The city of Fort Smith is facing a coming insolvency of its police and fire retirement contribution fund as early as 2019, but there are no plans to address the continually declining fund balance in this year's budget cycle as the city looks to possible solutions in future years, which could involve tax hikes.

According to documents provided to The City Wire by city of Fort Smith Finance Director Kara Bushkuhl, the Arkansas LOPFI (Local Police and Fire Retirement System) Contribution Fund in the city's budget is expected to withdraw $1.161 million more from the retirement fund during Fiscal Year 2015 than it pays in. The fiscal year is expected to still begin with $6.514 million despite the withdrawal of more funds than revenues.

The total fund balance is expected to only be $287,792 when Fiscal Year 2019 begins and continue going into the negatives at growing levels in subsequent years, culminating in a projected negative fund balance of $10.621 million by Dec. 31, 2022.

City Director Keith Lau, who last year raised the issue of unfunded liabilities in the police and fire pensions and other financial issues during budget meetings, said he would do the same during this year's budget meetings between city administration and the Board in an effort to formulate a plan to put more money into the fund's budget.

"I have been trying since I took office to address the financial problems with the underfunding of the LOPFI retirement fund. My position has been and remains the city should be allocating more general fund monies to soften the impact or at least delay the insolvency of the LOPFI fund. Doing so would allow the state legislature and or the city more time to solve the funding problem. Currently the LOPFI fund is scheduled to insolvent in 2019. Any change to state and local  law would not show revenue increases until 2018. I think it is fiscally irresponsible to not allocate more money to the problem in the 2015 budget. I will be discussing my position in the November Budget meetings."

PENSION FUND HISTORY, FUNDING
Bushkuhl explained that contributions to the plan — which the city is mandated by state law to keep funded in order to meet retirement obligations for the city's retired first responders — come from a variety of sources. Two revenue sources include millage rates of one mil each charged for both the police and fire retirements, as well as funneling 10% of district court fines to the pension contribution fund.

The millage rates of one mil for each retirement fund bring in about $1.378 million each, or $2.757 million combined each year. The fines contribute about $137,000 per year to the fund. Other funding comes from a portion of the eighth-cent sales tax for the new fire station at Chaffee Crossing, with about $500,000 in sales tax proceeds contributing to retirement contributions for firefighters stationed to the new firehouse.

Police officers and firefighters are also required to contribute to their retirements. Formerly, fire responders in Fort Smith paid 6% of their salaries to retirement funds, but that changed to 8.5% in 2011.

With revenues (contributions) to the plan totaling $6.35 million while money taken out of the plan sits at $7.511 million, the city has started exploring its options.

Bushkuhl said the city of Pine Bluff is in a similar situation as Fort Smith, with too many obligations and not enough money to meet the required contribution limits. So Pine Bluff approached the Arkansas Municipal League about proposing legislation that would allow local cities to raise millage rates by a vote of city residents to add more money to the retirement contribution funds. It was a plan that Fort Smith quickly embraced, Bushkuhl said.

"I do know that the Arkansas Municipal League has included a resolution in their packet of legislative actions for 2015 — a request to allow a constitutional amendment whereby cities can ask for additional millages for police and fire pension. So right now, we're restricted by the state to have one mil for each. And it does have to be a constitutional amendment. It does have to be voted on by the people to allow us to raise the millage."

MILLAGE ISSUES
In order to raise enough money to fully fund obligations before the fund goes broke in 2019, Bushkuhl said Fort Smith would likely go to voters seeking to more than double the current millage rates.

"I'd say a minimum, we'd have to double it to two (mils) each. I think it may have to be higher, to two and a half (mils each)."

By doing the 2.5 mil rate, the city would raise an additional $2.068 million for each pension plan, or a combined $4.135 million. The additional monies is not only enough to stop the bleeding, but to start replenishing the fund well into the future.

But while a millage rate increase may appear to be the solution to the problem, it is dependent on a statewide vote on passage of a constitutional amendment allowing rate hikes beyond the current maximum of one mil. Then it would need a winning vote of Fort Smith citizens who in August voted down a two mil increase for the public library. During the run up to the vote, Library Executive Director Jennifer Goodson said a homeowner would pay an additional $40 per year on a $100,000 if the increase had passed. The millage vote failed by a vote of 64.02% against to 35.98% for the increase out of 4,343 votes cast.

A possible vote for a millage increase for police and fire pensions could also be in discussion during an expected vote for a millage increase of between 4.5 and 6.5 mils for the Fort Smith School District, which plans to construct a third high school in Chaffee Crossing should the millage pass, as well as an events complex featuring a basketball arena and fine arts center on property it would lease from the Fort Smith Regional Airport.

OTHER REVENUE OPTIONS
Should the legislature fail to push through a constitutional amendment or voters fail to pass local millage rate increases following passage of said amendment, the city would have to look at other ways to fund the increases it needs before the fund goes broke in 2019.

Sales taxes are already nearing 10% and Bushkuhl said a new sales tax is unlikely, though she said when other current sales taxes like the one cent for streets comes up for renewal, it is possible the city could ask for reallocation of funds to support the pension fund.

Another option is levying franchise taxes on water and sewer customers. Water and sewer customers in the city do not pay franchise fees while cable, phone and most public utilities have the fee added on.

"There are other cities that charge franchise fees on their water and sewer and their sanitation," she said, adding that it was "not a real favorable option because we like to keep our fees as low as possible. But it is a possibility for a revenue source."

The franchise fee set by the city's Board of Directors, not a vote of the people, sits at 4%. It can be raised as high as 4.25%, according to state law.

Even though the city could charge franchise fees, Bushkuhl said it was a "balancing act because the Board has to look at the water and sewer fund and the sanitation fund and determine if (it is) a charge they want to pass onto … (customers) because that would have to be passed onto the customer. Just like the gas and electric franchise fees, those are on your bill every month."

Bushkuhl's comment regarding the franchise fees was made Oct. 1, before City Administrator Ray Gosack revealed on Oct. 3 that negotiations with the United States Department of Justice regarding an administrative order related to wet weather overflows had broken down, with the city expecting a lawsuit at any time from the DoJ.

At the time, Gosack said the city would likely increase water and sewer rates in coming months to raise the funds necessary to eventually be in compliance with the federal Clean Water Act. City Utility Director Steve Parke has previously said compliance with the act to prevent any overflows could cost the city an additional $150 million in coming years.

The Fort Smith Board of Directors approved a resolution during its regularly scheduled Tuesday (Oct. 7) meeting that expresses a desire to restart negotiations with the United States Department of Justice regarding compliance with the federal Clean Water Act.

The move by the Board comes after the city of Fort Smith was notified by the DoJ of impending litigation against the city prior to a previously planned negotiation session in Dallas two weeks ago. The DoJ is acting as legal representative of the Environmental Protection Agency in the case, which has spanned more than two decades with the city working to eliminate wet weather overflows during storm events.

City Administrator Ray Gosack said the city has made significant progress toward compliance, eliminating four of five overflow problems in the city since 2007 and said in spite of the Justice Department's planned lawsuit, the city would continue with projects aimed at bringing the city into compliance with federal law.

City Attorney Jerry Canfield during a special meeting Oct. 2 notifying the Board of impending legal action that he expected a lawsuit to be filed as soon as Oct. 3, though as of Tuesday's regular meeting, no such action had been filed. According to Canfield, the holdup last week was due to the Arkansas Attorney General's office seeking to speak to Fort Smith Mayor Sandy Sanders about the situation before signing the lawsuit filing.

Gosack said the attorney general's inclusion as a plaintiff in the case regularly occurs when there is federal action taken against a municipality.

"The federal government requires the state of Arkansas to take a position in the case because cities are creatures of the state, so we fall under the authority of the state government. So when the federal government is going to consider litigation against the city, the require the state to be a party to the action," he explained.

Gosack said the state has been involved in negotiations in "nearly all" sessions held between the city and the Department of Justice.

With the AG's office a plaintiff in the case and unable to provide assistance to the city, Gosack said U.S. Sens. John Boozman, R-Ark., and Mark Pryor, D-Ark., were notified Oct. 2 of the impending action of the Justice Department, as was U.S. Rep. Steve Womack, R-Rogers, who represents Fort Smith in Congress.

When asked about assistance from Fort Smith's congressional representatives in the situation, Gosack noted that Boozman has been updated throughout the process of negotiating with the federal government.

"This action started when he was a congressman and he was the first one to notify us about it. So Senator Boozman has had a particular interest in this issue in Fort Smith since it (negotiations) began nearly nine years ago. So I've kept his staff updated periodically as negotiations were proceeding."

Regarding updates for Pryor and Womack, Gosack said, "I haven't with them because they've not had the same interest that Senator Boozman has. Again, Senator Boozman's interest really began nine years ago when he was our congressman and alerted us that we were going to come under enforcement action."

During a visit to Fort Smith Monday (Oct. 6), Womack was asked whether there was any help his office could provide in the situation with Fort Smith and the Justice Department.

"Look, I'm not really commenting on that because I have just learned of the issue this week as the news broke. I've not had real intimate conversations with the city leaders about what DoJ and the city have been negotiating. And I'll just kind of reserve comment on that. Typically, when things get to the lawyers, it kind of ties the hands of members of Congress because of certain ethical considerations, undue influence. None of us want to do that.”

Womack also explained that during the transition from Boozman's holding the 3rd Congressional seat to Womack's swearing in, the topic of Fort Smith's non-compliance with the federal Clean Water Act was never discussed.

"That issue did not surface during the transition when I became the congressman and assumed the role from now-Senator Boozman. So again, it kind of caught me off guard because I was not aware that we had an issue brewing there with DoJ."

Womack said he has "a few questions for the city leaders. I want to get briefed on where they stand and the history behind it before we get too far down in the weeds on commenting."

Canfield told the Board Tuesday that he expects jurisdictional issues regarding who has authority over local water and waste water to arise after litigation is filed and added that he expects the city and the Justice Department to return to the negotiating table within months.

"Our guestimation is that in a matter of months, the parties will turn again to negotiating some method of an agreed plan of going forward. I just think we're going to be in a few months hiatus so far as negotiations are concerned. We as the administration are convinced that it's very important that the city not take a hiatus from continuing to plan to work and that we do keep our focus on the work that needs to be done for there will be a date when we have to explain what we've done in those months."

On day one as governor, Mike Ross would have state agencies review regulations that are more than three years old to see if they are still needed or if they were ever needed. Asa Hutchinson would contact half a dozen companies to see if they would consider coming to Arkansas.

Those answers were revealed during a lively televised debate broadcast by KATV and 40/29 before a rowdy crowd on the UALR campus Tuesday. Audience members cheered many responses between the two campaigns.

The debate covered many of the same issues already discussed at length by the campaign, but some rarely shared information, such as what they would do on day one, was unearthed. Another example: Ross said it should be illegal for anyone not living in the state of Arkansas to contribute to an Arkansas candidate. Hutchinson said that would be unconstitutional.

The candidates engaged each other or at least referred to each other numerous times.

Asked about expanding pre-kindergarten classes, Ross said Hutchinson had been inconsistent in expressing support for increasing funding in Arkansas while voting against it as a member of Congress. Hutchinson drew a distinction between supporting programs at the national and state levels.

Asked whether they supported raising the minimum wage, Hutchinson said he had always supported raising the minimum wage since first asked about it in 2012 but that the debate was over process. Ross said Hutchinson was making his decision because of politics.

“You’ve got to make decisions, Asa, not based on what public polling tells you, but you’ve got to make decisions from the heart,” Ross said.

On whether they supported the state’s Medicaid private option plan and what changes they might enact, Hutchinson said the program had worked well for hospitals and for the 200,000 people who now have health insurance because of it. However, the state needs cost figures before it can decide what changes need to be made. Ross said Hutchinson wasn’t answering the question and that he had clearly stated his support of the program from the beginning.

Both men have received A ratings from the National Rifle Association. Ross said he had questions about a provision allowing Arkansans to carry weapons openly because it made it harder for law enforcement to tell the good guys from the bad guys. He said he supports concealed carry provisions. Hutchinson said Ross’ “knees buckled” and that he had said it was “time for gun control” after the Sandy Hook school shooting. Ross’ facial expression indicated he didn’t agree with that interpretation of history.

The candidates also sparred on their competing tax plans – Hutchinson’s would lower rates for middle-income wage-earners, while Ross’ would move every Arkansan who makes less than $75,000 down to a lower tax bracket, thereby cutting income taxes for nearly every Arkansan who makes less than $75,000.

“His is really pie-in-the-sky, unworkable. Mine’s a very specific, doable plan,” Hutchinson said. Ross said Hutchinson’s plan would leave out the bottom 40% of Arkansas wage-earners.

Both candidates said they support the concept that marriage is between one man and one woman. Hutchinson said he would wait to see how the courts rule but hopes it is left to the states. Ross added that he would not tolerate discrimination in state government.

Asked what issues their wives might champion as first lady, Ross said his wife, Holly, a pharmacist, might focus on preventive medicine, while Hutchinson said his wife, Susan, would speak for herself but has a passion for children.

Unlike a previous debate hosted by KARK, there was less of a chill between the candidates.

They spoke to each other during breaks and at least forced smiles and laughter.

Asked to describe the funniest moments in the campaign, they each had a quick answer.

Ross said at one town hall meeting, a man had become so animated asking a question that his upper dentures had fallen out of his mouth and into his hand, and he still finished his question. Ross said he answered it with a straight face.

Hutchinson said he had taken a wrong turn while being followed by a Ross campaign tracker and ended up with his pickup truck on a bike path. If the video appears on YouTube, the audience would know why, he said.

The 2014 fiscal year is shaping up to be another record year for Tyson Foods thanks to potential gains from rising meat prices and the $8.5 billion purchase of Hillshire Brands.

Even the biggest of naysayers have come back around in recent days with respect to profit potential of the pro-forma company. Robert Moskow, analyst with Credit Suisse, initially made no secret of the fact Tyson was too optimistic about the synergies of its deal with Hillshire Brands.

On Oct. 1, Moskow noted to investors that three pieces of new information regarding fundamentals in the protein markets had led him to raise his earning estimates back in line with consensus and upgrade Tyson Foods to “neutral” from “under perform.”

“While we remain skeptical regarding management's ability to achieve its lofty synergy targets for the Hillshire Brands acquisition, we feel more comfortable that the strong demand and high margins in the core protein business (80% of EBIT) will smooth over the bumps in the road during the integration,” Moskow noted. (EBIT refers to earnings before interest and taxes and is a gross profit metric used by financial professionals.)

He raised the target share price of Tyson Foods to $42 citing a lower-than-expected forecast of chicken production across the industry, higher beef operating margins and optimal sow pricing for Hillshire Brands.

Shares of Tyson Foods (NYSE: TSN) closed Wednesday (Oct. 8) at $41.52, up 47 cents. During the past 52 weeks Tyson shares have ranged from a low of $27.33 to a high of $44.24.

Tyson reports its fiscal 2014 earnings results on Nov. 17. Wall Street expects Tyson to earn 75 cents per share in the quarter and $2.82 for the full year. Consensus is up 7% and 24.7%, respectively year-over-year.

CHICKEN PRODUCTION
Moskow cited a new 2015 outlook by EMI, a closely watched consulting firm, that pared down the forecast of the U.S. Department of Agriculture. The USDA expected a 3% increase in chicken production in 2015, but EMI trimmed that 1% because of the slow pace breeders are taking to rebuild the grandparent stock.

On Sept. 22, the USDA reported total frozen poultry supplies as of Aug. 31 were up 1% from July but remained 14% lower than a year ago. Total stocks of chicken were down 13% from last year. Total pounds of turkey in freezers were down 15% from Aug. 31, 2013.

Moskow said producers are now talking about tight supplies continuing into late 2015. The combination of tight supplies and strong demand has kept commodity chicken prices above their normal seasonal patterns. Poultry prices usually pull back at this time of year but have not slumped so far because retailers are heavily promoting chicken, keeping demand strong, said BB&T Capital Markets analyst Heather Jones.
“The strength seems to have caught many by surprise, as the (boneless, skinless) market tends to become sluggish this time of year,” Jones said.

She said some large processors limited buying this summer in anticipation of weaker pricing in early fall, but their inventories became too tight, forcing them to buy aggressively to fill orders. Tyson is a processor that also buys meat on the open market for further processing, a practice Tyson Foods CEO Donnie Smith will continue.

Chicken prices typically drop as autumn approaches, but pricing has slid just 1% since August, compared to a 5% decline a year ago. Jones is forecasting production will increase by 4% or more in the last three months of the year. She notes that breeder stock is up about 2% and some large companies are not cutting back on production as they typically do in the late summer.

In the short term, Jones expects there to be a softening in boneless, breast meat prices because that is when promotional demand wanes. That said, Jones said the large bird spot margins are still running at two times last year’s level and should remain positive in the fourth quarter because of lower feed costs than last year.

CHICKEN MARGINS
Chicken margins have been high this entire year and Ken Zaslow, analyst with BMO Capital Markets, expects they should hold above historical averages for the foreseeable future.

Zaslow warned there could be softening in leg quarter pricing following the Russian ban on U.S. legs. He said the sanction will likely pressure leg quarter prices by 5 cents to 7 cents until other countries absorb Russia’s export demand. Retail demand for leg quarters has not increased much despite dark meat’s relative cheapness to white meat and competing protein sources, Zaslow wrote in a note to clients.

Zaslow said there will be support for margins from limited production growth and strong demand. He noted that Georgia Dock whole bird prices remained at record levels thanks to ongoing demand amid tight competing meat supplies and limited supply of small birds. Georgia Dock whole bird wholesale prices on Oct. 2 were $1.14 a pound, up 8.5% from a year ago and 20% higher than the same week in 2012.

Zaslow said quick-service restaurant promotions continue to support whole birds prices. He said boneless skinless breast prices are likely to decline into this fall, reflecting retailers holding ample supplies to meet demand through the end of summer. He also expects higher soybean meal costs to help offset high wing prices and lower corn costs. Wholesale wing prices were quoted by Georgia Dock at $1.63 per pound on Oct. 1, up 12.5% from a year ago.

Georgia Dock pricing on Oct. 1 for boneless, skinless breast meat was $2.19 per pound, down a from an annual high $2.24 in mid July. A year ago the Georgia Dock price was $1.90 per pound, up 24.3% year-over-year.

RED MEAT MARGINS
Moskow notes that it would take more high chicken prices for him to raise his outlook on Tyson, but the meat giant is also getting help from rising beef margins.

“Industry beef margins have jumped into the high end of the normalized range. One beef processor we spoke to says that they recently pushed through higher pricing in the beef markets, thus setting them up for strong margins for the rest of the calendar year. We expect Tyson to enjoy similar benefits,” he noted.

The USDA reports total red meat supplies in freezers were down 7% from a year ago
Total pounds of beef in freezers were down 20% from last year. Beef packer margins declined $50 per head in September as they paid more for cattle and saw wholesale beef prices decline nearly $1 per hundredweight.

Sterling Beef Tracker reports beef packer profits totaled $30 per head last month, significantly higher than $22 per head profits they earned last year. Cash prices for fed cattle are nearly $38 per cwt. higher than last year, and negotiated hog prices are $6 per hundredweight higher than last year.

Pork packers saw a $5 per head decline in profit margins to $4.90 per head. Moskow said falling sow prices bodes well for Hillshire Brands' profit margins in its first quarter under Tyson Foods. Frozen pork supplies were down slightly from last year, according to the USDA report. Stocks of pork bellies were down 29% from last month, but up 136% from last year.

CONSUMER PINCH
While meat companies are making more money from higher prices, consumers are feeling the pinch in their wallets. The American Farm Bureau Federation said U.S. consumers are paying more for several food items according to an informal survey dated Oct. 2.

The bureau estimated consumers are paying $54.26 for 16 common items, up about 2%, from a year ago. Prices increased for seven items in the basket, which included meat, eggs and milk, while nine were less expensive.

“Several beef, pork and dairy products rose in price during the second half of the year, accounting for much of the increase in the market basket,” said John Anderson, AFBF’s deputy chief economist. “We’re seeing higher beef prices, which can be attributed to lower production.”

Darrell Peel, beef market analysts with Oklahoma State University, notes that beef prices have rallied throughout this year at nearly three times the historical 20-year average. He said drought in Texas and Oklahoma in 2012 pushed cattle slaughter forward and the national herd is at a 54-year low.

The Farm Bureau notes that sirloin tip roast posted the largest increase from a year ago, up 27%, to $5.52 per pound, followed by ground chuck, which rose 17%, to $4.31 per pound. The price of bacon jumped 9% and shredded cheddar cheese rose 6%. 

Items declining in price include Russet potatoes, bagged salad mixes and vegetable oils, each selling from 10% to 15% below the prices of year ago, according to the Farm Bureau report.

Dr. Margaret Tremwel, a recognized state and national leader in stroke care and one of the people instrumental in establishing a Fort Smith regional telemedicine network, has left Sparks Health System in Fort Smith to be the medical director of the stroke program at Fayetteville-based Washington Regional Medical System.

Tremwel’s departure was sudden and left officials with Sparks scrambling to maintain leadership and direction in a regional telemedicine network that as of late 2012 included 10 hospitals in western Arkansas and eastern Oklahoma.

According to an Oct. 1 e-mail from Sparks Chief Operating Office Jeremy Drinkwitz to members of the telemedicine network, Tremwel was set to remain with Sparks until Oct. 16.

“Many of you received telemedicine coverage through Dr. Tremwel and I regret to inform you that Sparks is unable to offer that service to you at this time. I know this is short notice. We had thought that we had until Oct 16th as Dr. Tremwel’s last day, however she informed us yesterday it was her last day which has caused us to scramble. Once again I apologize for this inconvenience,” Drinkwitz wrote in the e-mail.

Drinkwitz said in the e-mail he would contact each member of the network to determine “next steps” for the program.

When asked about Tremwel’s departure, Sparks issued this statement: “Sparks Health System is grateful for Dr. Margaret Tremwel’s many contributions toward improving stroke care and the stroke death rate in our area. Dr. Tremwel’s level of passion for her craft is widely respected. We are sad to see her go and wish her the best. Sparks still has two neurologists on staff who provide the same level of care using the same stroke care program protocols. Sparks remains a Primary Stroke Center and will continue seeking Comprehensive Stroke Center status.”

Tremwel was with Sparks more than 12 years, with her duties during that time including chief medical officer and chief qualify officer. Under Tremwel’s tenure, Sparks was one of the first 11 hospitals in the U.S. to be accredited as a primary stroke center. Their support of networked hospitals also improved the stroke-care status of the other hospitals.

Bill Bradley, president and CEO of Washington Regional, said in a statement that Tremwel’s sudden departure was the result of a desire to begin her work as soon as possible with the system’s Northwest Arkansas Neuroscience Institute.

“The timing of Dr. Tremwel’s decision was focused on the far-reaching developments within the Northwest Arkansas Neuroscience Institute, particularly the recent addition of endovascular neurosurgery capabilities that are only available in a few places nationally,” Bradley said. “Exciting new treatment options here, unique in Arkansas, and the opportunity to play an integral role in elevating stroke care to a new, noteworthy level were key in her decision to join the Washington Regional team.”

As a stroke neurologist and medical director of Washington Regional’s stroke program, Tremwel is tasked to obtain a “variety of certifications and accreditations” to be a Center of Excellence in Stroke Care, coordinate medical staff and nursing staff education relating to stroke care, and develop community outreach programs to educate the public about stroke care and support groups for patients and families dealing with stroke and recovery.

Significant internal corporate changes in management and structure within the Walmart U.S. division is an obvious sign that execs at Bentonville-based Wal-Mart Stores are serious about maximizing better comp sales through their small store formats.

Small formats, also known as Neighborhood Markets and soon-to-be more mini conveniences stores, are seen as a major growth engine for retail giant Walmart U.S., according to Mike Moore, the new president of small formats. Moore was one of seven speakers at the Emerging Trends in Retail Conference at the University of Arkansas Center for Retail Excellence on Wednesday (Oct. 8) in Fayetteville.

“We are putting a lot of time and money into small formats with 498 stores already open and a strong push of new openings in the fourth quarter,” Moore said.

Moore unveiled his new management team which he said were strategically chosen to specialize on the small formats in a manner similar to the 1988 rollout of supercenters.

He said the team is lean with five senior vice presidents that report to him with specific duties. The team, which had its first meeting this week, are: Larry Mahoney - logistics; Marc Lieberman - vice president of small formats; Brian Hooper - real estate; David Norman - operations over the West; and Glenda Fleming - operations over the East.

“We are opening so many new stores that there is a high number of brand new store managers. I needed strong operational support to help carry out that training in the day-to-day details. Marc has managed Neighborhood Market operations for years. David has a rich grocery background (with) Wal-Mart and Kroger and a strong passion for the business, while Glenda, an electrical engineer, has 25 years in store operations and thoroughly understands processes. They are great teachers,” Moore said of the group.

The Neighborhood Market was the brainchild of former Wal-Mart CEO David Glass who Moore said took a photo of a grocery store and a pharmacy and drew a red circle around the two and labeled the two as one format.

“He wondered if consumers would shop this new format, so we built some of them,” Moore said. “Today, the small format stores are just one of several formats that show promise as we continue to test convenience stores and pick-up grocery in Bentonville.”

He said real estate and logistics are also different for small formats, which is why they have their own designated executive. In areas like marketing and merchandising the small format team relies on the mother ship, Moore said.

NEW REGIONAL MANAGERS
Moore also announced five new regional managers for the small format stores. These were split into two districts – West and East – previously handled by market managers for supercenters. The regional managers are: Paul Stone, West; Randy Green, Southweast; Nick Berkeley, Central (recruited from ASDA); Paul Lewellen, Southeast; and Kaitlin Wolfe, East.

He said Lea Jepson joined the realignment team as senior director of merchandising for small formats. She works directly with the merchandising teams at Wal-Mart, the same category managers who purchase for supercenters.

Moore said this week he received at least 24 requests from suppliers for meetings about Wal-Mart’s small formats. He assured the crowd it’s not that different but there is a small team of veteran managers looking out for Neighborhood Markets that in that past hierarchy system sometimes got overshadowed or overlooked because the supercenters make the most money. 

“We are committed to making Neighborhood Markets the best grocery shopping experience possible. We are really focused on front-end store experiences with our expanded services and we continue add hours revamping the service desk and the pharmacy areas,” Moore said.

He said they are ingesting tons of customer feedback and making adjustments in the next store opening, tweaking the displays, layouts, counter heights and other store aspects. Moore said the redesign on the service center came about after the Neighborhood Market opened in Centerton, but before the Siloam Springs store opened 45 days later. He said the new design was complete and included in the Siloam Springs store, and will be tweaked in the 485 store openings in the coming months.

“We are making adjustments on the fly. Our CEO Doug McMillon has challenged us to fail fast and fix it quickly,” Moore added.

MINI-C-STORES
Another area where Wal-Mart is circling the wagons is with fuel stations, where they have not previously existed by the partnership with Murphy USA. Moore said fuel is important to Wal-Mart shoppers and it is adding fuel stations and now mini convenience stores at these fuel stations positioned outside of supercenters and Neighborhood Markets.

Moore said he managed a supercenter in Missouri that had a mini convenience store in the fuel station and customers used it. The new supercenter in Springdale has a mini convenience store in its fuel station, something Moore said is gaining traction.

“These formats don’t take sales from the supercenter,” he said, adding that they often add sales that may have been lost to convenience stores.

He said the Walmart To Go in Bentonville is not likely scaleable because of costs related to its large covered awnings and spark lighting, but the mini C-stores in conjunction with fuel stations do fit within the budget.

It remains to be seen if these fuel depots and small stores will also serve as pickup sites for programs such as site-to-store. Moore said Wal-Mart doesn't think in shopping channel terms. But it is  focused on trying to reach customers with various formats.

GAME PLAN
Moore said the game plan he shared with his new management team this week is Retail 101. It focuses on clean stores, taking care of customers, and managing inventory. Moore promised Neighborhood Market managers would be maniacs when it comes to “fresh” – produce, bakery and deli – areas in the stores.

“We have added hours in these areas because we know it’s important to customers and they will judge us based on their experiences. Checkouts are also important, an area where we will aim to improve customer experiences,” Moore said.

He said shoppers will see more demos that entice “building a basket,” and grand openings will feature “retailtainment” that harkens back to the early days of Wal-Mart.

Moore said when Wal-Mart hosts Wall Street analysts Oct. 15, there will be more announcements regarding small formats.

After a day of testimony from city directors and Fort Smith City Clerk Sherri Gard, the city of Fort Smith was dismissed by Circuit Court Judge James Cox from a lawsuit Wednesday (Oct. 8) that alleged it had violated the Arkansas Freedom of Information Act by polling city directors by telephone and email regarding the removal of two items from a meeting agenda.

The case was originally brought July 1 by Fort Smith resident Jack Swink after City Director Mike Lorenz successfully sought the removal of two items from city Board of Directors meeting agendas – one that would authorize an audit of legal billings and another that would establish a committee to review whether the city should hire in-house legal council or continue outsourcing legal services to the Daily and Woods Law Firm. The issues came about after attorney and blogger Matt Campbell alleged improper billing by the law firm against the city. Campbell represents current and former city employees in whistleblower suits against the city.

The case centered around the use of Fort Smith Municipal Code 2-31-4, which states, "Any item of business may be denied a place on or removed from the agenda by notice of four (4) directors to the city clerk prior to the date of the meeting of the proposed consideration. The city clerk shall immediately notify the city administrator, the mayor, the directors and other interested persons of such action.”

Lorenz placed a call to Gard, as well as an email, on two different occasions in June in which he was successful in removing the two items from meeting agendas after Gard contacted all members of the Board using the same methods.

Swink's lawsuit was brought after the second instance conducted by email in which Lorenz successfully removed the items, which had been placed on two agendas at two different times by City Director Philip Merry, with a second from City Director Pam Weber. While Swink alleged in his lawsuit that it violated the FOIA, Gard testified that her understanding was that the FOIA did not address how a city is to establish an agenda and further stated that "there is no definition of a meeting in the FOIA.”

In his attempt to show violation of FOIA, Swink's attorney Joey McCutchen – now a law partner of Campbell – asked whether the public was able to listen in on the calls.

"They're more than welcome to," Gard replied.

"How?" McCutchen asked.

After a brief pause, Gard said, "There would be no avenue.”

But as part of the plaintiff's cross examination, Gard noted that individuals who request notification of meetings are included in Board emails and receive notifications, including requesting media outlets.

"It's only people who request, but the news media (is included) as a courtesy," she said, adding that Swink had never requested notification of any Board meetings or other actions, such as removal of items from agendas.

It was noted through emails and news articles submitted as evidence by the city's defense attorney that the public was notified of removal of agenda items, with Gard testifying that the section of the city code in question had been used numerous times since 2012 with no objections. City Attorney Jerry Canfield provided both emails to citizens who requested notification, as well as media reports, to illustrate the pattern.

Merry was the first witness called by McCutchen and was asked whether he felt like his communications with Gard outside of regular meetings regarding agenda items, and removal thereof, constituted a violation of the open meetings section of the Freedom of Information Act.

"If I felt I was violating (the law), I would not have voted (to keep the items on the agenda). I felt the need to be complicit with a city official," Merry said.

McCutchen zeroed in on two emails written by Lorenz and City Director André Good sent in response to the second polling conducted by Gard regarding the removal of the agenda items at Lorenz's request. Both explained the men's reasons for removing items (Lorenz) or being in favor of keeping the items on the agenda (Good), which McCutchen used in an attempt to show the two were essentially having a discussion on city business outside the view of the public.

In Good's email, he signed off by noting, "these are issues that trouble me and not certain if such would be best discussed in a board setting or not.” McCutchen asked why Good would not want the issues discussed "out of a board setting.”

"I did not say out of a board setting," Good corrected. "I said better or not. I don't appreciate you putting words in my mouth. … And I absolutely did (have email dialogue with other city directors).”

He said it has happened in the past, but only on items that will not come up in meetings or on non-voting items, such as explaining why he would or would not favor leaving an item on the agenda.

The third and final city director to take the stand was Lorenz, who said his emails on the topic and his successful attempts to have the items removed from the agenda were not meetings under the FOIA, but instead discussing the creation of the agenda and explaining why he wanted to have the items in question removed.

Lorenz, whose email explaining his reasoning was submitted to Gard and then disseminated to the Board and the media, said he had no other way to explain his reasons at the time because "there was no way to have a discussion without violating FOIA.”

The last witness to testify was Swink, who Gard noted had never asked to be included in email correspondence including the Board and the media. He said he believed "the city violated FOIA and any meeting, formal or informal, should be open.”

"When it says directors should contact the clerk, I believe it means shall contact the clerk," he continued, implying that her polling of directors was a violation of the act.

But in cross examination by Canfield, Swink was asked whether he believed other sections of the city code that allow four directors to add items to the agenda in the same method as was demonstrated to have happened in the past was a violation of the act.

"Adding to (the agenda), I don't think it's taking transparency away," he said. "But I don't really know.”

During cross examination, he admitted to having not read the full language of the FOIA and asked again whether adding and taking agenda items outside of a public meeting was a violation of FOIA.

"The way it's asked, they'd both be illegal," Swink replied.

After a request was made by Canfield to dismiss the case following Swink's testimony, Judge Cox took about 15 minutes to come to a decision before dismissing the case.

He said based on the evidence presented and the testimony of the city officials, he could not find that a violation of the Freedom of Information Act had occurred by following  a local city ordinance.

"Issues in the resolutions have not been fully discussed and have not been voted on. They've not made it to the agenda," Cox said.

He also said Gard's actions were "not an improper action on the part of the city. Contact by the Clerk requesting notice from directors about an agenda item, whether it should remain or be removed from an agenda, it is the ruling of this court that that does not amount to a meeting under the Freedom of Information Act.”

He then dismissed the case "with prejudice," meaning the case cannot be brought back to the circuit court unless the Arkansas Court of Appeals or Arkansas Supreme Court send the case back to the court.

Following the ruling, McCutchen would not say whether Swink would appeal, but said he and Swink were "committed to transparency."

Some of the top female executives in Northwest Arkansas shared laughter and wisdom Wednesday (Oct. 8) morning at the Sunny Side of Leadership breakfast held at the Doubletree Suites in Bentonville.

The event was a fundraiser for Havenwood, which has worked to provide services to single parent families for 20 years in Northwest Arkansas. Havenwood held a similar event in May.

The panel of executives represented some of Northwest Arkansas’ largest, most influential companies:
• Karen Armstrong, VP Diversity and Leadership Development at Tyson Foods, Inc.;
• Racquel Harris, SVP of Marketing, Membership Strategy, & Insights at Sam’s Club;
• Sharon Orlopp, Global Chief Diversity Officer, SVP Corporate People at Wal-Mart Stores; and
• Shelley Simpson, Chief Marketing Officer, EVP, President of ICS and Truck at J.B. Hunt.

The panel moderator was Cindi Nance, dean emeritus and Nathan G. Gordon Professor of Law at University of Arkansas Law.

EFFECTIVE LEADERSHIP
The panelists were first asked to discuss their thoughts on the positive aspects they see they may bring to their leadership roles as women. Simpson said she is often one of the only women in the room during meetings and she finds she can bring skill sets that others can’t, including a high level of organization. She also talked about servant leadership and how women often bring their natural nurturing role into their job while men often bring their “provider” role into the workplace.

Armstrong said she has the opportunity to bring her “whole self” to work and foster an environment where her employees can do the same.

“Everyone has a life outside of work,” she said. “I’ve learned that it’s about work/life blend. There’s never going to be a balance.”

Harris worked at Kraft Foods before her role at Sam’s Club where she had the opportunity to learn from other female leaders about how to break down barriers and demonstrate empathy.  For Orlopp, the answer was the “power of storytelling” and the ability to connect to people at al levels.

The rest of the discussion explored a variety of leadership topics including social media/technology and successes in their respective companies with respect to leadership of a generationally diverse workforce.

Armstrong said a big learning moment for her was when she realized how people are motivated differently and work differently. For example, younger generations work better when they are multi-tasking, such as listening to music while working, whereas older generations often view that practice as distracting and “goofing off.”

She continued to say that Tyson developed a young professionals group, which received some pushback initially because some people thought the younger workers should just be blended into the other groups. They soon realized, however, that the demographic needs a different kind of development and that they can thrive if those development opportunities are presented. On the other side of the coin, the older, more long-time employees are the stewards of Tyson’s history, she said.

TECHNOLOGY, SOCIAL MEDIA
Another aspect of the discussion evolved around how social media and technology has affected their organizations and leadership. Harris said technology has made it easier to more quickly communicate, but one must also be careful to make sure to have in-person time with their employees and to also watch their tone in electronic communication.

“You don’t want to lose that personal interaction,” she said.

Nance said she tells law students that all firms look at social media profiles during the hiring process.

“Social media can affect their careers for good or bad,” she said.

Simpson said J.B. Hunt chose to open up the social channels because they realized it’s how their younger workers multitask and can be most effective. The company has embraced social media to the point that it uses internal platforms to connect employees across the organization.

The panel concluded the latter portion of the program by discussing how some people had a great influence on them and some of the challenges of advancing up in leadership roles.
Ideas such as constructive feedback and having a mentor and employer who cares about their employees as people were shared throughout the group.

Armstrong said something that always stuck with her that she now passes on to other rising leaders and employees is the idea that they will be famous for something and what do they want to be famous for?

“Are they different?,” she said.

Other leadership advice included:
• It’s important to appreciate diversity of race, backgrounds, talents (Harris)
• Always work to make a person’s situation better. Just because you had it hard doesn’t mean you should give others a hard time (Armstrong)
• Leaders often don’t know how to talk about diversity so they just don’t and this is a mistake (Simpson)
• Humor always helps (Orlopp).

Work has begun on a long planned beautification project at the intersection of Interstate 540 and Rogers Avenue in Fort Smith.

According to Beautify Fort Smith President Nancy Smreker, the project – once completed – will have planted more than $100,000 in natural improvements into one of the city's busiest intersections. She said the project, first announced in December 2013, was only possible because of the efforts of the Arkansas Highway and Transportation Department, who owns the land that will be used to plant more than 1,700 shrubs and roses, 2,100 lirope plants, 85 trees and 4,300 square yards of Bermuda grass.
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"They provided the permits," she said, adding that the AHTD was also responsible for boring the area for irrigation for the plants being installed.

"In the past, they would not let us bore and get water on these quads. So they're really the reason it's all possible because (the AHTD) was very cooperative.”

The project, with a total estimated price tag of $110,000, received all labor supplies at cost from landscaper Frank Sharum, whose crews are also installing the plants, trees and irrigation systems, which cross under Rogers Avenue at two different points, Smreker said.

"His portion (is costing) about $84,000 and includes landscaping, sod and irrigation for the whole four quads," she said.

The quads she mentions are on the four different sections where on and off ramps connect to the interstate and were paid for through donors.

The two largest quads were sold for $30,000 each. One was sponsored by First National Bank of Fort Smith President and CEO Sam Sicard, while another was sponsored jointly by Arvest Bank, the Walton Family Foundation and a $20,000 grant from the Western Arkansas Planning and Development District made possible through Sen. Jake Files, R-Fort Smith.

Two other smaller quads were sponsored for $15,000 each by businessman Bennie Westphal and a the Family Enterprise Center at the University of Arkansas at Fort Smith. Additional funding for the project came from boring Steve Forsgren did for irrigation at a cost of $33,000 with no profit. He donated an additional $5,000 to the project.

Smreker said all installation is being handled by Sharum Landscaping instead of volunteers with Beautify Fort Smith.

"No volunteers are allowed in those quads. They're all paid employees and have to be bonded and wear safety gear," she explained.

The first project many commuters along Rogers will notice is the installation of lirope plants between the bridges of I-540 next to Rogers Avenue, which has already begun. Once all projects are complete, the city of Fort Smith will pay $12,000 per year for Bowers Landscape to maintain the property at the interchange.

Work is expected to be complete on the project by mid-November, Smreker said, and added that it was just the beginning of work the new city commission is beginning in the area. A project still underway at exit 13 (I-540 and Jenny Lind) includes the already completed clearing of brush and a planned tree trimming provided by OG&E.

"OG&E will come in next week and trim the canopy of the pine trees and they're doing that at no charge. I think it will be several thousand dollars they're donating to get it done thanks to Dean Powell and Rob Ratley (with the energy company). They did another tree trimming at Old Greenwood and 540 and they're wanting to do their part to keep the three canopy pretty in Fort Smith.”

The other group taking part in the process is the Fianna Hills Property Owners Association, which has paid Elwin Hoover's land clearing company to come in and clear the brush at an unknown price.

"He has the equipment and he was able to actually mow down (old and dead) trees and mulch them at the same time andhe took care of the undergrowth and that sort of stuff," she said, adding that Fianna Hills Property Owners Association was partnering with Bradford and Udouj Realty to fund the project.

Other projects the Beautify Fort Smith commission has in the plans for the next year include:
• Installation of welcome signs at all Fort Smith city entrances;
• Adding Christmas lights to trees along Garrison Avenue during the holidays;
• Partnering the citywide litter pickups in April and October with tree giveaways;
• Planting trees at all city street interchanges; and
• Getting all interstate interchanges in the city under agreement with the AHTD for contractors to mow the property multiple times per month instead of just a few times per year.

Smreker said the Rogers Avenue interchange will be the only one under a contract for mowing once it is completed next month.

"We want all nine of the (exits) to be professionally mowed. We're trying to get funding for that. That's about as far as we got. We want it mowed and litter picked up and weedeated and edged around the curbing. That would be from where the interstate onramp starts and ends and to the fence line on both sides. It's exactly where the highway department mows three times a year. We want it to be two times a month."

Donald “Buddy” Wray, one of the legendary Tyson Foods officers who helped Don Tyson grow a regional poultry operation into a multibillion global food company, is one of four new members of the Arkansas Business Hall of Fame.

The Sam M. Walton College of Business at the University of Arkansas and the Arkansas Business Hall of Fame Board announced Thursday (Oct. 9) Al Bell, Stephen LaFrance Sr., Millie Ward and Wray will join the 66 other members of the Hall of Fame. The formal induction ceremony will be held on Feb. 13, 2015, at the Convention Center in Little Rock.

The Arkansas Business Hall of Fame is housed in the atrium of the Donald W. Reynolds Center for Enterprise Development at the Walton College on the University of Arkansas campus in Fayetteville.

“We are pleased to welcome another distinguished group of business leaders to the Arkansas Business Hall of Fame,” Walton College Dean Eli Jones said. “They join an exceptional list of inductees who have been recognized among the best in Arkansas business. The outstanding achievements of these four, just as all of the hall of fame’s current members, will have an impact on the future business leaders in Arkansas and around the world.”

Greg Lee, a Walton College alumnus and the retired chief administrative officer and international president of Tyson Foods, chaired the selection process. Criteria for selection included: the significance of the impact made as a business leader, the concern demonstrated for improving the community and the display of ethics in all business dealings. In addition, living inductees must be over the age of 60.

THE INDUCTEES
Al Bell, who as an executive and owner of Stax records made the Memphis Sound a major part of pop music in the 1960s and 1970s. In his more than a half-century in the music business, Bell has worked with artists such as Otis Redding, Issac Hayes, Booker T and the MGs, Sam and Dave, Rufus Thomas and the Staple Singers. Bell was involved in shaping the evolving sound of the Staples and wrote one of their biggest hits “I’ll Take You There.”

Stephen L. LaFrance Sr., who built USA Drug from one store into the largest privately owned chain of drugstores in the United States. In 2012, shortly before LaFrance died, Walgreens acquired USA Drug for more than $550 million.

Millie Ward, who is co-founder and president of Stone Ward, a full-service advertising agency with offices in Little Rock and Chicago. The agency brought in more than $47 million in capitalized billings last year.

Wray served in several executive positions over decades with Tyson Foods, including chief operating officer and executive vice president and special assistant to the president and CEO. He joined the management of the Tyson plant in Rogers and then was made manager of the company’s first processing plant in Springdale. Wray was part of a small team of Tyson principals who managed acquisition growth and played a pivotal role in Tyson’s product development, sales and marketing through the 1970s and 80s.

He was named chief operating officer, overseeing all operations including live poultry production, processing and sales. In 1991, Wray was promoted to president and held that office until he retired in 2000. He was a member of the Tyson board of directors from 1994-2003 and came out of retirement in 2008 to serve as executive vice president – special assistant to the president and chief executive officer.

Wray was named University of Arkansas Distinguished Alumni of the Year in 2000. In 2004, the university established the Donald “Buddy” Wray Chair in Food Safety in the Dale Bumpers College of Agriculture. In 2012, Wray was named by the Northwest Arkansas Community College as a “Quality of Life” honoree, which recognizes individuals for their leadership in building and sustaining an excellent quality of life in northwest Arkansas. He was inducted into the Arkansas Agriculture Hall of Fame in 2012.

There is no shortage news from three of the fastest growing startups in Northwest Arkansas tagged by The City Wire earlier as those to watch in 2014. New product launches, hiring additional staff and raising more capital to fund those ventures are common goals for the startups.

Oh Baby Foods CEO Fran Free said her organic baby food will soon be manufactured for a major grocery retailer under a private label. Her first venture in private labels is a deal that will launch in 2,000 stores in March.

“We began this process in June with help from our food scientist who has experience with private label. He got us a seat at the table with the retailer who was looking to expand its line of private label organic baby food and got us in the bidding process,” Free said.

Oh Baby put together 12 samples that were tasted at the retailer’s home office and compared to national brands. Free said the retailer chose six new product items which have completed a trial run at her manufacturer in California. All of the ingredients for those products have been secured and production for the new product line will begin in the early spring of 2015.

“We were not the lowest cost supplier, but this retailer liked the fact that we had just gotten our WEBENC (Woman owned business) certification as well as the fact that Oh Baby was a small and still agile company,” Free said.

Aside from more sales volume, Free said this added new business helps reduce the manufacturing costs for her Oh Baby line because of discounts they can get from larger, bulk pricing of raw materials.

OH BABY NEW FACES
Free said she has another meeting at the retailer’s home office in November and will share more details as they emerge.

“We are thrilled about this venture. It will increase our sales volume three-fold, so much growth that we are adding people to our team in the next few months and looking to take advantage of the retail-food talent in this area,” Free said.

One recent hire at Oh Baby was the addition of a national sales manager, Wayne Davey of RML Naturals. Free said Davey works remote from Atlanta and has more than 25 years of work in the natural foods segment. She said Davey manages three brands, with his Oh Baby management beginning Oct. 15. Free said she is shifting a lot of responsibility to Davey who will work with the reps, brokers, key account retailers, and distributor. This will free up more time for her to create new products and flavor profiles.

In the last update, Free said she was adding new retailers in the eastern U.S. and hired brokers and reps for this sales territory.  Free said these new sales reps and brokers begin their work with Oh Baby on Nov. 1.

More products and more people require additional capital and Free said she has already got that ball rolling. 

“We are working with Ramsay Ball (angel investor) on this part of the business who has identified an interested party. We provided updated financials and presentation materials. We expect to close this Series B round of $2 million by the end of the year,” Free said.

One advantage Free said she has gained in hiring Davey as a sales manager is his first hand knowledge of working with startups like Stacy’s Pita Chips from their early phase through acquisition.

“At some point when I have maximized the growth I can manage for Oh Baby, I would consider an acquisition by another party who can grow it to the next stage. My end goal is to make organic and natural baby foods more accessible to all,” Free said.

For now she is excited about growing her local team with professionals who can help navigate retail and manufacturing operations that would give her more time with her two children whom she said are growing up much too fast.

“That’s been the plan all along, but it has been put into overdrive. I am looking to add experienced people because every mistake today has higher stakes. Oh Baby doesn’t need Fran making those mistakes,” she said.

Free said she sees herself as CEO and the face of Oh Baby Foods but she is eager to delegate more of the day-to-day decisions to professionals with more experience.

PICASOLAR WINS
Douglas Hutchings, CEO of Picasolar, was one of two finalists in the South by Southwest Eco Pitch Competition held Oct. 7 in Austin, Texas. Picasolar tied for a win in the Greentech Category with California-based PAX Pure. The two winners were chosen  from a field of 18 competitors.

Hutchings said this competition does not award a cash prize to the winner, but it does draw a large audience of “thought leaders” and investors from around the globe. In the previous two years the South by Southwest Eco competitions have helped startups raise more than $27 million in seed money, the organization notes on its website.

“It is a big deal and I was able to start conversations in Austin that could lead to investments in the future as well as insights and interest in our product,” Hutchings said.

He said it can take months to get investors on board and Hutchings knows more capital will be needed next year to bring the solar panels to market. For now Hutchings said the company is on the verge of completing another round of capital. He said the financial packages have gone out and they are awaiting signatures from the investors in Arkansas, Canada and the United Kingdom.

Hutchings said he would provide more details on the amount secured once the deal is finalized. 

Earlier this summer Hutchings said Picasolar was in line for $1 million in additional funding for the next tier of the SunShot Incubator Program from the Department of Energy.

Over the next few months Hutchings said his team will focus on finalizing the SUNSHOT Awards program for its N-type solar cells. Following tests by the DOE against other products, Hutchings said it will seek to scale up to the manufacturing phase over the next year.

As money allows, Hutchings said he is building out a local team. He added one scientist earlier this week and hopes to hire two more in the near term. Picosolar has seven full-time employees and one part-time.

“The competitions can be interesting but they do take time away from the business and there is no shortage of work to be done on this business as we finish up the SUNSHOT Program,” Hutchings said.

DATARANK HIRING
Fayetteville-based DataRank plans to double its workforce by year-end compared to 2013. The most recent hire has been Josie Hardy who joined DataRank to head up marketing as work as a content creator. Hardy said she previously worked as a data analyst and is completing a masters degree in journalism. She will also help with data analysis.

DataRank has 15 employees and is adding to the number a few more software developers and tech professionals to round out the team. The company plans to launch its new web application in the next few weeks. The new platform is now being tested by select clients, Hardy said. 

DataRank said the new web application allows clients to access their own data in different ways via a completely overhauled dashboard that filters out the noise, prioritizes the comments and uncovers insights which can be put to use growing sales. The new website will also feature content related blogs, that Hardy has been hired to create and oversee.

DataRank said they will provide a year-over-year update on their growth and offer forward projections within the next six to eight weeks.

U.S. Rep. Tom Cotton, R-Dardanelle, brought his campaign for the U.S. Senate to Fort Smith Thursday (Oct. 9), bringing a familiar Arkansas native with him in an attempt to drum up support with less than a month away from the general election Nov. 4 and polls continuing to show a tight race.

Before a rally featuring former Gov. Mike Huckabee, R-Ark., Cotton spoke about issues both nationally and locally drawing attention in the final days of the campaign. His visit came on the same day he and his wife Anna announced they were expecting a baby boy in April 2015.

The death of ebola patient Thomas Eric Duncan in Dallas on Wednesday (Oct. 8), the first ebola patient to die in the United States, brought Cotton's focus back to a commercial aired by U.S. Sen. Mark Pryor, D-Ark., attacking Cotton's record on emergency preparedness during his single term in Congress.

Cotton called the commercial "silly" and said Pryor and President Barack Obama were not taking the threat of an ebola epidemic seriously.

"Ebola is a very serious matter. Mark Pryor's silly commercial is not serious and he and Barack Obama, I don't think, are taking it seriously enough. Obviously Americans should be proud of the fact that we are the one country that everyone in the world looks to to help counteract an outbreak like this. And we have troops and physicians and epidemiologists on the ground in west Africa. Russia doesn't, China doesn't. Everybody looks to America and we should be proud of that. And we should try to stop this outbreak in its tracks in west Africa."

How to do that and protect Americans, Cotton said, includes placing travel restrictions on nations seeing the highest cases of ebola, including Liberia.

In a statement, Pryor spokesman Grant Herring said, "Congressman Cotton has zero credibility on this serious issue after he was the only member of Congress from Arkansas, Republican or Democrat, to vote against adequate funding for the Center for Disease Control and emergency pandemic response programs."

Cotton also addressed the fight between the United States and its allies against the Islamic State, also known as ISIS. He said the United States should have left a troop presence in Iraq following the end of the Iraq War and said Obama disregarded "the advice of generals."

"They are beheading Americans and crucifying Christians and they have ambitions to strike Americans, not just in Middle East but right here in the United States, as well. So the president needs to be fully engaged and committed to victory, not just using pinprick airstrikes that don't the kind of volume or lethality that we need," Cotton said.

ROADS AND MARRIAGE
On the local issue of infrastructure funding for projects like Interstate 49 completion across the Arkansas River and dredging the Arkansas River to create a 12 foot channel, Cotton said it was time to remove Washington politics from the issue.

Earlier in the week, House Transportation and Infrastructure Committee Chairman Bill Shuster, R-Penn., was in the region reviewing infrastructure needs and said he was working on a surface transportation bill that would address 40 different corridors across the country including I-49, but would also add money to the bankrupt federal Highway Trust Fund. He said states like Arkansas that pump more money into infrastructure projects were likely to see more attention from the federal government.

Cotton said he was in favor of having states and local government invest more of their own money into projects and further added that he would work on making sure the trust fund was limited to just highway maintenance and construction, versus other items that he said it has been used for in the past.

"Sixty years ago when we were building an interstate grid system, it required a heavy role for federal involvement. But now, when you're talking about essentially regional projects like I-49, or even projects that affect a few counties here in Arkansas yet are funded by our gas tax, too often Washington bureaucrats are slowing it down. … A lot of that money should be turned back to the states in a pass-through mechanism so they can decide what's best for their citizens. … I also think we need to get the Highway Trust Fund back to being a highway trust fund. We need to build roads and bridges. We don't need our dollars being spent to build subways or light rail or to beautify the sides of highways with flower beds. All those things may be great projects that local communities or states want to engage in, but they don't help us here in Arkansas. Here in Arkansas, we need roads and we need bridges and our highway money should be going to support that, not going to support local projects like subways."

Cotton said he would take "under serious consideration" an amendment to the Constitution that U.S. Sen. Ted Cruz, R-Texas, has proposed that would allow states to make its own rules regarding marriage and therefore stop courts from ruling gay marriage bans unconstitutional. The proposed amendment comes the same week the U.S. Supreme Court refused to hear appeals to the overturning of five gay marriage bans in various states. One of the overturned bans was in Oklahoma, which lay less than a mile across the Arkansas River from Cotton's Thursday rally.

"I haven't seen the language of the amendment. I would review it. I would certainly take it under serious consideration because I don't think anybody at the founding or in the 19th century when we adopted the 14th Amendment believed that there was a Constitutional right to protect same-sex marriage. Marriage has throughout our history been a matter for state laws," he said.

‘SOIL OF THIS STATE’
Introducing Cotton at the rally at the Fort Smith Museum of History early Thursday afternoon, Boozman took an opportunity to encourage the crowd to not have apathy on Nov. 4 about the election.

"When you look at the history in the mid-term elections, a lot of people — even the people who are registered — don't go vote. So the key is us getting on the phone, getting the votes out … in a personal way saying, 'I'm going to take you.' If we'll do that, then Tom Cotton's going to be the next senator from Arkansas and as I said earlier, the first vote that he casts will be to get rid of Harry Reid."

The theme throughout Cotton's speech to the crowd of about 250 people was to "retire Pryor."

Huckabee, who served as Arkansas governor from 1996 to 2007, said electing Cotton was the only way to not only retire Pryor, but also retire the policies of the Obama administration.

"You've got the kind of person who when he goes to Washington will know who he is, where he comes from and will vote the kind of values that you sent him there to represent. He's one of us. He's somebody who comes from the soil of this state,” Huckabee said.

He finished by saying Cotton will stand for Christian values if elected to the Senate and said America had fallen out of favor with God.

"For the first time, people believe the prosperity that they enjoyed will not be shared by their children and grandchildren. Folks, America can't continue to have a population that does not have hope and optimism for its future. And the reason we've lost that is because we've turned our backs on God and we've turned our backs on our Constitution and we need to get people like Tom Cotton who once again represent what makes this country great and will never be sorry for it."

It’s been five years since Donnie Smith assumed the role of CEO at Tyson Foods. It's a job he says he still struggles to balance with his personal life especially now in light of the ongoing integration of Hillshire Brands which Tyson acquired for $8.5 billion.

Smith was the featured speaker at Cross Church’s Summit Luncheon on Thursday (Oct. 9) in Rogers. He spoke about his personal faith commitment and said each morning at 6:15 a.m., he and a team of other executives pray for Tyson Foods and issues in their industry.

In the five years since Smith and his management team took the helm, the meat giant’s market value has risen 228% to $14.41 billion as of Thursday. He said they focus on “being excellent, because good is not good enough.”

The only leadership style Smith supports at Tyson Foods is “servant leadership” because he feels it’s the only model that provides long term, lasting results.

“Leaders should serve their teams to make the whole team better. You may find a few self-serving leaders still working at Tyson, but give us time,” Smith said.

Smith shared a plan that he uses to maintain some sense of balance between his family time with wife Terry and his three children and the demanding job he holds.

“The term work-life balance is a mystery to me. I don’t know anyone who day-in and day-out strikes a perfect balance. For me it’s like a bank account. Sometimes I draw down on the balance like in recent months with this Hillshire acquisition, but I know that I can’t let if get too low. I have to start making some deposits to rebalance the account. Like last night when the whole family spent nearly 3 hours at Mama Z’s eating fried chicken and spaghetti. It took us about 30 minutes to eat and we spent the rest of time catching up,” Smith said.

He also said a person’s integrity “towers” are in constant jeopardy of being imploded by planes already launched – using the 9/11 analogy. He urged the crowd to watch for attacks and do what is necessary to shoot down the planes before impact.

“The loss of integrity is a fatal hit to one’s witness and leadership in the workplace,” Smith said.

Smith is not alone is his views. David Horsager, an expert and author on trust, said a lack of trust is business’ largest expense.
http://www.davidhorsager.com/

“We pay more for trusted brands. You will follow a trusted leader. When trust is lacking like a weak credit score the costs go up,” Horsager said during an Oct 8. speech at the Emerging Trends in Retail Conference held at University of Arkansas.

Horsager said trust is timeless and timely and the fastest way to lose trust is blame someone else. He shared eight pillars of trust that can make the difference between a good company and a great company. The pillars are clarity, compassion, character, competence, commitment, connection, contribution, and consistency.

“Companies that adhere to all eight pillars see unbelievable success,” he added.

Clarity, he said is critical because too many times businesses get bogged down in their own “strategic plans” that take much too long to act upon. He said Millennials are not that patient, they want clear, concise directions from leaders they trust.

“Most of the doable plans that change a company’s trajectory can take place in 90-days. That’s the sweet spot. That goes for individuals too. Any less time is not enough and anymore time drags on the end results,” Horsager said.

Assess where you are right now. It should take no more than 10 minutes to analyze and get started. Where do you want to be in 90 days? Why I am going there? The “why” is critical to Millennials, according to Horsager.

He said character of a corporation can be measured through integrity which is modeled by its leadership. The competence pillar is all about staying fresh, relevant and capable. Horsager said input leads to output so it’s important to “think about what you think about.”

The most important of the 8 pillars of trust is consistency, Horsager said.

“It’s the king of pillars. There is power in consistency. We trust sameness and Millennials want it,” he said. “It’s the little things done consistently over time that make the greatest difference.”

The Fort Smith Board of Directors and the Sebastian County Quorum Court toured the still under construction Ben Geren Aquatics Center Thursday (Oct. 9) and received an update on a proposed operating agreement with American Resort Management.

During pre-meeting tour of the facility, Senior Superintendent Rodney McDaniel of Flintco Construction told the two bodies that that steel for the 40-foot tall water slides would arrive late next week or early the week after, with the slides scheduled to be installed in the next three to four weeks, one of the first largely noticeable sings of progress for passers by on Zero Street.

But as McDaniel pointed out to the group of elected officials, much work has taken place in the ground and above to keep the project on track to open by Memorial Day 2015. Much of the area for the 500 cubic feet long lazy river has been dug with concrete pouring scheduled to begin within weeks. The river will have a depth of three feet, six inches.

Concrete has also been poured for the wave pool, which will have a capacity for 80,000 gallons of water while the entire park will have capacity of 450,000 gallons once complete. An 8,000 square foot bathhouse and concession stand has also risen from the ground, he said.

Since work started, he noted that Flintco had worked 145 days on the site without a work time lost accident, which he said was a testament to Flintco's professionalism and quality.

Once inside the Ben Geren Park emergency storm shelter for the joint meeting of the governing bodies of the city and county, both were presented with a tentative contract between the city of Fort Smith, Sebastian County and American Resort Management, in which the Erie, Pa.-based company would be hired to manage all functions in business and operations for a cut of 5% of revenue generated at the aquatics center.

Should both bodies approve the contract at their respective Oct. 21 meetings, the company would immediately start work for a contracted amount of $88,000, split between 2014 and 2015. Each body would be responsible for paying its half of the fee each year for pre-operations.

According to County Judge David Hudson, work expected to be completed during the pre-operation period includes marketing (naming, branding, and advertising), consultation with the governments on operating budgets and policies, recruiting staff, programming, community outreach, training and safety programs for staff, as well as setting pricing. The contract stipulates that an annual budget will be approved by the city and county which ARM will have to abide by annually. The budget would set pricing, as well as operations and maintenance budgets.

The agreement would also establish a facility account from which the company would pay all bills associated with the aquatics center and would be subject to review by both governments. Daily reporting of the fund will be available for the governments.

The contract would also include performance pay as incentives for the company to turn higher profits at the aquatics center. The draft contract presented to the board laid out a 5% straight payout of revenues, plus a bonus of 10% if operation goal of 110% was met, 7.5% if 105.1%-109.9% of goal was met, and 5% if 100.1% to 105% of the goal was met.

Included in Thursday's Board and Quorum Court packets was an updated financial outlook for the park, where the consultant Ballard King & Associates said total expenses were expected to be $1.261 million per year, though revenues were expected to come in at $1.443 million, a profit of nearly $183,000.

The company's projections show increased revenues to nearly $396,000 after the water park is in business five years, based on admission prices of $15 for individuals 48 inches or taller, $10 for those below 48 inches and free for children under 3 years of age. Passes would also be available for $112 for 10 admissions, a 25% discount from daily entrance rates. The facility would also be available for rental at $1,000 per hour.

Justice of the Peace Tony Crockett did not speak favorably of the proposal to hire ARM, a company with a variety of indoor parks across the northeastern United States. He asked why the company had not hired Kent Lemasters' company Amusement Aquatic Management of California. Lemasters had previously flown to Fort Smith and successfully sought inclusion of a wave pool at the water park and was one of three companies to submit for the contract to operate the park.

Fort Smith Parks and Recreation Director Mike Alsup said Lemasters' proposal included a price tag of $155,000 annually, while the ARM proposal equaled about $75,000 based on revenues of $1.5 million, receiving a 5% cut."Kent's pre-opening fee was $114,750," Alsup added, drawing a contrast to ARM's pre-opening of $88,000.

Even if revenues were higher, Alsup said, $2 million in revenues would equal pay of $100,000 per year to ARM and $2.5 million would be $125,000.

The contract presented Thursday is under review and could change before a final packet for both bodies is prepared by Friday of next week (Oct. 17). The bodies will vote on whether to approve the contract from ARM on Oct. 21.

The car sharing service Uber has been a thorn in the side of Fayetteville officials since its introduction to the Northwest Arkansas market earlier this year, with Fayetteville police issuing citations to drivers operating ride shares for the company. But could actions in Alaska pave a legal path to shutting down Uber in Fayetteville?

According to Alaska Dispatch News, the municipality of Anchorage, Alaska, has tried to shut down the car ride service within its jurisdiction because the company does not comply with "local laws governing taxis."

As a result of the company's continuing operation within the city without proper licenses for itself and its drivers, Mayor Dan Sullivan sued in Alaska Superior Court two weeks ago seeking an injunction to half Uber's operations within the city of Anchorage, ADN reported.

Fayetteville City Attorney Kit Williams said he has no plans to follow in Anchorage's footsteps and file a lawsuit against the San Francisco-based company for operating in Fayetteville without following local taxi regulations. Williams said the city will continue focusing its efforts on citing drivers for the service.

"It's theoretically possible to get an injunction against Uber operating within the city limits of Fayetteville," he said. "But it would be something we would only do after a long effort to enforce the (city's) ordinances in a normal way, which we're doing now.”

As for how the city is finding out about Uber drivers and subsequently citing them for operating a taxi without a license, Williams declined to provide details.

"It's not just a moving violation (that gets drivers pulled over)," he explained. "But I don't think I should probably be the one to talk about methods. The more that the drivers know about the officer's methods of detection, the more difficult it could be to enforce the law. It's just like how we don't tell burglars how we plan to catch them in the future.”

He said aside from simply writing citations to drivers working as independent contractors for Uber, which takes a cut of the driver's pay, a lawsuit could be hard to win in court. And the reason basically boils down to technicalities, though if Anchorage is successful it could lead to other cities following Anchorage's lead.

"I expect they (Uber) would say it's independent contractors. We're not operating, just a payment scheme. Then I would have to somehow prove that no, it's an operation. Something like this would be complex and difficult to establish," said Williams.

He also said the city administration has not yet made a legal challenge to Uber's corporate offices a priority. As for why the city's police force is even pursuing drivers for the ride share service, Williams said it comes down to public safety.

"Part of the process (for taxi drivers) is showing us their necessary insurance. It's higher insurance and much more expensive according to taxi drivers. They provide us a policy number and the policy provider notifies the city if it (the policy) is canceled," he said, adding that licensed taxi drivers are also put through an exhaustive police background check and must have their vehicles inspected for road safety by mechanics employed or contracted by the city.

He said while Uber can say its drivers have the necessary insurance to protect customers, there is no way to know for certain without enforcing the city's taxi regulations, another reason the city is targeting Uber drivers and attempting to bring the company under some sort of regulatory oversight.

Williams said the regulation of Uber also allows for protection of the local taxi industry, which he said could see negative economic consequences from Uber's continued operations in Fayetteville.

"With no restraints, it is possible with so many different individuals acting as a taxi that maybe none of the (traditional) taxi companies could survive with the restrictions we place on them. So a city could be left with no taxi service for its citizens.”

While no plan is in place to file a lawsuit, Williams said that could change at the discretion of the Fayetteville mayor or the city council should they choose to up the ante on Uber, but it would come at a price to Fayetteville taxpayers.

"If the city council wants to sue, they can file an ordinance saying they want it to happen," Williams said. "But I would say give me another attorney because I would think this would be too difficult and complex a case to be successful with it. Otherwise, the city council can appropriate money for outside council. And I have resisted that sort of stuff. … But in this case, I would say I could not take on this additional burden and they may consider it."

Little Rock-based electricity transmission coordinator Southwest Power Pool (SPP) has released a reliability impact assessment of the Environmental Protection Agency (EPA)’s proposed Clean Power Plan.

The study indicates not enough time is allowed to compensate for projected generation-unit retirements nor to build the transmission infrastructure necessary to maintain system reliability.

“The assessment’s findings make it very clear new generation and transmission expansion will be necessary from a reliability perspective,” said Lanny Nickell, SPP’s vice president of engineering. “SPP’s focus is first and foremost on reliability. The final rule adopted by the EPA should ensure that electric utilities will be able to continue to provide reliable service.”

The EPA regulation would cut existing power-plant carbon emissions from 2005 levels by 30% by 2030. Arkansas environmental and utility regulators are studying the potential impact in conjunction with various stakeholders with an interest in the new rule. Eventually, a state or regional plan to try to comply with the EPA edict will be submitted.

“If the CPP compliance period begins before generation and adequate infrastructure can be added, the SPP region will face a significant loss of load and violations of regulatory reliability standards,” Nickell said.

He also noted it can take up to 8.5 years to plan, design, and build the transmission infrastructure necessary to meet changing generation resources.

According to the impact assessment, SPP’s transmission system could face severe overloads that will lead to cascading outages. In comments SPP has filed with the EPA, SPP recommends:
• A series of technical conferences jointly sponsored by the EPA and the Federal Energy Regulatory Commission, focused on the CPP’s impacts on regional markets and power-system reliability;
• A detailed, comprehensive, and independent study of the North American bulk power system conducted by the North American Electric Reliability Corporation before the EPA adopts its final rules;
• Extending the CPP’s compliance schedule by at least five years; and
• Adoption of the ISO/RTO Council’s “reliability safety valve.”

SPP represents 78 utility and utility-related organizations in Arkansas, Kansas, Louisiana, Mississippi, Missouri, Nebraska, New Mexico, Oklahoma, and Texas. Its footprint serves more than 15 million customers.

Link here for more background on how the proposed EPA rules will impact Arkansas.

After a year-and-a-half of attack ads and press releases, Sen. Mark Pryor, D-Ark., and Rep. Tom Cotton, R-Dardanelle, will debate on the same stage twice this week: first on Monday in a debate sponsored by AETN, and then on Tuesday in Fayetteville in a debate that will be broadcast on the state’s ABC stations across Arkansas and CSPAN nationwide.

AETN will host debates involving candidates for the other major statewide and congressional offices over the course of this week.

The 90-minute AETN Senate debate will be held at Reynolds Performance Hall at the University of Central Arkansas at 2 p.m. Monday. It will be live streamed at AETN’s website, www.aetn.org, and then broadcast on AETN at 8 p.m. Libertarian Party candidate Nathan LaFrance and Green Party candidate Mark Swaney also will participate.

Pryor and Cotton will debate again at 7 p.m. Tuesday at the University of Arkansas-Fayetteville’s Global Campus. The 60-minute debate will be broadcast live on KATV, KATV.com, KAIT in Jonesboro and KHBS/KHOG in Northwest Arkansas. The event is sponsored by the Fayetteville Chamber of Commerce. Talk Business & Politics Editor-in-Chief Roby Brock will moderate the Fayetteville debate.

AETN’s debates will be at UCA’s Reynolds Performance Hall and will be live streamed at AETN’s website, www.aetn.org, as they happen and broadcast on AETN that evening. The U.S. Senate and governor’s debates will be 90 minutes. The rest will be 60. Third party candidates will participate. Steve Barnes, journalist and host of AETN’s “Arkansas Week,” will host. Admission is free and will be on a first-come, first-served basis, but audience reaction will not be permitted.

The AETN governor’s debate will occur at 2 p.m. on Thursday, Oct. 16, and will broadcast at 8 p.m. Participants are Republican Asa Hutchinson, Democrat Mike Ross, Libertarian Frank Gilbert, and Green Party nominee Joshua Drake.

The rest of the debates are as follows:
• Monday, Oct. 13 – 2nd District Congress. Candidates are Patrick Hays (D), French Hill (R), and Debbie Standiford (L). Taping and live streaming, 10 a.m. Broadcast, 7 p.m.

• Tuesday, Oct. 14 – 3rd District Congress. Candidates are Rep. Steve Womack, R-Rogers, and Grant Brand, (L). Taping and live streaming, 10 a.m. Broadcast, 7 p.m.

• Tuesday, Oct. 14 – 4th District Congress. Candidates are Bruce Westerman (R), James Lee Witt (D) and Ken Hamilton (L). Taping and live streaming, 2 p.m. Broadcast, 8 p.m.

• Wednesday, Oct. 15 – Secretary of State. Candidates are Susan Inman (D) and Jacob Holloway (L). Incumbent Secretary of State Mark Martin (R) declined to participate. Taping and live streaming, 10 a.m. Broadcast, 7 p.m.

• Wednesday, Oct. 15 – Attorney General. Participants are Nate Steel (D), Leslie Rutledge (R), and Aaron Cash (L). Taping and live streaming, 2 p.m. Broadcast, 8 p.m.

• Thursday, Oct. 16 – Lt. Governor. Participants are Rep. Tim Griffin, R-Little Rock, John Burkhalter (D), and Christopher Olsen (L). Taping and live streaming, 10 a.m. Broadcast, 7 p.m.

• Thursday, Oct. 16 – Governor. Participants are Joshua Drake (G), Frank Gilbert (L), Asa Hutchinson (R), and Mike Ross (D). Taping and live streaming, 2 p.m. Broadcast, 8 p.m.

• Friday, Oct. 17 – 1st District Congress. Participants are Rep. Rick Crawford, R-Jonesboro, Jackie McPherson (D) and Brian Wilhite (L). Taping and live streaming, 10 a.m. Broadcast, 7 p.m.

Freight volume has been strong across the trucking industry in the third quarter which analysts agree should propel J.B. Hunt Transport’s profits up 13% over the same period in 2013. Lowell-based Hunt reports earnings Tuesday (Oct. 14).

Wall Street consensus is 85 cents a share with net income ranging from $96 million to $100 million for the three-months ending Sept. 30. Net income earned in the year-ago period totaled $89.47 million, or 75 cents per-share.

“Freight volumes are growing nicely on a year-over-year basis for most trucking sectors as economic growth remains solid,” Bob Costello, chief economist for the American Trucking Association, said during an Oct. 6 ATA annual conference.

Analysts with Baird Equity Research note that spot truckload activity has been healthy in the third quarter and Hunt is poised to benefit from overall rail growth up 5.6% year-over-year in the quarter. Baird also notes that rail growth has subsided slightly since peaking at 6.8% in the second quarter.

Baird expects rate increases to continue in 2015 citing shippers' willingness to secure capacity in anticipation of some tightness in the fourth quarter and the likelihood of continued rate growth of 5% in 2015.

“Inflationary cost pressures have limited carrier margin expansion despite contractual rate increases of 3.4% in truckload, 2.3% for intermodal with driver pay rising between 5% and 15% an incremental headwind year-over-year,” Baird analyst Benjamin Hartman noted in a Sept. 5 note to investors.

Though Hunt’s profits don’t show the tension brewing from a looming driver shortage, execs and analysts have classified the challenge as “major” going forward. Costello said industry revenue and average revenue per mile are rising amid tighter capacity restraints linked to the driver shortage, but the effects will start to show in next few quarters.

The shortage was “as bad as ever and is expected to get worse in the near term,” as freight volumes continue to grow, Costello said. He reported that turnover – often a proxy for tracking the driver shortage – rose 11 percentage points to an annualized rate of 103% in the second quarter. The increase set the rate at its highest point since the third quarter of 2012.

“These turnover rates show that the shortage is acute, and if the freight economy continues to grow, it will worsen very quickly.”

J.B. Hunt CEO John Roberts III said in July that a difficult driver recruitment climate and driver growing driver shortage would dampen financial performance for the dedicated contract services and truckload segments in the coming quarters. A recent white paper compiled by J.B. Hunt Transport notes that “fiscal pressures are being felt across the transport and service industry. Driver shortage and retention topped the list of obstacles. The paper also suggests that carriers will raise rates well into 2015  to offset added expenses.

The report said carriers continue to adjust to 3% to 5% capacity reductions created by new hours-of-service regulations that went into effect July 2013. That gap is expected to widen when the use of electronic logging devices become mandated in late 2015 or early 2016.

Other regulation on the mind of industry execs is the mandated phase in of greener trucks between 2014 and 2018, the paper notes. ACT Research estimates the cost of a new tractor has increased by roughly 25% over the 2006 to 2012 period. Furthermore, following each EPA mandate, Class 8 tractors have experienced an average 10% rise in repairs and breakdowns, according to ACT Research.

Hunt notes in its white paper conclusion that shippers should prepare for significant cost recovery efforts by carriers — highway and intermodal — beginning in late 2014 and into 2015.

No one said it would be easy to shift manufacturing jobs from overseas back to the U.S. but Wal-Mart Stores vice president of U.S. manufacturing Cindi Marsiglio said the response in communities across the nation has been electric.

From GE light bulbs to Kent Bicycles and Element TVs the lights are again on at empty manufacturing sites in recent weeks as a handful of Wal-Mart suppliers answered the early call to put America back to work.

Marsiglio told The City Wire that the retail giant has 150 deals in the works with suppliers looking to onshore some or all of their production over the next few years. She said the last product lines to leave the U.S. have been some of the first to return. She said this takes time which is why Wal-Mart is giving the effort a 10-year window and $250 billion in buying incentives.

She shrugged off the notion that excitement around the initiative has waned, saying that energy seen around suppliers and government agencies remains high. She said Wal-Mart’s role in this venture is that of facilitator – making introductions, setting up review options for financing and making sure suppliers who want to explore U.S. manufacturing have that option.

GE recently resurrected three of its midwest plants that had been dormant since 2010 and they are now making halogen bulbs for Wal-Mart. Just a month ago these bulbs were being made in China. The company said it invested tens of millions of dollars in new bulb technology that are 28% more energy efficient and they have put 100 people back to work.

Marsiglio acknowledged that moving production onshore is not easy. She said in many instances processes have to change, technology must catch up and there has to be skilled labor, which may be in short supply in many communities.

KENT BICYCLES
Arnold Kamler, president and CEO of Kent Bicycles, told The City Wire that onshoring production has been a focus of his company for about four years because operating conditions in China shifted. He said Kent made bicycles in the U.S. between 1979 and 1990 before the cost advantages shifted to China. Kamler said 11 years of domestic production experience has been a huge advantage for the company as it sought to recruit a new U.S. management team.

He said the $4.3 million assembly plant in Manning, S.C., which employs 45 and the management team already in place is the start to moving some production back to the states. For now the U.S. plant is assembly only, but Kamler said as trained workers can be added over the next two years the facility will ramp up production to make frames, handle bars, rims and do the painting.

“Bicycles have not been made in the U.S. since 1998 so we are having to start from scratch and for now that’s just assembly. But by next year we hope to turn out 200,000 bicycles made in America,” Kamler said.

He said Chinese manufacturers typically steal their labor force from competitive companies, offering higher wages, which has led to inflationary costs and turnover rates of 15% to 20% per month. That, and the declining attitude of the Chinese worker, are part of the metrics that make the U.S. attractive for Kent.

CHINESE PARTNERSHIP
Unlike pure importers, Kamler said Kent’s manufacturing plant in China is also a 49% owner in the company since 2010 when his sister sold her interest.

“I negotiated a good deal with a major bike supplier in China who is not only a manufacturing partner but also a financial partner. We will import three million bicycles this year, so the U.S. manufacturing is still a small percentage of the total business,” Kamler said.

And it has to be that way for now, given the shortage of skilled labor and access to component parts in the U.S. But that hasn’t stopped Kamler from trying to recruit component part makers out of China into the U.S. Kamler said China is still a great place to build bikes but they are getting more expensive. He said the bikes made in South Carolina will be more expensive than they could be made in China today, but not as much one might think.

“Real estate and energy costs are lower in South Carolina than China, and steel costs the same. I’m hoping with good use of automation that within a few years we will be cost-competitive with China,” he said.

RIGHT TO WORK
Kent plans to employ 175 workers over the next four years as production ramps up in South Carolina. Kamler said the average wage at the assembly plant now is $14 per hour, and that would go higher as more skilled labor positions are added. One of the reasons Kamler said Kent chose South Carolina was because it is a right-to-work state.

“We also looked at Florida and Georgia because we wanted to be along the eastern seaboard, but Governor Nikki Haley made a hard sell. She can be quite convincing. We call her the snake charmer,” Kamler said.

The meeting with Haley took place at Wal-Mart’s 2013 Manufacturing Summit in Orlando. Prior to that Kamler said his Wal-Mart buyer had asked him two years prior if assembly would be possible in the U.S. He said the Summit got the conversation going again.

“Wal-Mart has definitely been a catalyst here,” Kamler said.

Kamler’s advice for suppliers looking to make products in the U.S. is to seek out the right manufacturing management team and be willing to spend the money to do so. He said it is very difficult for pure importers to start at ground zero with manufacturing.

“It is more than just finding an empty building and a small work force. It has to start with management insights in robotics and engineering. We were fortunate to have 11 years of experience making our products in the U.S. and cooperative professional partner in China,” Kamler said.

Marsiglio said she’s excited to meet Kamler’s assembly team on Wednesday (Oct.15) when the plant holds its grand opening events. Kamler said South Carolina and the local community of Manning has welcomed Kent and he feels somewhat like a celebrity in the midst of it all.

Kamler said the U.S. startup has come together quickly and while it’s not always an easy road, it’s one worth taking.

ROADBLOCKS
That road has proven impassable for Mel Redman, CEO of Redman & Associates. Redman was an early face of Wal-Mart U.S. Manufacturing Initiative. A long-time importer, Redman had planned to launch a brand new manufacturing facility in Rogers for his ride-on toy production.

But a major snafu with his product supplier — Hong Kong-based Sales Chief Enterprises — rendered the deal impossible.

Redman shuttered its Rogers plant last month after Sales Chief cut off their 60-day credit line and demanded full payment for the toys ordered for the holidays, according to a lawsuit filed in federal court on Sept 5. Redman was forced to suspend its small operation in Rogers until the matter can be resolved. He said closing the upstart venture was a last resort as he continues to try and make good on the orders promised to retailers ahead of the holidays.

Redman attorneys filed a motion Sept. 22 to extend the filing deadline for Sales Chief in the open court case to Dec. 26. Redman has sued Sales Chief for breach of warranty, misuse of trade secrets and breach of contract.

Wal-Mart was undaunted by the Redman troubles saying the circumstances in that situation appear to be specific to this manufacturer and its third party supplier. The retailer said it is not aware of any other similar problems with other onshoring efforts.

Retailers large and small look forward to a happy Halloween season this year thanks to more candy sales and ample folks celebrating this year with customs and parties, according to multiple surveys by retail trade groups.

Wal-Mart Global Insights leader Matt Kistler recently said earlier displays of Halloween candy in its stores created an unexpected social media buzz and early sales were strong.

“It makes you wonder if candy displays will go up earlier for Christmas and Valentine’s Day because of the success seen this Halloween,” Kistler said.

It turns out that Halloween is on the minds of consumers this year who are willing to dole out $125 per household on candy, costumes, decorations and other related holiday items, according to the International Council of Shopping Centers. The trade group anticipates 74% of U.S. households plan to spend money on Halloween-related items. The total benefit for retailers is expected to be $11.3 billion. Some 80% of households will spend the same as last year and 20% said they plan to increase spending, ICSC notes.

“Halloween has continued to grow in importance over the past several years and consumer demand has driven retailers to place greater emphasis on the holiday,” said Jesse Tron, spokesperson for ICSC. “The fact that consumers are willing to spend more on discretionary purchases is a positive sign for the upcoming holiday shopping season.”

While consumers are willing to spend for the holiday, Tron said they are still looking for sales and good prices which is why discount retailers are expected to get 34% of the overall sales. Supermarkets should garner about 18% of the sales, with drug store chains and wholesale clubs picking up 11% and 9%, respectively.

The National Retail Federation expects total spending at $7.4 billion, about one-third of which is spent on candy. About 75% of U.S. households plan to hand out candy to trick-or-treaters this year. Research indicates Baby Boomer households are the most likely to reward visitors on Halloween night. Some 84% of boomer households plan to distribute candy.

The most popular candy treat – chocolate – is favored by 72% of Americans. Candy corn, a holiday icon, is favored by just 12%. The National Retail Federation estimates that spending on children’s costumes will total $1.1 billion, while adults will spend $1.4 billion on costumes for themselves and another $350 million on costumes for their pets.

TOP COSTUMES
Disney’s Frozen and Teenage Mutant Ninja Turtle characters will take to the streets this Halloween. The National Retail Federation’s survey found that 2.6 million children plan to dress up as one of Disney’s Frozen characters, while about 1.8 million children will dress as one of the re-imagined classic characters from Teenage Mutant Ninja Turtles. Princess (3.4 million), animal (3 million) and Spider-Man (2.6 million) will be other popular choices for children.

“Children and adults love to celebrate this fall holiday in all sorts of ways, and it’s clear dressing in costume will be a top priority for millions of people this year,” said NRF President and CEO Matthew Shay. “Given the popular holiday falls on a Friday this year, retailers can expect increased web and in-store traffic in the weekdays leading up to the big night, meaning consumers will need to keep their eye on specific must-have items as they are likely to go fast.”

The survey also found 75 million adults will dress in costume, and most will stick to traditional options, including a witch (4.8 million), animal (2.6 million), Batman character (2 million) and pirate (1.8 million).

Findings revealed that among the 14.3% of celebrants planning to outfit their pets, 10.8% will dress their furry friends as a pumpkin, the top costume again this year. Fido and fluffy will also be found disguised as hot dogs, devils, bumble bees and cats.

2014 TRENDS
“Halloween continues to be a celebration for all ages and this year will be no exception. Last year with Halloween falling on a Thursday, sales grew nearly 10% – with this year’s observance on Friday, we anticipate even higher growth,” said Ken Alterman, president and CEO of Savers Thrift Stores.

Savers expects the “selfie” to be bigger than ever this year as 60% of social media users who dress up report their social networks will impact their costume choices. Social media has continued to spark costume wearers’ creativity – if a photo is likely to be posted to their social channels, 35% would be more inclined to create a one-of-a-kind costume. Almost half plan to get inspiration from their newsfeed, while 34% want to wear something different every year to avoid posting similar photos.

Alterman also notes that Hollywood celebrities being watched this holiday include Lady Gaga and Ellen Degeneres as they are each expected to take home the top prizes for costume creativity.

He said there is a certain amount of hype around the holiday and for good reason as 82% of those who dress up plan well in advance. On average consumers plan two and a half months ahead of Halloween.

It’s no surprise that the Walking Dead television series is the show inspiring the most costumes for the fourth year in a row. Alterman said regal furs, swords and wigs from the Game of Thrones cast also are a favorite this year.

He said 53% of Americans plan to decorate their homes and neighborhoods for Halloween, second only to Christmas.

NRF said researching and planning ahead online before buying in-store continues to be an integral part of the shopping experience this fall, with 41% of households planning to participate in ‘webrooming’ – researching online before purchasing Halloween-related items in physical stores.