Blue Arrow Bids for Manpower : Temporary Services Deal Raises Questions

Phil Blair, co-owner of the Manpower Inc. franchise in San Diego, and James Vonn, who owns the Temp Force franchise in San Diego, watched with more than passing interest last Friday when British-based Blue Arrow unveiled its $1.33-billion bid for Milwaukee-based Manpower Inc.

That mutual interest developed because if the proposed deal is completed, Manpower Inc. would join Temp Force and a handful of other temporary employment companies as independent subsidiaries of Blue Arrow, England’s largest temporary employment company.

The proposed merger would, in effect, leave Blair and Vonn as competitors who hold exclusive franchise contracts issued by different subsidiaries of the same holding company.

“The (acquisition of Manpower) raises some rather obvious questions,” acknowledged Vonn, who has owned the local Temp Force franchise for nearly five years. “I have an exclusive franchise agreement and so does Phil Blair. My speculation is that there has to be some arrangement made . . . and there’s no reason that it can’t be a friendly resolution.”

The board of Milwaukee-based Manpower on Friday accepted Blue Arrow’s $82.50-per-share bid for Manpower’s 16.1 million outstanding shares. Under terms of the agreement, Manpower, Temp Force and Blue Arrow would continue to operate as separate companies. The companies expect to complete the deal later this year.

Blue Arrow has acquired several smaller U.S. temporary employment services companies during the past year, including Career Employment Services, the Westbury, N.Y.-based parent company of Temp Force.

The San Diego Manpower franchise, which reported $350,000 in revenue in 1977, has in 10 years grown to be the largest single Manpower franchise on the West Coast, with $25 million in revenue in 1986, said Blair, whose partner is Mel Katz.

Manpower clients should notice no changes if Blue Arrow completes its proposed $1.33-billion acquisition of Manpower Inc., the world’s largest temporary employment agency, Blair said.

“I talked to (Manpower President Mitchell S. Fromstein) on Friday and he’s assured me that he’s going to stay in control of (Manpower),” Blair said. “He’s going to stay in charge of the employment services division in the combined companies.”

Blair and Vonn agreed that Blue Arrow will have to sort out its franchise situation after the merger is completed.

“Our franchise agreement states that Manpower Inc. cannot compete with us under the name ‘Manpower,’ Blair said Monday. “And the unwritten rule is that (the company) won’t compete under any name.”

“(Manpower) provides clerical and light industrial temporary people and so does Temp Force, so we’re really head-on competitors,” Vonn said.

Temp Force and Blue Arrow have been “extremely fast growing,” according to Vonn, who added that the “marriage with Manpower would only add additional strength to (Blue Arrow’s) operations.”

Temporary employment companies have been enjoying staggering growth in recent years. On an average day during 1986, more than 800,000 Americans served as temporary employees, according to the Alexandria, Va.-based Assn. of Temporary Services.

Manpower is the largest temporary help company in the world, with over 1,300 offices in over 30 countries.

Blue Arrow is a holding company that operates personnel and executive recruitment, office cleaning and financial services.