Original Equipment Manufacturers in 28 states. A new executive was also brought on board, Jack Wellman, who was named chief operating officer.

Expansion and Acquisitions in the Late 1990s

JOULÉ experienced some growth via external means in 1999, when in May it paid $1.3 million to purchase Ideal Technical Services, an engineering and other technical services staffing company. With offices in Mobile, Alabama, and Houston, Texas, Ideal helped JOULÉ to enlarge its geographical reach. All told, fiscal 1999 was a highly successful year for JOULÉ. Revenues grew by 23.2 percent over the previous year, totaling $68.2 million. In addition to expansion achieved in the Ideal acquisition, JOULÉ added more offices in New Jersey and entered the new markets of Baltimore, Maryland, and Wilmington, Delaware. Altogether the company did business in 39 states, Puerto Rico, and Canada in 1999. It also added a new service line during the year, JOULÉ PROfessional, which provided financial, sales, and human resources staff to New Jersey companies.

JOULÉ's stretch of strong growth continued in fiscal 2000. Revenues increased to more than $76.5 million and net income grew by 17 percent over the prior year to $845,000, and JOULÉ continued to outpace the performance of the industry as a whole. During the year the company entered new markets in Pennsylvania and Tennessee and added new categories to its successful scientific personnel placement services. The company's momentum began to fall off in fiscal 2001, as the nation's economy began to struggle. Nevertheless, JOULÉ posted record revenues, which totaled more than $78.6 million, and healthy profit of $622,000. While it opened four new offices in high-growth locations (Blue Ball, Pennsylvania; Mobile, Alabama; Red Bank, New Jersey; and Dover, New Jersey), JOULÉ also made concessions to the struggling economy by consolidating or closing seven branches.

JOULÉ's string of ten consecutive years of increasing revenues came to an end in fiscal 2002, as the recession finally caught up to the company's core New Jersey market. Revenues fell to $72.8 million and the company recorded a net loss of $162,000 for the year. Especially detrimental to the company's business was the lack of capital investment from American companies, which were reluctant to make major investmenst during such uncertain conditions. As a result, JOULÉ's Industrial Services segment was especially hard hit. The company responded by closing some offices while opening other to take advantage of growth opportunities. In the engineering discipline, for example, JOULÉ identified the marine repair and shipbuilding industries as avenues for future growth. Although tough times continued into 2003, JOULÉ was still healthy enough to complete an acquisition, picking up Wennik&Motta, a $70 million New England staffing firm that specialized in the placement of marketing and creative talent.

Principal Subsidiaries: JOULÉ Staffing Serivces, Inc.; JOULÉ Technical Staffing, Inc.; JOULÉ Technical Services, Inc.; JOULÉ Transportation Inc.

Principal Operating Units: Staffing Services; Industrial Contracting.

Principal Competitors: Adecco SA; Kelly Services, Inc.; Manpower Inc.
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