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Rising propane prices put pressure on poultry industry

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story by Kim Souza
ksouza@thecitywire.com

Casey Wilson, a poultry grower near Huntsville, Ark., said three of his seven houses are heated with propane gas and with two-week old birds and frigid temperatures he is quickly burning through the fuel supply.

“I don’t even want to think about what it’s going to cost when I have to call the fuel man. I won’t have enough to last this flock,” Wilson said, Wednesday evening (Jan. 29).

The average tank holds about 1,000 gallons per poultry house. Wilson said if he has to buy more fuel, it won’t be a full tank at the higher prices.

He’s not alone.

National Chicken Council President Mike Brown said his trade group is working with federal agencies, organizations and stakeholders to help alleviate the spot shortages being experienced with very tight supply reported in 31 states, including Arkansas.

Poultry is big business across the south, and areas from Arkansas to Georgia have been hit with frigid temperatures during the past two months.

“NCC fully understands that adequate residential heating must be the first priority, but, at the same time, it will be important to work to minimize the potential disruption to the food supply, especially animal agriculture. Chicken companies are not placing baby chicks in growout housing unless there is an assured supply of propane. NCC’s animal care/welfare guidelines call for the chicken during growout to be comfortable and free of stress from a harsh environment, such as a growout house being too cold,” Brown said.

Arkansas Attorney General Dustin McDaniel issued a consumer alert Wednesday to inform Arkansans about the cause of the spike in prices and to offer advice to those who are affected.

Spot wholesale propane prices have rallied $3.987 per gallon across the Midwest states this week, according to the U.S. Energy Information Administration. The price jumped 138% during January. The spot residential prices across the Midwest rose to $4.202 per gallon this week. 

The AG’s office said it has received dozens of calls about the price surge.

“I share the concerns about the high cost of propane, and I hope that these prices are only an anomaly because of the extremely cold temperatures and supply shortages. The retail price of propane is based largely on supply and demand, just like any free-market commodity,” McDaniel said. “However, we will continue to monitor propane prices for possible price gouging and look for other ways to assist consumers.”

Last week, Gov. Mike Beebe declared a state of emergency in Arkansas because of the propane shortage. During the state of emergency, the state’s price gouging law is in effect. That law prohibits businesses from increasing prices more than 10% unless the increased price is directly related to costs imposed by a supplier or because of higher labor and materials costs.
 
If propane retailers or distributors reach agreements with competitors on prices, that is price fixing. Federal and state antitrust laws prohibit fixing of prices. Any consumers with direct knowledge of price fixing of any commodity, including propane, should contact the Attorney General’s Consumer Protection Division.

Wilson said local poultry growers are already operating on razor thin margins and there is no room from doubling propane and fuel prices. Poultry houses will likely sit empty before farmers go into more debt, he said.

Five Star Votes: 
Average: 4.8(4 votes)

Arkansas Best full year net income reaches $15.8 million, beats estimates (Updated)

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Net income during 2013 for Fort Smith-based Arkansas Best Corp. was $15.8 million, much better than the $7.7 million loss in 2012 and the most the company has earned in a year since 2008. The per share earnings of 59 cents also blew past the consensus estimate of 47 cents per share.

Full year revenue for the transportation holding company was $2.299 billion, up more than 11% compared to the $2.065 billion in 2012. The largest subsidiary of Arkansas Best is ABF Freight System, one of the largest less-than-truckload carriers in the U.S.

Fourth quarter net income was $10.3 million, a big shift from the $7.9 million loss during the same quarter in 2012. The per share earnings of 38 cents also beat the 31 cents per share that was the consensus estimate among the analysts who follow the company.

However, the company had to deduct $1.435 million from fourth quarter earnings for expenses related to the new collective bargaining agreement with the International Brotherhood of Teamsters. That charge and other smaller accounting changes pushed recording fourth quarter net income to $8.4 million, or 31 cents per share.

"After a very challenging year in which we negotiated and implemented a new five-year labor agreement with the International Brotherhood of Teamsters, I am very pleased to report that ABF Freight ended the year with solid profitability, substantially reversing the unacceptable trend of losses in 2012," Judy McReynolds, Arkansas Best President and CEO, said in the report issued early Thursday (Jan. 30). "While that lengthy process was ongoing, we continued to make important strategic investments in our emerging businesses, all of which reported increased revenues and are well positioned for additional growth in 2014."

The company is also reducing the number of terminals it operates. In the conference call with analysts, McReynolds said ABF reached agreement with the Teamsters to consolidate 21 small terminals into nearby larger facilities.

Combined with the 8 terminal consolidations that occurred in the second half of 2013, this change of operations will result in reducing the total number of ABF Freight facilities to 248,” McReynolds noted in a transcript provided by Seeking Alpha.

Work to consolidate the terminals is set to begin in the first quarter of 2014.

Brad Delco, a transportation industry analyst with Little Rock-based Stephens Inc., has said a complete “rationalizing” of the ABF terminal network could ultimately generate up to $32.5 million in annual savings for Arkansas Best, with each terminal closed saving the company just short of $1 million.

‘MORE STABLE ECONOMY’
Arkansas Best Corp. officials announced Oct. 30 that the ABF National Master Freight Agreement was ratified by the Teamsters’ ABF National Negotiating Committee. The new contract covers about 7,500 employees of ABF Freight System who are members of the union. Most of those workers are drivers.

The company has said the agreement will result in savings of between $55 million and $65 million a year. The savings come from an immediate 7% wage reduction that is recovered by the fifth year of the contract. The wage and benefit reductions were set to begin Nov. 3. The company was also able to negotiate for flexibility in work schedules and work across job classifications. Most of those workers are drivers.

The company said an increase in business resulting from “a more stable economy,” and higher shipping rates boosted fourth quarter earnings. The federal Bureau of Economic Analysis on Thursday reported its “advance” estimate that the U.S. GDP grew 3.2% in the fourth quarter compared to the third quarter. GDP was up 4.1% in the third quarter.

Tonnage shipped during the quarter was up 2.7%, and full year tonnage was up 3.4%. Shipments per day increased 5.6% in the quarter and were up 3.3% for the year. Billed revenue per hundredweight was up 2.3% in the quarter, but up just 0.1% for the year.

McReynolds said in the morning call with analysts that the company was able to renew contracts in the fourth quarter with a 4% increase. However, the company is estimating $4 million in lost business from the January winter storms that hit much of the country.

BUSINESS DIVERSIFICATION
Company officials are also making progress on their goal to diversify their revenue stream by boosting business through their non-asset (businesses other than ABF Freight) divisions. For the year, ABF Freight generated $1.761 billion in operating revenue, or 76.6% of total operating revenue. The percentage is down from 82.5% during 2012. Growing overall revenue while reducing the percentage of revenue from ABF better insulates the company from negative events in the less-than-truckload sector.

“For full year 2013 together, Arkansas Best's emerging non-asset-based businesses demonstrated strong, positive increases in revenue and operating margins and produced positive cash flow,” the company noted in the earnings report. “Because of continued growth throughout the year, these businesses now represent 25% of total consolidated revenue and contributed significantly to Arkansas Best's operating results.”

The value of diversifying revenue is evident when comparing operating income of the segments. For example, ABF Freight generated 76.6% of the revenue during the year, and 52.5% of the operating income. Panther Logistics, the second largest subsidiary of Arkansas Best, generated 10.7% of operating revenue, but cranked out 36.4% of the total operating income among the five subsidiaries.

SEGMENT NUMBERS
• ABF Freight
Operating income
2013 (January-December): $10.033 million
2012 (January-December): -$19.8 million

• Panther (premium logistics freight services)
Operating income
2013 (January-December): $6.956 million
2012 (January-December): $2.402 million (Panther was acquired in June 2012)

• Domestic/Global transportation management
Operating income
2013 (January-December): $2.973 million
2012 (January-December): $3.013 million

• Emergency/preventative maintenance
Operating income
2013 (January-December): $3.274 million
2012 (January-December): $1.935 million

• Household goods moving
Operating income
2013 (January-December): $1.85 million
2012 (January-December): $692,000

Arkansas Best shares (NASDAQ: ABFS) closed Thursday at $33.40, up $1.18. During the past 52 weeks the share price has ranged from a $35.96 high to a $9.62 low.

Five Star Votes: 
Average: 5(3 votes)

Wal-Mart agrees on pay structure for CEOs McMillon, Cheesewright

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Wal-Mart’s board of directors has outlined the pay structure for the two highest ranking CEOs recently promoted from within the company ranks. The contract details were spelled out in filings with the Securities and Exchange Commission on Wednesday (Jan. 29).

CEO Doug McMillon will take the retailer’s reins on Feb. 1 earning a base salary of $1.2 million per year, subject to an annual adjustment. McMillon will also continue to be eligible for an annual cash incentive under the company's management incentive plan, based on performance criteria.

For fiscal 2015, McMillon’s target cash incentive payment under the plan will be 320% of his base salary, with a maximum possible payout of 400% of his base salary.

Equity based compensation of 48,710 shares of restricted stock will be awarded annually, vesting in three years. This perk is valued at roughly $3.6 million at the present share price of $74. Also on Jan. 24, McMillon received two additional stock awards in connection with the promotion. The first valued at $4.5 million will vest on Jan. 31, 2015. The second award vesting on Jan. 31, 2016 has an approximately value of $5.2 million around the $74 share price. Each of these stock compensation awards are contingent on performance goals being achieved.

Last year CEO Mike Duke, set to retire Feb. 1,  earned a total compensation of $20.69 million, including $13.6 million in stock awards, $4.37 million in bonus incentives and a base salary of $1.315 million.

As CEO of Walmart’s International division, McMillon earned total compensation of $9.56 million last year, including a base salary of $929,748, bonus pay of $1.55 million and stock awards of $6.5 million.

David Cheesewright will take over the control of Walmart’s International division on Feb. 1 earning a base salary of $1.150 million, subject to annual adjustments, to be paid in Canadian dollars.

Cheesewright will continue to reside in Canada, but also maintain a home in Bentonville, according to company sources. He received a one-time $2 million payment related to his transition back to the United States and the elimination of certain allowances and tax equalization associated with his prior expatriate positions. He is also eligible to receive an annual cash incentive based on performance goals achievement. His target cash incentive payment under the plan will be 240% of his base salary, with a maximum possible payout of 300% of his base salary.

Equity-based compensation of approximately $1.5 million in restricted shares will also be earned. These shares vest in three years.

Cheesewright is set to receive an annual equity award valued at $4.5 million ($74) per share over the next three year period, pending certain criteria are met.

Addition stock awards given in connection this promotion involved 38,634 shares that will vest on Jan. 31, 2015 and 43,808 shares that vest on Jan. 31, 2016. These two stock awards have present-day values of $2.85 million and $3.24 million, respectively.

Five Star Votes: 
Average: 5(1 vote)

Bank of the Ozarks acquires Summit Bank for $216 million

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story from Talk Business, a TCW content partner

Little Rock-based Bank of the Ozarks announced Thursday that it has entered into a definitive agreement and plan of merger with Summit Bancorp, Inc. and its wholly-owned bank subsidiary Summit Bank.

Bank of the Ozarks will acquire the Arkadelphia-based bank for $216 million.

Summit Bank operates 23 banking offices and one loan production office in nine Arkansas counties. At December 31, 2013, Summit Bank had approximately $1.2 billion of total assets, $778 million of loans and $994 million of deposits.

The move will push Bank of the Ozarks to nearly $6 billion in total assets.

Summit Bank originated from a charter granted in 1996 to Horizon Bank of Columbia County, Ark. In February 2000, its name was changed to Summit Bank and expansion began throughout southwest and central Arkansas.

“I’m proud of the organization we’ve built over the past fourteen years at Summit Bank and equally proud to join forces with Bank of the Ozarks. We are very pleased to partner with one of the nation’s most respected banking organizations,” said Summit Bank Chairman and CEO Ross Whipple.

“Today, two premier Arkansas banking organizations, who share very similar philosophies and cultures, are joining to create an even more powerful banking franchise for our customers, employees and shareholders,” said George Gleason, Chairman and CEO of Bank of the Ozarks. “Bank of the Ozarks has built its Arkansas presence primarily in the northern and central parts of the state, while Summit Bank has built a strong presence primarily in southwest and central Arkansas. The synergies created by combining these two complementary, high performing community banks are significant.”

“Given the similarities in our cultures and business models, this combination should be very positive and a smooth transaction for our combined customers and employees. Our customers will undoubtedly benefit from our expanded offices and product offerings,” Gleason added.

DETAILS FOR SHAREHOLDERS
Both bank’s boards have approved the deal.

Under the terms of the agreement, each outstanding share of common stock of Summit will be converted, at the election of each Summit shareholder, into the right to receive shares of the Bank of the Ozark’s common stock, plus cash in lieu of any fractional share, or the right to receive cash, all subject to certain conditions and potential adjustments, provided that at least 80% of the merger consideration paid to Summit shareholders will consist of shares of the company’s common stock.

The number of company shares to be issued will be determined based on Summit shareholder elections and the company’s ten day average closing stock price as of the fifth business day prior to the closing date, ranging between $43.58 per share and $72.63 per share.

Upon the closing of the transaction, Summit will merge into Bank of the Ozarks. Completion of the transaction is subject to certain closing conditions, including customary regulatory approvals and the approval of the shareholders of Summit. The transaction is expected to close by the end of the second quarter of 2014.

Following closing of the transaction, Ross Whipple is expected to serve on the board of directors for Bank of the Ozarks bank and holding company.

Bank of the Ozarks said this is the company’s 11th acquisition since March 2010 and the largest in its history.

Bank of the Ozarks acquisition of Summit Bank adds another dimension to consolidations in Arkansas’ banking sector. Last year, Home Bancshares closed on a $286 million acquisition of Liberty Bancshares. Simmons First National Bank acquired Metropolitan National Bank for $53.6 million.

Bank of the Ozarks shares (NASDAQ: OZRK) were priced around $62.30 in late afternoon trading, up more than 7%. During the past 52 weeks, the share price has ranged from a $64.75 high to a $36.17 low.

Five Star Votes: 
Average: 5(1 vote)

Wall Street expects a nice payday from Tyson Foods

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story by Kim Souza
ksouza@thecitywire.com

Tyson Foods is expected to release healthy first quarter earnings of 64 cents a share on Friday (Jan. 31) ahead of the market opening. This would equal about $226 million in net income, a 30% gain over earnings in the year-ago period. The 64-cent per share mark is the consensus estimate of 11 analysts who follow the meat company.

Virtually all of that gain is expected to come from improved metrics in the company’s chicken division, with a 5% gain in gross sales revenue — 3.5% more in volume and 1.5% more in price. Total revenue projections of $8.76 billion in sales are 4.3% better than those achieved a year ago.

Analysts with Credit Suisse peg Tyson to report 60 cents per share, with total revenue growth of $8.77 million, up 4.4% year-over-year. They note that consumers continue to trade down from record high beef costs to lower priced chicken.

Tyson is expected to see operating profits of $202 million in its chicken segment, up 88% from the $107 million reported a year ago. Lower grain costs and other internal efficiencies helped to raise the segment’s operating margin to 6.5%, more near historical levels. A year ago the segment ran less efficiently with a 3.8% operating margin.

This looks to be the best first quarter results for Tyson Foods in several years, despite ongoing headwinds in the beef and pork segments.

The beef segment is expected to report $3.642 billion, up 2% in volume sales with 2.5% higher prices than a year ago. Operating income for the beef segment is expected to be $44 million, down from $46 million a year ago. The segment’s operating margin of $25 per head, according to analysts. If that’s the case, Tyson outperformed the beef packer industry as whole. Average margins for the full quarter were likely in a range of negative $30 to $45 per head, according to Derrell Peel, livestock marketing specialist at the Oklahoma State University. 

Tyson’s processing facilities are located closer to their cattle sources which results in a lower delivery cost. In general, it costs 10 cents per head, per mile to ship cattle, analysts note.

Peel said last week, packer margins were likely positive $35 to 45 a head. He said the drop in boxed beef prices the past two days will push packer margins negative again as fed cattle prices are not falling as fast from the recent spike.

Credit Suisse analysts believe the second quarter ending Mar. 31 will the toughest for beef margins with some recovery expected in the back half of the year.

Pork sales for Tyson Foods are expected to be $1.411 billion, up 3.5% from a year go — all of that was price related. Lower operating profits are expected in this segment — $85 million versus $125 a year ago. This decline is linked to a 32% decline in profit per head.

Tyson continues to invest in its prepared foods segment and is updating several plants for better operating efficiencies and acquiring other companies that can help the food company expand its value-added sales in convenience stores.

Prepared Foods sales are expected to be $862 million, up 2.5% from a year ago. However, operating profits are expected to decline to $24 million, some 27% because of the ongoing renovations in some of the larger lunch meat plants.

Last quarter Tyson launched seven new handheld protein items, jumping on the breakfast bandwagon. This follows a trend of consumers shifting away from cereal to protein filled convenient breakfast items. Hillshire Farms, Kellogg and ConAgra have each benefited from this trend. Tyson estimates the frozen handheld breakfast category grew by $1 billion year over year. Tyson hopes capture its share with the Day Starts branded products such as biscuits, flatbreads and wrapped omelets.

Analysts expect an update from Tyson on this push for more convenience food sales during the call on Friday, Jan. 31. 

Shareholders have seen their investment value rise 54% in the past year closing at $34.49 on Thursday (Jan. 30). Given the increased stock price, Credit Suisse is neutral on the shares. 

Motley Fool contributor Daniel Jones notes that sales data from the past three years indicates the company is improving its sales but doing so by means of rising costs and fewer customers and/or lower sales per customer.

“Although it's nice to be able to charge more for your product, a corresponding falloff in sales volume implies that the company could be affected by competitors like Kraft Foods or Pilgrim's Pride,” Jones noted.

Five Star Votes: 
Average: 5(2 votes)

Crawford County officials change tax plan for jail funding

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story by Ryan Saylor
rsaylor@thecitywire.com

There's been another change in the plans for a new jail in Crawford County.

It was just a week ago that County Judge John Hall said the Quorum Court was leaning toward a half-cent sales tax— a half cent for 20 years to build the jail facility and another half cent to permanently fund operations and other law enforcement functions in the county sheriff's office.

Hall said Thursday (Jan. 30) that those plans were scrapped by a meeting of the Quorum Court's Jail Committee on Wednesday (Jan. 29). Now, instead of two quarter cent proposals, Crawford County voters are likely to vote on a half cent tax for nine years and a separate permanent quarter cent sales tax to fund law enforcement and operations, according to Hall.

"With the (original) fourth of a cent (proposal), it was going to be for 20 plus years and it was going to pay $17 million worth of interest on $20 million (in debt)," he said.

By shortening the time frame while increasing the amount the Court would be requesting from county taxpayers, Hall said the county would only pay $3.5 million in interest over those nine years and possible less, depending on the economy.

"It (sales tax revenues) go up, it pays off quicker. All of the money that comes in on debt serve has to be given to the debt, so if it happens to be more than anticipated, it pays off quicker."

While the amount of interest that would have been paid on the sales tax proposal floated last week was a high amount, Hall said other issues weighed on the jail committee meeting beyond the interest to be paid on the debt.

"In 25 years, it will be time to build another (jail) and the tax would probably never cease. We would have to start over and build another one. So we thought the public would be accepting (of a new sales tax) if it went away in nine years."

Now that the ballot titles declaring the tax rates for voters has passed the jail committee, Hall said the entire Quorum Court would vote at its regular February meeting on whether to place the issue on the May 20 primary ballot.

And it is not until that vote happens that any of the proposals are set in stone, meaning changes could still make their way into a proposal to be voted on before the Quorum Court on February 17.

Should both issues gain voter approval in May, the sales tax rate in Alma and Van Buren — Crawford County's two largest cities — would jump from 9.5% to 10.25%. The result would be one of the highest local sales tax rates in the nation.

Van Buren Chamber of Commerce Executive Director Jackie Krutsch said last week that voters should understand that while unpopular, operating a jail is an essential service in any county, on pair with police and fire protection. (It should be noted that Krutsch did not state an opinion for or against the proposed taxes, nor did the Van Buren Chamber of Commerce.)

If the tax is passed by voters on May 20, Hall said sales tax collection would begin in October with the county receiving its first portion of the money in December. In preparation for possible passage of the tax, which will be the county's fourth attempt at securing sales tax funding for a new jail, Hall said architects would likely begin work on the jail's formal design in about March.

"But the project can't start (construction) until the money gets here. So construction would probably start a year from now if they pass it in May."

And as he said last week, Hall hopes the fourth time is a charm.

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No takers yet for historic Masonic Temple in downtown Fort Smith

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story by Ryan Saylor
rsaylor@thecitywire.com

A piece of Fort Smith history has been on the market for a year, still sitting unsold even with the property listed for only $14.27 per square foot.

The fact that the Masonic Temple at 200 N. 11th St., in downtown Fort Smith is still on the market may be alarming to some, but listing agent Jerry Seiter, Nunnelee Wright Commercial Properties' man tasked with unloading the building for the Free Masons, said it was really no surprise.

"I think I made the statement when it was listed that it could take two years or more to sell this thing," he said. "I think two years is realistic."

The facility, a three story concrete structure that includes an auditorium capable of seating 900, is listed for $750,000. The price, Seiter said, is a bargain.

"I talked to a builder about (what it would cost) building it from the ground up. He said it would probably cost $20 million or more to build it in today's market."

That's right. To build a comparable building to the one for sale, a building built in 1929, the cost would run upward of $20 million.

The price on the facility is one of the selling points for any organization that may look to buy the structure. According to Seiter, so far there have been very few serious considerations.

"Churches, the city of Fort Smith. We talked to them early on about using it as their city offices," he said.

Deputy City Administrator Jeff Dingman knocked down speculation that the city would consider moving into the structure, built the same year as the massive stock market crash that came to be known as Black Tuesday.

"When speculation like that comes up, it's kicked up internally. But no determination has been made as to how it would meet the city's needs," he said.

Besides the nearly century old building not meeting the requirements of the Americans With Disabilities Act, Dingman said the location was also troublesome.

"The location seems good, but it also has a lot of constraints," he said, alluding to the lack of an extensive parking area as well as being in a spot that could cause traffic headaches for workers or citizens coming or going at any given time.

Mayor Sandy Sanders, who recalled watching the movie "Bonnie and Clyde" in the facility's theater as a teenager, confirmed Dingman's statements on how well the facility could work for the city.

"Having been in there years ago, it wouldn't work," he said.

Seiter said another possibility was the University of Arkansas at Fort Smith purchasing the facility, though there is now considerable doubt.

"I wouldn't be surprised if they end up with it down the road, but their purchase of Second Street Live may have hindered that to some degree, at least for a little while. But churches, the city of Fort Smith, UAFS — those are the logical uses of it."

Regardless of who purchases the building, Seiter said the comparatively low price would free up any eventual buyer to invest considerable money in renovations.

"I wouldn't have any idea what costs that would take," he said. "It depends on how extensive they want to go. I wouldn't have any idea."

Whatever happens, residents can at least know that the building will continue thanks to its designation as a historical building.

"There's restrictions to the exterior (due to the designation). I don't think you can do any kind of major changes to the exterior. But I think the interior is pretty much wide open. I think you can do whatever you need to within the codes of the city. But being registered as a historical landmark, you are very limited on what you can do to the exterior. (Making it handicap) accessible, that's pretty much all you can do."

Two members of the Free Masons were contacted a total of six times over three days for comment, but phone calls were not returned.

BUILDING HISTORY
Following are some details of the history and features of the Masonic Temple according to mastermason.com.

• Architects were George Mann of Little Rock, who was assisted by Harlson and Nelson of Fort Smith.

• The general contract was let to Gordon Walker, Little Rock, on a bid of $208,500, on June 11,1927. Ground was broken June 25. Other contracts not included in the general award, together with furnishings and equipment, brought the total cost of the Temple to $385,000.

• The cornerstone was laid Dec. 7, 1928, and the Temple was opened to the general public on Sept. 7-8,1929.

Five Star Votes: 
Average: 5(3 votes)

Koprovic, Webb reappointed to the Arkansas Economic Development Commission

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With reappointments by Gov. Mike Beebe (D) of Chester Koprovic and Lee Webb, the Fort Smith region will continue to be home to two of the 16 members of the high-profile Arkansas Economic Development Commission.

Koprovic, who is the board chairman of Boyd Metals, B&C of Fort Smith and Kopco, was first appointed to the commission by Gov. Mike Huckabee (R) in 2001 following the death of Fort Smith businessman Tom Barr. When his fourth full term expires in January 2018, Koprovic will have served almost 17 years as a commissioner.

Boyd Metals is a metal service company with offices and operations in Arkansas, Missouri and Oklahoma. B&C and Kopco are metal fabrication and welding operations in Fort Smith. (Koprovic also has an ownership interest in The City Wire.)

FOCUS SHIFT
The focus of the commission and agency has shifted during his time.

“When I first when on, most of the emphasis was to create jobs, to bring in new jobs,” Koprovic said. “Now we work a  lot on retaining the jobs we have ... and trying to grow those companies.”

Koprovic said incentives offered by the AEDC have improved thanks to support from the Arkansas Legislature and leadership from Beebe’s office. He’s supported Beebe’s focus on connecting education and economic development, but said the state needs to do more with its education efforts.

“Coming out of high school, a high school graduate needs to be prepared to step into a job, and right now I don’t think they are prepared to step into a job,” Koprovic said.

Webb, a member of the Sebastian County Election Commission and co-owner of Economy Trailer in Fort Smith, was first appointed in 2010. This will be his second term on the commission. He said his first surprise as a commissioner was learning that the group “is actually a working commission and not just a ‘show up’ commission.” He also shared Koprovic’s assessment that the agency has been more focused in recent years on the retention and expansion of existing operations.

“Job retention has been a pretty big issue the last few years. I think we’ve been pretty successful with that, and we’ve also been successful in getting some other companies to move here,” Webb said.

‘LAST MINUTE’ FRUSTRATION'
He said a top frustration of serving on the commission is how tough it is to recruit new operations.

“I’m sure we have from 30 to 50 active files, with the staff working to get new jobs to Arkansas. ... I’ll tell you that a frustration for me is when Arkansas may have the best site and the best deal and the (AEDC) staff has really pulled together a great deal, but at the last minute some political thing comes in that we really had no control over,” Webb explained.

While he wouldn’t label it a frustration, Koprovic said he still hopes to see the state land an auto manufacturer.

“I would like to see Arkansas get an automobile plant. We’ve tried to get one almost the entire time I’ve been on the commission. We’re one of the few southern states to not have a plant like that,” Koprovic said, adding that he believes “there will be more auto plants built in America.”

DEVELOPMENT OPTIMISM
It may not be a large auto plant, but Webb is optimistic the agency will announce new jobs or job expansions in the next year. He said the effort by Wal-Mart Stores to return manufacturing to the U.S. has helped generate more prospects for new jobs and expansion in Arkansas.

“We want to create more jobs, and I think we are on the right track for that. They (AEDC staff) are working with a lot of projects right now. I think you’re going to see some good announcements come up in the next year. ... And you also have that initiative from Wal-Mart to bring those (manufacturing) jobs back and that is really helping a lot right now,” Webb said.

Koprovic said his time on the commission has provided him an education on economic activity in Arkansas.

“It’s been one of the most interesting things I’ve ever done. We go to different cities each month, and we get to meet people we’d never get to meet ... and see products we didn’t know were being made in the state,” Koprovic said.

Five Star Votes: 
Average: 5(1 vote)

The Friday Wire: Notes on jobs, pollution and a farm bill fight

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Changes to the Whirlpool pollution plan, the success of Krutsch, the political fight over the federal farm bill, and State of the Union disappointment are part of the Jan. 31 Friday Wire for the Fort Smith region.

NOTES & ANALYSIS
Positive and perspective with jobs numbers
The Fort Smith region saw its non-farm job numbers rise from 116,900 in December 2012 to 120,300 in December 2013. That’s a 2.91% gain, and it was enough to see the region rank 34 out of 372 metro areas in terms of percentage growth. The region ranked 327 in 2012, so the move was significant.

Also, the Fort Smith metro jobless rate fell to 6.9% in November and brought to an end 55 consecutive months in which the regional jobless rate was at or above 7%.

And while we should celebrate such numbers, we should also be mindful of how much more improvement is needed just to get the region back to the economic normals of just a few years ago.

The size of the Fort Smith regional workforce during November was 132,163, down from the 132,867 during October, and below the 132,392 during November 2012. The labor force reached a revised high of 140,253 in October 2007. Having more than 8,000 out of the labor force count is not a good thing.

Also, the number of employed was 122,993 in November. And while that is an improvement compared to November 2012, it’s almost 10,000 fewer than the 132,779 employed in 2007.

Things are better in the region, but there is a lot of ground to be made up.

ICYMI
Following are a few stories posted this week on The City Wire that we hope you didn’t miss. But in case you missed it ...
Political fight to continue on ‘far from a perfect’ federal farm bill
Democrats and U.S. Sen. Mark Pryor, D-Ark., will do all they can to make political hay with U.S. Rep. Tom Cotton’s vote Wednesday (Jan. 29) against the federal farm bill. And while Cotton, a Republican from Dardanelle, was the only member of Arkansas’ U.S. House delegation to post a ‘No’ vote, and while the bill was supported by the politically powerful Arkansas Farm Bureau, the political lines of the farm legislation are not as clear or as straight as the rows of a freshly planted soybean field.

Convention Center revenue rise
The Fort Smith Convention Center saw a drop in the number of events it hosted in 2013, but that did not stop the event center from having one of its best revenue years since opening.

Ross and ‘raw politics’
A long pause ensued after Democratic gubernatorial candidate and former Arkansas Congressman Mike Ross was asked his thoughts about President Obama’s State of the Union address. Ross rolled a cough drop around in his mouth and stared ahead for a few seconds before replying: “I think that, you know, it needed more substance.”

NUMBERS ON THE WIRE
• $15.8 million: Full year 2013 net income for Fort Smith-based Arkansas Best Corp., a big improvement over the $7.7 million loss in 2012.

• 7.4%: The Arkansas unemployment rate as of December 2013, the most recent month data was available. The rate is an increase from 7.1% in December 2012, making Arkansas only one of six states to post a year-over-year jobless rate increase.

• 2016: The anticipated year chemical oxidation treatments will begin in and around the former Whirlpool facility in Fort Smith. The treatments are now mandated by the Arkansas Department of Environmental Quality to treatment a spill of toxic trichloroethylene (TCE), a cancer-causing chemical whose plume has migrated to a neighborhood north of the Whirlpool facility.

OUTSIDE THE WIRE
The President and Costco
President Obama chose a Costco warehouse store in Maryland on Wednesday to push for a hike in the federal minimum wage, choosing Costco, the White House says, because it is "acting on its own to pay its workers a fair wage."

Officials discuss Texas-Mexico high-speed rail line
A high-speed rail line connecting San Antonio and Monterrey, Mexico, could be less than a decade away from welcoming its first passengers, according to federal and Texas officials who met with Mexican officials in Washington, D.C., on Thursday to discuss the project.

More on Hillary and 2016
Former U.S. Secretary of State Hillary Clinton remained vague on Monday about whether she would run for president in 2016 and said the militant attack in Benghazi, Libya, was the biggest regret of her four years as the top U.S. diplomat.

WORD ON THE WIRE
"She is the first to  send the success of anything we do to someone other than herself. She will tell you that any Chamber success is due to the volunteers and staff we have, but I will tell you that without her committed leadership it would not be the strong and vibrant organization that it is today."
– Janie Simmons, executive assistant at the Van Buren Chamber of Commerce, speaking about Jackie Krutsch, executive director of the Chamber

"A lot of this is in our alcohol sales. It took us a while to come up with the right procedures, the right equipment. We did have to make purchase of cash registers, a portable safe ... things of that nature. So we also had to get our procedures down. But you can see that we're picking up steam here."
– Executive Director Claude Legris of the Fort Smith Advertising and Promotion Commission discussing the rise in revenue at the Fort Smith Convention Center during a Jan. 28 Fort Smith Board of Directors study session

"Overall, I’m disappointed with the President’s State of the Union address because he was heavy on rhetoric, but light on specifics about how we can move our country forward. I’ve always said that I’ll work with the President when I think he’s right, but oppose him when I think he’s wrong. That’s why I’ve opposed his policies on gun control, the Keystone Pipeline, military action in Syria, regulatory overreach on our farms — to name a few — and why I’ll continue to oppose his agenda when it’s bad for Arkansas and our country.”
– U.S. Sen. Mark Pryor, D-Ark., in his response to President Barack Obama’s State of the Union address

Five Star Votes: 
Average: 5(1 vote)

Tyson Foods first quarter net income up almost 47% (Updated)

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story by Kim Souza
ksouza@thecitywire.com

Fiscal first quarter net income for Springdale-based Tyson Foods was $254 million, well ahead of the $173 million in the first quarter of 2013 and outpacing the consensus Wall Street estimate by $28 million.


Total revenue in the quarter was a record $8.761 billion, better than the $8.366 billion in the first quarter of 2013, the company announced in an earnings statement issued early Friday (Jan. 31).
 The per share earnings of 72 cents was much better than the consensus Wall Street estimate of 64 cents per share.


"I'm very pleased with our strong first quarter results, and I'm confident in my expectations for the full year," Donnie Smith, president and CEO of Tyson Foods, said in the earnings statement. "We're growing sales and earnings and executing our strategy - including making our third prepared foods acquisition in less than a year - while reinvesting in our existing businesses and buying back shares.”


Despite sales being higher in all four primary segments of the company, and sales volume up 4.1% in the beef segment and up 3.6% in the chicken segment, overall the company slightly missed top line revenue projections.


BIG CHICKEN

Chicken continues to be the protein of choice among more consumers helping Tyson Foods grow its sales and overall profits. Operating income for the chicken segment rose to $225 million, more than double the $111 million in the same quarter of fiscal year 2013.


The company’s chicken operating margin rose to 7.5%, returning to normalized ranges as lower grain costs helped Tyson save $170 million. Easing grain costs helped to offset some price volatility relating to excess supplies losses of some $28 million from Tyson’s international poultry operations.


China was the largest source of the negative international returns. There has been a change in the market dynamics in China over the past year, demand has not recovered there relating economic slowing and continued concerns of avian influenza.


“We have decided to slow our pace of expansion inside China for now to allow for demand to catch up with supplies,” Smith said. “We’ve taken our foot off of the gas in China, but we are still on the road.”

He said by the end of this year, the two plants in China will be running one shift with company controlled birds, but they will not be buying open market bird in the interim.
 Tyson said it is also handling shorter term challenges related to the "polar vortex" weather event and subsequent propane shortages.
 Smith said the company has made propane purchases from down in the Houston area and has transported that to growers that faced short supplies.

“I am not aware of any Tyson grower that is experiencing propane shortages for their houses. We will continue to work with our growers on pay issues related to these higher costs,” Smith said, during the call.


Tyson expects domestic chicken production to increase around 3% this fiscal year. The company said it expects to save $600 million on grain costs for feed ingredients, compared to last year’s spending. There will be some lag time in these savings being realized.


“We think chicken will be the winner going forward,” Smith said during the earnings call on Friday. “Chicken will see a halo effect because of the higher prices of beef.”


BETTER BEEF

Tyson’s beef segment continues to outperform the packer industry as a whole, reporting better-than-expected operating income of $58 million in the recent quarter, an improvement of $46 million reported a year ago.


Beef sales volumes rose thanks to better demand, despite higher sales prices. Tyson expects to see a reduction in fed cattle supplies between 2% to 3% from last year, but said it generally has adequate supplies in the regions where it operates. 


For the full year, Tyson expects to its operating margins challenged because of higher overall cattle costs. In the recent quarter Tyson beef operated with a 1.9% margin, well below the historical levels — 2.5% to 4.5%.


“Consumers will likely see higher beef prices and fewer grocer promotions this year,” said Jim Lochner, chief operating officer.


LEANER PORK
Tyson’s pork segment was a little leaner in the recent quarter generating $121 million in operating income, down from $125 million in the year-ago period.

Sales volumes in pork decreased as a result of balancing supply with customer demand and reduced exports. Pork sales totaled $1.424 billion, up 6.7% in price, but down 2.1% in total volume. Lochner said the metrics and margins in the pork business have recently improved. He expects industry hog supplies to decrease around 3% in fiscal 2014 compared to fiscal 2013, offset by increased average live weights.

For fiscal 2014, Lochner expects the pork segment will be in its normalized range of 6% to 8%.

Lochner said this will be his last earnings call as he will relocating back to Dakota Dunes, S.D., in anticipation of his retirement in September.

PREPARED FOODS
Tyson views its prepared foods segment as a growth vehicle and continues to invest and tweak these diverse operations to better serve changing consumer demands.

The prepared foods segment posted sales of $907 million, up 3.5% in volume and 4.2% in price, from a year ago.

Operating income fell to $16 million, as a result of $40 million in higher costs of raw materials and investments in the company’s lunch meat business and other growth platforms. Smith said the investments made in this segment, with three recent acquisitions will start to pay dividends toward the back half of this year. He said this category is one that will work to be nimble enough to give consumers the products they want.

He said the company will continue to look for other acquisitions that fit the company’s long term growth goals.

ROSY OUTLOOK
Company officials said they expect fiscal year 2014 revenue to reach $36 billion by “accelerating growth in domestic value-added chicken sales, prepared food sales and international chicken production.” Revenue in 2013 was $34.374 billion.

The rosy outlook provided by Tyson execs was welcome news to Wall Street investors looking for a safe haven play on Friday. Shares of Tyson Foods (NYSE:TSN) rallied more than 5% to $36.23 in heavy early trading, amid a broader market sell off with a 1.31% dip in the Dow Jones Industries and a 0.86% decline in the Nasdaq.

This uptick in Tyson shares set a new 52-week high, intraday. During the past 52 weeks the share price had ranged from a $35.74 high to a $21.79 low.

Five Star Votes: 
Average: 3(2 votes)

Wal-Mart lowers earnings on winter weather, lower food stamp payments

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The earnings report to be issued on Doug McMillon’s 20th day on the job as the new Wal-Mart CEO may not be pretty.

Wal-Mart Stores Chief Financial Officer Charles Holley announced Friday that bad weather, a worse than expected hit from reduced food stamp payments and one-time charges related to international operations will reduce the earnings per share number by 26 cents – that’s almost triple the 10 cents per share negative impact announced Nov. 14.

A 26 cent per share hit is about $842.4 million. The company is set to release full year and fourth quarter earnings on Feb. 20. Doug McMillon, now the CEO of Walmart International, is set to succeed Mike Duke as Wal-Mart Stores CEO on Feb. 1.

The Bentonville-based global retailer said full year earnings per share is likely to hit at or below the previous guidance of $5.11 cents and $5.21. For the fiscal fourth quarter, the earnings per share will hit at or below the range of $1.60 to $1.70.

Also, the company said its comp store sales – a closely watched metric in the retail industry – for Walmart and Sam’s Club will be less than previously expected. Prior to Friday, the comp sales were expected to be flat for Walmart U.S. and between flat and 2% for Sam’s Club.

“Despite a holiday season that delivered positive comps, two factors contributed to lower comp sales performance for the 14-week period for Walmart U.S.,” Holley said in the statement. “First, the sales impact from the reduction in SNAP (the U.S. government Supplemental Nutrition Assistance Program) benefits that went into effect Nov. 1 is greater than we expected. And, second, eight named winter storms resulted in store closures that impacted traffic throughout the quarter.”

SNAP is roughly 10% of the total U.S. grocery business, but benefits go to one in seven Americans, or some 48 million consumers. All of them will see their monthly benefits reduced on Nov. 1. For example, a family of four has been getting $588 per month in SNAP benefits since 2009, but that will be reduced by $36, or 5% after Oct. 31. Arkansas will lose about $52 million in SNAP support from Nov. 1, through September 2014, according to the Center on Budget and Policy Priorities, Washington D.C., a nonpartisan research and policy institute.

Grocery is a $151 billion annual business at Wal-Mart driving 55% of the company’s total U.S. revenue last year. Wal-Mart controls about 25% of nation’s grocery marketshare, according to Michele Simon’s June 2012 report from Eat, Drink, Politics.

Jack Sinclair, executive vice president of grocery for Walmart U.S., said in October that Walmart has an 18% share of the SNAP payments, or about $13.2 billion a year.

The SNAP cuts are essentially a return to the payment formula prior to 2009. Congress approved in 2009 a $45.2 billion stimulus into the program as part of the American Recovery and Reinvestment Act, which bumped up SNAP benefits through October 2013. 

SNAP recipients have seen a 4% dip in their spending, according to shopper metrics, greater than 1% predicted impact.

"Wal-Mart caters to lower-income consumers which have been hit disproportionately hard relative to higher-income consumers," Morningstar analyst Ken Perkins told Reuters.

About 20% of the company's shoppers are food stamp users, analysts have estimated.

CNBC analyst Jim Cramer said Wal-Mart is also not default bell weather it once was, as more and more consumers are chasing lower prices anywhere they can find them — online with Amazon, dollar stores, etc.

Lowered earnings guidance from Wal-Mart coincided with a federal report showing declines in personal income and disposable income in 2013 compared to 2012.

According to Friday’s report by the U.S. Bureau of Economic Analysis, personal income was up by $2.3 billion in December, up less than 0.1%, and disposable personal income for the month was down less than 0.1%,

For the full year, the BEA reported that personal income was up 2.8% compared to a 4.2% gain in 2012. Disposable personal income fell 1.9% compared to a gain of 3.9% in 2012.

Wal-Mart shares (NYSE: WMT) were trading down slightly at $74.41 in the morning session.. During the past 52 weeks the share price has ranged from an $81.37 high to a $68.13 low.

Five Star Votes: 
Average: 5(4 votes)

Tyson shareholders, record price, strong profits, farewell bids

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story by Kim Souza
ksouza@thecitrywire.com

In typical, non-ceremonial fashion Tyson Foods shareholders held their 51st annual meeting in Springdale on Friday morning (Jan.31). The investors had plenty to celebrate with a new record stock price, rallying more than 9.4% to $37.74 and twice the normal shares traded in the morning session.

That said, the entire event lasted just under 23 minutes, and it included the executives taking time to bid farewell to two of its senior leaders.

Chief Operating Officer Jim Lochner is relocating back to South Dakota prior to his retirement in September, and Buddy Wray, a former CEO and special assistant, is retiring a second time in February after coming back into the business in 2008. The retirements were announced in November, but this is the last shareholder meeting they plan to attend as company execs.

Tyson Chairman John Tyson thanked Lochner for his leadership and service throughout the years crediting him as one of the “best” in the industry who learned through experience. He referred to Lochner as a “master professor” saying that he it doesn’t matter what you know if you can’t teach it to others. CEO Donnie Smith also thanked Lochner for the way he has prepared the company’s future leadership and credited him with much of the financial success the company has seen in recent years.

Lochner will continue serve the company in a consultant role through 2017. John Tyson noted this will allow more time for Lochner’s big game hunting out West.

Tyson said Buddy Wray helped raise him, and his expertise has proved invaluable for 50 years, including designing the company’s iconic logo. Wray retired from as president in 2000, but was called back into business by his long-time friend and company pioneer Don Tyson in 2008.

“He has been a trusted advisor to me during a phenomenal period in our company's history," Smith said. "His wisdom and guidance helped us deliver outstanding results and his nearly six decades of experience have been a wonderful gift."

Smith told shareholders that 2014 is off to a great start as the stock set another record high in active trading on the heels of a stellar first quarter performance.

“If you’ve checked your phone in the past few minutes like I have, you can see the share price continues to rally,” he said.

Smith assured shareholders the game always has its challenges, but he’s confident that he has the right people on his team, making the right plays to ensure Tyson Foods wins.

BUSINESS MEETING
Tyson shareholders (95.23%) approved the following directors for a one-year term:
• John Tyson, 60, chairman of the board
• Kathleen M. Bader, 63 president and CEO of NatureWorks LLC
• Gaurdie E. Banister Jr., 56, CEO of Aera Energy
• Jim Kever, 61, founding partner of Voyent Partners

• Kevin M. McNamara, 57, founding principal of McNamara Family Ventures
• Brad T. Sauer, 54, EVP at 3M Industrial Business Group
• Robert Thurber, 66, retired exec from Sysco
• Barbara A. Tyson, 64, former company consultant and VP
• Albert C. Zapanta, 72, CEO of the U.S. Mexico Chamber of Commerce

Tyson shareholders (99.74%) approved the ratification of PricewaterhouseCoopers LLP to serve as the company's independent registered public accounting firm for the fiscal year ending Sept. 27.

Five Star Votes: 
Average: 4.5(2 votes)

Fundraising numbers in for 4th Congressional District candidates

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story by Ryan Saylor
rsaylor@thecitywire.com

The fundraising gap is getting closer for two Hot Springs Republicans vying to replace U.S. Tom Cotton, R-Dardanelle, in Congress.

Businessman Tommy Moll reported raising only $142,000 during the fourth quarter of 2013, a 49.47% decrease from his third quarter total of $281,000.

At the same time, Arkansas House Majority Leader Bruce Westerman showed consistency during a reporting period that typically sees a significant drop in reported donations due to the period falling during the Thanksgiving, Christmas and New Years holidays. Westerman reported raising $107,074.16 during the fourth quarter, only a 3.07% drop from his third quarter fundraising total of $110,466.43.

While Westerman may be closing the fundraising gap, his campaign is still at a distinct disadvantage when it comes to cash on hand. The leader of the Arkansas House Republicans reported $154,992.49 cash on hand. By contrast, Moll — whose strong third quarter totals took him from somewhat obscurity to a formidable candidate in the expansive 4th Congressional district — reported cash on hand of more than $358,000.

Moll said his campaign's first two fundraising quarters, which saw more than $423,000 in donations, would allow him to introduce his message across the district.

“Our campaign is off to a great start, and thanks to our generous supporters we will have the resources to spread our common sense conservative message of constitutionally limited government, individual liberty, and economic freedom.”

Moll's fundraising report comes the same week he was endorsed in his Congressional bid by FreedomWorks PAC, a group strongly associated with the Tea Party movement.

In announcing the endorsement Tuesday (Jan. 28), FreedomWorks President Matt Kibbe said Moll's business background would set him apart in the halls of Congress.

“Tommy Moll’s extensive background in economics and trade policy, combined with his business experience in the energy sector, will be a refreshing addition to Congress. Moll is a committed fiscal conservative who will fight ObamaCare and Medicaid Expansion, and be a strong voice in the next generation of leaders in the Liberty Caucus.”

While Moll may be securing endorsements, Westerman's campaign is taking a different approach, stating that "93% of donations were from Arkansas. Among Arkansas donations, 67% came from the Fourth District with 67% of those contributions coming from Garland County."

The reference by the Westerman campaign draws a contrast between its candidate and Moll, who grew up in the 3rd District city of Fort Smith and attended college in Virginia, graduate school in the United Kingdom and law school in New York.

In a statement on his website, Westerman said he was "especially moved by the large amount of support I have received by the people of my hometown, where I learned the common sense rural conservative values that we need more of in Congress.

Beyond thanking supporters in Hot Springs, he also took effort to address donors across the Fourth District.

“I am very thankful to the large amount of Fourth District supporters who helped us exceed our goal this quarter by making an investment in my campaign to fight the unfair, top-down, centralized government of President Obama and remind him that it is Congress that legislates, not the White House."

Dardanelle Democrat James Lee Witt, the former director of the Federal Emergency Management Agency (FEMA) during the Clinton administration and a former Yell County judge, reported raising $243,946.17 during the fourth quarter. He entered the race on Nov. 5 and is being challenged by community college instructor Janice Percefull of Hot Springs.

The primaries for both Democrats and Republicans statewide will be held May 20, with a general election set for Nov. 4.

Five Star Votes: 
Average: 5(1 vote)

U.S. Attorney General Eric Holder visits district office in Fort Smith

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U.S. Attorney General Eric Holder was in Fort Smith on Thursday (Jan. 30) as part of what is an effort by the nation’s top law enforcement officer to visit all 93 U.S. Attorney district offices around the country.

Joyce Snow, a spokeswoman for the office of Conner Eldridge, U.S. Attorney for the Western District of Arkansas, confirmed that Holder was visited the district office in downtown Fort Smith. Snow could only confirm the visit, and did not provide information on the length of the visit, areas toured or other details.

Jim Dunn, executive director of the U.S. Marshals Museum, said Holder did not stop at the planned site of the U.S. Marshals Museum. The Marshals Service is within Holder’s Department of Justice.

Fort Smith Regional Airport Director John Parker said a military aircraft landed at the airport around 9 a.m., with a motorcade picking up the occupants and transporting them to downtown Fort Smith.

A caravan of cars and SUVs transported Holder from TAC Air at the Fort Smith Regional Airport to the U.S. Attorney offices in downtown Fort Smith. Holder’s caravan returned to TAC Air around 1 p.m. on Thursday.

He visited Fort Smith the same day he issued a statement calling for the death penalty in the case of Dzhokhar Tsarnaev, one of the two Boston bombers. Holder’s statement noted: “After consideration of the relevant facts, the applicable regulations and the submissions made by the defendant’s counsel, I have determined that the United States will seek the death penalty in this matter. The nature of the conduct at issue and the resultant harm compel this decision.”

Holder has served as the 82nd U.S. Attorney General since Feb. 3, 2009. Holder was also appointed by President Bill Clinton in 1997 to serve as Deputy Attorney General, and prior to that served as the U.S. Attorney for the District of Columbia.

Eldridge has served as U.S. Attorney for the Western District of Arkansas since March 2011. He was 33 at the time.

Eldridge filled a post vacant since Jan. 4, 2009, when former U.S. Attorney Bob Balfe resigned to serve in the Northwest Arkansas law offices of Mitchell Selig Gates & Woodyard. Balfe served as the U.S. Attorney since November 2004.

Prior to coming to Fort Smith, Eldridge served as a Special Deputy Prosecutor for the Prosecuting Attorney’s Office of Clark County, Arkansas since 2009. Eldridge previously worked for Summit Bank and Summit Bancorp, Inc., serving in various senior management positions.  He was ultimately named CEO in 2008.

The Western District of Arkansas includes 34 counties stretching from Texarkana and El Dorado to Fayetteville and Fort Smith.

Five Star Votes: 
Average: 5(2 votes)

Sen. Rand Paul talks drug laws, tax policy at Hot Springs GOP event

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story by Ryan Saylor
rsaylor@thecitywire.com

A speech by U.S. Sen. Rand Paul, R-Ky., Friday night (Jan. 31) in Hot Springs seemed less like a pep talk to Arkansas Republicans and more like the first of many stump speeches the freshman Senator could make should he jump into the 2016 presidential race.

It was a possibility the candidate addressed head on when asked about it during a question and answer session following his speech, saying that he was in discussions with his family about a run.

"I've jokingly said there are two votes in my household, my wife has both of them and both of them are a no right now. But there's a little truth to that in that my wife and I are a team. We're a family. We do take our family very seriously, whether or not we can withstand the onslaught of what is involved in this. …I don't mind taking body blows from the media, but I don't like when my family is attacked or included. So that is a difficult decision. It is a lot of time away from family."

While Paul said he understood the personal sacrifice he and his family would have to make for a run, he is also keenly aware that he is an oft-discussed candidate who could come into the race with real name ID.

"I do recognize that I am in a position where I could stand a chance, though, so we really are seriously considering it. I also think that if we do the same thing we've always done, we're not going to win. It has to be different. It has to have a different twist."

The different twist was laid out in a nearly 30 minute speech in which Paul outlined his reason for attempting to block increased government spending, laid out new tax policy proposals, addressed income inequality and changing laws relating to drug use.

On the issue of drug use, the freshman Senator from Kentucky said the current set of laws dealing with narcotics had unfairly targeted minorities.

"I personally think criminal justice, particularly the war on drugs in our country, has unfairly treated some people — particularly African-Americans and Hispanics. I'm not saying let's get rid of the drug laws. I'm saying let's get rid of the racial outcome of the drug laws."

Paul cited unsourced statistics, where he said teens, when asked, would admit to drug use nearly fifty percent of the time — a number that held steady for both whites and African-Americans. But the current population of those incarcerated for drug-related crimes is disproportionate, he said.

"But you know what? If you look at who's in prison for these drug crimes, three out of four people in prison are black or Hispanic."

Paul proposed lessening penalties for first time offenders, namely teens and young adults, as well as allowing convicted criminals who have served their time for drug-related offenses to eventually regain their right to vote and contribute in a meaningful way to society.

"I'm not saying encourage it. But let's be the party that's open to having a more just solution for these kids."

In addressing income inequality and tax policy, Paul said the Republican Party would "have to be the party of the middle class and for the middle class." In order to do so, he proposed so-called Economic Freedom Zones, a proposal that would drastically lower tax rates in impoverished areas, leaving that money in the local economy with the hope that it will be used to spur economic growth.

Paul said the perfect example of where one of these zones could work would be Detroit, the largest municipal government in the United States to ever file bankruptcy.

"What it does is it allows people to bail themselves out. Instead of taking money from Little Rock, or Hot Springs, or from Arkansas, or from Houston or Louisville and sending it to Detroit, we just simply let Detroit keep more of their own money. If you do this — and I'm not talking about halfway, I'm not talking about government grants ... I'm talking about dramatically lowering taxes almost to zero in places that are blighted — if you do it in Detroit, it's $1.3 billion over ten years."

The figure, he said, was in addition to any local property, income and sales taxes the municipality may take in.

He said such policies were good for the economy and would go further in alleviating poverty than government assistance programs, such as SNAP (food stamps).

"But we need to step up and be for something. Let's be for alleviating poverty and long-term unemployment."

The evening also featured Paul railing against what he labeled excess government spending, highlighting such perceived wasteful spending as a program designing menus for individuals who could one day live on Mars, a treadmill for shrimp and excess spending on certain programs pertaining to the Department of Homeland Security.

One comment, while a punch line in Arkansas, could surely ruffle feathers should he run for President and campaign in North Dakota.

"We sent $8 million for security to Fargo, North Dakota, and I say, 'You know what? If the terrorists get to Fargo, we might as well just give up.'"

Paul said he was highlighting wasteful spending on all levels, saying that instead of spending money on $500 toilet seats in the military, that money should go to pay service members a living wage.

The speech was already drawing Republican condemnation even before Paul took the stage, with the Democratic Party of Arkansas holding a press conference early Friday criticizing what it said were Paul and Republican U.S. Rep. Tom Cotton's extreme voting record, pointing to Cotton's recent vote against the farm bill. Cotton, a Republican from Dardanelle representing Arkansas’ 4th Congressional District, is running to unseat U.S. Sen. Mark Pryor, D-Ark.

"Farming is the largest industry in Arkansas. It's directly responsible for one in six jobs in Arkansas," said DPA Executive Director Candace Martin. "How Congressman Cotton can justify voting against the hundreds of farmers and their families, I guess I'll just never understand that."

Cotton responded to the criticism of his farm bill vote following Paul's speech, saying that it included what he called too much wasteful spending.

"Look, I listened to Arkansas farmers. About two-thirds of them are cattleman, poultry producers, swine producers, they opposed this legislation in large part because it poses unfair regulations and trade barriers on them. It's going to hurt a lot of crop producers, as well, when Canada and Mexico retaliate against us. But generally, as I learned growing up on a farm in Yell County, farmers know you can't keep spending more money than you take in. This legislation spends nearly a trillion dollars and Arkansas farmers only get one-half of one percent benefit from that, in part because it's 80% food stamps."

Cotton said training programs and other programs should be requirements for anyone receiving nutritional assistance through programs like SNAP.

Republican Party of Arkansas Spokesperson Holly Wilson said Friday's event was not expected to bank the party any additional funds, but instead would break even. The event was previously scheduled for December, but was re-scheduled due to inclement weather.

The weekend's events continue Saturday (Feb. 1) when the RPA will hold its Winter state committee meeting at the Arlington Hotel, beginning at 10 a.m.

Five Star Votes: 
Average: 5(3 votes)

Blustery winter reshaping family budgets, hurting retailers

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story by Kim Souza
ksouza@thecitywire.com

Retailers often mention weather as a reason for lackluster sales. It was too warm during the holiday season of 2012 which weighed down sales of winter coats, sweaters and other warm apparel.

But the holiday season of 2013 and the blustery "Polar Vortex" is far worse, at times crippling air travel to the tune of $1.7 billion in January, with an early economic cost estimate of $5 billion, according to Planalytics, a weather intelligence company based in Philadelphia.

Retailers from Amazon to Wal-Mart have said extreme winter weather is partly responsible for weaker earnings through the holiday season and month of January. And with three winter storms expected the first week of February there doesn’t seem to be any relief in sight.


“Middle income consumers are facing higher heating costs just to stay warm at home, which is bound to mean there is less money for discretionary spending. Their food spending is even compromised. They have been conditioned to shop with coupons, seeking bargains and that behavior is not likely to change, even if the economy does improve,” said Rich Yamarone, chief economist with Bloomberg Brief.

Marc Henning of Bella Vista, said his electric bill was $340 this month. Up just shy of $100 from last month.

“Our bill usually runs in the $140 range most the year. We're going to have to adjust our budget or to compensate for this recent bill,” he said.

Jami Dennis, of Powell, Mo., said she has shopped less frequently because of the inclement weather. That said, when Dennis does shop, she tends to stock up for longer periods of time.

“I have spent a little more online to ward off cabin fever, but with propane prices rising above $4 per gallon this past week I will need to tighten other spending to ensure I can stay warm until spring arrives,” Dennis said.

While consumers have spent more time inside this year, it’s understandable that store traffic would also have been lighter, Yamarone said. But a there’s another problem also impacting retail sales and that’s competitive pressure eroding operating margins. He said when retailers are sitting on unsold inventory they are forced to reduce prices to try and lure people into their stores, and lower prices mean tighter margins with less room to absorb the shocks being seen this winter.

“Middle class and lower income consumers are having a tough time, paying higher taxes this year and Mother Nature isn’t doing anyone any favors. Budgets are tighter and there is less fuel in the tank to move this economy forward,” Yarmarone said.

Jack Kleinhenz, chief economist for the National Retail Federation, said it’s tough to quantify the direct impact to the retail sector from the eight named winter storms already in the books, when there’s still six more weeks of winter expected for much of the country. He said it’s important to remember that this winter weather is transitory in nature and it will eventually pass. Kleinhenz expects some retailers will make up some of the losses when spring does arrive.

In the meantime, the demand for electric blankets, heaters, boots and ice melt are up year-over-year, according to Planalytics.

On another positive note, Kleinhenz said some of the ski areas are having great seasons, after suffering heavy losses the past two years.

Five Star Votes: 
Average: 4(1 vote)

Plans move forward on major renovation of Fianna Hills Country Club

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story by Ryan Saylor
rsaylor@thecitywire.com

Plans to drastically alter the appearance and business model of the Fianna Hills Country Club are continuing to move forward, with plans for a $20 million investment in the property.

Lancy Beaty, a partner with Dr. Stephen Nelson in Fort Smith-based FSM Redevelopment Partners, said one of the biggest hurdles in moving forward with the project so far as been finding a way to zone the revamped country club, which is zoned by the city of Fort Smith as R-2SF, or a residential zoning that permits country clubs.

"Under that definition, a country club is permitted, but it's a conditional use," Beaty said. "There's an existing conditional use as an existing country club, but if you combine the attributes that we are combing there — including the guest suites — there's no definition in the zoning code that defines that particular group of attributes together."

As a result, Beaty is working with the city on the creation of a planned zoning district (PZD) for the country club, which he described as "hybrid zones." It’s only the third time the city has worked with a developer through a PZD process.

The new zone would allow FSM Redevelopment Partners to continue with plans to build an expanded Fianna Hills Country Club on the property's existing footprint while adding features including guest suites, which Beaty said would only be available to members and their guests, not to the general public. The policy will keep the facility from being a bustling hotel open to the general public, and instead will continue serving the needs of club members through the expanded amenities.

NEW LOOK, NEW SERVICES
The overall look of the structure will change with the planned expansion of the facility, Beaty said, with the facility having a "modern rustic" look, which would appear to mimic a lodge. Renovation will including stripping the facility down to steel and concrete and then rebuilding.

The addition of guest suites and a change in appearance are not only meant to modernize the club, it is meant to revolutionize its business model as it expands offerings beyond a golf-focused venue.

Among the offerings at the facility will be an updated menu at the club's restaurant, the addition of an airport concierge service as well as the addition of concierge medical offerings for those who choose that level of membership.

"We have the airport concierge service. Those folks that travel a lot are able to just come to the club and they can leave their car there and we'll be able to carry them to the airport and pick them back up," he said. "That's in our elite membership package, along with the concierge medical that's in the elite package. …It's more wellness management. You know, the ability to have somebody that knows you and can address your concerns with medications or prescription refills."

Beaty is quick to note that the club will not host a full acute care clinic, but he said prescriptions can be delivered to an individual's home while other medical-related issues can be addressed quickly for elite members, a group that will be limited to only 100 individuals.

DIFFERENT FEE STRUCTURE
The changes Beaty and his partners have detailed for current members of Fianna Hills Country Club will result in a more expensive club membership, but he was quick to mention the changes members will get.

"It's more expensive in that it's structured differently. In most clubs, there's that fee-base (for membership), and that's what you pay plus any ancillary costs plus food and beverage. You know, you pay your membership — you know, your key to the door — then whatever you consume."

In the case of the revamped Fianna Hills Country Club, Beaty said there would be "a capital piece that is $30,000 and that capital piece is paid up front. You can write a check for it, or we made arrangements for people to finance that capital piece over various terms, whatever fits their budget."

"So they pay the capital piece to the financial institution and they pay the maintenance fee to us, which will be kind of like your monthly dues. So long story short, if you take that scenario and you blend it through their current costs now versus the new costs, it will cost them about $125 more a month if they financed the $30,000 piece."

The difference? A brand new country club, a vastly improved golf course managed by Scottsdale, Ariz.-based Troon Golf — a world-renowned golf course management company operating golf courses in 32 states and 27 countries — and amenities that set the revamped Fianna Hills Country Club apart from anything offered in the region.

COMMUNITY COMMITMENT
For FSM Redevelopment Partners to feel comfortable moving forward on expanding the facility from 27,000 square feet to its planned 85,000 square feet, Beaty said his would need the commitment of about 500 individuals. Those individuals would place $1,000 deposits on the project, with the deposit sitting in escrow until the company closes its planned purchase of the facility following approval by the city of Fort Smith's planning commission and Board of Directors. The committed members would only pay up once the building is complete and there is a certificate of occupancy hanging in the building. It is a deal that Beaty has assured current and prospective members included no risk to them.

"People are committing that if we build it they're in," he said. "And we're committing that if you're in, we'll build it. It's a reciprocal commitment and we don't get anything until it's a done deal."

While Beaty said about 500 commitments are needed for his company to move forward with the project, he said membership would be limited so that the club’s overall customer base is no more than 2,500 people.

In a statement FSM Redevelopment Partners sent to the media on Monday (Feb. 3), Beaty commented on community reaction to the planned changes at Fianna Hills Country Club: “The proposed changes to the club were met with mixed reactions from the Legacy Members, and there was a bit of sticker shock with the capital investment required. However, I was very pleased with the number of membership reservations that were received and those funds have been placed in escrow at Guaranty Abstract and Title Company in Fort Smith pending the completion the project. We’ve received a positive reaction to our redevelopment plan, especially among area corporations and companies who see the benefit of our innovative approach toward a country club.”

The PZD consideration for Fianna Hills Country Club is scheduled for a hearing before the Fort Smith planning commission in March, with a hearing and vote before the Fort Smith Board of Directors at a later date.

Five Star Votes: 
Average: 4.9(12 votes)

Fort Smith sales tax collections dip 0.69% in 2013

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Editor’s note: This story is a component of The Compass Report. The quarterly Compass Report is managed by The City Wire and presented by Fort Smith-based Benefit Bank. Other supporting sponsors of The Compass Report are Cox Communications and the Fort Smith Regional Chamber of Commerce.

Sales tax collection for the city of Fort Smith were down 0.69% for the 2013 reporting year, ending two years of collection gains and coming in 1.16% below budget estimates. However, the year ended on a positive note with the December report showing gains in city collections and the city’s portion of the countywide 1% sales tax.

Each of the city’s 1% sales taxes (1% for streets and 1% for water and sewer projects) collected $1.595 million in the December report, up 2.26% from the same period in 2012.

The collections in the December report were 8.9% below budget estimates. (Because the state of Arkansas has a two-month delay in reporting collections back to the cities, the city of Fort Smith — for budgeting purposes — has historically reflected the collections on a one-month delay. Which is to say, the tax collections remitted to cities in January are from taxes collected in November and transferred by merchants to the state in December.)

Total collections in the 2013 reporting period of the two 1% taxes were $38.937 million. Collections in 2012 of the two 1% taxes totaled $39.21 million, slightly ahead of the $38.683 million during 2011. The 2011 collections were 3.9% above 2010 collections.

Fort Smith’s share of the county 1% sales tax in the December report was $1.243 million, up 2.52% compared to December 2012. The collection was down just 0.08% compared to the revenue estimate.

The countywide tax has generated $15.353 million for Fort Smith during 2013, up 0.49% compared to 2012 and down 1.99% compared to budget forecasts.

The countywide tax generated $15.279 million in 2012, just ahead of the $15.15 million in 2011, but lower than the peak collection of $16.61 million in 2008.

The countywide tax collection is critical because the revenue is a little more than 40% of the city’s general budget of roughly $42 million. A majority of the general fund budget general supports fire, police and other critical city functions. The dip in collections compared to budget estimates has resulted in city officials seeking 4% budget cuts from all departments.

AREA COLLECTIONS
Following are selected regional tax collection figures provided by the Arkansas Department of Finance and Administration.

Sales tax collections in Crawford County for the first 11 months of 2013 total $5.824 million, up more than 2.3% compared to the $5.691 million in the same period of 2012.

Collections in Van Buren for the first 11 months of 2013 are $6.559 million, well ahead of the $3.219 million in the same period of 2012. The city approved a 1% sales increase in 2012 for infrastructure improvements and emergency services upgrades.

Collections in Franklin County for the first 11 months of 2013 were $2.41 million, down 0.31% compared to the same period in 2012.

Collections in Logan County for the first 11 months of 2013 were $1.861 million, up an impressive 20.3% compared to the same period in 2012.

Collections in Sebastian County for the first 11 months of 2013 were $26.097 million, up 1.24% compared to the same period in 2012. Collections in the Sebastian County city of Greenwood totaled $1.818 million for the first 11 months of 2013, better than the $1.783 million during the same period of 2012.

PREVIOUS ANNUAL COLLECTION INFO (Fort Smith)
2% sales tax collection (1% for streets; 1% for water/sewer bonds)
2013: $38.937 million
2012: $39.210 million
2011: $38.683 million
2010: $37.229 million
2009: $37.554 million
2008: $41.226 million
2007: $37.858 million
2006: $36.840 million

Fort Smith portion of 1% countywide sales tax
2013: $15.353 million
2012: $15.279 million
2011: $15.15 million
2010: $14.89 million
2009: $15.04 million
2008: $16.61 million
2007: $15.15 million
2006: $14.71 million

Five Star Votes: 
Average: 5(1 vote)

Gossage of Ozark latest area legislator to announce a re-election bid

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story by Ryan Saylor
rsaylor@thecitywire.com

Rep. Bill Gossage, R-Ozark, has announced that he will seek a second term as the representative for District in the Arkansas House later this year.

Gossage, assistant superintendent of the Ozark Public School System and the president of the Ozark Area Chamber of Commerce, said in a press release that his first term focused on education and tax policy.

“Over the past year I have fought for better education for our children and tax relief for all Arkansans. Though we’ve been successful, there is much more work to do to make Arkansas a better place to work and raise our families.”

The re-election announcement from Gossage goes on to say that he "served on the House Revenue and Taxation Committee, the Aging Children and Youth, Legislative & Military Affairs Committee and was also appointed by Speaker Carter to the State and Public School and Health Insurance Program Legislative Task Force. Gossage served as Republican Chair of the Freshman Caucus and Policy Chairman for the House Republican Caucus."

Gossage is just the latest local politician to announce a run for a House or Senate seat from the Fort Smith area. Following are a list of candidates who have announced for election later this year:

• Justin Boyd: A Republican from Fort Smith, Boyd became the first announced candidate in District 77, currently represented by term-limited Rep. Stephanie Malone, R-Fort Smith.

In his campaign announcement, Boyd made clear that his background in the medical field was going to become a large part of his campaign.

"Without a doubt, (health care) is (an) important issue to me and one I am passionate about," he said. "But running for this office means I can make positive changes in all areas for my family and other families in Arkansas. Being a State Representative isn't a license for mediocrity. (It) means you get in and roll your sleeves up and make things work for your neighbors."

Sebastian County Justice of the Peace Danny Aldridge, R-Fort Smith, has been rumored to be exploring a run for the seat but confirmed Monday (Feb. 3) that he would not seek the seat.

• Rep. Charlene Fite: The freshman Republican from Van Buren is so far the only announced candidate for her District 80 seat, which encompasses parts of western Crawford and Washington Counties.

In announcing her re-election bid, Fite said her short tenure had already resulted in 11 sponsored bills, all passing both the House and Senate.

"Bills sponsored by Fite include one establishing civil penalties for the crime of stalking; an act providing for licensed qualified interpreters for individuals who are deaf; an act strengthening sentence enhancement for domestic battering; an act concerning the required child maltreatment central registry checks for adoption; an act to provide for extended post-conviction no contact orders for certain criminal offenses; and an act to amend the child maltreatment act."

• Rep. Justin Harris: A representative whose district runs from West Fork to Alma, Harris confirmed July 2013 that he would not run for any higher office, instead saying that he felt most effective right where he was.

"I think there's too much at stake in the upcoming legislative session …to look at the private option, to see what we've got to look at for every year it's going to have to be approved. And look at the triggers, and just to see what's going to have to be approved."

The often outspoken Republican will be seeking his third and last term in the Arkansas House of Representatives.

• Sen. Bruce Holland and Rep. Terry Rice: When Sen. Bruce Holland, a Greenwood Republican, ran for re-election to the state senate in 2012, he got a run for his money from then-Rep. Rick Green, R-Van Buren, with the race quickly turning dirty. In the end, Holland came out on top even after Green endorsed Holland's Democratic challenger, Rep. Tracy Pennartz of Fort Smith.

In this latest primary matchup, Rep. Terry Rice, R-Waldron, said he would run for Holland's District 9 seat in order to uphold the values that have guided him as a state representative, he said.

"As a business owner, I understand the pressures of making a payroll, dealing with taxes and excessive government regulations, along with the additional costs passed on to the consumers who already live on a tight budget. I live by the conservative values instilled in me by my father and grandfather — faith, family, hard work, and mature judgment."

For his part, Holland has said he and Rice are friends and he was caught off guard.

• Rep. George McGill: The Fort Smith Democrat (District 78) said he would seek a second term in the Arkansas House back in November 2013, highlighting several different accomplishments in his announcement, including assistance in securing more than $1 million for the U.S. Marshals Museum. McGill also pointed to his leadership in "protecting funding for higher education throughout the state" and having the Arkansas Economic Development Team visit Fort Smith.

• Matt Pitsch: The Republican business owner is making his second run for the District 76 seat, hoping to succeed the man he challenged to a primary in 2012.

Pitsch, who lost that year's primary to Rep. Denny Altes, R-Fort Smith, a term-limited establishment of the Sebastian County Republican Party, touted himself as a fiscal conservative focused on economic development when he announced for this year's run.

Five Star Votes: 
Average: 5(2 votes)

A greener Wal-Mart is a slow work in progress

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story by Kim Souza
ksouza@thecitywire.com

Wal-Mart has plenty of fans and critics when it comes to the retailer’s sustainability initiatives. When former CEO Lee Scott boldly announced the retailer’s sustainability platform eight years ago, there were doubters that Wal-Mart would stay the course.

While the journey to a Green Wal-Mart is a long one, there is some progress being made. In fiscal 2013, the retailer said its bottom line benefited $150 million from sustainability initiatives, such as solar and wind energy projects, fuel cell installations and its zero waste program. This was on top of $231 million it saved in 2012 from waste reduction and recycling.

Katie Ware, spokeswoman for the Environmental Defense Fund’s corporate partnership program, said there is a direct correlation between sustainable spending projects helping to boost bottom lines profits over time.

“We have had a partnership with Wal-Mart for the past seven years, and have worked directly with the retailer on multiple projects: developing the sustainability index that it now uses with its suppliers; reducing harmful chemicals in products sold; and optimizing fertilizer use among the agricultural farms that supply produce and other food items,” Ware said in a phone interview.

Wal-Mart is an active member of the Green Power Partnership with with the Environmental Protection Agency. Each year the EPA ranks its Green Power partners on sustainability impact — reducing electricity usage, while also developing new renewable energy capacity generation.

Among Fortune 500 company’s Wal-Mart ranks No. 5 in terms of renewable energy used, according the list released last month. No. 1 Intel Corp. used 3.1 billion kilowatt hours, 100% of its total electricity usage. No. 2 Microsoft used 1.935 billion kilowatt hours, 80% of its total electricity usage. No. 3 Kohl’s Department Store used 1.536 billion kilowatt hours, 105% of its total electricity usage. No. 4 Whole Foods used 800.2 million kilowatt hours, 107% of its total electricity usage.

No. 5 Wal-Mart Stores used 751.4 million kilowatt hours, 4% of its total  electricity usage.

Stacy Mitchell, environmental expert with the Institute for Local Self-Reliance, said there is one glaring difference between the other top four companies and Wal-Mart.

“Just 4% of Wal-Mart’s energy used is renewable. They are quite willing to purchase renewable energy in markets where other electricity rates are already high, but don’t want to discuss core aspects of their business model that are far from efficient, such as their sprawl, land use and construction design,” Mitchell said in a phone interview.

She said another way to evaluate Wal-Mart’s professed leadership on climate is to look at its greenhouse gas emissions intensity — the volume of pollution it produces per $1 million in sales. Wal-Mart’s emissions intensity – 45 metric tons of CO2e per $1 million in sales – is higher than that of competing chains, including Costco (16 metric tons) and Target (42 metric tons), according to the Mitchell.

Costco’s emissions intensity is only about one-third of Wal-Mart’s, in part because Costco’s high-wage workforce generates more sales per square foot and therefore uses less energy to produce the same revenue.

Mitchell said Wal-Mart has received loads of media attention for sustainability efforts when it’s the suppliers doing most of the heavy lifting. But not everyone sees it that way.

EXPONENTIAL EFFECT
Ware said one of the reasons EDF has made it a point to work with Wal-Mart on sustainability goals is because of the exponential effect which can be realized with the the Wal-Mart lever is applied.

“They are huge in terms of scale and when their suppliers – 100,000 strong – all get onboard on issues like reducing harmful chemicals throughout the supply chain, that can be a game changer,” Ware said.

Last fall Wal-Mart announced a new policy on sustainable chemistry in consumables. This was sorely needed across the industry given that some 40% of the products tested by the EDF were found to contain chemical of “concern,” Ware said.

Beginning in January 2015, Wal-Mart will require suppliers to provide online public ingredient disclosure for consumable products sold at Wal-Mart. Consumable products include commonly used items like baby lotion, cosmetics, shampoo, spray cleaners and air fresheners.

The retailer also prioritized a list of 10 chemical ingredients as its initial list of high priority chemicals that are targeted for continuous reduction, restriction, and elimination, using informed substitution principles. Wal-Mart said it would regularly review if additional chemicals should be prioritized. Also, Wal-Mart will begin to label its private brand cleaning products according to EPA safer product labeling program.

Ware said harnessing the massive scale of Wal-Mart's business to move hazardous chemicals out of the supply chain and off store shelves will have ripple effects across the entire industry.

No one argues that consumers today demand safer products and they are reading the labels. EDF said it pushed hard for this policy, which sets a new standard for the retail industry and sends a strong signal to suppliers that it’s time to get serious about phasing out hazardous chemicals in products. Wal-Mart’s largest supplier, Proctor & Gamble, was already onboard making a similar announcement the prior week before the retail giant.


Another area where EDF believes Wal-Mart can move the needle is working with suppliers to reduce nitrogen based fertilizers, which is responsible for nearly half of Wal-Mart’s carbon footprint in its supply chain.



Ware said the EDF has spent several years working with farmers to optimize fertilizer use on farms. Wal-Mart recently announced commitments from 15 suppliers to encourage better fertilizer use in their supply chain. These changes will touch more than 30% of the food and sales in the North America.

“That’s huge,” Ware said.

EDF estimated this agricultural initiative would save seven million metric tons of greenhouse gases, in addition to protecting water and soil quality.

Five Star Votes: 
Average: 5(2 votes)
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