Tumbling crude oil prices are pushing gasoline pump prices to their lowest level in years, giving optimism to U.S. and Arkansas consumers that they will be able to fill up for less than $3 a gallon this fall.

According to the U.S. Energy Information Administration’s (EIA) recent short-term energy forecast, U.S. regular gasoline retail prices fell to an average of $3.49 per gallon, 12 cents below the July average and 21 cents below the average in June. U.S. regular gasoline retail prices are projected to continue to decline to an average of $3.18 gallon by December, 12 cents lower than what was previously predicted a month ago.

Those month-to-month revisions to the U.S. Energy Department’s short-term forecast on Tuesday mean that Arkansas drivers, who typically pay nearly 20-30 cents less per gallon than the national average, could see pump prices fall below $3 a gallon in the fourth quarter for the first time since 2010 – if retailers choose to lower prices comparatively at the local level.

“The big crunch in summer travel is done and most of us can look forward to lower gas prices during the next few months,” said AAA spokesman Avery Ash. “If we can get through September without any major refinery or overseas problems, we should see more gas stations drop below $3.00 per gallon this fall.”

Typically, Ash said, gas prices from September to December are cheaper than the rest of the year as the nation’s refineries switch to cheaper blend winter fuels after Labor Day, which signals the end of the summer driving season.

And although the average price for a gallon of regular unleaded gasoline during the summer driving season was the fourth most expensive on record at $3.58 per gallon, pump prices in most parts of the country have fallen significantly during the second half of the summer with the national average 25 cents cheaper per gallon since June 28.

“It was truly a summer of contrasts with consumers paying the highest seasonal prices in years to begin the summer, but ending with the lowest prices since 2010,” Ash said. “Many drivers lucked out with it costing significantly less to fill up the car during the busiest part of the summer.”

Overall, gas prices nationally averaged $3.46 per gallon in August, compared to $3.57 (2013), $3.69 (2012) and $3.62 (2011). The national average price of gas was $3.60 per gallon in July and $3.67 per gallon in June. Currently, average U.S. price for a gallon of regular unleaded is $3.43, about 5 cents per gallon than a month ago and down 13 cents from a year ago.

ARKANSAS PRICES
Closer to home, Arkansas motorists today are paying an average of $3.19 per gallon to fill up their tank across the state, eight cents cheaper than a month ago, according to AAA’s daily fuel gauge.

Pump prices in the state’s metropolitan areas range from a low of $3.15 per gallon in the Pine Bluff area to a high of $3.19 at the Texarkana state line. Motorists in the Fort Smith and Fayetteville-Springdale-Rogers area are seeing prices at an average of $3.17 per gallon and travelers and residents in Little Rock-North Little Rock are paying an average of $3.18 a gallon to fill up their tanks.

Drivers choosing to fill up the tanks with a higher-grade of gasoline should expect to pay an average premium of $3.56 a gallon across the state. Big rig drivers and other diesel fuel users will see pump prices at about $3.67 a gallon, down three cents from a month ago.

CONSUMER IMPACT
Not surprisingly, the lower pump prices are already having a positive psychological effect on consumers according to National Association of Convenience Stores (NACS). On Tuesday, NACS released its monthly consumer fuels survey showing that optimism among U.S. drivers increased 8 percentage points from August’s 10-month low of 39%.

NACS, which represents more than 151,000 convenience stores across the U.S. with annual motor fuel sales exceeding $491 billion, conducts the monthly consumer sentiment to gauge how gas prices affect broader economic trends. In September, the NACS report said, 47% of gas consumers across the U.S. said they were optimistic about the economy, the highest level of optimism in 14 months.

Jeff Lenard, vice president of strategic initiatives for the convenience store industry, said the eight-point swing in overall in optimism from a month ago was the largest recorded since January 2013, when NACS first began its conducting its monthly snapshot of nearly 1,100 gasoline-buying consumers. Overall, nearly 9 in 10 consumers (87%) say that gas prices, which they report have dropped 20 cents per gallon over the past two months, have an impact on their feelings about the economy.

“We have seen increasingly wide swings in economic mood over the past three months as consumers continue to sort out how world and national events could affect their economic security. At the same time, it appears that what happens at the corner store with gas prices continues to play a major role with consumer sentiment,” Lenard said.

Still, Lenard hedged his bets on whether or not fuel prices nationwide will drop below $3 a gallon, a perceived psychological barrier that some economists say affects consumer spending habits. Lenard said a number of factors affect the price that consumers pay at the pump, ranging from whether crude oil prices drop stay $100 a barrel or a hurricane hitting the U.S. Gulf Coast to local factors such as taxes and transportation costs from the refinery to the pump.

Lenard said convenience store owners, which represent about 80 percent of the gasoline sold to U.S. consumers, don’t make a big profit at the pump. He said most convenience stores owners use gasoline sales as a lead-in to get consumers to buy other goods, such as fountain drinks and snacks, when they fill up their tanks.

“For retailers, they only make three cents per gallon, or about a quarter (25 cents) for a fill up,” Lenard said. “If they are not feeling good about the gas prices, they won’t go into the store. ... The whole idea behind the survey is that we feel that gas prices have an enormous impact on consumers. It is not a discretionary spend that they can put off. You can’t go to the boss and say I am not coming in this week. People drive because they have to.”

OTHER ENERGY MARKET MOVES
Below are additional highlights of the EIA’s short-term energy outlook:
• Natural gas spot prices fell 15% from an average of $4.59 per million British thermal units (MMBtu) in June to $3.91 MMBtu in August even as natural gas stock builds continued to outpace historical norms. Natural gas working inventories on August 29 totaled 2.71 trillion cubic feet (Tcf), 0.47 Tcf or 15% below the level at the same time a year ago and 0.50 Tcf or 15% below the previous five-year average (2009-13). The EIA expects that the Henry Hub natural gas spot price, which averaged $3.73 per MMBtu in 2013, will average $4.46 per MMBtu in 2014 and $3.8 per MMBtu in 2015.

• Total U.S. crude oil production averaged an estimated 8.6 million barrels per day (bbl/d) in August, the highest monthly production since July 1986. Total crude oil production, which averaged 7.5 million bbl/d in 2013, is expected to average 9.5 million bbl/d in 2015, 0.2 million bbl/d higher than projected in last month’s forecast. If achieved, the 2015 forecast would be the highest annual average crude oil production since 1970.

“The growth in domestic liquids production has contributed to a significant decline in petroleum imports,” the EIA said.

• The share of total U.S. petroleum and other liquids consumption met by net imports fell from 60% in 2005 to an average of 32% in 2013. EIA expects the net import share to decline to 21% in 2015, which would be the lowest level since 1968.

In trading Tuesday, international Brent crude oil prices slid below $100 per barrel for the first time in 17 months, while U.S. crude prices moved higher following the EIA’s weekly inventory report citing lower energy stockpiles as refineries prepare to switch to winter fuel blends.

At the close of Tuesday’s session, Brent prices settled at $99.16, the lowest closing price since April 18, 2013. On the New York Mercantile Exchange, West Texas Intermediate crude for October delivery closed up nine cents at $92.75 per barrel.

Meanwhile, NYMEX natural gas futures were trading Wednesday at 3.956 per MMBtu, down slightly from Tuesday’s close at 3.978 per MMBtu.

A Congressional watchdog agency says Arkansas' private option won't be revenue neutral and could bring a price tag for state taxpayers of $778 million over the next three years.

On Monday, the Governmental Accountability Office released a 16-page report that outlined its contention that the 2013 U.S. Department of Health and Human Services (HHS) approval of a waiver for the private option – Arkansas' bipartisan-crafted Medicaid expansion plan – would have cost more than straight Medicaid expansion.

HHS allows states to experiment with innovative approaches to programs through waivers, which often leads to hypothetical scenarios or models in scenarios pitched for experimentation. The GAO report was critical of Arkansas' assumptions.

"Specifically, HHS approved a spending limit for the demonstration that was based, in part, on hypothetical costs — significantly higher payment amounts the state assumed it would have to make to providers if it expanded coverage under the traditional Medicaid program — without requesting any data from the state to support the state’s assumptions," the report stated.

"GAO estimated that, by including these costs, the 3-year, nearly $4.0 billion spending limit that HHS approved for the state’s demonstration was approximately $778 million more than what the spending limit would have been if it was based on the state’s actual payment rates for services under the traditional Medicaid program," the report said.

But state and federal officials countered the GAO criticism.

Matt DeCample, spokesman for Gov. Mike Beebe, said GAO never contacted Arkansas officials for additional details of the state's assumptions, which might have clarified aspects of the criticism. He also said GAO's reluctance to take into account program changes that Arkansas is implementing to lower costs makes the watchdog group's conclusions questionable.

For instance, Arkansas officials have maintained that the private option will result in savings from marketplace competition among insurance plans and from improved health care due to more access.

State leaders have also long contended that "churning"– which occurs when Medicaid recipients enter and exit the program due to income fluctuations – would be reduced with the exchange system, thus producing cost savings. And there has been substantial debate about the rising costs of Medicaid payments to providers, which led to Republican legislators' interest in experimenting with competition in the marketplace through the private option.

The GAO report admits these omissions, but justified them in its comments.

"As noted in this report, we reviewed Arkansas’s budget neutrality explanation as provided to HHS, and we found that the state’s assumptions that the state would pay Medicaid providers significantly higher rates in the absence of the demonstration were questionable and supporting documentation was limited," GAO said.

"[W]e based our estimate on the historical expenditure data provided by Arkansas, which we believe is the appropriate subset of data for developing such an estimate," the GAO report said. "In our view, if the state was not paying these costs before the demonstration, these costs should not be approved under demonstration spending limits without strong evidence supporting the deviation from HHS’s policy of relying on state historical spending for projecting future costs."

This latest report from the GAO highlights an on-going feud between the executive and legislative branches of the federal government. The GAO is the watchdog arm of Congress and conducts its analyses independent of federal agencies.

In the private option report, GAO officials conclude, "HHS’s approval of $778 million dollars of hypothetical costs in the Arkansas demonstration spending limit and the department’s waiver of its cost-effectiveness requirement is further evidence of our long-standing concerns that HHS is approving demonstrations that may not be budget-neutral."

This week, Arkansas officials disclosed that private option enrollment had reached 194,257.

“From our perspective, interest in the program continues to be strong and we think the private option is working as it was anticipated,” said Arkansas Department of Human Services Spokeswoman Amy Webb.

On Tuesday, a new coalition of hospital and health care groups announced an initiative to help Arkansans learn about their health care options and enroll in coverage using a $300,000 grant from the Fred Darragh Foundation.

Arkansans for Coverage was created in response to legislation passed this year by legislators prohibiting state agencies from publicizing the private option, the state program that uses Medicaid dollars to pay for private insurance for low-income residents. The law also prevents state agencies from publicizing the Arkansas Health Insurance Marketplace, the exchange where consumers can purchase subsidized health insurance. The group also will advocate for a smoother enrollment process.

The Darragh Foundation money will fund four “assister” positions at community organizations – one each at Mental Health Council and at Future Builders, Inc. in central Arkansas, one at Tri-County Rural Health Network in Jefferson County, and one at Legal Aid of Arkansas in Northwest Arkansas.

The coalition involves Arkansas Advocates for Children and Families, the Arkansas Hospital Association, Arkansas Interfaith Alliance, Arkansas Minority Health Consortium, Partners for Inclusive Communities, and Community Health Centers of Arkansas.

Dollar General won’t take “no” for an answer. The company extended a tender offer directly to Family Dollar stockholders for $80 a share on Wednesday (Sept. 10). The hostile takeover attempt comes after two rejected acquisition offers to Family Dollar’s board of directors.

“By taking this step, we are providing all Family Dollar shareholders a voice in this process, and we urge them to tender into our offer,” said Dollar General CEO Rick Dreiling. “We now can begin the antitrust review process and will have an opportunity to present our position directly to the Federal Trade Commission. As we previously have stated, we are confident in the results of our antitrust analysis, and we look forward to a constructive dialogue with the FTC.”

In an offer made last week, Dollar General added a $500 million breakup fee and increased the number of stores it is willing to sell to get antitrust approval to 1,500 from 700.

Family Dollar management opted to take a lower priced offer from Dollar Tree, a deal that would reward stockholders with $74.50 per share and allow more of its 7,000 stores to remain open. Family Dollar management cited anti-trust concerns as the main reason it opted for the Dollar Tree offer because there is not as much overlap in those two company footprints. 

If Dollar General is successful in its hostile takeover attempt and U.S. regulators sign off of the deal, the combined companies would form the largest retail chain in the country more than 18,000 stores. Wal-Mart, a big box discounter but also a competitor in the dollar store channel, has just 11,000 stores across the entire world.

Family Dollar said Wednesday it would "review and consider" the tender offer from its larger discount retailing rival, as part of its fiduciary responsibilities to its shareholders. Family Dollar urged its shareholders to take no action until it announces its recommendation in a regulatory filing no later than Sept. 23. The company reiterated its support for the Dollar Tree merger.

The hostile offer announced Wednesday is slated to expire Oct. 8, unless extended. Dollar General said it will immediately begin seeking anti-trust clearance for the deal.

The jury is still out as to whether this blockbuster deal will pass regulatory muster. It ranks as the fifth largest hostile takeover attempt this year among U.S. based companies, according to Dealogic who values the deal at $9.849 billion. None of the four larger deals have been completed, according to Edward Jones, media spokesman for Dealogic.

The 21st Century Fox hostile attempt to acquire Time Warner was valued at $96.34 billion when announced in July and has since been withdrawn. The same is true for Charter Communications $62.61 billion bid for Time Warner announced in January.

Jones said Valeant Pharmaceuticals $56 billion hostile bid for Allergan Inc. is still pending as is the $33.7 billion hostile takeover deal for T-Mobile by Iliad SA.

“It will be interesting to see how this shakes out. It is likely going to come down to the Federal Trade Commission approval and this is a way for Dollar General to test for themselves those waters,” said Alan Ellstrand, corporate governance expert at the Sam M. Walton College of Business, University of Arkansas.

He said historically the measure of success in hostile takeover situations is linked to how the deal is financed. 

“If a company has to highly leverage its assets with a great deal of debt to accomplish a hostile takeover, then it could be vulnerable if market dynamics change, interest rates rise or there is some other economic factor that impacts profitability,” Ellstrand said.

The Dollar General offer is not conditioned upon any financing arrangements. Dollar General has received written commitments from Goldman, Sachs & Co. and Citigroup Global Markets Inc. for the financing necessary to consummate the proposed all-cash transaction.

Ellstrand said shareholders will likely to be tempted to take higher offer, especially institutional investors.

Dollar General management notes their $80 per share offer provides Family Dollar shareholders with approximately $640 million of additional aggregate value over the Dollar Tree offer. It represents a premium of 31.9% over the closing price of $60.66 for Family Dollar stock six weeks ago, the day before Dollar Tree made its first offer.

Brian Yarbrough, a retail analyst with St. Louis-based Edward D. Jones & Co., notes that Dollar Tree will just have to see how events play out as it probably lacks the resources to outbid Dollar General, which is about twice its size.

“There’s no reason for Dollar Tree to up their bid,” he said. “At the end of the day, they know Dollar General has a lot more firepower.”

With the ink barely dry on its blockbuster $8.55 billion deal, Tyson Foods CEO Donnie Smith wasted no time in providing an upbeat “Brady Bunch” assessment on the integration of Hillshire Foods brands’ and operations.

"We're moving forward quickly with the integration and finding synergies, and we feel good about our ability to capture $225 million in synergies in the first year and $500 million by year three," Smith said Monday during the Barclay’s Consumer Conference in New York. "The more we get into it, the better we feel."

Smith said as the companies come together, it will be important to keep the best aspects of both organizations intact. He especially wants to keep the spark that led to the brand-building, marketing, innovation and product-development success at Hillshire. He said the Hillshire merger moves Tyson forward faster.

“What have to be careful not to over Tysonize Hillshire Farms. We know what our strengths are and theirs and we want to bring the best of both companies to the table,” Smith said. 

While the deal was still being finalized, the first mission among Tyson Foods’ execs was step back and assess, “Who is Tyson 2.0?” Smith told investors. Realigning talent also was a first initiative. That announcement was made Aug. 28. Smith referred to their blended corporate family as the “Brady Bunch approach.”

“I feel like we’ve brought the best of both companies together and used the strengths of both companies to help move our business forward,” Smith said.

Tyson Foods’ Chief Financial Officer Dennis Leatherby also reassured investors by announcing that the company is sticking to its 2014 full year earnings guidance of $2.78 per share – independent of the Hillshire costs and merger activities. Tyson's fiscal 2014 year ends Sept. 27.

Tyson expects the addition of Hillshire to be accretive to earnings in fiscal 2015 and substantially accretive thereafter. Leatherby said he expects at least 10% earnings per share growth in fiscal 2015.

"We're staying focused on our strategy. We're going to leverage our iconic brands and No. 1 market share positions to grow the prepared foods segment, and we've hit the ground running to capture synergies. If we do all these things well, the result will be reduced volatility and expanded operating margins," he said.

Leather told investors that Hillshire’s business is 74% retail and 26% food service, which makes for a complimentary blend into Tyson’s prepared foods segment which is the opposite.

Tyson Foods also expects beef and pork margins in its red meat business to improve in 2015.

“I see a much better year ahead for the chicken business too,” Smith said.

Smith projects the beef herd will shrink about 2% to 3% this coming year, but with more cattle moving toward to the Midwest, Tyson expects no problem with procurement given that’s where its slaughter facilities are located.

“All of our beef processing plants are around the big high-efficiency feedlots. So cattle are actually moving toward our plants,” Smith said.

Plants at a distance from the Midwest will become more challenged over time, given the cost of moving live cattle is about 10 cents per mile per head, Smith said.

“So if you're 500 miles away from the cattle supply, you've got a $50 a head disadvantage, for example, to someone like Tyson who is sitting right on top of the big high-density feedlots,” he said.

Smith said Tyson has been able to maintain decent beef margins and he doesn’t see that changing in the near term. In pork, lower corn prices will provide incentive for production to expand, after double-digit declines tied to the Porcine Epidemic Diarrhea Virus. Bio-security measures put in place at hog farms around the country should help reduce the PEDV effect going forward, Smith said.

“It would likely be the latter part of 2015, maybe moving on into 2016 before that increased supply manifests itself in a meaningful way, but I think we can say that production could be up 1% or 2% next year,” Smith added.

Smith predicted Tyson’s chicken segment margins will reach or exceed 10% percent in 2015. Smith said overall supply won’t begin to increase until about July 2015 because of the limited breeder flock.

Margins in the company’s prepared foods business will be “significantly stronger” next year, boosted by the addition of Hillshire Brands and operational improvements, Smith concluded.

Fort Smith's highest grossing hotel is back under local ownership and millions of dollars in renovations are planned for the facility, according to its new owners.

The 178-room Hampton Inn and Suites, located at 6201-C Rogers Avenue, had been put up for sale by Austin, Texas-based Summit Hotels for an asking price of $12 million, according to Storm Nolan, a partner in Fort Smith-based CSK Hotels.

"We've actually been interested in the Hampton for a long time and tried to buy it years ago," he said, adding that the sale of the hotel was completed Tuesday (Sept.9).

Summit Hotel Properties said in a Wednesday (Sept. 10) press release that the property sold for $8.8 million.

"It was owned by a publicly traded REIT based in Texas and so when they were ready to sell we happened to be the one they selected," he added.

For Nolan, the purchase of the hotel will be his company's 15th hotel project to be involved in and adds a third property to the company's portfolio. The other properties under DSK ownership include a hotel under the Marriott brand in Little Rock and a Choice Hotel-branded property in Texarkana, Texas.

The reason for purchasing the Hampton Inn property in Fort Smith, Nolan said, was partly because of the corporate branding associated with Hampton.

"Hampton is in the Hilton family (with) HHonors Rewards," he explained. "Business travelers love that system. As such, Hilton does a good job of making sure the properties are well maintained and part of our plans include a $3 million renovation."

According to Nolan, the renovation will include a complete top to bottom re-do of guest rooms, as well as an update to the facade of the hotel which he said will provide a "well designed, modern hotel experience" in the Fort Smith market.

Renovations are expected to begin between the end of this year and mid-2015 with a scheduled completion date of "the end of next year," he said.

Nolan said financing for the hotel's purchase and renovations was provided by Fort Smith-based Benefit Bank. For Nolan and business partner Kane Whitt, adding the hotel to its list of Fort Smith-owned and managed properties will allow them to focus their efforts locally.

"It just complements some of the other businesses we already have," Whitt said, adding that one of the company's local investments is ownership and management of Green Pointe Shopping Center on Rogers Avenue in Fort Smith.

Nolan said the purchase of the hotel was not simply about the numbers making sense, but also about positively impacting the local economy, noting that the hotel's general manager Henry Perez is on the city's A&P Commission and other hotel staff are involved in community non-profits.

"As far as why (we invested in this property), we're based in Fort Smith so it is in our hometown. This will make our 15th hotel project. Based on the numbers they're doing (with $4.1 million in annual revenues), it looked like a good investment for us. We're kind of excited. We know a lot of business people in Fort Smith and to take a hotel from Wall Street ownership to local ownership will resonate well with locals, local travelers and people referring other travelers to the area."

The hotel employs 40 staff, with Nolan adding that the levels would not increase for the foreseeable future.

The share price of Summit Hotel Properties (NYSE: INN) closed Wednesday at $10.51, down six cents. During the past 52 weeks, the share price has ranged from an $8.50 low to an $11.09 high. The company has 90 hotels with 11,380 rooms in 21 states.

The Regional Intermodal Transportation Authority is scheduled to meet with the chairman of the U.S. House Transportation and Infrastructure Committee next month, the second meeting with a high-ranking Washington politician in Fort Smith since August regarding infrastructure-related issues.

According to RITA Executive Director Mat Pitsch, U.S. Rep. Bill Shuster, a Republican from Pennsylvania and chairman of the House Transportation and Infrastructure Committee, was invited to visit Fort Smith and meet with RITA by U.S. Rep. Steve Womack, R-Rogers.

The visit will be much like U.S. Sen. Jim Inhofe's visit to Fort Smith in August, when the Oklahoma Republican and ranking member of the Senate's Environment and Public Works (EPW) Committee toured the area's infrastructure, heard about area needs and met for a question and answer session with the RITA board of directors.

Pitsch said bringing senior politicians like Shuster and Inhofe to the area places special emphasis on the region's infrastructure needs that the board hopes will be kept in mind when funding is allocated for infrastructure development.

"When we bring in people like Congressman Shuster, we are trying to shine a bright light on where we want to see this interstate," Pitsch said, specifically highlighting the group's efforts to see the interstate completed from Alma to Texarkana.

Pitsch said the success of meetings with Inhofe and Shuster will not be able to necessarily be measured in tangible, immediate ways.

"If you define success as shining a bright light, that is the success of what RITA can do. We all understand that money for roads (is limited). We all hear the stories, but that doesn't mean that we don't want to communicate with the folks (responsible for funding) to build this road. Our job is to keep shining bright lights where we need interstates, railroads, the (slack water) harbor and expand the airport and offer to help in any way we can help."

He said specifically that the days of getting large earmarks to fund the billions needed to complete the interstate or other infrastructure projects were in the past, adding that the focus during each budget cycle should be on completing segments of the road that will eventually join Interstate 49 into a single roadway from Louisiana to Kansas City.

To illustrate his point, Pitsch pointed to the segments of the interstate completed from north of the Arkansas state line to Kansas City, as well as stretches from Bella Vista to Alma, the stretch through Chaffee Crossing expected to open next month and another stretch from Texarkana to the Louisiana border.

"You always want to keep the end in mind and we want an interstate that traverses the middle of the U.S., but when asking for an interstate in one chunk you don't get a responsive audience. But if you put it into bite-sized pieces, you might."

One of the more critical bite-sized pieces is an about 15-mile segment across the Arkansas River near Fort Smith that would connect I-49 near Alma to the northern segment of I-49 at Chaffee Crossing and Barling. That piece is estimated to cost at least $350 million.

U.S. Sen. John Boozman, R-Ark, said in August that even getting funding to replenish the federal Highway Trust Fund was going to be a challenge and added that for new projects, it would be essential for the federal government to receive assistance from local and state governments.

Pitsch may have an opportunity to influence the state's funding of highway projects in January when he is sworn in to his first term as a state representative after winning a primary in May and having no general election opponent in the November general election. But he said it is difficult to say what exactly he will be able to do in the short term as a state representative to get funding, such as requesting state surplus funds be used for interstate construction.

"I would hope to be involved in some transit issues from my day job, but the House is one of 100 people. I'm going to be a freshman legislator down there. I'm all about roads and infrastructure. … I'm all about that. Infrastructure leads to jobs, employed people and a better society and economy. But as to what kind of an impact someone who has not served in the legislature can have, it's not fair (to try and answer that question right now). I don't want to say that I'm going to do this and that."

As for what happens after Shuster's visit, Pitsch said it is anyone's guess. The hope, he said, is that the Fort Smith projects will be top of mind for Shuster and Inhofe as they head back to the Hill and that the Arkansas Congressional delegation is able to remind both men about the area's infrastructure needs as bills are written and come before committee in the next Congress.

Wal-Mart Stores was among the top five big spenders for U.S. development last year that doled out $66.7 billion for business infrastructure which includes facilities, property and equipment, according a report from the Progressive Policy Institute. 

Since 2011 the top five anted up $198.6 billion in U.S development projects. The five in the Institute report are:
• AT&T: $20.944 billion ($60.509 billion in the past three years)
• Verizon: $15.443 billion ($46.643 billion)
• ExxonMobile: $11.072 billion ($34.929 billion)
• Chevron:$10.562 billion ($31.377 billion)
• Wal-Mart: $8.652 billion ($25.144 billion)

Last year’s U.S. investment among the top 25 big corporate spenders totaled $152 billion, up 1.47% from the year-ago period, said PPI economist Diana Carew. She told The City Wire that the increase was slightly below the 2% to 2.5% rate from the two prior consecutive years.

She said the report’s mission is to draw attention to companies and industries that are investing in America’s future. Carew said companies that invest in the U.S. create opportunities for economic growth. 

“We know government policies can greatly impact corporate investment which is why we’re advocates for policies that encourage spending here among U.S.-based corporations,” she said.

DIGITAL/WIRELESS
Telecom has led in U.S. infrastructure spending over the past three years with competitors AT&T and Verizon forking over a combined $167.652 billion, of which $107 billion was invested into domestic wireline and wireless networks. 

Carew said to put that number in perspective one should consider that all government investment in airports, urban mass transit, and other non-highway transportation projects in the U.S. over the same period came to only $81 billion.

She said as the world becomes more connected via technology the economy must also evolve into one that’s data-driven. Carew does not expect a pullback in spending among telecom and technology companies anytime soon.

Ironically as the world becomes more interconnected, Carew said it is imperative that all types of companies invest more in digital, mobile and other technological advances at home to better compete in the “Internet of Things” world. The Internet of Things is a concept that describes a future where everyday physical objects will be connected to the internet and be able to identify themselves to other devices, according to Techopedia.com.

Wal-Mart, a traditional discount retailer is leading its sector in tech-related spending. Last year roughly $2.5 billion of the $8.862 billion Wal-Mart invested went to technology- related expansion projects in the U.S., according to PPI.

Wal-Mart’s tech spending equaled more than half of the total investments by tech giants Google and Apple at $4.697 billion and $2.807 billion, respectively. Wal-Mart also spent slightly less on its U.S. tech investments than Amazon’s total spending of $2.648 billion last year.

RETAILER SECTOR
Carew said Wal-Mart was the only retailer on the top 25 big spenders list, Amazon which ranked No. 25 is listed as an internet company. 

As a sector, retail ranked sixth out of seventh in terms of U.S. investment last year at roughly $9 billion. Transportation ranked lower at $7 billion with investments by Union Pacific Railroad at $3.496 billion and FedEx’s $3.198 billion, according to PPI.

The report did mention Kroger, Target and CVS as retailers also ramping up their U.S. investments in the last year. In 2013, Kroger’s capital spending was $2.33 billion, CVS spent $1.974 billion and Target spent $1.886 billion.

Coming out of the 2007 recession, the retail-wholesale trade sector curtailed its U.S. investment 11.2% though 2012. Manufacturing investment declined 4% during the same 5-year period.

OIL/GAS
The sector contributing the biggest gains to the nation’s economic recovery post 2007 has been oil and gas exploration amid the natural gas fracking boom. This segment increased U.S. investment 31% between 2007 and 2012, according to PPI. The Telecom, cable and internet sector investment was second with 21.2% growth.

This year’s list also included 10 energy companies either involved in the exploration and production of oil and gas, or involved in energy distribution and power. All told, these 10 companies invested a total of $57 billion in 2013, or 37% of the top 25 investment.

Much of the investment by the oil and gas companies on the list was concentrated on deepwater oil reserves off the Gulf of Mexico. In addition, these companies reported sizeable oil and gas exploration and production investment on reserves in Alaska, California, Louisiana, North Dakota, Ohio, Texas and Wyoming.

More than 350 sales items and 35 woman-owned companies have become Wal-Mart suppliers in the almost two years since Wal-Mart and Walmart.com announced an effort to bring more woman-owned suppliers’ products from around the round to an online marketplace.

The Empowering Women Together program is part of the retailer’s larger Global Women's Economic Empowerment Initiative aimed at helping woman build better lives through sales opportunities, training and promotion, according to Ravi Jariwala, Walmart.com spokesman.

“We've set specific goals for 2016 and are working toward them with good progress,” Jariwala told The City Wire.

He said Walmart.com is now working with 35 woman-owned companies who are supplying more than 350 items for sale via the Empowering Women Together website page on Walmart.com. Sales begin in March 2013 from 19 woman-owned businesses from around the world.

Wal-Mart said by 2016 the dedicated e-commerce site will feature approximately 500 items – from apparel and jewelry, to stationery and accessories – by more than 20,000 women in nearly two dozen countries. The retailer refers to its Empowering Women Together marketplace as a “Store for Good.” 

“Our hope is to provide these hard-working women with opportunities to improve their own lives, while creating new jobs and enhancing the lives of their families and their communities. Each supplier in the Empowering Women Together program is a woman-owned business or an aggregator with the mission of supporting women-owned businesses,” Walmart.com notes on its website.

Wal-Mart said the challenge for many small women-owned businesses – and particularly women artisans – is that they have a good product, but they may not have the size or scale to sell in the retailer’s brick-and-mortar stores.

The Women’s Bean Project based in Denver is a non-profit organization that employs chronically impoverished and unemployed women.

Women in the program make hand-crafted jewelry and food items, all while learning basic life skills, like how to solve problems and how to set goals and job readiness skills like computer skills and attention to detail. It’s more than a paycheck for them, it’s a path to a new life, notes MiKaela Wardlaw Lemmon, vice president at Sam’s Club. Lemmon previously worked as the executive director for the Walmart’s Empowering Women’s Initiative.

“Empowering Women Together has about 35% more suppliers since it began in 2013, and the program continues to grow.  This is just one way Walmart is working to empower women and source $20 billion from women-owned businesses,” Lemmon notes in her blog.

Thousands of miles away in New Deli, India Nimal Designs, run by Babita Gupta and her 25 employees, are at work crafting home furnishings, clothing and accessories.

“They told me I am nobody, but you have made me somebody. Now I dream of making all under privileged woman like me,” notds Usha, one of 10 female employees at Nimal Designs.

Nimal Designs was brought to Walmart.com by a partnership the retailer has with Full Circle Exchange, a non-profit social enterprise brand dedicated to empowering women and whole communities to rise above poverty through design partnerships, innovative products and sustainable economic opportunities. Full Circle Exchange artisans sell products in Walmart, Macy’s, Whole Foods and other regional grocers.

Jariwala told The City Wire that Walmart.com seeks to grow the number of woman-owned suppliers through the Empowering Women Together campaign. He said all eyes and ears at Wal-Mart are open for eligible women-owned business suppliers.

Wal-Mart outlines the following guidelines for potential woman-owned suppliers on its website.

“Internationally, we are concentrating on suppliers with very little or limited access to customers. Most will have revenues of $10 million or less and fewer than 300 stores selling their products. While we help these women-owned businesses grow, we want them to grow with us. So we will continue to work with suppliers who enter the program and grow into higher revenues.”

Polls taken within days of each other place the Arkansas governor's race as either a competitive race between Democrat Mike Ross and Republican Asa Hutchinson or a far lead for Hutchinson with the race in its final two months. But with two national polling firms having such different results in the race, which one should observers of politics and polling trust?

Dr. Jay Barth, a politics professor at Hendrix College in Conway and a pollster for The City Wire content partner Talk Business & Politics, said it is important to look at a collection of polls to get a sense of where an election stands versus looking at a single poll.

"Once you have looked at a number of polls, you can have confidence in trends that are shown," he explained.

While outliers like a poll by Marist College and NBC News – which has Hutchinson up by nine points against Ross – can shift the average slightly, he said looking at "an aggregation" of polls gives a better idea of not only where the election is going but where it has been. An easy and quick way to view an aggregation of polling data is by visiting RealClearPolitics.com, a site that tracks polling in most of the top political races across the country including the race for Arkansas governor.

Dr. Janine Parry, a political science professor at the University of Arkansas in Fayetteville and the director of the Arkansas Poll, said many times there is little movement from poll to poll.

"There are a good many reasons why these polls are far apart since the vast majority of polls confirm the previous polls," she said. "Typically, there's very little movement, so what happened here in an outlier."

Even though focus has been paid to the NBC News/Marist poll with Hutchinson besting Ross by nine points, a recent poll by right-leaning Rasmussen Reports taken just six days before the Marist poll had Ross up by two. Previous polling typically had Hutchinson up by only five or six points with a margin of error around four points. In the case of the NBC Marist poll, the margin of error was 3.9%, while the Rasmussen was 4%.

"In terms of why these are different, sometimes no matter how well a poll is conducted, there's always room for error," she said. "That's why good pollsters and good reporters report the margin of error. Even if the margin is tight … at any given time, we're only 95% sure that the result we arrive at is (the right) number. There's some noise possible in any poll. It could be that one of these polls falls into this category. Or it could be that both do, though it's unlikely."

Parry said political scientists and pollsters like herself and Barth would always look at methodologies when it comes to polling, noting that sampling of likely voters to registered voters impacts results. So does the inclusion of a select number of cell phones and the number of females versus males in a given poll.

"Those are all places you have to look," Parry said. "If those things aren't reported, any polling number should be suspicious. What I emphasize (when I discuss polling information with civic groups) is the more information they give you, the more confident you should feel about results. Samples, margin of error, questions asked, etc.”

Barth noted that polling nearly always sees a large difference in polls that screen for simply registered voters versus likely voters, with some of the pollsters asking specifically if the respondent plans to vote while others go based on voter data to see how many of the last several elections respondents voted in.

Barth and Parry said it is important for political observers to focus on the overall picture instead of depending on one specific poll, with Barth noting that voter turnout is likely to play the biggest roll in the election regardless of what polling data may be showing.

"The big thing I'm seeing in the polls is that if it's more (based on) all registered voters, the Democrats are advantaged. If it's a very narrow likely voter screen, then it really skews Republican. So this means it's really all about turnout. If turnout is especially high for the mid-term and if the electorate is going to show up and vote, Democrats are advantaged. If that does happen (and voter turnout is low), Republicans are advantaged significantly.”

The state of the races in Arkansas, Barth added, varies. In the Senate race, he said it would stay close until the end with polling data barely moving for either Democratic incumbent U.S. Sen. Mark Pryor or his Republican opponent, U.S. Rep. Tom Cotton.

In the race for governor, he said the last two months still provide room for movement for both candidates.

"The governor's race has a little more malleability in it. I think the candidates are still a little less known," he said, adding that as both campaigns continuing pouring money into television and other advertising avenues, polls could start to see more movement.

In the races for Congress, Barth described those races as more "fluid." The state legislative races are also described as fluid, he said, adding that individual voters' partisanship could ultimately decide many of the races.

Parry said whatever happens, political observers and the public wanting to have an idea of what is happening in the races should dive into specifics of polls released in the coming weeks instead of just rely on the talking heads, campaigns and bloggers to dictate the facts.

"But the public should probably pay more attention to evaluating the candidates instead of who is ahead," she added.

The number of bad loans banks are writing off may have dropped in the last year or more, but it does not mean profits are necessarily increasing at Fort Smith area banks.

According to figures provided by the FDIC, Arvest Bank, Benefit Bank, Citizens Bank & Trust of Van Buren, Farmers Bank of Greenwood and First National Bank of Fort Smith reported net income of $67.676 million for the first half of 2014. The total represents a decline of 5.77% from the first half of 2013, when net income for the five banks totaled $71.823 million.

Keith Hefner, president and CEO of Citizens Bank & Trust, said extra costs associated with the federal Dodd-Frank Act have put an undue burden on many banks. As a result of tightening regulations caused by the federal legislation, which was passed in the fallout from the 2008 financial crisis, many banks are having to add staff, outsource compliance operations or both in order to abide by the law, Hefner said.

Named after legislative authors U.S. Sen. Chris Dodd and U.S. Rep. Barney Frank, the “Dodd-Frank Wall Street Reform and Consumer Protection Act” was signed into law on July 21, 2010. Dodd and Frank have since retired from Congress. It was passed in response to the near collapse of several large U.S.-based banking operations in 2007-2008. Democratic leaders in Congress blamed the financial problems on a lack of federal oversight. Advocates of the law say it will prevent banks and other financial institutions from essentially creating a financial house of cards.

"In the past two years, we have added four positions in our bank that we created as a result of compliance with some facet of meeting the requirements of Dodd-Frank," he said. "In addition to that, we have either outsourced or increased our level of reliance on outsourced compliance support as a result of what has been implemented and what we see coming in the next year to two years that we will have to be in compliance with. It's a financial commitment either with people or utilization of support outside your organization.”

It is a story heard across the state, with CEO Don Gibson of Springdale's Legacy Bank noting that the bank has added a full-time compliance professional to try and create a safe haven in the midst of burdensome regulation.

“I recently attended training in Memphis. The very first slide of the training showed the number of pages in the Dodd Frank legislation against all other banking acts. Content wise, Dodd Frank has volumes of requirements that will end up costing consumers more in the long run,” Gibson recently told The City Wire.

At Arvest Bank, which has operations in Arkansas, Kansas, Missouri and Oklahoma, profits have fallen from $69.646 million during the first half of 2013 to $56.644 million during the first half of this year. At First National Bank of Fort Smith, profits have fallen from $8.881 million during the first half of last year to $6.931 million during the same period this year.

Farmers Bank of Greenwood held steady, with $639,000 in profit for the first half of the year versus $635,000 during the first half of last year. Citizens Bank & Trust was an outlier, with profits increasing from $2.125 million during the first half of last year to $2.701 million during the first half of 2014. The other outlier, though on a smaller scale, was Benefit Bank which saw a profit of $761,000 for the first half of 2014, versus $536,000 for the first half of 2013.

As for the drops in profits seen at many area banks, Hefner said adding staff means more than just adding salaries.

"There's greater expenses involved when you add staff with benefits and so there's increased expense on the income side of the bank. That puts a greater burden on the profitability. We are fortunate that we have a $360 million asset size, so we're confident we can absorb the extra cost going forward, particularly as we see the economy improving.”

He said the banks that will be impacted more are those that have far smaller asset portfolios and run razor thin margins.

"There's a real challenge for banks not maybe located in our geographic area that are smaller that I think will struggle mightily with absorbing this. It's a shame because any community needs a good local community bank. I don't think our congressional representatives fully understood the repercussions of what Dodd-Frank would do to the state of Arkansas and the community banks. It was an overreaction to a problem that community banks in Arkansas didn't create, yet we're bearing the burden of.”

And while profits may be down at banks in the region, Hefner pointed to optimism in the local economy, saying that banks like Citizens were starting to see the improvements on their balance sheets.

And that is the case with provisions for loan and lease losses, or the money required to be set aside to cover expected losses.

Arvest's provisions dropped to $1.214 million for the first half of this year versus $2.651 million it had set aside during the same period last year, while Benefit Bank has no money set aside this year and had $60,000 set aside last year.

Citizens set aside $298,000 in provisions during the first half of this year, a significant drop from its 2013 first half of the year provisions of $.155 million.

Farmers Bank is the only bank to increase its provisions, going from no provisions during the first half of last year to $10,000 during the first six months of 2014.

First National Bank has decreased its level of losses significantly since 2011, when it had $11.53 million set aside for losses during the first half of the year compared to only $1.056 million during the first half of 2013 and only $300,000 for the first half of 2014.

In spite of the improved balance sheets, Hefner said a concern that remains going into next year is what happens with Rural Development Loans. He said even though Citizens does not directly service RDLs, the trickle down of a possible loss of the loan option in Van Buren could result in less work for local contractors and vendors who work in new home construction. And that could directly impact bank profitability in the region.

"So the direct impact on our bank is minimal, but it impacts our customers. … It impacts (us) indirectly.”

BANK PROFITS (January-June 2014)
Arvest Bank
2014: $56.644 million
2013: $59.646 million
Return on Assets: 0.78%

Benefit Bank
2014: $761,000
2013: $536,000
Return on Assets: 0.81%

Citizens Bank & Trust
2014: $2.701 million
2013: $2.125 million
Return on Assets: 1.49%

Farmers Bank
2014: $639,000
2013: $635,000
Return on Assets: 0.68%

First National Bank of Fort Smith
2014: $6.931 million
2013: $8.881 million
Return on Assets: 1.18%

Enrollment figures at the University of Arkansas in Fort Smith fell by 4.63% from last year's Fall enrollment of 7,154 students to Fall 2014's enrollment of 6,823 students.

According to the university's new Vice Chancellor for Enrollment Management Julie Burdick, enrollment figures ramped up during the recession and could have been because laid off workers going back to school in an attempt to boost their skill sets and resumes.

"As I looked at what was happening, what this university is going through is typical of the national trend because of the change in the demographics of students and the effects of the economy," she said. "I think any university, and it could have happened here, you're riding that wave and don't quite see what's happening at the time and you are enjoying those big numbers. Like other big universities, the numbers started to level off (at UAFS).”

Not only have demographics changed with a lower number of non-traditional students seeking to add new skills and education, but she said the number of concurrently enrolled high school students has seen a slow down in growth.

As a result of the declining enrollment figures, Burdick said she was "hired to right the ship and stabilize and put together an enrollment plan.”

To do that, Burdick said she is doing a complete assessment of everything from staff to processes at the university, equating her job to improving customer service for students at the campus at Waldron and Grand Avenue.

"If a student takes five steps for admissions, I'll question each one. Let's make it simpler and more customer friendly for the student," she said, adding that part of the process of making the campus more customer friendly includes streamlining Compass Tests.

She said making the campus more customer friendly is almost "like sales.”

"The market today is much more competitive and admissions have gotten more like sales, analyzing the numbers and having a strategic plan down to each market segment – traditional high school students, the adult market, online market, out of state market, honors market – all of those.”

To improve the numbers, she is working with admissions staff to tweak travel schedules so the university can get the biggest bang for its buck with a limited budget.

She said the university also offers in-state tuition for students living in states that border Arkansas, though she said little focus has been placed on recruiting out of state students.

"With that said, have we really gone after that (market)? We haven't seen that. We have a rep that goes to Texas, but I think last year was his first year traveling. When you start to travel to different areas – Oklahoma City, Tulsa, Memphis, Tenn. – it takes a while to get your name out, but it builds over time. We are starting to do that and attending national college fairs within a six hour radius.”

The university is also re-evaluating its scholarship offerings as it looks to boost enrollment, with Burdick asking, "How can UAFS be really competitive and help students that have financial need? We have a fairly high Pell (Grant)-eligible population, about 62%. So we need to be aggressive about what we do for students with needs that qualify for college level work.”

The other focus is customer service for the public that visits the campus and encouraging more campus visits.

"It is a campus, I'd say a destination campus, and we know if we can get them here, they're much more likely to come (back as a student). There was one 'Den Day' last fall and now three large preview days," she said, adding that the campus is working to be more parent friendly and is adding one-stop events for financial aid assistance to individuals visiting the campus and making the decision to enroll.

While all the efforts are intended to boost enrollment in the long term, there is still the issue of short term impacts of the 4.63% dip in enrollment this fall. She said no layoffs will occur as a result of the drop in enrollment, but "I do know we've had those talks with the vice chancellor of finance that we may look at positions and scrutinize (the need for any positions) before filling them.”

Darrell Morrison, vice chancellor for finance and administration, said adjustments to the university's budgets are taking place due to the drop in enrollment and said the university may have to use savings to meet some of its immediate needs.

"Enrollment has a direct impact on the university's operating budget since it is our now our major source of revenue as state support has declined through the years. We will be adjusting our budget expenditures in the weeks to come. However, we will probably also have to use reserves in order to continue to offer all services and academic experiences.”

Regardless of whether the university has to dip into reserves, he said, "We are committed to our students and we will ensure that they will be not be impacted in a negative way."

More than 300 people came to a Sebastian County Democratic Party-sponsored barbecue dinner Saturday night (Sept. 13) for a chance to hear from the party's top of the ticket candidates, U.S. Sen. Mark Pryor and gubernatorial hopeful Mike Ross.

Ross brought a well-practiced message of jobs, education, workforce training and tax cuts to the event, held at Economy Trailer on U.S. Highway 71 South in Fort Smith, and took an opportunity to defend against attacks from Republican opponent Asa Hutchinson, who has recently said Ross was misleading the state's voters on his tax cut plan.

"Going around the state promising millions in new or expanded programs and vowing to cut taxes for every group one comes across for political gain is, quite frankly, misleading," Hutchinson said Sept. 8 in a press release, adding that he was committed to "keeping our state financially sound.”

In response, Ross said his plan is not only fiscally conservative, but likened it to Gov. Mike Beebe's tax cuts during his two terms in office on most groceries. He also took a shot at Hutchinson's tax plan, which reduces tax rates from 7% to 6% for those earning between $34,000 to $75,000 a year, and from 6% to 5% for those earning between $20,400 to $33,999 annually. Hutchinson has said the reduction would result in approximately $300 a year savings for up to a half-million taxpayers and would cost about $100 million.

"The difference between Congressman Hutchinson's plan and mine is he's promising to cut $100 million in year one when DF&A (Arkansas Department of Finance & Administration) is estimating that net revenue growth for that year will be $40 million. So that'll leaves us with a $60 million deficit," he said.

"I'm the real fiscal conservative in this race. My plan calls to cut taxes exactly like Gov. Beebe did when he took the sales tax off groceries. We're going to balance the budget first. This is not Washington, money doesn't grow on trees. We don't print money here. We don't deficit spend. We're going to balance the budget first, we're going to fund education, Medicaid and public safety and then as we have revenue growth, and we always do, we are going to begin to implement my plan.”

Ross also discussed recent poll numbers released by NBC News/Marist College and CBS News/The New York Times, which shows Hutchinson up by 9% and 7% respectively, pointing to a poll taken just four days prior to the NBC News/Marist College poll which shows Ross with a lead.

"Well, Rasmussen – which is much more reputable than any of those other polls – was done 10 days ago and said I was leading by two (percentage points). Four days later, there was a poll that said I was down nine. I mean, 11 point swing in four days? Come on. Ask Eric Cantor about polls. His pollster was one of the best in America, said he was going to win by 25 points. He lost by 10," he said, adding that he believes the race for governor is still a toss up between himself and Hutchinson.

"And I think you may see some other polling information in the next day or two that will really reflect where this race really is. We believe it's tied up, we think it's a statistical dead head and I think it stays there all the way to November 4 and it's going to come down to turn out," Ross explained.

Pryor also took a swipe at some of the polling that has taken place in his race for a third term in the Senate, appearing almost dismissive of the data coming out about his race against U.S. Rep. Tom Cotton, R-Dardanelle. The NBC News/Marist poll, with a margin of error of +/- 3.9%, showed Cotton up 5% while a Rasmussen poll showed Pryor up 1% with a margin of error of +/- 4%.

"I really don't put a whole lot of stock in the polls, I mean we've seen the polls be very wrong in a series of races. I mean look, I'm up in some of the polls, too, so I'm not even putting stock in those polls. I'm just saying that this race is about Arkansas and it's about people getting out and voting. This is your chance to allow your voice to be heard."

In a race will end in less than two months, much attention has been paid to advertising done by outside groups and the campaigns themselves. One of Pryor's recent ads, which criticizes Cotton for a vote against a pandemic prevention bill, has brought a national spotlight back to the campaign that has been a focus of the beltway media on and off for much of the last year.

Asked about criticism of the ad, Pryor said the substance of the commercial was accurate.

"Let me say this – the substance of the ad is true and that is he voted against the disaster preparedness when it comes to infectious disease, a pandemic like that. And I chaired two different hearings while I was in the Senate on pandemics. You know, ebola was one of those things," he said, noting that anthrax and sarin gas were also a focus of the hearings.

The two-term senator and former Arkansas attorney general also addressed the situation in Iraq and President Barack Obama's announcement this week of a bombing campaign on ISIS targets in Iraq and Syria, along with training and arming moderate Syrian rebels in the country wracked by a years-long civil war.

"I thought (the President's Sept. 10 speech) brought some clarity. I think people had been waiting on (Obama) to show a little leadership and give us some direction here and I think it's done that and I know that the United States is actively working with a lot of different countries to try to build a true coalition. You know, I'm hopeful that there will be a broad-based coalition and there will be a lot of nearby countries involved and they won't just be supportive, but also putting airplanes and boots on the ground. Whatever needs to happen, they'll be out there on the front lines, so to speak."

The rate of auto repossessions jumped 70% across the U.S. led by subprime and deep subprime borrowers, according to credit agency Experian. It’s a jump expected by officials with Bentonville-based America’s Car-Mart and a trend for which they’ve prepared.

The combined subprime and deep subprime borrowers accounted for more than 12 million of the open auto loans in the second quarter. This accounts for nearly 20% of all open auto loans. Experian notes in their report these risky loans are still smaller than they were at the start of the recession despite hefty increases in the past two years.

Jeff Williams, chief financial officer of America’s Car-Mart, recently told analysts at the C.L. King investor conference in New York, that in the past six years of zero-percent interest more and more lenders have entered the subprime auto space to chase the higher yields. Many of those are new car lenders and their used-car departments, independent auto dealers and traditional tote-the-note lots that write the loans and then sell them off in the secondary market, he said.

Experian considers subprime as borrowers with credit scores of 550 and 619. Deep subprime levels involve credit scores below 550. Williams said Car-Mart’s core customer falls in the deep subprime level. 

That said, Car-Mart’s delinquencies and charge-offs related to repossessions are improving as noted in the company’s recent quarterly earnings report. Car-Mart also holds the loans it makes in-house and works directly with this riskier customer base on collections. The average interest rate charged at Car-Mart is 15%, a rate Williams said it earns given the risks, time and personnel it takes to properly service the loan.

“I think some of these new players in the market offering lower rates are not adequately pricing in the cost to service them after the contract is signed,” Williams said.

One of the ways Car-Mart has invested in tools to help service loans is by equipping each automobile it sells with GPS tracking equipment.

“This is an expense on the front end, but if it helps us track down a borrower when they first become delinquent, we have a better chance to work with them and keep them in the car,” Williams said. “Most of our loans that go delinquent do so in the 11th month of a 28-month contract.”

This compares to the average auto loan that now stretches over 5.5 years with an average payment of $474, according to Experian data.

Car-Mart executives said during their recent earnings call that dealers who stretch out loans for smaller monthly payments aren’t doing the borrowers any favors. Williams said about two quarters ago some of their better customers were courted away by dealers offering lower payments.

“Some of our customers were faced with a decision that looked good at the time. Dealers talked them into turning their cars back into Car-Mart lots and defaulting on our loans. ... The one thing we work to do is get our borrowers some equity on the front-end and own the car outright within 28 months, while there is still plenty of life left in the vehicle,” Williams said.

He said the biggest reason for default is mechanical failure, which is why Car-Mart’s 50 buyers scour their regions for the best possible fleet to stock the 136 lots.

Bill Armstrong, analyst with C.L. King, recently upgraded Car-Mart shares from neutral to a buy position.

“We think credit availability for subprime auto buyers may begin tightening up in the months ahead as industry-wide loss rates continue to increase. At the same time, Car-Mart appears to be more effectively adapting to the still-difficult competitive environment, as evidenced by its improved performance in first quarter,” Armstrong said.

He said the dynamics are a positive for Car-Mart as they represent a reduction in competitive pressure and could drive more traffic to their stores. William’s told investors and analysts that market conditions point to Car-Mart having weathered the worst of this hyper-competitive loan climate. He said the company was keeping a “squeaky clean” balance sheet and focusing on cash flows in case there is another wave of competition.

He said Car-Mart’s loan loss provision is still trending higher than historical levels, but much of that uptick is related to competitive pressures with a small amount being macro-economic woes with its 60,000 customer base.

“Some 10% or more of our market consumers are worse off than they were eight years ago when inflation is factored in,” Williams said. “One reason we grow top line revenue consistently is because we take care of a 60,000 customer base. We are there to lend them support and options when they need it. That is how we earn repeat business and referrals.”

Car-Mart shares closed Friday (Sept. 12) at $41.64, down 80 cents. During the past 52 weeks the share price has ranged from a $47.93 high to a $34.56 low.

There’s no shortage of building activity across Benton and Washington counties with the biggest overall project being the $600 million widening of the spine, aka Interstate 49, to provide better access North to South.

The new NWA Interstate 49 Corridor Report compiled by CBRE brokers David Erstine and Clinton Bennett lists more than 25 large scale commercial building projects underway in the region’s four largest cites along I-49. The projects noted in the report are located within two miles east and west of the corridor. Another two dozen projects in the same vicinity have been publicly announced and have gained planning approval.

“The interchange work in Springdale at Don Tyson Parkway and the Fayetteville Flyover were city investments that are already paying high dividends through increased mobility and commercial investment,” Erstine told The City Wire.

Wal-Mart’s recent announcement of a new Neighborhood Market at the Don Tyson interchange is seen as a catalyst that could spawn more development west of I-49 with the city’s widening of 58th Street, according to Springdale Mayor Doug Sprouse. Sam’s Club has staked out a spot at the junction of 58th Street and U.S. 412 also a new development in west Springdale. 

Just one more exit north at Elm Springs Road, McDonald’s and Arvest Bank are building in front of the new Walmart Supercenter, Spouse said the city’s widening of Elm Springs Road west of I-49 in recent years cleared the way for this new development.

ROADS AND OFFICE SPACE
Erstine said the flyover interchange in Fayetteville was important to Whole Foods’ decision to build on College Avenue. He added that the region is “selling itself” to some site selectors in part because of the completed and ongoing infrastructure investments needed to position the area for its burgeoning growth.

“The 8th Street to Walton Avenue interchange, and Bella Vista and 412 bypasses are coming in the next few years which is a positive sign to investors and developers looking at this region,” he said.

Bentonville Mayor Bob McCaslin said recently that the orange barrels, traffic and seemingly endless roadwork is a sign of progress, growth and opportunity. He said it also signals that people want to live here — a growth problem which many cities across the nation would like to have.

Traffic counts along this corridor have doubled in the past decade due to the increase in population of the region and commercial development, and are forecasted to double again by 2020 according to the Northwest Arkansas Planning Commission.

CRBE notes that 70% of region’s existing office square footage, 53% of multifamily square footage, and 58% of retail square footage has been constructed since 2000. It was needed to catch up with growing demand fueled by population shifts. The region has grown at a rate of 944 new residents a month, placing it in the top 20 in percentage growth rates seven times since 1991 according to Northwest Arkansas Council and Census data, the report states.

CORPORATE SHIFTS, EXPANSION
Erstine said Northwest Arkansas is predicted to be the third fastest-growing economy among large metropolitan areas in the nation through 2020, behind only Austin and Raleigh-Durham, according to IHS Global Insight.

“Crossing over the 500,000 population mark was a milestone, an important metric for certain retailers and restaurants. Another 25,000 to 35,000 people and Northwest Arkansas will move into the top 100 metro markets in the nation,” he said.

Erstine and Bennett said the inexpensive capital is fueling much of the speculative commercial investments in retail, office and warehouse projects planned or already underway. 

In Benton County they attribute much of the developer confidence back to Wal-Mart’s exploring other formats which is requiring several suppliers already here to add to their staffs and need larger offices. Erstine said Tyson Food’s recent purchase of Hillshire Brands also puts the region in the national spotlight.

In Fayetteville, Erstine said the University of Arkansas’ growth is helping to push more development west to Wedington. Freddy’s Frozen Custard, Starbuck and First Security Bank have projects planned or already underway in that direction, according to the report.

Looking ahead, Erstine said all the commercial building noted in their report, particularly the office and spec retail space, will likely cause some market softening in the next 18-24 months as those projects come online. He said now the space is fairly tight in retail, office and warehouse which is why developers are turning dirt again.

DEVELOPMENTS ON TAP
• Bentonville
Walmart Pickup Grocery
Rainbow Junction Retail space
Walmart Neighborhood Market
Tarden Office Building
Fountain Plaza, 67,355 square feet
Landers McClarty Chrysler Dodge Jeep Ram
Campbell Soup Building

• Fayetteville
Optometry Clinic
Dunkin Donuts
First Security Bank
Super Cuts
Dickies BBQ
Hyundai Dealership
Freddy’s Frozen Custard
Northwest Health Clinic
Hilton Gardens Hotel
Whole Foods
My Dentist
Whataburger
Starbucks
Kum & Go
Fellowship Bible Church
AT&T
Discount Tire

• Lowell
Kum & Go 
Washington Regional/Blue Cross
Arkansas State Troopers Facility

• Rogers 
Pinnacle Heights Retail
Twin Peaks
Foster’s
Mercy Downtown Rogers
Busters
10 Story Office Building 
Shops at Pleasant Crossing, 22,000 square feet
Legacy National Bank
Whataburger
Highrise Trampoline Park 
Pei Wei 
Shops on the Creeks
Indian Motorcycle 
Walmart Neighborhood Market 
Cavendar’s Boots

• Springdale
McDonald’s 
Med Express
Arvest Bank
Walmart Neighborhood Market 
Sam’s Club 
Casey’s General Store 
Verizon
CVS Pharmacy

Home sales in the Fort Smith area continue to show gains in the northern half of the region, while the southern half's figures are almost flat.

For the first eight months of the year, Crawford County's home sales have increased 33.74% to $47.079 million compared to $35.202 million during the same period a year ago. In Sebastian County, home sales have increased 1.54% to $120.437 million compared to $118.613 million during the first eight months of 2013.

Breaking the numbers down for the month of August, Crawford County is up 4.77% to $6.765 million for the month of August compared to $6.457 million during the same period last year.

Sebastian County's August sales figures declined 24.43% for the month of August, bringing in only $16.559 million last month compared to $21.912 million in August 2013.

Larry Stanfill, a broker with Chuck Fawcett Realty's Greenwood office, said there were a variety of reasons sales could be so lopsided between the counties.

"I do know that in Greenwood, for example, the market is upside down. There's more homes than there are buyers. That's been the case and Greenwood is still in that position. There are just a lot of homes for sale. People are moving to Greenwood, but not in comparison to what's for sale."

The excess inventory may be bad news for homeowners looking to sell, but it is good news for buyers looking for a bargain, Stanfill said.

He noted the median sale price as having been impacted by the current market, with the MSP of Crawford County homes dropping 1.73% from $115,500 last August to $113,500 this August. In Sebastian County, the drop was even steeper, diving 15.95% from $128,500 last August to $108,000 in August 2014.

"Appraisal values are staying steady," he explained. "But it is still a buyer's market and sellers have had homes on the market for a year or longer, so they're doing what they can to move out from under them."

And in many cases, Stanfill said that means slashing the price on homes.

Another factor playing a part in Crawford County's strong performance compared to Sebastian County was the back and fourth on the potential loss of Rural Development loans. It was expected that Van Buren would lose the loans at the end of September following a decision by a local Arkansas office of the United States Department of Agriculture, which stated the city no longer met the qualifications of a rural community due to its close proximity to Fort Smith. USDA Secretary Tom Vilsack later imposed a one-year moratorium on Van Buren and six other communities in Arkansas from losing Rural Development loan eligibility.

"I do know that played a role in (Crawford County's sales figures)," Stanfill said, noting that many people were rushing to get in before the Sept. 30 deadline initially handed down by the USDA. With the one-year delay, the new deadline will be Sept. 30, 2015.

"Rural Development is important to the smaller towns in (the region)," he added. "If we lose rural development, it'll hurt us."

Looking at the rest of the year, Stanfill said market observers and industry insiders should expect the slowdown that is typical of the winter months. But he said if his sales at present are any indication of the rest of the year, the typical winter slowdown may not be as bad as years past.

"We will probably remain steady, but winter months are typically the slower months. As for me, I'm having the best year I've ever had and I still have quite a bit going on for closings in the next month and I'm hoping it holds. But historically, November, December, January, and February are our slowest months. So I'm expecting it (to be the same) this year. Even so, I'm pleasantly surprised it's staying as busy as it is. I'm staying strong on my end."

Home Sales Data (January - August)
• Crawford County
Unit Sales
2014: 407
2013: 323

Total Sales Volume
2014: $47.079 million
2013: $35.202 million

Median Sales Price
2014: $106,000
2013: $106,250

• Sebastian County
Unit Sales
2014: 913
2013: 839

Total Sales Volume
2014: $120.437 million
2013: $118.614 million

Median Sales Price
2014: $114,450
2013: $116,500

Agents and brokers across Northwest Arkansas report steady work, though the number of homes (742) sold in August in the two-county area was down 9% from the same period last year.

MountData.com reports total August sales of $145.194 million, roughly $11 million shy of the same month last year. Some $2.28 million of that shortfall came in Benton County, while Washington County’s sales were off by $8.88 million compared to August 2013.

The local Coldwell Banker franchise reports that August 2014 was its second best month this year with more than $50 million in closed sales. CEO George Faucette said his firm’s year-to-date unit sales are slightly behind last year, but the average sales price is up 4% year-over-year. He doesn’t see any major hurdles for buyers, noting they do need good credit and the necessary income to qualify. 

Bob Downum, broker with Weichert Downum Group in Springdale, told The City Wire that the numbers are strong on the surface.

“They’re steady, no big surges up or down and while overall sales are lagging last year, 2014 is a lot better than 2012,” Downum said. “It looks to be a sustainable pace.”

Unit sales are up 17% from August 2012 and total sales volume rose 20% from $120.5 million posted in August 2012, according to MountData.com

Downum said there is adequate buyer demand because when new listings pricd right come on the market they sell fast. The average days on the market for all homes selling this year is 52.

“We can always use more listings,” he said.

MountData.com also notes there was an average of 5.8 months of inventory at the end of August for homes priced between $100,000 and $150,000. Paul Bynum, market analyst with MountData. deems that a seller’s market. Bynum reports there were 1,049 new listings and 605 pending sales at the end of August. That compared to 1,024 new listings and 647 pending sales in the year-ago period. He said pending transactions are a leading indicator of future market sales.

Total residential listings in the local metro area stood at 3,760 at the end of August, that was 90 more than reported in July and down about 1% from a year ago. New homes accounted for 483 of the listings in August, compared to 340 new home listings in August 2013.

YEAR-TO-DATE
Through the first eight months of 2014, agents have sold 4,867 homes valued in excess of $917.89 million, according to MountData. Unit sales are down 3%, while total sales volume is 0.5% lower than the prior year.

The average per-square-foot price so far this year has been $89, up $1 from last month, Bynum said. The median sales price rose to $155,000 in Benton County, up 0.64% from a year ago and 7.8% higher than in 2012. In Washington County, the media sales price was $150,000 through August of this year, up 0.67% from a year ago and soaring 9% higher than in 2012.

Downum said sellers hear and read that prices are rising but one segment that remains stifled are homeowners who purchased between 2003 and 2008 because they likely paid top of the market prices.

“They realize prices are going up but the increases are mostly tied to fewer foreclosures and more new homes at higher prices in the mix. The hardest category is for used homes, not foreclosures, but those where the buyer saw their neighborhood values go down after they purchased. Prices may have bounced back about 6% in the past two years but there is no real profit at this point that allows a seller to move up or downsize,” Downum said.

He explained that this dynamic not only keeps a lid on inventory but also limits the number of buyers because they can’t afford to sell and move at today’s prices.

MORTGAGE OPTIONS
Wells Fargo Mortgage released a report Monday (Sept. 15) that showed many potential homeowners fear it’s harder to get a home loan so they don’t bother looking. No one would argue that mortgage qualification has tightened since 2007, but banking experts say they are still making loans to people with low to no down payments, less than perfect credit and offering help with closings costs.

Wells Fargo reports that two-thirds of Americans it recently surveyed feel that now is a good time to buy a home, but many are reluctant to do so because of the uncertainty about qualifying for a mortgage.

“Although the homebuying process has changed in many ways in recent years, our survey found Americans still view homeownership as an achievement to be proud of and many believe that now is a good time to buy a home,” said Franklin Codel, head of Wells Fargo Home Mortgage Production.

Codel said his bank has taken steps to expand the pool of eligible home buyers. Earlier this year it lowered the minimum credit scores, or FICO scores, for loans that are backed by the government the Federal Housing Administration, Fannie Mae, or Freddie Mac.

“When we expanded FICO ranges, we saw not only an increase in applications but we also saw an increase in approval rates,” Codel said, without providing specifics on application volume or approval rates.

Wells is not the only lender in this region tweaking its mortgage product line to help buyers qualify since the Dodd-Frank banking regulation forced tighter underwriting requirements.

“We have a program we call the ‘Affordable 100’ we have had it for nearly two years and it’s growing in popularity in Benton and Washington counties, especially since the changes in the RD loans came into effect,” said Keith Smith, senior vice president, regional lending manager at Regions Bank in Little Rock.

Smith told The City Wire that the “Affordable 100” has a maximum income level of $47,600 and it provides 100% financing with no added mortgage insurance for borrowers with a 680 credit score.

He said the same program is also available to borrowers with 620 credit score if they can make a 3% down payment. An FHA loan allows for a 580 credit score for first time buyers who can make a 3.5% downpayment. There is also an added mortgage insurance premium on the FHA loan. 

Smith also said Regions has a new product for first time borrowers with no traditional credit history that allows them get down payment assistance for the 5% required equity and closing costs are paid by Regions and not rolled into the loan amount.

He said the new First Time Buyer product is not an FHA loan which is capped at  $271,050. In some markets that is not high enough. Smith said this loan is an option for buyers who may borrow some of the 5% downpayment from family, need to establish traditional credit and get their closing costs paid.

The Crawford County Quorum Court voted unanimously Monday night (Sept. 15) to purchase nearly 16 acres of land to house the county's voter-approved $20 million jail project. The land, which is two tracts side-by-side, sits just outside of the Van Buren city limits between Van Buren and Alma along the northbound lanes of U.S. Highway 64.

Justice of the Peace Lloyd Cole, who chairs the Quorum Court's jail committee, said purchasing the additional land east of the eight acres that had already been surveyed and put into contract allowed architects to design the jail with in a way that allowed for easier future expansion.

The original eight acre tract cost $275,000 while the adjoining 7.66 acres was listed for $191,000, for a cumulative total of $466,000 for land acquisition. Should the court only have approved purchase of the original eight acres, Cole noted it would have cost more to build out future expansions than purchasing the land approved at Monday's meeting.

"It'll cost that much just to prepare that land for a (future) structure as (we're paying for) the land we're trying to buy right now,"County Judge John Hall noted during a meeting on the then-proposed land purchase on Sept. 9.

Cole also said expanding the jail to the west on the originally contracted property would have made prisoner escorts through the facility more dangerous since there would not be a direct link between the sheriff's intake center and any future expansion without first having to go through the original jail. Having the additional land will allow the county to build any future expansion closer to intake and reduce the distance inmates would have to be transported.

"If you're bringing a prisoner in, you've got to escort through one controlled facility all the way to get to another facility. Well, as someone who's escorted inmates before, you don't want to escort them any further than you have to. You have a lot of things going on," Cole said. "You've got a control center right here with 350 inmates. There's a lot going on. I don't want to have to transfer them through there. If we come up and make a 'Y' through here, we can purchase this over to the east – the wagon wheel, we call it – and at some point add another facility right here.”

Justice of the Peace Butch Barnes said purchasing the land now when the owner of the 7.66 acres was motivated to unload his investment was a smart move for he county in the long run.

"The smartest thing for us to do is buy this property. I mean, it's a win, win situation. Down the road 10 years from now … we know what happened down the road at this (the county's present) jail. There's no room," he said.

Hall noted that the original budget for land was set at $475,000, meaning that the land purchase was coming in under budget. Had the court only approved funding for the original eight acres, Hall said U.S. Bank - the trustees of $20 million in bond funds to be used for the project - would have been required to let the additional budgeted funds for land sit until the bonds were paid off in nine years, essentially saving the county no money since interest would have been paid on the unused but borrowed funds.

Following the unanimous approval of the ordinance for the land purchase, a spontaneous round of applause filled the circuit courtroom where Monday's meeting was held. Hall said the court's move to approve the land "says a lot about how this county government works for the good of everybody together.”

In other business, the Quorum Court approved an amended budget ordinance that would have originally proved money to the county assessor's office to fulfill terms of a contract for GIS services in the amount of $6,891.85.

County Assessor Ronnie Dale said money was originally removed from his 2014 fiscal year budget by the court in order to balance the budget. Dale said he was told the money would be made available to him to fulfill the contracts his office would undertake during the year.

But Justice of the Peace Elaina Damante had a different recollection of discussions with the assessor.

"I specifically asked him if he would be able to pay his service contracts. He told me yes. None of the other elected officials who we cut a lot more from their budgets have come before us and how he's coming before us. And that is why I'm having a problem because I feel like we're not treating all of our elected officials fairly.”

Hall initially had the court vote on the budget ordinance as presented, which included several other line items for various departments, at which time Justice of the Peace Carrie Jernigan said if the ordinance passed she would like to see the court turn around and remove $6,800 in funding from the assessor's office to make up for the request.

But after the original ordinance failed, a motion was made to amend the ordinance and remove the request from Dale's office. The ordinance then passed nine to four.

Following the meeting, Dale said he had no choice but to not pay the contract, which could result in the county not being able to use services and software provided through the GIS surveyor. Dale said the flyovers and resulting assessments have uncovered $5 million in previously undocumented properties netting the county an additional $50,000 in revenue.

As for the problems between himself and the court, Dale said he believes the court plays favorites with elected officials.

"You see, you've got this little clique up here. They don't like me because I'm not their fan and so anyway, they vote against everything I ask for. They fight me on everything, but this was a contract that was signed by the county judge and me and I just came back to ask for the money to pay for it because they took $15,000 in money out of my service contracts. Well, they didn't give me the money back. They told me they would give it back to me first of the year. They didn't give it back."

Northwest Arkansas’ business development and job production grew by a whopping 5.6 percentage points in 2013 – ranking the area as the 26th fastest-expanding economy in the U.S., according to new statistics released Tuesday (Sept. 16) by the U.S. Bureau of Economic Analysis (BLS).

The closely-watched BLS report from the U.S. Department of Commerce also spotlighted the fact that the Fayetteville-Springdale-Rogers area’s professional and business service sector saw the greatest economic expansion among the nation’s 381 largest metropolitan areas (MSAs) in 2013, increasing real Gross Domestic Product (GDP) growth by 3.33 percentage points.

That doesn’t surprise Kathy Deck, director of the University of Arkansas’ Walton College of Business Center for Business and Economic Research. She has observed the region’s workforce growth for some time, and the BLS report further confirms the university’s own research.

“This is wonderful news, but it is consistent in what we are seeing in the (Arkansas) labor numbers and consistent with what we have been seeing in one of the key industries in Northwest Arkansas – the growth of the professional and business service sector,” said the University of Arkansas economist.

‘SUPER SECTOR’
Deck added that over the past decade, jobs in this high-paying, fast-growing sector have grown more quickly than other sectors of the region’s economy. According to the most recent employment report from the state Department of Workforce Services (AWS), there are 129,400 professional and business service sector jobs on Arkansas payrolls, up 600 from just a month ago and 2,400 from the same period in 2013.

In the Fayetteville-Springdale-Rogers area, there are 41,600 payroll jobs in the professional and business service sector, up 1,000 from a year ago. Also, the AWS forecasts in its long-term workforce forecast that this “super sector” will add 12,548 addition jobs to the state’s economy by 2022.

“That sector now represents 20 percent of the employment in (Northwest Arkansas), when just a few years ago is was only 15 percent” Deck said. “I have said in the past that economies don’t change on a dime, but the rapid growth in this sector is really driving the (expansion) we have seen in this region.”

ARKANSAS METRO REPORTS
Overall, economic activity in most of Arkansas’ MSAs is expanding, except in Texarkana and Pine Bluff. For example, the Little Rock-North Little Rock-Conway and Fayetteville-Springdale-Rogers MSAs ranked among the nation’s top 100 in GDP growth in 2013, coming in at 65th and 97th, respectively.

However, the Little Rock area only grew year-over-year by 0.7%, ranking the state’s largest economy at 239th by percentage growth in the U.S. By comparison, the Little Rock economy generated $40.9 billion in GDP growth versus $23.8 billion of economic activity in Northwest Arkansas.

Additionally, the Jonesboro, Fort Smith, and Hot Springs MSAs also saw positive economic momentum in 2013, expanding their economies by 2%, 1.8% and 0.8%, respectively. Texarkana and Pine Bluff, however, declined by 2.7% and 3.3%. The Memphis metropolitan area, which also includes West Memphis and other parts of Northeast Arkansas, contracted by 0.1 percentage points and ranked as the 46th largest metropolitan area by GDP.

NATIONAL GROWTH
Nationwide, Arkansas and the rest of the nation appear to be emerging from the drawn out Great Recession as real GDP increased in 292 of the nation’s 381 metropolitan areas in 2013, led by widespread growth in finance, insurance, real estate, rental, and leasing, nondurable-goods manufacturing, and professional and business services. Collectively, real GDP for U.S. metro areas increased 1.7% in 2013 after increasing 2.6% in 2012.

Last month, the BLS reported that Arkansas’ economic base grew by three percent in the fourth quarter of 2013, pushed upward largely on the strength by the state’s blue collar manufacturing base.

Greg Kaza, executive director and economist at the Arkansas Policy Foundation, said the stand-out for Arkansas’ economy was the state’s non-durable manufacturing sector – which produces “soft goods” that are immediately consumed or last less than three years.

“That one really stands out in terms of growth,” Kaza said. “It is not really sexy, but it is really important for our state’s economy.”

SECTOR HIGHLIGHTS
Below are additional highlights of the Bureau’s analysis of economic growth in the nation’s largest metropolitan areas.

• Finance, insurance, real estate, rental and leasing contributed 0.36 percentage point to U.S. metropolitan area real GDP growth in 2013. Growth in this industry accounted for more than half of real GDP growth in 61 metropolitan areas, and contributed more than one percentage point to growth in 55 metropolitan areas, most notably in Williamsport, Pa. (3.49 percentage points); State College, Pa. (3.02 percentage points); and Bloomington, Ill. (2.87 percentage points).

• Nondurable-goods manufacturing contributed 0.32 percentage point to U.S. metropolitan area real GDP growth in 2013. This industry contributed to growth in 273 metropolitan areas and contributed more than one percentage point to growth in 45 metropolitan areas. Strong contributions from this industry fueled growth in many areas, including in the nation’s fastest growing metropolitan area—Mount Vernon-Anacortes, Wash. – which grew 10.6%.

• Professional and business services contributed 0.24 percentage point to U.S. metropolitan area real GDP growth in 2013. This industry contributed to growth in 245 metropolitan areas and contributed more than one percentage point to growth in 19 metropolitan areas. The largest contributions from this industry occurred in Fayetteville-Springdale-Rogers, Ark. and Janesville-Beloit, Wisc. (2.61 percentage points).

• Although natural resources and mining was not a major contributor to growth for the nation, this industry contributed to strong growth in several metropolitan areas. Mining in the Utica and Marcellus shale formations led to notable contributions to growth for natural resources and mining in Beckley, W.Va. (11.49 percentage points); Wheeling, W.Va. (8.50 percentage points); and Charleston, W.Va. (3.63 percentage points). Mining in the Niobrara shale formation contributed significantly to the 10.1% increase in total real GDP for Greeley, Colo.

• The government sector subtracted 0.12 percentage point from U.S. metropolitan area real GDP growth in 2013. This sector subtracted from growth in 292 metropolitan areas. The largest subtractions occurred in Hinesville, Ga. (4.12 percentage points); Jacksonville, N.C. (3.00 percentage points); and Warner Robins, GA (2.05 percentage points).

With Wal-Mart’s lead spokesman David Tovar’s resignation, the global retailer is challenged now to find a new link to the outside media on important topics such as the looming Federal Corruption Practice Act violations, labor issues and the moves toward smaller-format stores.

Tovar announced Sept. 12 he was leaving Wal-Mart Stores “after eight amazing years.”

“I can’t yet tell you where I’ll be next or what I’ll be doing but I hope to share some news with you soon,” Tovar wrote.

However, Bloomberg News reported Tuesday (Sept. 16) that Tovar had to resign after it was discovered he did not earn a bachelor’s degree from the University of Delaware. Tovar’s resume with Wal-Mart indicated he had graduated from the university.

TOVAR’S EXIT
Tovar told The City Wire Tuesday (Sept. 16) he has nothing but good things to say about Wal-Mart and he respects the company’s decision. He said 18 years ago, after four years at the University of Delaware he walked in the graduation ceremony, only to find out later than he lacked a few credit hours toward earning his bachelor’s degree.

He told The City Wire that Wal-Mart discovered the discrepancy in a routine background check as he was up for a promotion. 

“Wal-Mart has been nothing but supportive to me over the eight years I have worked here, and especially so these past couple of weeks since this discovery,” Tovar said. “I have contacted the University of Delaware, and completing the lacking requirements are a priority No. 1 for me.”

Tovar said he’s grateful for the opportunities he’s had to learn from “brilliant leaders” at Wal-Mart and it’s the people he will most miss.

“I respect Wal-Mart’s position in this case,” he added.

HIRING A REPLACEMENT
Alan Ellstrand, corporate governance expert at the University of Arkansas, said the lead corporate communicator will likely be someone “battle tested under pressure” and someone who presents a “great impression, a skilled communicator who is cool and composed under pressure.”

“I think Mr. Tovar’s replacement is less likely to be someone from the inside with astute Wal-Mart knowledge as it is someone who has the ability to handle the media in the toughest of situations. Perhaps someone who has worked on political campaigns. Wal-Mart has had some success recruiting there,” Ellstrand said.

Dan Bartlett, former counselor to President George W. Bush, joined Wal-Mart in May 2013 as executive vice president of corporate affairs. He replaced Leslie Dach and is Tovar’s boss.

NEW OPPORTUNITY
With Tovar’s pending exit, experts agree Wal-Mart has the opportunity to change its face toward the grueling media. Many of the recent promotions under CEO Doug McMillon’s camp have come from the international circles, including Greg Foran, the new CEO of Walmart U.S.

Some have suggested the new hire will be a female from political or international circles. Or both.

Ellstrand said whoever it is, the person will need to be fully credible and able to share the worst of news at times in a stoic manner.

“Appearances matter and delivery is crucial because a company’s stock price can go up and down erratically when news is announced,” Ellstrand said. “Think about successful press secretaries to the President. It’s really not much different.”

Aside from being a skilled communicator, written and verbal, Ellstrand said corporate giants also need to look for salesman qualities – people who can capture and hold the attention of media and satisfy their questions without giving away too much information in the process.

“Wal-Mart has the power and purse to hire the best out there if that’s what the company wants to do,” Ellstrand said.

Retail is king in Northwest Arkansas, but the logistics sector is growing. Total Quality Logistics (TQL), one of the largest freight brokerage firms in the nation, announced Tuesday (Sept. 16) plans to open an office in Lowell that could house up to 50 jobs.

According to a statement from the Arkansas Economic Development Commission, hiring for sales jobs will begin immediately, and the initial investment is $250,000.

“We’re pleased to add the state of Arkansas to our footprint. This new location will give us access to the outstanding professional talent in Northwest Arkansas,” TQL Executive Vice President Kerry Byrne said in the statement.

Cincinnati-based TQL was founded in 1997 by Ken Oaks, a former shipper in the fresh produce industry. In 2013, the company moved more than 815,000 loads, including fresh fruits and vegetables, meat and poultry, building supplies, and machinery and equipment. The company has grown from $1 million in sales in 1997 to more than $1.6 billion in 2013. The company has more than 30 offices in 15 states.

TQL is a non-asset based freight brokerage company, which means it does not own equipment but connects those who need goods shipped with operators of the various modes of transportation. The company notes on its website that it works with more than 50,000 carriers in North America to move 3,500 “different types of commodities.”

TQL’s sales team ranked four years in a row as one of the “50 Best Companies to Sell For” by Selling Power Magazine. TQL is a 10-time honoree on the Inc. 500|5000 list and recipient of numerous workplace and industry awards.

“Northwest Arkansas has a strong reputation as a hub for logistics, so it’s only fitting for a company like Total Quality Logistics to be drawn here,” Gov. Mike Beebe said. “They should have no problem finding the sales force they need among the region’s well-educated workforce.”

According to the AEDC statement, TQL was the first freight brokers in the nation to introduce mobile freight finding applications to the trucking industry. The company’s “Carrier Dashboard” app allows approved carriers to search for TQL loads and set up alerts to notify them when loads for lanes they want become available. “TQL TRAX” allows shippers to look up specified loads by PO number and track status, as well as easily communicate with their personal account executive from their mobile phone or tablet.

“Rogers and Lowell have a long history of working together to welcome new companies to the Northwest Arkansas business family,” Raymond Burns, president and CEO of the Rogers-Lowell Chamber of Commerce, said in the statement. “The entire area is glad to see a strong company such as TQL planting roots in Lowell, and we are looking forward to seeing the company grow and prosper here.”

NEAR THE HUNT GIANT
TQL opens its office next to one of the biggest players in the sector – Lowell-based J.B. Hunt Transport Inc.

Hunt, which began in 1961 as a small trucking operation, is now one of the world’s largest transportation services and logistics operations. Unlike TQL, Hunt not only provides logistics services but owns assets. With more than 66,000 units, the company has the largest private container fleet in North America. Hunt also works with more than 28,000 transportation companies to provide shipping and delivery services.

For the first six months of fiscal 2014, intermodal operations represented 60% of J.B. Hunt revenue and 76% of the company’s operating income.

Hunt’s Integrated Capacity Solutions segment is also growing. The segment employee count at the end of the first half of 2014 was 540, well ahead of the 440 during the same period in fiscal 2013. The number of third-party carriers used in the segment grew from 33,400 in the first half of fiscal 2013 to to 36,300 in the same period of 2014.

“We continue to execute our branch network growth strategy and opened two new branches during the quarter, bringing the total branch count to 26,” Hunt noted in its second quarter earnings report released July 15.

UNIVERSITY SUPPORT
Growth in the industry sector has resulted in Hunt working with the University of Arkansas to develop a training program. In April, Hunt and the UA announced the J.B. Hunt Supply Chain University program. Almost 300 J.B. Hunt sales executives gathered during the summer of 2013 at the UA for the company’s supply chain forum.

“The J.B. Hunt Supply Chain University will expand the forum’s scope and reach by developing an innovative learning curriculum to empower J.B. Hunt employees with current supply chain knowledge focused on helping them create additional value for their customers,” noted a UA statement on the new program.

The Walton College of Business at the UA offers degree programs in transportation and logistics, supply chain management and supply chain management with a retail focus.

Grant Tennille, executive director of the Arkansas Economic Development Commission, has said that Arkansas is in a position to be a global leader in logistics services and training. He said in an April speech to members of the Fort Smith Regional Chamber of Commerce that the state's logistics industry is a primary example of what Arkansas innovation has done to change the world.

"Logistics was invented in Arkansas. Before Sam Walton and David Glass and J.B. Hunt, what we now know as logistics was just people driving things around in trucks,” Tennille said. “There is now incredible science behind how we move goods around the world. The concept of 'just in time delivery'– which if you're in business in this room, I promise you understand 'just in time.' That's the way the world runs now — that was invented in Bentonville, Arkansas."