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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

With the first confirmed human to human transmission of the ebola virus within the United States having been confirmed in Dallas, officials in the two state region are reviewing procedures in preparation for possible ebola cases in Arkansas and Oklahoma.

Dr. Dirk Haselow, state epidemiologist at the Arkansas Department of Health and Human Services, said Arkansas has been working on preparedness since before the first diagnosed case of the now-deceased Thomas Eric Duncan, who flew from Liberia to Dallas where he was the first case ever diagnosed with the virus in the U.S. He eventually died. A nurse who treated Duncan now has the first human transmission of the virus in the United States.

"The state has already been working to prepare for an outbreak of any kind for a long time. We have a preparedness and emergency response branch in our health department established shortly after 9/11," Haselow said.

Part of the infrastructure in place includes streamlined communications between hospitals, physicians and the state health department, he said.

Matt DeCample, spokesman for Arkansas Gov. Mike Beebe, said the governor was keeping abreast of the situation and was in contact with state and federal officials, though no formal cabinet meetings or emergency sessions were planned. He added that the state was prepared to take action similar to how it responds to tornadoes and other natural disasters should the need arise.

"I think that as the administration, we have the ability to coordinate state resources as needed with anything. Depending on the specific circumstances, especially having been (in office) as long as we have, we can get people up and moving pretty fast for whatever assistance may be needed whether response, education, coordinating or advising on protocol.”

DeCample noted that this was not the first health scare the state has prepared for during Beebe's nearly eight years in office, giving the state practice for this potential situation.

In Oklahoma, Gov. Mary Fallin held a meeting of officials from mayors of the state's largest cities to cabinet officials Monday (Oct. 13), according to Press Secretary Michael McNutt.

"Governor Mary Fallin called together state agency heads and representatives from health groups and from Tulsa and Oklahoma City on Monday to discuss ongoing preparations for a potential Ebola threat," he said. "Oklahoma health officials said there are no cases of Ebola virus infections in the state -- but that emergency response plans are in place in case a person is diagnosed with the disease. Secretary of Health and Human Services Terry Cline said the governor and others have been discussing the Ebola threat for the past couple months.”

He said much like Arkansas, the state is in constant contact with hospitals even before the governor's Monday meeting of more than 40 officials at her state capitol office.

"On July 29, the Oklahoma Department of Health sent its first health alert on Ebola to about 3,200 health officials in the state, including about 1,700 health care providers. … Those attending included Craig Jones, president of the Oklahoma Hospital Association, Ken King, executive director of the Oklahoma State Medical Association, State Epidemiologist Kristy Bradley, State Veterinarian Rod Hall, Tulsa Mayor Dewey Bartlett and Jim Couch, Oklahoma City’s city manager.”

Regional hospitals indicated to The City Wire that they are following CDC and state-issued guidance on how to deal with a potential ebola patient.

Laura Keep, a spokesman for Mercy, said the health system's hospitals in the region are taking extra precautions to keep staff and patients safe.

"(We) do have patient isolation rooms (at Mercy hospitals in Fort Smith and Rogers). Yes, we are following the guidelines from the state health department and the Centers for Disease Control and Prevention (CDC). Mercy facilities across Arkansas, Kansas, Missouri and Oklahoma are taking every precaution in evaluating patients for possible Ebola Virus Disease.

"Patients are being screened upon arrival for symptoms and questioned about travel to West Africa and contact with people who have been to West Africa," Keep continued. "Mercy co-workers are undergoing continuing education regarding the disease including how to identify patients at risk and precautions necessary if there is a patient with possible virus symptoms.”

Donna Bragg, director of marketing and communications at Sparks Health System in Fort Smith and Summit Medical Center in Van Buren, said even though its doctors believe it is highly unlikely ebola will make its way to the Fort Smith region, the hospital is prepared to follow CDC guidance. Patricia Driscoll, director of business development and marketing with Northwest Health System in Springdale, offered a similar assessment. Both hospital systems are owned by Franklin, Tenn.-based Community Health Systems.

The statement from both hospitals noted that they are “dedicated to providing patients with high quality care in a safe environment. Although the risk is low, if a patient exhibits symptoms of Ebola, we are prepared to follow infection control protocols established by the Centers for Disease Control and Prevention beginning with placing the patient in isolation. Medical personnel who enter the room would be protected with gowns, masks, face shields and gloves, and nonessential staff and visitors would be restricted from entering. The suspected case would be reported to local and state health departments and the CDC and we would continue to follow their guidance.”

Haselow of Arkansas' health department said all hospitals are being advised on how to train for wearing protective garments. He said the risk can exist even after leaving a patient's quarantine if bodily fluids of any kind have come in contact with the protective outfits worn by medical staff. Ebola is only transmissible through direct contact to bodily fluids, not through the air.

To know proper procedures for removing such garments without getting any fluid on a healthcare worker and possibly risking exposure to ebola, he said hospitals have been advised to suit up doctors and nurses.

"We've learned from experiences in other hospitals, particularly Dallas, that talking about it is not enough. We need to have hospitals practice it and drill it and actually have evaluation of how well to put on and take off protective equipment. Just try putting your clothes on without ever touching the outside of them. It's hard. There are specific protocols to make sure you don't accidentally contaminate yourselves. We are advising people to practice removing protective gear after smearing it with chocolate sauce or ketchup to show how easy it is to get that on you.”

Should an ebola case be diagnosed in Arkansas, Haselow said it would largely be dealt with locally with state support.

"The (Arkansas state) health officer does have a great deal of authority, but what we'd do is hope to be involved at the front end. If a physician is concerned, isolate that person and call us to bring us up to speed and we can give them additional guidance on the level of risk and what to do with that person in terms of isolation.”

Haselow said testing for ebola can be arranged by the state through the CDC and individuals from the state, including himself, would interview the patient in person regarding travel and other risk factors that could isolate not only where the individual could have contracted ebola, but also who else may be at risk.

DeCample said while the state's role is generally coordinating response, it is not out of the question to consider the deployment of the National Guard to help deal with any potential widespread ebola outbreak should it occur in Arkansas, though again he stressed that it was not expected to become an outbreak should any cases be diagnosed.

"The state's role is generally coordinating that response. … But that's not something I could tell you with certainty one way or another. Just like every time we have a natural disaster, is it to the level of deploying the National Guard? We have a fantastic National Guard, but it always depends on the situation.”

In a departure from the often times toxic nature of political races in the 21st century, the two candidates vying for an open at-large seat on the Fort Smith Board of Directors engaged in a civil discussion of issues facing the municipality in a candidate forum held at noon Monday (Oct. 13) that could have been mistaken for a conversation between two friends instead of political opponents.

The candidates, former City Director Don Hutchings and Parks and Recreation Commission Sherry Toliver, expressed agreement in many issues but found differences, as well, including on the question of whether the city administrator form of government could be due for a change. Toliver did not come out in full support of changing the form of local governance, but she admitted that "something is missing" in the current government.

"A lot of people are dissatisfied with it. I've heard rumblings that it should be changed, even so much so that some people want to get a petition going (that would put a change in government to a vote) to make that happen. I'm not sure what the alternative could be. That would require some study on my part, but the city mayor, administrator and the director form of government - right now something is lacking, something is missing and that's why I'm running for city director.”

Hutchings took a different approach and said voters last century had already made their voices heard on the form of government Fort Smith should operate under.

"The city administrator form of government is often not perfect, it needs some improvement. But the citizens voted to do this and I think there's a great form of representation of these city directors – three at large and the four ward directors. And then having an elected mayor and having an administrator who is good at the business world. … It could be improved, but I would like to stick with what we have now.”

The two also addressed the issue of the police and fire pension contribution fund, which The City Wire reported last week could go broke as early as 2019 based on projections by the city of Fort Smith's finance department. The problem should have been addressed when city leaders were first made aware of the funding issues, Toliver said.

"The budget is a big issue right now. … We've all read about the police pension funds and how it's going to be no money there in 2019. Twenty years ago or so, whenever the budget was figured, they didn't look at this very closely. In hindsight, we know that something should have been done differently and now we're paying the price. So it's going to have to be looked at quickly," she said, adding that the problem will have to be resolved for not only current retirees but those who will draw from the pensions in later decades.

With work on the 2015 budget already underway, Toliver said it was time to make the pension funding and police pay raises a priority instead of waiting. Hutchings said he was nervous, but would do whatever it takes to ensure money is there to meet obligations even though he recounted years of budget cuts already undergone by city departments during his previous stint on the Board.

"Police and firefighters are nervous right now. And looking at the city budget, we're nervous. Will there be enough money when that day comes? And I know Sherry feels the same way. Whatever it takes. They deserve it, they've got to have it and I believe that it will happen when they get their pension and retirement funds.

Both candidates were asked how they would make controversial decisions that saw citizens nearly evenly split on a given issue. Hutchings said he knows he "won't please everyone," but: ”It's a very strong philosophy of mine to find out what the citizens want and it's majority rules. That's the great Democracy that we have in America. So we have sat down and listened to both sides of many issues and we really are blessed in this community to have so much unity, but everyone once in a while there's contention.”

Toliver had a decidedly different take and said many groups of citizens are left out of the decision making process in Fort Smith.

"We hear from a certain segment of people and whole groups of people are left out. And when they feel not included, they don't come. You have low voter turnout, you have low voter participation in public meetings. That's because the people don't feel like their voices are being heard. And so this is what needs to be corrected, when you study and issue and make an informed decision, then you should be able to stick with you decision no matter if two or three people might disagree with you.”

Hutchings and Toliver are running for the only contested Board seat, at-large position seven which is being vacated by City Director Philip Merry. Early voting begins next week, with the non-partisan general election for the seat taking place Nov. 4.

Investors of J.B. Hunt Transport Services enjoyed a 5.5% gain in their share value Tuesday (Oct. 14) in active trading on the heels of the logistics giant reporting stellar third quarter results even with challenges within the industry.

The stock price rallied to $75.22, up $3.92 per share before noon Tuesday as the major market indices also logged big gains, led by lower oil prices helping transport stocks.

Lowell-based J.B. Hunt pocketed income of $102.41 million in the quarter ending Sept. 30. Profits rose 14% from $89.5 million posted in the prior year period. That equated to 87 cents per share, a 16% gain over the 75 cents returned a year ago and 3 cents better than Wall Street expected.
 
It wasn’t just bottom line profits that propelled Hunt higher. The diversified carrier also exceeded top line predictions posting revenue of $1.6 billion, compared to $1.44 billion a year ago. Analysts polled by Thomson Reuters expected revenue of $1.59 billion in the quarter.

Operating income for the quarter totaled $172 million versus $151 million for the third quarter 2013.

Hunt officials attributed results to higher rates and increased load volume in three of its four operating segments. The company also cited higher operating costs related to driver recruitment, higher pay for third party drivers, increases in mileage pay, rising equipment costs and escalating insurance and workers compensation expense.

Interest expense in the quarter increased from a year ago due to higher debt levels primarily from increased net capital expenditures.

The Street.com analysts see some important positives in J.B. Hunt which they believe will out weight perceived weaknesses in the sector, which is why they give the stock a “buy” rating.

“The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, growth in earnings per share, good cash flow from operations and increase in net income. We feel these strengths outweigh the fact that the company shows low profit margins,” Street.com analysts note.

PROFIT BY SEGMENT
• Intermodal
Intermodal — rail via truck — revenue totaled $963.56 million in the recent quarter, up 8% from a year ago. Operating income totaled $125 million, a 6% gain year-over-year. This important segment for Hunt is 60% of the company’s total revenue and 73% of its operating income.

Load growth in this segment rose 8% in the quarter amid a challenging environment for rail services and limited dray fleet capacity. Much of the growth was in the Eastern network, Revenue per load was flat.

Slow train speeds and the shortage in dray fleet capacity continues to reduce network efficiency and reduces margins in this segment.

• Dedicated Contract Services
Dedicated Contract Services saw its segment revenue rise 13% to $361 million in the quarter. Net operating income was $34.3 million, up 17% from a year ago. This segment comprises 12% of the company revenue and 20% of operating income. Productivity (revenue per truck per week) increased by approximately 4% compared to 2013 due to increased customer demand at accounts open longer than a year and rate increases implemented during the quarter. 

An additional 538 revenue producing trucks were in the fleet by the end of the quarter compared to the prior year primarily reflecting new contracts in this and prior periods.

• Integrated Capacity Solutions
The fast growing segment with Hunt’s portfolio is the Integrated Capacity Solutions, or brokerage division. This segment grew revenue by 35% to $185.13 million in the quarter, and operating income rose to $8.4 million, up 197% year-over-year. This segment accounted for 12% of the company revenue and 5% of the operating income in the recent quarter.

The revenue growth was attributed to a 24% increase in load volume and a 9% gain in revenue per load. Revenue grew faster than volumes primarily due to freight mix changes driven from customer demand. Contractual business was approximately 64% of total load volume but only 58% of total revenue in the current quarter compared to 64% of total volume and 61% of total revenue in third quarter 2013. The company said spot load demand is also strong.

Operating income gains relate to a 3% gain in gross margins thanks to customer rate increases in the contract business. Personnel costs also increased as the company builds out its branch network. Total branches at the end of the quarter grew to 28. ICS’s carrier base increased 11% and the employee count increased 18% compared to third quarter 2013.

• Trucking division
The laggard segment for Hunt continues to be its truckload division, now under new management. The truckload segment posted a 1% dip in revenue to $95.7 million in the quarter linked to a 6% reduction in fleet size. This segment comprises 6% of the company’s overall revenue and 2% of its operating income. The operating income for the segment totaled $4.33 million, up 569% year-over-year.

Rates per mile rose 10%, but the average length of haul was 3% shorter. The company said it’s working to create a more balanced network and it raised rates 6% on average in this segment. At the end of the quarter Hunt had 1,843 tractors, down from 1,951 a year ago.

Across each of the segments Hunt noted higher costs due to driver training, shortage of drivers, insurance rate increases and higher equipment charges.

BALANCE SHEET
Hunt had $837 million in outstanding debt at the end of the quarter. Debt rose from $687 million a year ago.

The company said its capital expenditures for the nine months of this year totaled $479 million compared to $334 million for the same period of 2013. Hunt also continues to hold a cash position of $5.9 million at the end of the period.

There were no share buybacks in the recent quarter as the company continues to focus on investing in its core businesses. There is approximately $263 million remaining under the company’s share repurchase authorization.

A lawsuit expected to be filed earlier this month by the Department of Justice against the city of Fort Smith over Clean Water Act violations has not yet been filed thanks to an effort by Arkansas Attorney General Dustin McDaniel to resolve the issue outside the court.

On Oct. 2, Fort Smith officials held a press conference to announce the sudden end of negotiations between the city and the federal Environmental Protection Agency and the Department of Justice. City officials were notified Sept. 24 by the DOJ that negotiations were over and they were “considering” a lawsuit.

Negotiations, which have lasted more than eight years, center on the city’s wet weather water and sewer system. The city was placed under an administrative order in 1993 for violations of the federal Clean Water Act. Since that time, city officials say they have invested more than $201.2 million improving the city's wet weather system, and another $150 million or more could be poured into improvements before the city atones for violations of the federal Clean Water Act – bringing the grand total for compliance with the law to $351.2 million.

Federal legal action would likely have required McDaniel to sign on as a plaintiff against the city.

Aaron Sadler, spokesman for McDaniel, confirmed Oct. 10 that the AG is working to avoid litigation.

“The Attorney General's Office is working closely with all parties to attempt to resolve this matter. Because of the sensitivity of the issue, the AG doesn't have any comment,” Sadler noted.

Fort Smith officials also declined on Oct. 13 to comment on why nothing has been filed on a lawsuit they expected to be filed earlier this month.

On Tuesday (Oct. 14), Sadler said McDaniel is hoping to “bring the parties back to the negotiating table,” and there is no timeline on the process.

Gosack said in early October that the lawsuit would likely be the result of federal officials wanting the city to do more work in a shorter time period.

"We think the federal government was concerned on a couple of points. One is the amount of work that was going to be done by the city of Fort Smith. And our concern was the affordability issue and the community's ability to pay."

The city has said more than 70% of the chronic problems have been addressed and only nine wet weather issues were noted in the previous year. The city also said it has reduced overflows during wet weather situations by 79% from 2007 to 2013.

To pay for more necessary work, the city has said it may have to raise rates on more than 30,500 sewer customers, with those increases possible in 2015.

Real estate markets are often linked to economic performance but a report from Irvine, Calif.,-based RealtyTrac suggests that housing market turnarounds also favor incumbents in most of the eight hotly contested Senate races across the country. However, that may not be the case in Arkansas or Kansas.

RealtyTrac analyzed the health of local markets in more than 1,500 counties nationwide compared to two years ago. The metrics examined were housing affordability, unemployment rates, foreclosure starts and median home prices. Data found that 52% of the counties were deemed “Better Off” than two years ago, while 11% were “Worse Off” and 36% were categorized as a “Toss Up.”

“The housing market recovery has truly taken hold in about half of the country, but the recovery is weak or experiencing a relapse in the other half,” said Daren Blomquist, vice president of RealtyTrac. “Whether because of good government policy, sheer luck or otherwise, the majority of county housing markets in six of the eight states with close U.S. Senate races are better off than they were two years ago. This should favor the incumbent, or the incumbent’s party, all else being equal — which of course we know it is not. The only exceptions were Iowa and Alaska, where the majority of county housing markets were classified as toss-ups compared with two years ago.”

RealtyTrac said Arkansas’ housing market favors Democratic incumbent U.S. Sen. Mark Pryor. Of the nine counties in Arkansas with sufficient housing data to score, eight were categorized as “Better Off” while one was categorized as a Toss-Up and none were categorized as Worse Off.

Arkansas’ three largest counties — Pulaski, Benton, and Washington — all had a decrease of about 1% in unemployment rates compared with two years ago. Northwest Arkansas added 5,000 jobs between 2012 and 2013. Employment in the region reached a new annual peak of 214,500 in 2013, according to the State of Region report compiled by the Center for Business and Economic Research at the University of Arkansas.

Income growth in Benton and Washington counties has grown faster than peer regions, but still lags the national average. The median household income for the region stood at $47,905 in 2013, a 5% increase over the median household income in 2012. Average wages in Northwest Arkansas increased 5% between 2012 and 2013, to $46,133, according the UA report.

In Washington County, 17% of homeowners with a mortgage are seriously underwater, while in Benton County 14% of the homes are worth less than owed. In Pulaski County it’s 12%, according to the RealtyTrac report. That said, home prices are headed in the right direction. In Washington County, median prices are up 27% between August 2012 and August 2014. In Benton County prices have risen 29% in the same two year period, according to MountData.com.

RealtyTrac notes that home affordability for those at the median income is up 5% from two years ago in the Northwest Arkansas market.

Arkansas foreclosure starts are down in all three counties compared with two years ago: 90% in Benton County, 78% in Washington County and 70% in Pulaski County, according to RealtyTrac.

Blomquist notes in the report that while the market improvements should favor two-term Democratic incumbent Pryor, Republican challenger U.S. Rep. Tom Cotton is ahead in Arkansas polls.

“Pryor is in the fight of his political life against freshman GOP challenger Tom Cotton. Democrats are making an unprecedented push on the ground to get out the vote in the Razorback State, but it might not be enough to overcome the unpopularity of a two-term Democratic president with a 31% approval rating,” Blomquist noted.

Kansas was only other contested Senate race where the housing market recovery does not favor the incumbent. In that race an independent challenger Greg Orman has a 10% lead over Republican U.S. Sen. Pat Roberts, according to Blomquist.

RealtyTrac dubbed Alaska a toss-up state where Republican challenger Dan Sullivan is out pacing the Democratic U.S. Sen. Mark Begich with a 48 to 42 margin, according to a CBS-New York Times poll.

Blomquist said Senate races in Louisiana, Iowa, Colorado, North Carolina and Georgia favor the incumbents.

A Whirlpool Corporation executive and one of its hired environmental consultants told the Fort Smith Board of Directors Tuesday (Oct. 14) that a third round of chemical oxidation treatments would commence at the end of October. The third round comes after the first two rounds that occurred in March, May and June of this year.

Company officials also updated the Board on settlement talks with homeowners.

The chemical oxidation treatments planned for later this month will occur in a section of the TCE plume known as "Area 1," near the northwest corner of the Whirlpool plant where degreasing using the potentially cancer causing chemical trichloroethylene (TCE) was used until the 1980s, according to consultant Michael Ellis, a principal with ENVIRON. The company has been hired by Whirlpool to handle its remediation of land impacted by TCE in the groundwater and soil on and near the company's shuttered south Fort Smith plant.

During the period when injections will occur, Ellis said between 12,000 and 15,000 gallons of chemical oxidation solution will be pumped into the contaminated ground in an effort to break down the TCE and hopefully return the soil and groundwater to what could be considered “normal.”

As part of the effort, Ellis noted that the company had removed 300 cubic yards of impacted soil and moved it to an off-site disposal location. In its place, the company used crushed limestone backfill "in order to enhance natural attenuation of TCE in groundwater beneath Area 1, and provide a platform for potential future activities," Ellis explained during his Board presentation.

Ellis said even though there has been a suggestion by the Board that the company do more soil removal, he said it simply was not warranted.

"For all soil removal in Area 1. As we've discussed, it won't have an impact on groundwater migrating from Ingersoll Road to the north (where a residential neighborhood sits on the TCE plume). Area 1 is further to the south and that impact is migrating to the south. This work in Area 1 does not impact the groundwater that migrated to the north.”

Removal of large amounts of soil could also put the Whirlpool structures and others in danger of damage or collapse, including an electric sub-station in the area, he said. Ellis also said that despite an assertion from ADEQ that the TCE plume could be growing, levels of TCE were decreasing in the opinion of ENVIRON.

"The TCE concentration in the plume continues to decrease. That's based upon quarterly monitoring that we've been performing. However, there are some changes in specific locations with the variability of the locations and the variability of where the plume exist. But overall, if you look at the entire groundwater plume, it's stable and we're starting to see overall decreases in the TCE concentrations.”

In all, Ellis said 202 membrane interface probes are in place to screen soil and groundwater, as well as 62 soil probes for soil and groundwater sampling and 86 monitoring wells sampled quarterly. He also said five temporary boundary wells had been installed to monitor expansion, or lack thereof, of the TCE plume. Ellis said northeast corner monitoring was also taking place near the Boys and Girls Club of Fort Smith, where TCE concentrations have been above acceptable levels.

Jeff Noel, vice president of public relations for Whirlpool, told The City Wire that monitoring was taking place in the area, which includes a road project set to begin that would add lanes to Ingersoll Road. The challenge in doing monitoring, he said, is ADEQ has requested the monitors be installed where the road work will be taking place.

"Where they are talking about, no (monitoring will be taking place) until maybe is there another location that achieves the same end. But scientifically, we can get the same data with dispersement of the other wells. So it's not as if there's not data," he said, adding that the city was cooperative with the testing in the construction zone, but said it is just a challenge to achieve the goals of ADEQ while the city is trying to do a major construction project in the area.

Additional monitoring will take place through the use of vapor monitoring, Noel said, with Whirlpool offering some residents $10,000 to allow vapor monitors to be installed on their property. He added that "no release of any claims against Whirlpool will be required.”

The testing would include indoor air monitoring, slab and crawl space monitoring, as well as soil monitoring just above the groundwater level.

Noel also provided further details of a proposed settlement offered to property owners in a class action lawsuit, noting that the company was offering to pay 100% of the devaluation amount for properties impacted by the TCE plume, plus 33% of that total and all costs associated with achieving the settlement.

In return, property owners would release Whirlpool of all property claims and allow for reasonable testing and monitoring on property and allow a deed restriction on drilling to be placed on impacted properties. Noel said it would allow property owners to reclaim as much as 75.7% of the original tax appraised value of the properties before Sebastian County Tax Assessor Becky Yandell lowered property values in the TCE plume. According to information Noel said was compiled by Whirlpool, typical TCE settlements only recover 20% of property values.

The settlement is under consideration U.S. District Judge P.K. Holmes III of the U.S. Western District Court of Arkansas in Fort Smith.

U.S. Sen. Mark Pryor, D-Ark., and U.S. Rep. Tom Cotton, R-Dardanelle, and who face each other in the U.S. Senate race had nothing significant new to provide Arkansas voters who may yet be undecided on a race that some national pundits say could be critical to which party controls the U.S. Senate.

However, the likely line of the night was related to a definition the definition of a middle class Arkansan. More on that later in the story.

The first and only live televised debate took place at the University of Arkansas’ Global Campus in Fayetteville in front of more than 300 “invited guests” and hosted by the Fayetteville Chamber of Commerce. Agreed upon topics were education, economic development

Pryor was able to use almost each response and rebuttal to tag Cotton as a tool for “out-of-state billionaires.” Pryor said the billionaires “have bought” a candidate who will cut important social programs like Medicare, Social Security and Food Stamps in order to deliver tax cuts to the billionaires.

“I listen to you and he listens to the billionaires,” Pryor said of Cotton.

Likewise, Cotton used almost each response and rebuttal to tag Pryor as being in lockstep with President Barack Obama, often beginning an answer with “Mark Pryor and Barack Obama … .” Cotton, who announced during the debate that he and his new wife are expecting a baby, said the policies of President Obama are on the Arkansas ballot.

“A vote for Mark Pryor is a vote for Barack Obama,” Cotton said, adding that Pryor is a “rubber stamp for Barack Obama’s weakness” in foreign affairs.

To be fair, the fight is drawn along national lines, with the Pryor-Cotton matchup one of eight U.S. Senate races closely watched in the top political offices in Washington, D.C.

The Pryor-Cotton match was close through the summer in various polls, but in recent weeks the polling indicates a shift favorable to Cotton. Real Clear Politics noted Oct. 7 that “Mark Pryor enters the home stretch clearly behind Rep. Tom Cotton.” A September 29 note from Real Clear Politics suggested that Pryor “is in deep trouble.”

“Two months before the election, Pryor still seems to be stuck at 43 percent. There's still plenty of room for him to win this race, but he remains the most vulnerable incumbent,” noted Real Clear Politics.

Erik Dorey, deputy campaign manager for the Pryor campaign, did not dispute the race was close, but said Pryor is working each day to connect with voters.

“It us anyone’s game at this point. … When Mark gets out around the state and talks to Arkansans, the reaction is universally heartwarming,” Dorey said, adding that “Arkansans aren’t entirely as clueless as Tom Cotton thinks they are.”

As to the issues, support and solvency for social programs, jobs and healthcare were the dominant topics.

Responding to a questions about how to “define” the middle class, Pryor said he wants to grow the economy by growing the middle class, but Cotton believes he can build up the economy by supporting billionaires.

Cotton responded by saying Obamacare and other regulatory policies supported by Obama and Pryor have hurt the middle class and small businesses.

“The way we stop it (loss of jobs in Arkansas) is to get government out of the private sector,” Cotton said.

After being reminded by debate moderator Roby Brock that the question was about providing a definition of the middle class, Pryor said a middle class income is around $200,000. That amount, which is considerably more than the eventually median income of just over $40,000, would later blow up social media.

Pryor would say that Congress and state leaders must change tax and other policies to incentivize returning manufacturing jobs to the U.S.

“All the economists say the time is now,” Pryor said of pursuing manufacturing jobs.

Cotton stuck to his message that shrinking the size of government is the best way to help the middle class. He also zinged Pryor on the middle class number.

“Pryor must be the one hanging out with out of state billionaires if he thinks $200,000 is the middle class,” Cotton said.

Following are other comments from the debate.

Pryor said Wal-Mart employees who lost their insurance now have an option because Arkansas Republicans and Democrats worked to create the Private Option system. Pryor said Obamacare is not perfect and he would like to make changes to the law but would not want “to go back to those days” when insurance companies were in charge of the insurance system.

Cotton said “failures” of Obamacare are “intended consequences” to result in “government healthcare.” For the Arkansans who are losing their insurance, Cotton reminded the crowd that “Mark Pyor and Barack Obama took that (insurance) away from them.”

Pryor responded by by noting that Cotton does not have a solution for a workable healthcare solution. For Arkansans in a “high-risk pool,” Pryor said Cotton’s plans are “like throwing sick people to the wolves.”

In closing, Cotton said President Obama’s policies are on the ballot in Arkansas, and said if voters are “satisfied with the status quo, then I’m not your guy.”

Following numerous responses in which Cotton tied Pryor to Obama, Pryor said to the audience that Cotton is “running against one man, but I’m running for three million Arkansans.”

Greg Foran has had an “unvarnished” view of store operations at Walmart U.S., and he said restoring balance between inventory and sales is needed to improve lackluster margins. He admitted that such balance will take a lot of work, and it won’t be easy.

Foran is just 100 days into his job as the new Walmart U.S. CEO. The New Zealander and retail veteran replaced Bill Simon with an edict from Wal-Mart Stores CEO Doug McMillon to grow top line sales at Walmart U.S.

Foran has spent most of the last three months in the stores surveying the army of 1.2 million employees on their ideas for how the laggard segment can improve store performance, grow top line sales while staying focused on the changing needs of consumers.

Walmart U.S. has reported flat to negative same-store sales for the past several quarters. Foran said the problem can be fixed by better store operations as well as home office and logistics dialing into the details which is the heart and secret sauce for retail. He said past cuts did more harm than good.

‘A LOT OF WORK TO DO’
“We have cut muscle instead of fat. I have gotten some 3,000 emails around 260 a day from my teams in the field. I can sense new energy because they have a voice they want to share and I have learned tons,” Foran said. “It’s been an unvarnished appraisal, a diagnostic review of our business from Springfield to Dallas, Atlanta to Grand Rapids and Detroit this past Sunday.”

An operator at heart, Foran said began his career in retail at age 15 as a night stocker and managed his first store by 19.

“Retail is detail. ... We’ve got a lot of work to do, one store at a time,” he added.

One of the first moves by Foran was setting the meeting cadence which is he said critical in retail. He said it goes back to the days of Sam Walton, with operational management meetings on Friday to make sure they are ready to maximize sales on Saturday and Sunday which will be reviewed on Monday.

“It reminds us each week about the urgency of every weekend. Sales have got to come up and traffic must also improve,” Foran said.

THE INVENTORY PROBLEM
In the first half of this year net sales were up 2.3% or $3.2 billion, but operating income fell 3.3% He said the focus has been on improving store standards and service offerings. An area he intends to analyze is the 5% increase in inventory levels.

“Inventory has been growing at twice the rate of sales. ... In some cases stores may  only have room for 80 items and we are sending them 120. More stock is coming in than what is going out. We are over-SKU’d in some cases,” Foran said. “Simplifying the inventory management process actions were started this year but it has continued to grow. I have a cross-functional team working on it.”

A backroom manager in mid-Tennessee told The City Wire in June that his store was continually over-shipped on every thing from fishing poles to school supplies. He said the problem was growing worse in each of the past three years and negatively impacting that store’s profitability. Foran said Wednesday that these are the kinds of issues he has witnessed in his 100-day cross country store tour.

‘FRESH’ CLUTTER
Duncan Mac Naughton, chief merchandising officer for Walmart U.S., said possible port issues on the West Coast caused retailers to order earlier and store longer, which is requiring additional containers. He said new stores are responsible for about half of the overall increase. Foran believes inventory can be managed better. He said there is not enough enough discipline involved in accurately counting the inventory.

“There are opportunities upstream and downstream – it takes time, it’s not easy but we do know how to do it,” Foran said.

Veteran store management has responded to Foran’s call for advice and he has put together about 40 tasks including work in competitive pricing, more private label offerings, and returning store labor where it’s needed and trimming areas where it’s not.

“We can do more. On my tour it looks like we might be getting somewhat cluttered in ‘fresh.’ There is great opportunity here, but the last thing a shopper wants to do is trip over two pallets of Coca Cola or a display of Halloween candy in order to get to the fresh apples. We have done a pretty good job with fruit, but we need to work on our vegetables. ... I think we may be carrying one, two or three days too much product in produce,” Foran said.

He said competencies in “fresh” take time to develop, something he intends to do along with better meat and deli offerings. Wal-Mart said its most loyal customer only spends 40% of their fresh grocery budget there each week, and that’s an opportunity store officials are exploring.

Mac Naughton said the retailer is resurrecting the “Would I buy it” training program around selecting fresh produce. They are also working with suppliers to get fresher products with longer shelf lives in the stores at competitive prices with a “Guaranteed by me” label.

“We have to do a better job with customer service which is why we are adding 60,000 seasonal workers this holiday,” said Gisel Ruiz, chief operating officer for Walmart U.S.

She said in-stock issues continue to be high on the list for the retailer. She said in recent months, 20 million man hours have been repurposed to stock products after the company simplified the procedures this spring.

‘GOLDEN NUGGETS’
Foran acknowledged that prior efforts had barely moved the needle in reducing in-stocks across the company. He said in-stock issues, mark downs, inventory damages, outlier stores and merchandise returns were all weighing on margins. 

When asked how he will reverse the trend, Foran said the answer lies in lots of little things done better in stores all across the nation. He said his tour across the country also unveiled several “golden nuggets” within the business, namely in the expertise he intends to tap out in the trenches.

“I don’t underestimate for one moment that army that is Walmart. We must get them to march in sync,” Foran said. “The supercenter, well managed and well run, is a great growth driver.”

Ruiz said about half of the 500 discount stores evaluated over the past year have plans for updates or expansions. 

Wal-Mart also talked about the upcoming holiday season but deferred any sales guidance until the November earnings call. That said, the retailer did update its overall fiscal 2015 sales guidance by trimming the expected gains to between 2% and 3% from the 3% to 5% forecast in October 2013.

Topline revenue is forecast to grow between 2.5% and 3.5% this year and next from the $483 billion recorded last year. Operating income is expected to remain flat at $28 billion through next year. Walmart U.S. is roughly 58% of the total sales for the global retailer. Last year those sales totaled $279 billion, with a 3% gain estimated this year.

The city of Fort Smith may have seen a victory last week with the dismissal of a lawsuit alleging violations of the Freedom of Information Act, but the issue for the city is not over as it seeks legislative action to clarify sections of the Arkansas law the city finds ambiguous.

A letter dated Aug. 26 from Fort Smith City Administrator Ray Gosack to Arkansas Attorney General Dustin McDaniel, Rep. Andrea Lea of the State Agencies & Governmental Affairs Committee, Executive Director Tom Larimer of the Arkansas Press Association and Executive Director Don Zimmerman of the Arkansas Municipal League outlines the city's request for clarification through legislative action.

Gosack noted a series of lawsuits leveled against the city regarding violations of the state law regarding open meetings under the FOIA, with some having been successful while others were not.

Gosack’s letter specifically mentioned the case of Harris vs. City of Fort Smith, in which Fort Smith resident David Harris' lawsuit, on an appeal to the Arkansas Supreme Court, said a meeting occurred out of public view. According to the city administrator, the court determined "ten years ago that a public meeting occurred when a non board member contacted the seven members of the Fort Smith Board of Directors one-on-one serially where the 'purpose of the one-on-one meetings was to obtain the decision of the board as a whole' on a substantive issue."

Since then, a variety of other lawsuits have followed in which Gosack said conflicting opinions had been issued and said a lot of the issue rests in the lack of a meeting definition within the FOIA law passed in the 1960s.

"More than 30 other states, plus the District of Columbia, include in their Sunshine Laws a clear and distinct definition for the word 'meeting.' To date, the Arkansas General Assembly has failed to provide that definition and, as a consequence, the Arkansas Supreme Court, on a case-by-base basis, has determined whether a specific set of facts presented to it constitutes a 'meeting' under the FOIA."

He said as a result, the state Supreme Court is having to decide what constitutes a meeting on a "case-by-case basis." Gosack also said the definition of a meeting should not change based on "ever changing sets of facts and ensuing court decisions."

"… The Arkansas Freedom of Information Act has provided a great public service and benefit to the people of Arkansas. However, the uncertainty created by the lack of definition of 'meeting' poses a significant constitutional risk to the public benefit of the FOIA's requirement of open public meetings," Gosack wrote.

One of those addressed in the letter, Rep. Andrea Lea, R-Russellville, said she could not recall specific details of the letter but said she has always erred on the side of transparency during her three terms in the Arkansas House of Representatives. Lea, who is the Republican nominee for Arkansas state auditor, did not recall the matter of Fort Smith's request for an update to the Arkansas Freedom of Information Act being addressed with other members of the governmental affairs committee who will continue service in the General Assembly in 2015 and said she had referred the letter to local Fort Smith legislators.

Sen. Jake Files, R-Fort Smith, said he was familiar with Fort Smith's previous lawsuits alleging FOIA violations and said questions regarding FOIA are common during each legislative session.

"Each session, there are different things that come up as it relates to FOIA," he said. "What I would like to see is more transparency and more openness as it relates to local governments across the (state)."

Files said the issue of an open and transparent government "will be considered with each request," though he did not confirm that he would pursue legislative action at the request of the city.

"I'm interested to get to the bottom of it, but (the legislature must) be careful that whatever is proposed doesn't limit the citizen's access to information."

Gosack's letter said while the city wants a firm definition of a meeting, "(the) City of Fort Smith does not have a predetermined position as to the full extent of the definition of public meetings ..."

"I respectfully urge that our respective offices and organizations accept the responsibility to provide leadership in addressing this issue with the Arkansas General Assembly," he added.

Home sales in the region were up double digits in September, with Crawford County posting a 13.75% improvement in sales volume over the same month in 2013 while Sebastian County posted an 18.74% gain.

Crawford County's home sales totaled $7.734 million for the month, while Sebastian County rang in at $16.47 million.

For the first three quarters of the year, Crawford County reported strong figures, as well, with $54.762 million in sales, a 30.38% jump from the same period last year when $42.002 million in sales were reported. In Sebastian County, the first three quarters of this year saw $137.191 million in volume, a 3.55% increase over the same period's sales of $132.483 million last year.

Sandra Heiner, executive director of the Crawford County Board of Realtors and the broker/owner of Turner Realty in Van Buren, said there were several factors at play in both counties.

In Sebastian County, Heiner said new home construction in Chaffee Crossing drove home sales up for the entire county while in Crawford County, Rural Development Loans were continuing to be a driving force in the local housing market.

"It is (helping," she said of the loans, noting that residents are still trying to get loans locked in before a moratorium on RDLs are set to expire in September 2015. The loan program had originally been slated to expire before U.S. Department of Agriculture Secretary Tom Vilsack imposed the moratorium for Arkansas' impacted communities, which included Van Buren and five other communities statewide.

Heiner said during the moratorium, lobbyists and locals in the real estate business would continue making the case for RDL in Van Buren.

"We keep fighting for that (in the regional USDA office) in Little Rock. The lobbyists that we have in Little Rock keep fighting for it. They keep trying to do away with it, but we've still got it. We're able to retain it (until next year)."

She said the county would continue benefitting from the RDLs even if Van Buren loses access to it, largely because of its proximity to both the Fort Smith and Northwest Arkansas metropolitan areas.

"People want to live in small towns," she said. "Van Buren is the closest to Fort Smith, but we get a lot of people that come to Crawford County to buy because of its smaller towns."

In August, Larry Stanfill, a broker with Chuck Fawcett Realty's Greenwood office said the fall and winter months typically slow down in the real estate market due to a variety of factors, such as the weather, a busy holiday season and parents not wanting to move their children during the school year.

But with Crawford and Sebastian Counties volume performing so well in September, Heiner was asked what could be behind the numbers and she said it was largely sales from the summer months still trickling into the fall.

"If they are going to move, they will be getting ready to move in August before school starts. But sometimes that rolls into September and makes it a good month. They can't sometimes close until September, though many want to move and get into a district before school starts."

She added that with many districts, including Fort Smith, having open enrollment it is becoming less and less of an issue, though.

"Many of them have an open door policy if you bring your child to school (and do not rely on school-provided transportation)."

Home Sales Data (January - September)
• Crawford County
Unit Sales
2014: 469
2013: 377

Total Sales Volume
2014: $54.762 million
2013: $42.002 million

Median Sales Price
2014: $107,000
2013: $109,900

• Sebastian County
Unit Sales
2014: 1,035
2013: 948

Total Sales Volume
2014: $137.191 million
2013: $132.483 million

Median Sales Price
2014: $114.450
2013: $116,000

The Arkansas Supreme Court unanimously upheld a lower court ruling and overturned a controversial voter ID law passed in the 2013 General Assembly.

The Republican-led legislature passed the voter ID law, which requires proof of identity to vote, that was vetoed by Gov. Mike Beebe and overridden by lawmakers along party lines.

At the time of his veto, Beebe raised constitutional concerns and said the action was “an expensive solution in search of a problem” and was “an unnecessary measure that would negatively impact one of our most precious rights as citizens.”

In striking down the law on Wednesday (Oct. 15), the state’s high court said the voter ID law, Act 595, did not pass constitutional muster because it required an “additional qualification” beyond four requirements in the state’s Constitution. Those four requirements state that “any person may vote in an election in this state who is:
(1) A citizen of the United States;
(2) A resident of the State of Arkansas;
(3) At least eighteen (18) years of age; and
(4) Lawfully registered to vote in the election.

“For approximately 150 years, this court has remained steadfast in its adherence to the strict interpretation of the requisite voter qualifications articulated in the Arkansas Constitution,” Justice Don Corbin wrote in the opinion. “[W]ith the legislature’s passage of Act 595 requiring this additional qualification, we cannot determine any ‘set of circumstances exists under which [Act 595] would be valid.’”

In a concurring opinion, Justice Courtney Goodson wrote that the voter ID law was unconstitutional because it did not receive a two-thirds vote of the state Legislature – a requirement she said was necessary to alter the constitutional provision. The law was passed in 2013 along party lines, which consisted of only 51 votes in the 100-member House of Representatives.

“Because the Act failed to obtain a two-thirds vote, it is invalid. As a consequence, it is wholly unnecessary to decide whether the Act added a new qualification to voting as prohibited by article 3. Therefore, I concur in the decision striking down the Act,” she wrote.

Arkansas Democratic and Republican leaders quickly responded to the decision.

Democratic Party of Arkansas Chairman Vincent Insalaco noted in a statement, “We are thrilled that the Republican Voter ID law was unanimously struck down as unconstitutional by the Arkansas Supreme Court. This law only made it harder for voters to exercise their most sacred right. While a thousand votes were thrown out during May’s primary when the Voter ID law was in place, every vote will be justly counted in November’s election. Today’s decision is a win for all Arkansas voters.”

Republican Party of Arkansas Chairman Doyle Webb issued this statement: “We had hoped that the Supreme Court would affirm the Voter ID Law and help restore the integrity of the ballot in Arkansas; unfortunately, the Court failed to do so. We do not anticipate that this will have any impact on Republican victories in November since the people of Arkansas now identify with the views and values of the Republican Party as reflected in the last two election cycles.”

Foreclosures are not the factor they once were in local real estate markets across the state and nation. The local rates continue to decline faster and farther than the nation as a whole.

In Benton and Washington counties there were 38 households slated for auction in the third quarter of 2014, down from 82 reported in second quarter of 2014, and 169 filed in the third quarter last year, according to Irvine, Calif.,-based RealtyTrac.

There were 86 total filings in Northwest Arkansas which includes bank-owned properties at the end of September, down 81% from 463 filings reported a year ago.

The Fort Smith metro area registered 16 local homes slated for auction in the third quarter, well below the 57 properties entering foreclosure in the year-ago period. Sebastian and Crawford counties report 38 total filings, which includes bank-owned properties at the end for the third quarter. Filings are down 24% from the second quarter. Crawford County’s total filings declined 30% from a year ago, while Sebastian County experienced a 70% reduction in that annual period.

Jim Long, a real estate agent for Crye-Leike in Bentonville, said there are 192 property listings in the MLS – Northwest Arkansas and the Fort Smith areas – considered foreclosures. Those properties range from 42 HUD properties near $100,000 to upper end homes nearing $200,000 stretched from Fort Smith to Bella Vista.

“Two years ago there were four times that number. We were getting new listings each week. That slowed to nearly nothing from the spring through August and since September we have started to see more of bank-owned listings hit the market,” Long said.

He closed a foreclosure property sale in Bentonville late last month. Long said the buyer paid list price of $112,000 for the home that was listed just seven days.

“We wrote an offer sight unseen and took it with us to the showing. This buyer said she had lost out on two other deals and she was taking no chances this time. The foreclosures are not staying on the market long, especially those that are competitively priced. We have no trouble moving these properties,” Long added.

RealtyTrac reports 317,171 U.S. properties had foreclosure filings in the third quarter. Activity is down 16% from a year ago but up 0.42 % from the previous quarter — the first quarterly increase since the third quarter of 2011. The quarterly increase in overall foreclosure activity was driven by a 2% increase in default notices, and a 7% quarterly increase in scheduled foreclosure auctions. Bank repossessions declined 12% from the previous quarter.

“September foreclosure activity was back to pre-housing bubble levels nationwide, in large part thanks to a continued slide in bank repossessions,” said Daren Blomquist, vice president at RealtyTrac. “However, a recent rise in scheduled foreclosure auctions in many markets across the country shows lenders are continuing to clean house of lingering delinquent loans. This rise in scheduled auctions foreshadows a corresponding rise in bank repossessions and auction sales to third party buyers in the coming months.”

Arkansas ranks near the bottom on the national scale (45) in total foreclosure activity in the third quarter. There were 308 homes receiving foreclosure filing in the quarter across the Natural State. The pace is down 43.78% from the second quarter and 68% lower than a year ago.

AVERTING FORECLOSURE
The Department of the Treasury reports 1 in 17 homeowners are behind on their mortgages as of Sept. 24. For that reason the government recently chose to extend the Making Home Affordable Program through Dec. 31, 2016.

Since launched in 2009, Making Home Affordable (HAMP) has helped more than 1.5 million families nationwide avert foreclosure. From those approved for modifications roughly 1 million are still active, more than 460,000 of them have been disqualified. About 35,500 of those loans have been paid off, according to the most recent report by the Treasury Department.

“As the economy continues to heal from the Great Recession, many homeowners still struggle to make their mortgage payments,” said Deputy Treasury Secretary Sarah Bloom Raskin. “The good news is that help is still available. This new public sevice campaign is our latest effort to raise awareness of the free government resources available through Making Home Affordable to assist struggling homeowners in avoiding foreclosure.”

In the recent quarter 88,250 homeowners had forebearance actions begun on their loans, that was 6% lower than the prior quarter. Modifications under the Treasury Department’s FHA and Rural Development Programs totaled 9,807 in the recent quarter. The agency said these modification programs for lower income families rose 68% from a year ago.

Freight tonnage moved along the McClellan-Kerr Arkansas River Navigation System is down 4% for the year, but a local port operator said it is not necessarily resulting in reduced business or cash flow for businesses using the river system to move goods.

Marty Shell, owner of Five Rivers Distribution in Van Buren and the operator of the Ports of Fort Smith and Van Buren, said part of the reason for the decline in freight movement along the river in an increase in transportation prices along the river.

"I can tell you that three months ago, you could take a barge of freight from Catoosa, Okla., to New Orleans for $9 per net ton," Shell said. "In 90 days, that same barge is selling for $40 to $45 a ton."

He said part of the reason for the increase in transport costs and a decline in local freight movements along the river channel is a good harvest in the northern plains, where goods are transported down the Mississippi River.

The key for ports along the northern section of the Mississippi is getting harvests and other goods moved out before the hard winter freeze sets in and barge traffic is shut down along the Mississippi. With the solid harvest, more barges have been taken off the Arkansas River and other rivers across the nation to meet demand along the upper Mississippi, Shell said.

"That has driven barge (usage) through the roof, along with rail," he said, noting that the two forms of transportation are staying busy.

With the coming freeze in the north, Shell said it was vital to get the freight moved out of the north because once the river is shut down, barges could be in place on the river for months on end. He said when that happens, it again impacts areas like Arkansas and Oklahoma that need the barges to move product to the Mississippi and down to New Orleans.

In addition to the supply and demand issue for barges, Shell also noted that locks 14 and 17 in Oklahoma were down for two weeks during the last quarter, which meant no barges were moving into or coming out of the state and negatively affecting overall tonnage for the year.

To better understand how that can drag down the year's total tonnage, Shell noted that between 300,000 and 350,000 tons of product moves up and down the Arkansas River's navigation system each week.

"That would be equivalent to 15,217 tractor trailers. That's the capacity we're taking off the roads."

But with Oklahoma closed to movements for two weeks, coupled with the barge supply and demand situation along the upper Mississippi, Shell said the numbers could remain down for some if not all of the last part of the year.

Industries down the most in terms of tonnage moved along the river include petrol products (down 45%), other chemicals (down 21%), wheat (down 19%), food/farm products (down 27%) and manufactured equipment (down 82%).

Industries posting positive tonnage rates include iron and steel (up 10%), chemical fertilizer (up 6%), sand/gravel and rock (up 12%), minerals and building supplies (up 13%) and soy beans (up 59%).

In terms of inbound movements (freight arriving from the Mississippi River), total tonnage is up 12% to 3.551 million tons, with internal freight movements up 7% to 1.963 million tons.

It is the outbound tonnage dragging down totals, though, with freight movements to the Mississippi River down 20% to only 3.129 tons compared to the same nine months of last year (January through September).

Shell reiterated that in spite of the drop in freight, local businesses are not necessarily hurting thanks to the rise in transport costs in the last three months.

"Tonnage wise, it might be down. But monetarily, we are staying busy and we have no complaints. We've been happy with 2014."

Fort Smith-based ArcBest Corp. (formerly Arkansas Best Corp.) is buying an additional 30 acres for its corporate headquarter expansion at Chaffee Crossing. The transportation holding company also announced Thursday that Roy Slagle has retired as president and CEO of ABF Freight System – the company’s largest subsidiary.

Slagle’s retirement was effective Oct. 15. He had been with the company 37 years and rose through the ranks of ABF’s sales and marketing side. Some of his early jobs with ABF Freight were in Ohio and Pennsylvania. ABF is one of the largest less-than-truckload carriers in the U.S.

In a note to employees, ArcBest President and CEO Judy McReynolds said Slagle’s retirement is “well-deserved,” and that Slagle leaves ABF positioned for success.

“After several difficult years during the great recession, lengthy negotiations to secure a new five-year labor agreement and the ongoing network optimization, ABF Freight is well-positioned to succeed in a marketplace that continues to become more competitive,” McReynolds noted in the employee note. “It’s up to all of us to execute on our goal for ABF Freight to return to historic levels of profitability and regain market share. We must ensure that it’s easy for our customers to do business with us and that we earn their trust, every day.”

Succeeding Slagle is Tim Thorne, a 24-year ABF Freight employee who moves up from the job of vice president of linehaul operations. Thorne joined ABF in 1990 after serving as a U.S. Army captain. He rose through the ranks, and in addition to overseeing linehaul operations served as the regional vice president of Operations and was based in Salt Lake City.

“Through his many experiences, Tim has become a highly regarded leader at ABF Freight with a strong customer focus and deep knowledge of our freight operations across the country,” McReynolds said in the employee note. “As we look for ways to better serve our customers, I am confident Tim will work tirelessly to ensure the ABF Freight experience exceeds their expectations.”

Thorne earned a bachelor’s degree in business administration from the University of Oklahoma and master’s degree in business administration from the University of North Alabama.

MORE PROPERTY
ArcBest has already purchased 30 acres for a planned $30 million corporate headquarters relocation at Chaffee Crossing in Fort Smith and at a specially called Fort Chaffee Redevelopment Authority meeting, the company bought an additional 30 acres of land.

Ivy Owen, executive director of the FCRA, said the 30 acres lies to the east of ArcBest's planned corporate headquarters. Ten acres of land near the McClure Amphitheater adjacent to the proposed headquarters is also under option for ArcBest, meaning the company could end up with 70 acres in Chaffee Crossing.

"In their planning for the future, they need some additional acres and looked at a couple of alternatives," he said. "They ended up with an additional 30 acres east of their planned location."

Owen said FCRA is charging $10,000 per acre for the land, or $300,000 total, the same as the original 30 acres that will house the planned ArcBest headquarters relocation.

As for other development in the area, Owen said high end housing developers have expressed interest in building subdivisions around the new headquarters. He said preliminary plans call for a walkable community with tree-lined streets and walking trails, similar to neighborhoods in and around the ArcBest headquarters on Old Greenwood Road.

He said no deals are yet in place for housing developments, just interest expressed by developers.

Groundbreaking of a new ArcBest Corp. headquarters is expected in the first quarter of 2015, with an expected opening in 2016.

EARNINGS REPORT
ArcBest is set to announce third quarter earnings on Nov. 3. The consensus of analyst estimates is earnings of 77 cents per share, well ahead of 52 cents per share in the third quarter of 2014. Total revenue for the quarter could be around $700 million, also ahead of the $623 million in the third quarter of 2014.

The company may be on its way to two consecutive years of positive financial results. Net income for the first six months of 2014 was $12.015 million, a big improvement over the $8.517 million loss during the same period in 2013. Total revenue for the first half of 2014 totaled $1.236 billion, better than the $1.097 billion during the same period of 2013.

Shares of ArcBest (NASDAQ: ARCB) closed Thursday at $32.45, up 32 cents. During the past 52 weeks the share price has ranged from a $45.68 high to a $24.06 low.

Through what have been more than $6.55 million in investments that began in 2006, Pinnacle Communications is now offering one gigabit Internet service to its about 1,000 customers in and around Lavaca. It’s the only exchange in Arkansas to offer the speed to all customers.

The service in the Sebastian County city west of Fort Smith was rolled out on Thursday (Oct. 16). Pinnacle President Keith Gibson said the service puts Lavaca on the map with much bigger cities.

“Google has rolled out 1 Gig service in Kansas City, and AT&T has plans to provide the service in Atlanta, St. Louis, Miami, Chicago and other cities,” Gibson said in a statement. “Because we made the decision several years ago to rebuild our territory with fiber to every home and business, we are now in a position, after significant investment in upgrades, to offer Gigabit service to our customers in the beautiful rural community of Lavaca.”

The Arkansas Telecommunications Association confirmed that Pinnacle is the only telecom company in Arkansas to provide the service to all customers. Some companies may offer a gigabit to some customers, but not across their entire network.

A gigabit, in terms of Internet service, allows for 1 billion bits of information to be transferred each second.

John Zeiler, general manager at Pinnacle, said the work that allowed for a gigabit of speed began in 2006 when the company invested $6 million in a “Fiber to The Home” project. The worked pushed a fiber optic cable to each home or business in the Pinnacle system.

Another $550,000 was spent on switching platforms, a new fiber drive and other components needed to better connect customers on Pinnacle’s network to the Internet.

The basic charge for phone service through Pinnacle is $20 per month. The charge for phone and the new Internet service is $199 per month.

“We have not developed Gigabit pricing without phone service due to complex pricing mechanism within the National Exchange Carriers Association (NECA) that necessitates a higher price to us for than wholesale option of Internet only,” Zeiler said in an e-mail interview with The City Wire.

Zeiler said in Arkansas the company has about 870 residential customers and about 130 business customers. He said 63% of the total customer base subscribes to their Internet service.

Gibson said in his statement that the new service also has an economic development bonus for the region.

“In a community like Lavaca, having this service provides easy and immediate access to the information and tools necessary to allow doctors, lawyers, salespersons, and others to be productive from home. It also is an exciting service opportunity for those businesses who desire satellite or remote offices, such as a local health care provider who can be connected to a main clinic or hospital.”

Telecoms like Cox Communications and CenturyLink make 1 gigabit service available in certain communities or on a case-by-case basis. For example, on Aug. 5, CenturyLink announced that 1 gigabit service was available in 16 cities. None of those cities were in Arkansas.

In its “Game of Gig: You Upgrade or You Die,” report made public in August, Gig.U said momentum is growing behind efforts to provide 1 gigabit service around the country. Gig.U began three years ago by 36 “research university communities” with a goal “to accelerate the deployment of next-generation broadband networks to enhance educational and economic development.”

The report noted that “radical” recent moves are pushing that goal toward reality.

“Through a combination of efforts, scores of American communities, including over a dozen Gig.U communities, are now deeply engaged in deploying of such networks. Many of these, like our own efforts, were initiated by communities. Now, however, in a radical change in the past 12 months, multiple service providers are initiating their own efforts.”

Asa Hutchinson (R) and Mike Ross (D) both want the state to join a lawsuit by 12 other states against proposed EPA regulations that would reduce carbon emissions by coal plants.

Hutchinson and Ross discussed that issue and others during a debate at UCA Thursday that can be viewed here. It will be televised tonight at 8 p.m. on AETN.

The proposed regulation is meant to reduce carbon emissions by 30% from 2005 levels but will require Arkansas to take a 44.5% hit – a hard pill for some to swallow in a state where SWEPCO’s new John W. Turk Jr. Power Plant has only been in operation since December 2012.

Libertarian Frank Gilbert agreed that the state should push back against the EPA regulation. Green Party nominee Joshua Drake supports the regulation as a means of combatting climate change.

The candidates debated a day after the Arkansas Supreme Court ruled unconstitutional Arkansas’ law requiring voters to present a photo ID in order to vote. Hutchinson said he was surprised and disappointed by the ruling. He said he did not believe presenting a photo ID is an unreasonable burden. The other candidates said they agreed with the ruling, with Ross explaining that the law had resulted in the disqualifying of ballots by voters who were not trying to disobey the law, including World War II veterans.

The candidates covered many of the same issues that have been discussed throughout the campaign. Ross did create a new line of attack by criticizing Hutchinson’s legal representation of James Fondren, a Defense Department official charged and ultimately convicted of giving classified information to a Chinese spy.

Ross said during the debate and in the following press conference that Hutchinson chose who to represent as an attorney. Hutchinson said he simply was defending a client, pointing to the fact that President John Adams once defended a British solder accused of murder.

Asked about the state’s Medicaid private option, Ross said he supports it, arguing that it helps people who are trying to stay off welfare. He described a meeting with a server at one of his events who said the private option had helped her obtain health insurance for the first time since her husband left her. Hutchinson, as he has throughout the campaign, said the program should be evaluated according to its costs.

“Mr. Ross is unwise whenever he says, ‘I’m for it, regardless of the costs, regardless of how many people are on there, let’s just do it,’” he said.

Hutchinson also criticized Ross for voting out of committee a health care bill that ultimately wasn’t adopted but that Hutchinson said laid the foundation for the Affordable Care Act. Ross said he voted against the ACA and was one of three Democrats later to vote to repeal it. Gilbert opposes the private option. Drake supports it but said he would have preferred simply expanding Medicaid.

Gilbert advocated the release of all nonviolent drug offenders, explaining it would make unnecessary a proposed $100 million prison. Drake likewise said nonviolent drug offenders should not be imprisoned.

Both of the two major party candidates have proposed tax cuts – Hutchinson an immediate one for middle income earners, while Ross would adopt a more phased-in approach. Hutchinson said his plan is necessary because Arkansas has higher income taxes than surrounding states. Ross said Hutchinson was advocating for what he called the “Kansas model,” where tax cuts have led to a budget shortfall and significant spending cuts.

Gilbert said by eliminating corporate welfare, no longer imprisoning nonviolent drug offenders, and making other cuts, Arkansas could eliminate all income taxes without raising others by the end of his eight years in office. Drake said taxes should be lowered on the middle class and raised on the wealthy, while the minimum wage should be raised to $10 an hour.

On immigration, Hutchinson said border security should come first followed by immigration reform. Ross said illegal immigration had increased while Hutchinson was under secretary for border and transportation security of the Department of Homeland Security, while illegal drug use had increased while Hutchinson was director of the Drug Enforcement Agency.

“Now, if Congressman Hutchinson can’t run a couple of little government agencies, I don’t know how in the world he’s going to run the state of Arkansas,” Ross said.

A Federal Reserve economist says Arkansas’ economy struggles to gain a stable foothold for solid growth years after the so-called “Great Recession,” with the Little Rock and Northwest Arkansas areas being the largest “pockets” of growth.

As Arkansas emerges from the long shadow of the first economic decline in the 21st century, a lot of questions are still being asked about the overall health of the state’s economy after the Great Recession. What is clear to many Arkansans – from business leaders, economists and politicians to every day workers and ordinary consumers – is that economic conditions are no longer the way they use to be only a few years ago. There appears to be a new normal.

Charles “Chuck” Gascon, regional economist and research support coordinator with the Federal Reserve Bank of St. Louis, recently gave his observations about the state of Arkansas’ economy in a wide-ranging interview with TalkBusiness.net. Gascon was also in Little Rock on Wednesday to give a presentation on the U.S. and Arkansas economy at the annual state economic forecast at the University of Arkansas at Little rock.

In summarizing Arkansas’ economy, Gascon gave an interesting observation about the difficulty in generalizing about the state’s economic fortunes when compared to other states. For example, when looking at the state’s GDP productivity numbers, 30% of the state’s output comes from the Little Rock area and another 20% comes from fast-growing Northwest Arkansas economy.

“So you are talking about two areas with 50 percent of your output,” he said. “When you look at statistics, you have these two real pockets of strength and growth, but everything else is significantly different.”

In his role at the Federal Reserve’s regional office in St. Louis, Gascon and his colleagues provide detailed economic data and commentary for the Eight Federal Reserve District. The most familiar commentary comes from the Regional Economist and the widely-held Beige Book report, which provides an ongoing summary of conditions in the Eight District and the 11 other districts in the Federal Reserve system.

Headquartered in St. Louis, the Eighth District has main branches in Little Rock, Louisville, Ky., and Memphis, Tenn. The district includes all of Arkansas and portions of six other states: Illinois, Indiana, Kentucky, Mississippi, Missouri and Tennessee.

TWO MAJOR TRENDS
In assessing the current recovery from what many believe is the most severe downturn since the Great Depression, Gascon says there are two major trends related to the state’s rebound from the continuing effects of the recession that ended nearly six years ago.

“First, there is the long-term trend in manufacturing when we got the shock from the loss of manufacturing jobs,” Gascon said. “But at the same time when you look at the health care sector, you see the long-term increase in this sector and it continues to add jobs after the recession.”

But unlike a lot of government critics, Gascon says the shift toward a healthcare-focused, service sector heavy economy did not just begin in Arkansas and rest of the nation in March 2010 with the passage of the Affordable Care Act, widely known as Obamacare.

He pointed to the U.S. Bureau of Labor Statistics’ current forecast on U.S. employment from 2012-2022, which projected that occupations and industries related to healthcare will add the most new jobs across the nation in the next decade.

“The main reason is the demographic shift in the aging of the population. That is the big driver,” Gascon said. “I think I am pretty sure that those job growth projections happened before the Affordable Care Act was passed.”

Still, the Federal Reserve researcher said Arkansas will have to adjust to the historic changes from a being manufacturing-based economy to one that is largely powered by service sector jobs. He said the worker needed in the healthcare field is unlike the traditional blue collar workers who drove the state’s economy over the past 50 years.

“The skill sets in those two sectors are very different. That is one reason that we have this friction in the labor market because there is a ‘mismatch’ of jobs in demand and the skills that are needed,” he said. “Then you have workers who have left their jobs in construction and manufacturing who are (retiring) early and leaving the work force.”

LABOR MARKET SHIFTS
That is also a major cause for the state’s declining labor pool, Gascon offered. That same question has been raised by several Arkansas economists over the past 12 months, including University of Arkansas economist Kathy Deck. The director of the university’s Center for Business and Economic raised a note of caution in January when state labor numbers showed more rural counties of the state were experiencing employment downturns more severe than those that took place during the recent recession.

According to the state Department of Workforce Services, nearly all of Arkansas’ workforce investment areas saw decreasing populations in 2013. That resulted in the state’s labor force and employment decreasing between 2012 and 2013, at 18,100 and 17,600 respectively.

“I know labor force participation rate in Arkansas is a little lower because of demographics – in the sense that the population is a little older than in older states. That is why there is a steeper decline here relative to the rest of the nation,” he said.

On the positive side, however, the shrinking labor market has not equated to less worker productivity. In his presentation at UALR, the Federal Reserve economist said the state’s road to recovery has been “slow, but steady” with real GDP (Gross Domestic Product) growth of 8% since 2006.

MANUFACTURING, AGRI PRODUCTIVITY
Still, when you look at detailed income statistics on the Arkansas economic output, Gascon said, the spike in productivity is driven by growth in dividends, capital gains and profits versus increases in wages and salaries.

“When we talk to manufacturers, they say they are growing at a slower pace,” said the St. Louis-based economist. “Arkansas’ total production per worker is about $10,000 since 2006. That means they have been able to increase their productivity with fewer workers.”

Gascon continued: “When you look at the broader overall health of Arkansas and the nation, it is a different story than what you see when you look at (productivity).”

In Arkansas agriculture sector, the story there has also been dissimilar to the rest of the state. In August, the U.S. Bureau of Economic Analysis reported that Arkansas’ GDP grew by 3% in the fourth quarter of 2013. However, the state’s agriculture and farming sector lost ground, falling 1.36 points in overall growth.

“I think there are a couple of things that come to mind in the terms of the performance of the agri sector. What are the yields? And how is that going to translate to prices,” Gascon said, explaining why the state’s largest industry is face strong economic headwinds. “And this year, the yields have been great and prices have come way down and that has squeezed income.”

HOUSING MARKET FACTORS
Concerning the housing market, Gascon said housing prices in the state are on the rise, but not as quickly as the rest of the nation.

“There is a steady level of growth, but we didn’t get the ‘big Boston (housing) boom’ in Arkansas on prices,” he said.

More troubling, Gascon said, is the slowdown in sales of housing stock across the state in 2013. He said real estate agents he has talked to across the Eighth District say housing inventories are low.

“That means people are having a harder time finding the (home) they are looking for,” he offered.

Gascon said the other trend he is seeing in the real estate sector in Arkansas and across the region is that first-time home buyers are slow to enter the housing market.

“Is this a permanent shift or are we more in a bubble phase where the preference for when people start their families has just moved back a few years?” he asked.

“What that means is that we are in a pause phase until this group hits that threshold, then we will see that steady movement in the housing market again,” said the Eight District economist. “But it is going to take a little time for that to play out.”

INTEREST RATE FUTURE
At the same time, the momentum in the housing market largely depends on the Federal Reserve’s supervision of the nation’s most influential economic indicator – interest rates. In September, the nation’s central bank renewed its pledge to keep interest rates near zero for a "considerable time." 

The last time the Fed raised its federal-funds short-term interest-rate target was in 2006, a year before the financial crisis in 2007 that pushed the U.S. into the Great Recession. Today, many economic experts and investors are taking bets on whether the Fed will raise interest rates at its next policy meeting in June 2015. Gascon didn’t predict what he thought the Fed may do, but offered that the nation’s monetary policy will continue on the “steady path.”

“In this economy that we are in right now, things to be pretty slow moving,” he said. “Any path you look at on expectations from the market of the Federal Reserve’s (policy) …, we are not going to see a big jump in interest rates.”

Yet, the Federal Reserve economist did say there is also an upside for the housing market when there is an expectation that interest rates will rise in the short term.

“On the arithmetic side of the equation, as mortgage rates move upward – the cost of getting a home also rises,” he said. “The other side is that Interest rate (hikes) can cause people to take action. People realize they can no longer stay on the sidelines.”

Price, assortment, experience and access is how Wal-Mart execs define what matters most to customers, and they are working to lead in each of these areas by combining physical retail expertise with ongoing innovation from Walmart.com.

“I'm excited about where retail is going and about where Wal-Mart's going to go. There are so many new ideas percolating around about what we can do with our business and today we've got more new tools to help us serve customers in a way that will surprise and delight them,” Wal-Mart CEO Doug McMillon said as he opened the retailer’s annual meeting for the investment community Oct. 15 in Rogers.

McMillon said he’s spent so much time in Silicon Valley this year that Neil Ashe, CEO of Wal-Mart Global eCommerce, has threatened to get him an apartment. McMillon said it’s the work at Walmart.com that is helping the retailer best predict customers’ needs and anticipate where their next move.

One of the most recent tools used by consumers shopping physical stores is the Savings Catcher program. Wal-Mart said 33 million receipts have been scanned and 2 million new accounts have been gleaned by Walmart.com since the app went nationwide in August. Ashe said Savings Catcher has been brand affirming and it gives shoppers a reason to come back. But it’s not just about developing tools to help shoppers save money. The work in San Bruno, Calif. – the headquarters of Walmart.com – is also about new fulfillment options and testing new delivery experiences which could be the next phase of retail shopping.

PICKUP OPTIONS
The Walmart Pickup Grocery tests in Bentonville and Denver are a collaborative effort between San Bruno and Bentonville – from the online order process via enhanced website to smart search and user friendly interface. 

Michael Bender, chief operating officer of Wal-Mart Global e-Commerce, said the retailer is putting commerce where our customer wants it to be. He said the grocery home delivery and pickup are high on the retailer’s radar, not just in the U.S. but around the world.

The new Pickup Grocery format in Bentonville is a distant cousin to the “dark stores” already common in retailer’s ASDA Grocery business in the United Kingdom. Those stores have delivered groceries to online shoppers for several years.

Stewart Samuel, analyst with IGD, said it’s interesting to watch Walmart U.S. and ASDA testing pickup sites at the same time, with each coming to the concept from different perspectives.

“ASDA has planned to add lots of pickup centers in the U.K. over the next year, these will be in tube (subway) stations and fueling sites,” he said. 

Bender said a similar pickup hub service is available in China for an 80,000 resident apartment complex. The shoppers order online and pick up at the apartment hub. Mexico also has a mature grocery home delivery service and pickup tests are also being evaluated there.

SAM’S CLUB
Sam’s Club in Bentonville is also testing a drive-thru service that allows members to shop online from club merchandise — including grocery— and select a pick up time to retrieve the order at their convenience. The Drive-thru service does not require the member to get out for their car. An attendant loads the order for the member and collects a signature at the driver’s side window.

This test at Sam’s Club is on top of the Club Pickup, which was formerly dubbed Click and Pull now available in 700 clubs in the U.S., according to Jamie Iannone, CEO of SamsClub.com.

Iannone said more seasonal holiday and weighed products have been added to the Club Pickup option. This has required members to check in at kiosk and retrieve their online orders at the front of the store. He said some changes are coming ahead of the holidays at front of-the-store pickups at Sam’s Club.

Analysts asked Wal-Mart and Sam’s Club execs last week how the retailer is balancing the productivity of workers who are now doing more of the shopping tasks for consumers. Iannone said employees picking items for consumers’ online orders are equipped with a backend navigation system that directs them to aisle and shelf locations for each product on the list. This system is also being used in the Pickup Grocery format by Wal-Mart in Bentonville and in Denver.

He said changes to the front-end collection processes and the backside of picking orders have been made possible by the ongoing work on the Sam’s Club website and mobile applications from the team in San Bruno.

CART CRASHES
Analysts also asked the retail execs how they are handling abandoned online shopping carts and if they are missing out on impulse buys when a shopper never comes into the store.

Wal-Mart said it does not ship orders until payment has been received. They give shoppers several options for paying, which includes paying in cash at the store. However, the retailer said if shoppers chose the cash payment option, the order is suspended for 24 to 48 hours to give the shopper time to go the store and make payment. Wal-Mart was very clear that it does not ship product or pull it from the shelf for fulfillment until payment has been rendered.

Ashe said many of the shoppers using site-to-store do prefer to pay for the product order in cash, but the order is not fulfilled until payment is made. In Denver, where the pickup is at the physical stores and with the Pickup at Sam’s Club, Ashe said it’s common for shoppers to enter the store and add to the physical cart 40% of the time.

Wal-Mart said online shopping for later pickup options are not a substitute for stock-up trips. Research shows that consumers appreciate retailers who will pick the products and load them because of the time savings it creates in their busy lives. That is not a replacement for browse-and-shop or treasure-hunt shopping which physical stores can provide.

STORAGE LOCKERS
Ravi Jariwala, spokesman for Walmart.com, said the new site-to-store lockers in the Pleasant Grove Road Walmart Supercenter in Rogers are an extension of the locker tests underway in the Washington D.C. stores.

He said the Rogers store is a single test site. Jariwala told The City Wire that the site-to-store delivery option for general merchandise is widely used across the retailers 4,000 stores. The process without the lockers requires the shopper to go to the Walmart.com service desk, usually located in the back of the big box store. They show a form of I.D. and give their order number and collect the merchandise, which was paid for online.

WIth the locker system, he said shoppers go to the kiosk at the locker site in the front of the store. An email or text confirmation is sent to the customer once the order is set for pickup at the store locker. The details for how to access and open the correct locker is included in the confirmation. 

The lockers themselves range in size from (3” X 3”) to (18” X 18”), with six inch and nine inch versions in between. The locker resembles a large billboard display that greets customers entering the store rather than a bank of lockers as there are no handles or numbers of identifying letters. The appropriate door opens for the customer automatically once the code information is entered in the kiosk.

PHARMACY APP
The team in San Bruno recently launched a Pharmacy App for mobile phones that works in conjunction with the in-store shopping app and Savings Catcher. Jariwala said within just a few weeks of launch the vast majority of Walmart’s pharmacies had received and filled a prescription via the app.

“Some 65% of our customers are mobile phone users. That percentage rises to 80% for shoppers under the age of 35. This app allows customers to refill a prescription by simply scanning a refill label on the prescription bottle or box. It also provides them a complete history review of their pharmacy account. They can also transfer a prescription  with this app,” Jariwala said.

The app includes a search and locate option to find the nearest Walmart Pharmacy to the user’s physical location. It also give users an opportunity to search the retailer’s list of $4 prescriptions by drug category such as cholesterol, antibiotics and allergies.

“Right now, one-third of the total online refills that have been done digitally, were done through this application. Wal-Mart customers really love it,” said Fernando Madeira president and CEO of Walmart.com.

He said Wal-Mart’s most loyal customers are shopping via multiple formats.

“The more you shop online or on mobile, the more your (physical) store shop increases as well,” Madeira added.