Glenview Capital Management has succeeded in its effort to replace the Board of Directors at Health Management Associates – the parent company of Sparks Health System in Fort Smith and Summit Medical Center in Van Buren.

Monday’s (Aug. 12) news ends several months of a bitter proxy fight between New York City-based Glenview and HMA. Glenview, which owns 14.6% of HMA shares, had initiated a “consent” vote to remove the existing board of directors at HMA. Officials with Glenview alleged that HMA board and management actions in running the company were “substandard.”

On June 25 Glenview formally requested that HMA shareholders vote for a complete overhaul of the HMA board of directors. Officials with Glenview say the problems at HMA are so deep that they believe all new Board members are required who have the experience to make changes.

HMA officials refuted the allegations, but in late June noted that the company “recently engaged Morgan Stanley to assist with its ongoing consideration of strategic alternatives and opportunities available to HMA.” Also, in recent days HMA offered Glenview and olive branch of accepting one Glenview nominee to the board. An indication that the Glenview push may succeed when closely watched Institutional Shareholders Services recommended that HMA shareholders vote for the Glenview slate of board nominees.

Glenview has, apparently, won the shareholder battle to “Revitalize HMA.” Glenview issued the following statement.

“Earlier today, Glenview submitted to the appropriate representatives of HMA documentation that a majority of shareholders have voted for the removal and replacement of the entire Board of Directors at HMA. We anticipate that the Sitting HMA Board will work with their outside advisors to ensure a prompt fiduciary review of the voting results. Led by future HMA Chairman Steven Shulman, the nominees will be in contact with the outgoing HMA Board and their advisors to ensure a smooth transition to be effected this week.”

UPDATED INFO: HMA issued this statement late Monday: “An independent inspector of election will promptly review and certify the validity of the written consents delivered to the Company. The HMA board is committed to ensuring an orderly transition if the written consents delivered by Glenview are validated by the independent inspector of election. The Company will provide further information when the review of the independent inspector of election is complete.”

The news from Glenview raises questions about the July 30 announcement that Community Health Systems plans to acquire Naples, Fla.-based HMA in a deal valued at $7.6 billion that could close in the first quarter of 2014.

Community Health officials said in this Reuters report that the board shift is not changing their plans.

"Our definitive agreement to acquire HMA remains unchanged. We look forward to working constructively with the new board of directors at HMA to complete this strategic transaction," Community Health spokeswoman Tomi Galin said in an emailed statement to Reuters.

Community Health Systems is almost double the size of HMA, and its hospital portfolio includes eight facilities in Arkansas. Those include four in Northwest Arkansas – Northwest Medical Center-Bentonville, Northwest Medical Center-Springdale, Siloam Springs Regional Hospital and Willow Creek Women’s Hospital.

However, Glenview has said the $13.78 per share offering for HMA is too low, and said the offer from Franklin, Tenn.-based Community Health will get a second look.

“Several months from now, with greater Board and Management engagement and greater transparency, Glenview and other shareholders will consider the Community Proposal with an eye towards maximizing shareholder value and positioning HMA to best serve the healthcare needs of its local communities,” noted the Glenview filing.

Glenview has investments of approximately $2 billion with five hospital chains, and manages more than $6 billion in all of its investment funds.

Glenview’s apparent success in replacing the HMA board delivers even more uncertainty for the 500-job regional service center HMA has planned for Fort Smith. HMA officials announced on April 4 that the center would be housed in what was once a portion of Phoenix Village Mall. HMA estimated the annual payroll will be $21.5 million, with the center at full employment within 12 months. The facility is scheduled to begin operations in early September.

Shares of HMA (NYSE: HMA) closed Monday at $13.24, unchanged from the previous close. During the past 52 weeks the share price has ranged from a $17.28 high to a $6.53 low.

Gov. Mike Beebe along with economic development officials from around Arkansas plan to attend a Wal-Mart organized manufacturing summit later this month that is part of the retailer’s effort to buy at least $50 billion in U.S. made products during the next 10 years.

The event, labeled by Bentonville-based Wal-Mart as the U.S. Manufacturing Summit, is scheduled for Aug. 22-23, and will be held in Orlando, Fla.

“Our goal is to convene suppliers, government bodies, thought leaders and other retailers to accelerate our mission of leading an American renewal in manufacturing,” Greg Hall, vice president of U.S. sourcing and manufacturing, told Site Selection magazine in a July 2013 interview. “If a supplier is evaluating U.S. production or expansion of U.S. production, attending this summit is designed to provide understanding of state and local incentives, opportunities, work-force capabilities, readily available raw materials, economics, etc., all in one place.”

Two-thirds of products purchased by Wal-Mart come from the U.S., but much of that is for food. The Jan. 15, 2013, announcement by Wal-Mart provided two areas in which the company hoped to help grow U.S. manufacturing.

“The company will grow U.S. manufacturing on two fronts: by increasing what it already buys here – in categories like sporting goods, apparel basics, storage products, games, and paper products, and by helping to onshore U.S. production in high potential areas like textiles, furniture and higher-end appliances,” noted the company statement.

As of July, Wal-Mart had been in contact with about 25 state governors and economic development offices about the program.

Matt DeCample, spokesman for Arkansas Gov. Mike Beebe, confirmed that Beebe would attend the summit. Others from Arkansas attending include Grant Tennille, executive director of the Arkansas Economic Development Commission; Tim Allen, president of the Fort Smith Regional Chamber of Commerce; and representatives with the Northwest Arkansas Council.

“The governor is going. We’re going to make a big push on that,” Tennille said. “I’m real hopeful that the Wal-Mart onshoring (effort) is going to be good for Arkansas.”

THE FORT SMITH MESSAGE
Allen said he plans to travel to the summit with several flash drives full of information that speak to the advantages of doing business in the Fort Smith area.

“I’m going to bring the Fort Smith message, and make the rounds and target, or select companies (that fit),” he explained. “Fort Smith has several buildings, very nice buildings that are food grade and good for manufacturing.”


Allen said recruiting new businesses in recent years has more to do with the people than the facilities.

“It’s often about the people, the workforce, and the training that we can provide. ... I think, for a lot of reasons, that we can tell a good story with that,” Allen said.

Allen also believes Fort Smith may have a geographic advantage.

“One thing I will be talking about is our close proximity to the (Wal-Mart) corporate headquarters. I think logistically, just located 50 or 55 minutes south of the headquarters ... I think Fort Smith is sitting in a good location,” Allen explained.

Landing any piece of the $50 billion onshoring effort will help the Fort Smith area. Of Arkansas’ three largest metro areas, the Fort Smith region has been the hardest hit in the past decade in terms losing manufacturing jobs. Between June 2003 and June 2013, jobs in the sector are down 23% in central Arkansas, down 34.16% in the Fort Smith region, and down 20.8% in Northwest Arkansas.

U.S., ARKANSAS MANUFACTURING TRENDS
Tennille, Allen and many of their peers around the state and country have good reason to hope the onshoring effort helps the U.S. manufacturing sector.

Historically, U.S. manufacturing sector employment has ranged between 17 million and 19 million. It reached a high of 19.553 million jobs in June 1979. Sector employment has been stuck below 12 million since May 2009. Prior to May 2009, the last time sector employment was below 12 million was May 1941.

In early 2010, Arkansas’ manufacturing sector appeared to find a bottom and entered a 14-month period (April 2010-May 2011) in which employment remained above the 160,000 level. By early 2012, sector employment resumed its decline. May and June of 2013 marked the first time employment in the sector was consecutively below the 155,000 level.

Between June 2010 and June 2013, Arkansas lost 7,700 manufacturing jobs, a decline of 4.75%. Among Arkansas’ neighboring states, only Mississippi also saw a decline in manufacturing jobs in the same period, but that was just a 500 job loss, or a decline of 0.36%.

During the same three-year period, the manufacturing workforce grew by 3,600 jobs in Louisiana; grew by 9,500 jobs in Missouri; grew by 12,300 jobs in Oklahoma; and grew by an impressive 55,900 jobs in Texas. Nationally, there was a 3.7% gain in manufacturing employment between June 2010 and June 2013. However, all states have seen a manufacturing workforce decline when compared to the previous decade (June 2003). (Link here to read more about the manufacturing job rebound fading in Arkansas.)

‘RECRUITING LIKE CRAZY’
Allen is not unfounded in his hopes that Arkansas cities may have a leg up on landing new business from Wal-Mart’s onshoring drive.

Beebe’s office and Wal-Mart launched in May the “Arkansas’ Own” program that features consumer products from Arkansas. According to Wal-Mart, the retailer carries more than 1,700 units made, produced or processed in Arkansas. Hall, in the Site Selection interview, said the Arkansas items come from 73 brands and 44 suppliers. The companies range from such global operations as Springdale-based Tyson Foods to “smaller, lesser-known companies.”

“Walmart's goal is to create awareness and drive consumer interest in Arkansas products and help the vendors and suppliers in our home state,” Hall noted in the interview.

Hall also said he hoped the $50 billion push would rise to $500 billion in purchasing of U.S. goods if other retailers participate.

Whether it’s $50 billion or $500 billion, the program has Tennille’s attention.

“We’re very focused on trying to take advantage of that (Wal-Mart onshoring program), ... and recruiting like crazy in those areas,” Tennille said.

Consumers looking for bargains in July helped to hoist retail sales a little higher marking the fourth consecutive month of positive gains, according to sales data released by the U.S. Department of Commerce on Tuesday (Aug. 13).

But it was a mixed bag for retailers in July, with sales gains in many back-to-school categories like clothing and sporting goods, but surprising declines in home-based categories, including building materials and furniture stores. 

According to the National Retail Federation, July retail sales (excluding automobiles, gas stations and restaurants) increased 5% unadjusted year-over-year. On an adjusted basis, sales rose 0.3% from June.



“Consumers continued to grind forward in July, but consumers alone can’t be expected to shoulder the burden of the economy," NRF President and CEO Matthew Shay said.

He said fiscal and monetary policy uncertainties combined with stagnant economic and employment conditions continue to breed a volatile market with extreme swings in consumer spending. The economy can’t seem to maintain any amount of momentum.

“We just can’t seem to pull ourselves up,” Shay added.



Even with modest gains in employment and steady consumer confidence, the economy is stuck in neutral, said NRF chief economist Jack Kleinhenz.

“While clothing and sporting goods retailers saw modest gains with early back-to-school shopping, home-based retailers saw marked decreases, possibly indicating the end of the year-long housing boom. This month’s retail sales report will make any decision on tapering that much harder for policymakers in D.C,” Kleinhenz said.



Other findings from the July retail sales report include:
• Building material and garden equipment and supplies dealers stores’ sales decreased 0.4% seasonally-adjusted; yet increased 9.8% year-over-year.

• Clothing and clothing accessories stores' sales increased 0.9% seasonally-adjusted month-to-month, also rising 5.3% year-over-year.


• Furniture and home furnishing stores’ sales decreased 1.4% seasonally-adjusted month-to-month; yet increased 5.1% year-over-year.

• General merchandise stores’ sales increased 0.4% seasonally-adjusted month-to-month; also up 1.3% year-over-year.

• Online-only retailers’ sales increased 0.1% seasonally-adjusted month-to-month while rising 11.3% year-over-year.

• Sporting goods, hobby, book and music stores’ sales increased 1% seasonally-adjusted month-to-month; also rose 3.9% year-over-year.

Leaders of Arvest Bank, First Bank Corp., Benefit Bank and reps from the Arkansas Bankers Association gathered Tuesday (Aug. 13) in Fort Smith with U.S. Rep. Steve Womack, R-Rogers, to reinforce their concern that new and expected federal regulations are a threat to community banks.

The bankers – along with Bill Holmes, president and CEO of the Arkansas Bankers Association, and Eric Munson, director of legislation and regulation for the association – met with Womack in the board room at the First National Bank building in downtown Fort Smith. The bankers attending the meeting were Joe Edwards, president of Fort Smith-based Benefit Bank; Keith Hefner, president and CEO of Citizens Bank & Trust in Van Buren; Craig Rivaldo, president of Arvest Bank in the Fort Smith region; Sam T. Sicard, president of First Bank Corp.; and John Womack (no relation to Rep. Womack), president of Arvest Bank in the central Arkansas area.

The specific angst of the gathered bankers is with federal rules promulgated under the Dodd-Frank law. Named after legislative authors U.S. Sen. Chris Dodd and U.S. Rep. Barney Frank, the “Dodd-Frank Wall Street Reform and Consumer Protection Act” was signed into law on July 21, 2010. Dodd and Frank have since retired from Congress.

It was passed in response to the near collapse of several large U.S.-based banking operations in 2007-2008. Democratic leaders in Congress blamed the financial problems on a lack of federal oversight.

Advocates of the law say it will prevent banks and other financial institutions from essentially creating a financial house of cards.

Key provisions of the Act, which are expected to be more fully articulated in 2013 and 2014, include:
• Creation of a consumer interest “independent watchdog” housed at the Federal Reserve;
• Establishes capital requirements designed to end the “too big to fail” possibility among the big banks;
• Creates an “advance warning system” to identify systemic problems before they become big problems;
• Eliminates loopholes that allow the “exotic instruments” that helped fuel the financial meltdown in 2008; and,
• Creates new accountability and transparency rules for credit rating agencies.

The law was designed to increase examination and enforcement of banks and other financial service companies with more than $10 billion in assets. However, regulations will also increase for banks under the $10 billion level.

Community and regional bank operators in the Fort Smith and Northwest Arkansas areas have been on record as saying Dodd-Frank was an overreaction to what happened in 2007-2008. They reiterated that belief during the visit with Womack.

Sicard, president of Fort Smith-based First Bank Corp., said Dodd-Frank is a “one-size-fits-all approach” that is making it difficult for community banks to approve home and other loans.

“We wanted him (Womack) to see the challenges with the regulation that is burying our business,” Sicard said. “This will have a definite impact, a negative impact, on local communities.”

First Bank Corp. operates several banks, including First National Bank of Rogers and Citizens Bank and Trust in Van Buren.

According to Accenture, which recently issued results from a global survey of the financial sector about Dodd-Frank, the legislation is the “most comprehensive set of U.S. regulatory reform measures since the Great Depression.”

But the Accenture report also noted that more regulations are coming.

“Yet, more than two years after the Act was signed by President Barack Obama, only a third of Dodd-Frank’s nearly 400 required rules have been finalized and only a third have been proposed,” noted the Accenture report.

Accenture’s survey results included the following findings:
• Overall, 10% of companies anticipate spending from $100 million to $200 million on Dodd-Frank across the lifetime of the program, and half anticipate spending at least $50 million;
• Many companies see beneficial results from Dodd-Frank; for example, 64% of respondents believe the Act will strengthen their competitive position, especially within the capital markets industry, and a strong majority believe Dodd-Frank will lead to greater profitability across the lifetime of the program; and
• 77% of companies responding believe the proposed regulatory reforms — and their effect on revenue streams — will cause them to revise their long-term business strategies.

The Republican leadership of the U.S. House Committee on Financial Services continues to be a proponent of reversing Dodd-Frank. The U.S. House has passed seven bills that would essentially kill Dodd-Frank.

Rep. Womack likely needed little convincing from the bankers about the impact of Dodd-Frank.

“This creates a terrible regulatory environment ... that will put community banks out of business or turn them into glorified ATMs,” Womack said prior to a luncheon with the bankers.

Womack believes a “handful of political victories” are needed to change enough votes in the U.S. Senate if Dodd-Frank is to be reversed.

“But the real question is, ‘Can it be done (reversed) in time to save some of the more vulnerable banks?’” Womack added.

Certainly not all members of Congress oppose Dodd-Frank.

U.S. Sen. Elizabeth Warren, D-Mass., recently said she will push back against any legislation that comes to the Senate attempting to reverse or weaken Dodd-Frank.

"Wall Street’s aggressive determination paid off last week when the House Financial Services Committee reported out several bills to roll back reforms to the derivatives markets included in the Dodd-Frank Act," Warren said in a statement published by the Huffington Post. “I strongly agree with Treasury Secretary Lew’s opposition to the bills. The Dodd-Frank Act put in place a variety of measures that work together as a system to protect consumers, hold big banks accountable, and reduce the risk of future crises. It is dangerous for Congress to amend the derivatives provisions of the Dodd-Frank Act without at the same time taking accompanying steps to strengthen reform and maintain the law’s equilibrium."

The newest frontier ripe with growth opportunities is an ocean away but several Northwest Arkansas-based companies are poised to benefit from these burgeoning economies within sub-Sahara Africa. 

Earlier this week, Wal-Mart’s South African business unit known as Massmart Holdings, confirmed it is in talks to take a majority stake in the Kenyan grocer Naivas and 28 stores. Wal-Mart paid $2.4 billion for a majority stake in MassMart Holdings just two years ago.

But as other retailers like Carrefour have been making deals to carve out their own African territory along the Ivory Coast, analysts said it’s likely Wal-Mart will pull the trigger on more acquisitions in the grocery arena in the next year or so.

Wal-Mart does not comment on pending deals. But it’s business partner MassMart did say the firm met recently with several important players in Kenya about building relationships in that region.

RIPE OPPORTUNITY
Economists agree that strong economic growth rates across multiple African economies are creating a new middle class of consumers and possibilities for retailers, supply chain experts like CaseStack, and agricultural food companies like Cobb-Vantress, owned by Tyson Foods.

Over the past decade, six of the 10 fastest growing economies are in Africa, which has already prompted some of country’s largest firms like Wal-Mart, Procter & Gamble and General Electric to invest in sub-Saharan regions. Kenya, home to Naivas, is expected to post economic grow of 6% this year on top of 5% gains from 2012.

Massmart Holdings released a sneak peak of its six month earnings on Tuesday (Aug. 13). The company said its first-half earnings rose by as much as 57%, lifted primarily by favorable exchange rates. The retailer expects headline earnings between $2.18 and $2.34 per share for the 26 weeks to June 23. This compares with $1.49  earned a year earlier. The firm said it would give greater details on the results when it releases the full report Aug. 22.

Dan Sanker, CEO of Fayetteville-based CaseStack, recently traveled to South Africa to meet with retailers and product companies like Procter & Gamble about the challenges they face in the highly fragmented markets across sub-Sahara Africa. Sanker sees real possibilities for his third party logistic firm to provide supply chain solutions to both retailers and suppliers doing business in Africa.

“There is tremendous potential on the large continent but most of the retailers began with a focus on a particular region, working with partners if necessary to navigate the fragmented supply chain,” Sanker said.

The status quo for the retail supply chain gaps that exist in Africa mean products are “usually” available,” he said.

“This isn’t up to the standards American companies have come to expect.”

Sanker said the barriers to entry into Africa are lower than in China and other parts of Asia. However, Africa’s growth rates often rival those in Asia, grossly outperforming the U.S. and Europe rates over the past several years. He cited a 2012 global retailing report compiled by Deloitte and STORES Media, that shows the top 250 retailers based in Africa and the Middle East posting composite growth over 15% for the past five years. This compared to a 6% average of the top 250 worldwide retailers.

SUPPLY CHAIN GAPS
Sanker said if CaseStack has a client that wants to “hit go” tomorrow on an African retail or product sales expansion, his firm is ready to help.

“In talking with several retailers in South Africa, it was clear that visibility within the supply chain is lacking. Our technology and warehouse hub system used in the U.S. is a good fit for smaller suppliers and retailers and could work quite easily in South Africa.”

He said the technology piece includes seamless language and measurement translations to facilitate users on either end of the communication link.

Sanker said forecasting tools, like those his firm provides, also helps shore up product inventory discrepancies. And the final mile piece of the supply chain which can wreak havoc with online sales could be addressed with a trusted carrier system. In many parts of Africa the postal service is unreliable and some retailers commented that up to 50% of packages are lost (likely stolen) or are otherwise never delivered. He said this has prompted retailers to experiment using multiple carriers and charging the buyer with a delivery fee of out $4.

As Africa has quickly adopted mobile technology, those retailers and suppliers who can conquer the home delivery are poised to win favor and market share among the continent’s 800 million or so cell phone users. In a nation of 1.08 billion, cell phone penetration is expected to surpass 80% this year, according to ABI Research.

FOOD DEMAND
With the economic conditions in Africa improving, there has been a huge increase in the demand for poultry throughout the sub-Saharan region.

This has not caught Siloam Springs-based Cobb-Vantress by surprise. The Tyson Foods subsidiary has been a breeding stock distributor in central Africa since 1962 through a partnership with the Irvine’s Group, based in Zimbabwe.

“It is our belief that poultry production will increase tremendously over the next decade and to tap this market a new organization, Cobb Africa, was formed in June 2009 to export parents and hatching eggs to developing African countries,” the company noted in an internal newsletter earlier this year.

Cobb is also busy in southern Africa. With southern African countries importing substantial volumes of chicken meat, there is great potential for their own production to double or even triple over the next few years, according to Pieter Oosthuysen, regional manager for Cobb.


There are about 150 million people in the developing countries of southern Africa and most are not self-sufficient in chicken production and competing with imports, This affects local meat prices through oversupply, Oosthuysen said in March.

“If the same rate of chicken consumption of South Africa is applied to Namibia, the current production would need to increase three fold over the next few years to meet the demand. The biggest limiting factors in developing these markets are lack of infrastructure, shortages of raw materials such as maize and soybeans, and availability of water,” he said.

Oosthuysen said there are Cobb grandparents operations with Hybrid Poultry in Zambia, Irvine’s in Zimbabwe and Pioneer Foods and Rainbow Farms in South Africa. Cobb Africa, based in Johannesburg, South Africa, supplies most of the sub-Saharan countries directly from its operation in Zimbabwe or from Europe. They are involved in supplying hundreds of thousands of day-old broiler chicks in Africa per week.

An issue that is sure to spur a heated debate at next Tuesday's (Aug. 20) regular Fort Smith Board of Directors meeting is a proposal that would give City Administrator Ray Gosack the ability to hire and fire department heads without having to get prior approval from the Board.

According to Deputy City Administrator Jeff Dingman, the issue was first brought up during the Board's retreat to Mt. Magazine State Park in July.

Both before and after today's noon study session, Board members expressed their views on the issue, with opinions varying wildly.

• Ward 1 Director Keith Lau:
"Yes, I think it's a good thing. I think it's good governance. I think it's a, I don't look at it so much as a hire and fire as much as I do a command and control. It's a hierarchy of who's in charge and who respects the authority of who's in charge because ultimately I think if there was ever a poor fire or a poor hire that that would ultimately come under the purview of the Board."

• Ward 2 Director Andre Good:
"I am not. But I've got a lot more to say about the issue. I absolutely trust Ray and his decision, but the decision we make on this vote goes beyond Ray. What if Ray unfortunately meets an untimely demise? What happens if he chooses to leave? I think this goes much more past our trust of Ray and I have all confidence and trust in Ray."

• Ward 3 Director Mike Lorenz:
"Yes. … You know, it's an efficient governance issue to me. It has nothing to do with anything that's happened in the past. ... You know, I think the CEO of any company, and this is a big company, should have the authority to hire and fire his immediate reports. There's nobody between directors, department heads and (the) city administrator. He's got direct authority. There's going to be political problems regardless of which way it's done. I feel like this takes some of this out of it. The arguments been made that we were elected to hire and fire these people. I don't agree with that. I think that the Board was elected to make policy decisions and hire a city administrator. It's his responsibility to run the business on day to day basis. It puts us in a management position that we shouldn't be in."

• Ward 4 Director George Catsavis:
"I'm not for it. … I just feel like we were elected by the people to represent them and their best interest for the city and I just think we need to have some say in the hire and fire issue. (Any of the department heads should come before the Board for hiring and firing.) Yeah, or at least go through the administrator and the administrator come through the Board. My biggest concern is there's politics always enters into this kind of issue and I just feel like this could easily get out of control."

• At-Large Position 5 Director Pam Weber:
"I think it's a good discussion to have. Well, I think with any business the CEO or President of the business has the option to hire and fire his team. I think that we have good communication with the present administrator. I think if he were going to make a change he would probably tell us before we read it. I would not be reading it in the newspaper or The City Wire. I think he's good about communicating with us and I think works on a daily basis (to uphold good communication). I do not think it's my job to tell a department head how to run their department or hire a department head. That is not my job as a director."

• At-Large Position 6 Director Kevin Settle:
"No. I am not at all. No. … I'm against it because the people voted to change this form of government and gave the directors that right 40 plus years ago and there's, it's the people's voice, it allows the people to have the majority on those decisions and by the Board giving up that right, it puts on person in charge and it doesn't allow the directors to have a say, which we should. … The way it's been proposed, he'll have final say. That's not the way it is now. Right now, he recommends and we have to give the approval or not approval, which is a check and balance. … The ordinance is done. It's gone through multiple mayors, multiple directors and it's worked great. I don't see a reason we need to make a change. I just think we take away from the people."

• At-Large Position 7 Director Philip Merry:
"I'm for it. 110%. The timing is right. As I understand it, the 15 department heads are all doing quite well. There's nothing that as I understand it that's driving towards this topic other than taking a step back, looking at the architecture of how we do our business, how we do our governance. Would you want to be the CEO of a company with 900 employees, $311 million and you can't, you have no say over the department heads situation. I've not heard of a situation where a board of directors, where a CEO of a large corporation could literally compete with the employee to the board for a certain position. Right now, in the strictest sense, you could have a department head lobby the board and if that person has 4-3, it doesn't matter what the administrator thinks that person's performance is."

In other business, the Board:
• Discussed proposed changes to residential parking ordinances, including limiting the number of cars that can park at a residence and whether or not residents could park on lawns; and
• Discussed methods to encourage residents to properly store sanitation containers on non-pick up days. Instead of taking official action, the Board has encouraged the department of sanitation to engage in an education program that would emphasize how to store containers out of site of the street.

U.S. Sen. Mark Pryor, D-Ark., who last week found an opponent in Republican freshman U.S. Rep. Tom Cotton, R-Dardanelle, said on Tuesday night (Aug. 13) that he has not received backlash from his assertion last week that the Affordable Care Act is creating jobs.

In defending his statements made Aug. 8 to the Arkansas State Chamber of Commerce, Pryor cited a RAND study that touts the economic boost the state could receive from the ACA, commonly referred to as Obamacare. In the chamber speech, Pryor referred to a Rand study saying the new health care law would create more than 6,000 jobs in Arkansas.

The study Pryor cites said about 6,200 hundred new jobs would be created "by economic growth stemming from insurance expansion."

Pryor also said the job creation would be new positions created by by private business through larger customer bases associated with Rand's estimated additional 401,000 insured Arkansans and businesses that are taking some sort of government funding or subsidy tied to the affordable care act.

"My guess is it's going to be a mix of a little bit of everything. You're probably going to see more jobs in healthcare because there's going to be more healthcare available to people. More people will have insurance. About 500,000 Arkansans will have insurance as a result of this. That's huge, if you think about it. That's one sixth of our population. One out of six people will have private insurance for healthcare that don't have it today. I'm assuming as part of that, you'll see more people working in different aspects of healthcare, there's going to be more paying customers in healthcare. Also, you need to remember that there's a lot of tax credits in this law for individuals and families and small businesses and they will get tax credits for themselves and people in their company to help afford health insurance."

The same Rand study Pryor quotes does claim $550 million in net economic growth, though the study says that the growth is "accounting for subsidies, Medicaid expansion, taxes, and Medicare cuts." The study also claims that the that the calculations are projections to "reflect likely conditions in 2016, given a fully implemented Affordable Care Act."

Pryor's doubling down on the Affordable Care Act comes even as polls show Arkansans overwhelmingly against the law.

In a poll conducted last year by Talk Business, 58% of likely voters contacted said opponents of the law should continue attempts to block it. Another 46.5% said they were against an expansion of Medicaid in Arkansas, which eventually was passed by the state legislature and has become known as the "private option."

Even with public opinion possibly not on his side, Pryor said he would still back the law, especially now that the act is the law of the land.

"I don't know that I'd say I'm doubling down, but it is the law of the land, it went to the U.S. Supreme Court. They decided it. The House has now tried to repeal it 40 times. They're not going to repeal it, it's just not going to happen. At some point, you have to decide, OK. Are we going to continue beating our head against a wall or are we going to try to make this law work better?" he asked. "And I'll be the first to tell you, this law is far from perfect. It's not perfect. It's needs some fixes. I've lead the charge on some of those and I'll continue to do that on some of those changes, as well. You know, it's a work in progress and healthcare is very, very complicated. There's no doubt that it is a big and complicated piece of legislation and probably if you get say 80% of it right, then you've done something."

Pryor, who was in Fort Smith for a speech to the Military Officers Association of America meeting in Fort Smith, said he would continue working with his colleagues in the Senate to fix what he called the "other 20%."

"That's one of the differences between my opponent and me. He wants to repeal, repeal, repeal. He's not offering any kind of solution to make health care more affordable, more accessible. He's not trying to get health care out in rural America. He's not trying to help poor people with health care. All he's trying to do is repeal, repeal, repeal."

Enplanements turned positive during July at the Fort Smith Regional Airport, and the Northwest Arkansas Regional Airport (XNA) saw its year-to-date traffic growth expand to 3.7%.

During the first quarter of the year, enplanements at XNA were up 2.4%, and rose to a 3.18% increase for the first six months of the year.

July delivered 52,577 enplanements at XNA, up 6.67% compared to July 2012. For the first seven months of 2013, enplanements at XNA total 337,760, up 3.7% over the 325,676 enplanements during the same period of 2012. The enplanement tally for the seven-month period in 2013 is also ahead of the 335,948 during the same period of 2011.

August could bring more traffic to the airport. American Airlines is adding non-stop flights from Northwest Arkansas Regional Airport to Los Angeles International Airport in Southern California starting Aug. 27. XNA provides service to 14 destinations on five airlines across the country.

Enplanements at XNA totaled 565,045 during 2012, up just 0.4% compared to 2011. Although slight, the gain prevented XNA from posting two-consecutive years of enplanement declines. XNA’s first full year of traffic was 1999, and the airport posted eight consecutive years of enplanement gains before seeing a decline in 2008. It reached a peak of 598,886 in 2007.

FORT SMITH TRAFFIC

The Fort Smith Regional Airport, posted July enplanements of 7,673, up slightly compared to the 7,661 in July 2012 1.4% compared to June 2012.

The airport is served by flights from Atlanta and Dallas-Fort Worth.

Although still in negative territory, the enplanement trend is improving in Fort Smith. For the first six months of 2013, enplanements at the airport were down 3.9% compared to the same period in 2012, and enplanements during the first quarter were down 7.4% compared to the same period in 2012.

For the first seven months of 2013, enplanements at Fort Smith total 49,714, down 3.37% compared to the same period in 2012.

Enplanements at the Fort Smith Regional Airport totaled 86,653 during 2012, just ahead of the 86,234 in 2011, and marking three consecutive years of enplanement gains.

American Airlines enplanements out of Fort Smith during the first seven months of 2013 total 28,971, down 4.28% compared to the same period in 2012. Delta enplanements during the first seven months of 2013 total 20,743, down 2% compared to the same period of 2012.

LITTLE ROCK
Enplanements at the Bill & Hillary Clinton Airport (Little Rock National Airport), totaled 549,329 during the the first six months of 2013, down 4.33% compared to the same period of 2012. June 2013 enplanements totaled 114,856, up 4.3% compared to June 2012. (As of Aug. 13 officials at the airport did not have July traffic figures.)

Enplanements in 2012 totaled 1.147 million, up 4.07% compared to 2011. The 2012 numbers also ended five consecutive years of enplanement declines at Arkansas’ largest commercial field.

Last week’s travels with U.S. Sen. Mark Pryor, D-Ark., and his new GOP challenger, U.S. Rep. Tom Cotton, R-Dardanelle, took us on a whirlwind series of trips across the state.

This week, both men ramped up their travels with Pryor touring northwest Arkansas and Cotton taking a Congressional trip to Israel. Cotton announced his entry in the Senate race in Dardanelle on Tuesday night (Aug. 6) and spent the next two days traveling by car to Fayetteville, Springdale, Mountain Home, Jonesboro, Hot Springs, Hot Springs Village and Texarkana. He even made a last-minute stop at the Faulkner County Tea Party committee meeting in Conway.

Cotton has stirred plenty of controversy during his short 8 months in office in the U.S. House of Representatives. He’s had high-profile national public appearances and has been part of an ultra-conservative faction of the Republican caucus that has taken principled stands opposing the Farm Bill, student loan changes, and disaster relief funding – all votes that Pryor and Democrats will use repeatedly in the campaign.

For a guy who has made waves and forced reforms as a freshman in the House, the question for Tom Cotton becomes: why not stay put and continue to push for greater changes or a leadership role in the GOP-controlled House while making a safe run for re-election?

His answer centers around the core reason he’s entered politics: President Obama.

“The Senate has been one of his staunchest allies. I think that while I’ve made an impact for the people of Arkansas in the House, I can have a bigger impact on the people of Arkansas in the Senate by helping that institution stand up to an agenda that I don’t think is an agenda shared by the people of Arkansas,” Cotton says.

Republicans need to pick up 6 seats in the U.S. Senate to gain control of the upper chamber.  Arkansas is one of four states with Democratic incumbents who are perceived as potentially vulnerable. The other three states are Alaska, Louisiana and North Carolina.

Pryor, who considers himself at the “center of the Senate,” has been tied to his support of several of President Obama’s big agenda items: the Dodd-Frank financial bill, the stimulus program, and of course health care reform. He’s also taken independent stands on other issues, including efforts to address balancing the budget and gun control.

In the past week, Pryor has criss-crossed Arkansas attending events in his official Senate capacity in Batesville, Ash Flat, Mammoth Springs, Melbourne, Little Rock, Lonoke, Rogers, Springdale, Fayetteville and Fort Smith.  It’s part of his recess work and Pryor says he would much rather be meeting with constituents than blocking off time for fundraising calls.

“Fundraising is probably the least favorite part of the job. My favorite part is getting out in the state and talking to people,” Pryor said.

He knows his voting record will be a major focus of firepower from Cotton and the myriad national conservative groups that have already shown they’re willing to spend millions in Arkansas to oust him.  But he also knows that Cotton’s perceived “extremism” and the freshman Congressman’s voting record will allow him to counterpunch.

“I think certainly voting records are on limits. I think if we’ll stick to the voting records and stick to the facts, I think that’s what the people of Arkansas deserve to have in this campaign. I’m afraid what you’re going to see though is a lot of outside money,” Pryor said.

To counter the influence of money, you just have to “trust people” Pryor explains.

“You have to trust people in this state that they’re smart enough to figure it out, and they are. We’ve seen it over and over and over, election after election.  I look forward to this race. I look forward to talking about my record and what I’ve been able to accomplish, to tell people why I want another six years.”

While Pryor’s recess work is taking him to various corners of the state, Cotton is criss-crossing the globe. A week after announcing his Senate bid, he took a pre-planned official visit to Israel as part of his work on the House Foreign Affairs Committee.  The trip is open to freshman members of both parties and is sponsored by the American Israel Educational Foundation Seminar in Israel.

“The trip is paid for by the foundation and all appropriate paperwork has been approved by the ethics committee,” said Cotton spokesperson Caroline Rabbitt. “The purpose of the trip is to attend seminars, meetings, and briefings. The seminars are considered among the most substantive, rigorous, and valuable opportunities for members of Congress to gain a firsthand understanding of some of America’s most pressing foreign policy challenges. They offer members the chance to meet with both Israeli and Palestinian officials and hear from speakers representing diverse views across the political spectrum.”

Rabbitt also pointed out that Cotton has two Israeli-owned companies in his Congressional district, Delek Holdings in El Dorado and Spectra Technologies of East Camden.

WHAT YOU MAY NOT KNOW
The opportunity to spend time on the road with both Senate candidates afforded me a chance to delve into their personal lives a little bit more. That will be the subject of a forthcoming Talk Business Arkansas magazine article in early September.

A couple of takeaways to share for immediate consumption:
• Cotton is an avid runner and has completed 11 marathons to date.

• For relaxation, he’s an avid sports fan who enjoys football and baseball.

• His favorite pro teams include the Dallas Cowboys and New England Patriots and the St. Louis Cardinals and Boston Red Sox.

• Pryor is looking forward to upcoming hunting seasons, in particular because it is an activity he enjoys with his son.

• His daughter, the younger of his two children, will start college this fall.

• You will no doubt catch Pryor at Razorback football games this year. As a UA graduate, he’s a diehard fan.

Fort Smith city politics may heat up well before the 2014 election. Fort Smith City Director Philip Merry Jr., has said he may run for Mayor.

Merry previously told The City Wire he had explored and ruled out a run for state representative, saying he would instead explore ways to serve in the Fort Smith area.

That service appears directed toward the mayor’s office. Merry confirmed with The City Wire that he is considering a run for Fort Smith mayor, which could pit him against incumbent Mayor Sandy Sanders in next years election. Merry said he has been approached by numerous citizens about running for the office.

"I've been approached by many. I have been approached by many all over town and I am weighing it, praying on it, analyzing the time commitment."

Merry, who as a director at-large has already won a citywide election in 2010, said there are various reasons he is considering running for mayor instead of running for re-election to his Board position.

"I really would like to be, if I were to do it I would do it because I think I would bring enthusiasm, bring a balance between board room serious and the…not to be a cheerleader, but to be an outward, enthusiastic word to the community about how great this place this and how we need to band together and take it over the top."

Along with the mayoral post, the three at-large Board posts are up for re-election in 2014 – Merry, and City Directors Kevin Settle and Pam Weber.

Numerous sources have confirmed to The City Wire that Sanders has told them he would run for re-election, but Sanders said his plans were not set in stone.

"I'm getting lots of strong encouragement to run again and I'm strongly considering it and will make the announcement at an appropriate time."

Sanders said even though he has a little less than a year and a half left in his first term, he would like to accomplish more for the city and focus more on those issues before announcing a decision on re-election.

"I am strongly considering running for re-election and I appreciate all of the encouragement from people urging me to do so."

An announcement, he said, would come "sooner rather than later."

The mayor also confirmed that he did not yet have a campaign team in place, instead saying "all that will be worked out as I get closer to any announcement."

In discussing his future, Merry said he was not necessarily eyeing a race against Sanders, but instead was envisioning what he would like the position of mayor to function should he not only enter the race, but win.

"I am saying that he is very procedurally excellent but I'm not talking about Sanders, I am talking about what I would want to do."

In addition to Merry and Sanders, former director Don Hutchings has said he is exploring a run for one of the three available at-large director positions, though he said a decision was not coming anytime soon.

Weber confirmed that she has not yet made up her mind about a run, saying that it would be a family decision.

"We don't do anything without discussing it and making the decision together," she said, adding that it was just too early to make a decision.

Settle, who also serves as the city's vice mayor, has not made any public statements about his political future.

Arkansas was one of 29 states to see an increase in foreclosure activity in July, as lenders continue to work through a backlog of properties held up by federal litigation filed two years ago.

There were 742 new foreclosure filings across Arkansas in July, according to Irvine, Calif.-based RealtyTrac, a 152% increase in the delinquent mortgage activity from a year ago.

“While foreclosures are continuing to boil over in a select group of markets where state legislation and court rulings kept a lid on foreclosure activity during the worst of the housing crisis,” said Daren Blomquist, vice president of RealtyTrac.

RealtyTrac reported 130,888 foreclosure filings in the U.S., down 32% from a year ago. The report also shows one in every 1,001 U.S. housing units with a foreclosure filing during the month.

Arkansas led the nation in bank repossession rates last month taking back 344 properties, a 266% increase over the prior year.

Oklahoma ranked second behind Arkansas with 126% increased rate of bank repossessions.
 
In Benton County, one in every 686 households were facing possible foreclosure. There were 134 new filings last month, up 152% from the
year-ago period. Bank repossessions accounted for 71% of the total filings.

In Washington County there were 55 new filings in July, up nearly 62% from a year ago. One in every 1,573 households in Washington County
were serious delinquent on their mortgages.

Jim Long, agent with Crye-Leike Real Estate in Bentonville, said there are 396 foreclosure listings in the Multiple Listing Service database which includes Crawford and Sebastian counties in addition to the local metro area.  

Long said there have been 64 new foreclosure listings in the past 10 days. Last month the MLS showed 296 distressed properties for sale. Distressed listings have risen from 249 in April and 222 in March.

Sebastian County reported 24 new foreclosure filings in July, up 50% from a year ago. Unlike those in Northwest Arkansas, two-thirds of the filings in the Fort Smith metro area were for notices of trustee sale, the midway point in the somewhat lengthy foreclosure process.

RealtyTrac estimates that one in every 2,262 households in Sebastian County are in jeopardy of foreclosure.

The smaller Crawford County market reported 12 new foreclosure filings in July. This compared to 3 in the prior-year period, an increase of 300%. Roughly one in every 2,149 households in the county are facing possible foreclosure as of July.

And like Sebastian County, the vast majority of the new filings were for notices of trustee sale.

In the foreclosure process the notice of default generally occurs within 90 to 120 days of delinquency, the second phase of trustee sale can take another 60 days to execute, which leaves the final phase of bank repossession and resale.

Sentiment out of Bentonville on Thursday (Aug. 15) was one of caution by Wal-Mart executives who slashed the company’s growth projections for this fiscal year by 50%, on the heels of two softer-than-expected quarters.

Wal-Mart is seen as a barometer for the broader economy as its sales comprise roughly 10% the nation’s retail spending, excluding automobiles. This negative sentiment sent the broader markets south with the Dow Jones Industrials and the S&P 500 sliding 1.38% and 1.33%, respectively.

The retailer continues to blame higher payroll taxes and unusual weather patterns paired with cautious spending habits for its second consecutive quarter of negative U.S. same-store sales, after five straight quarters of positive comps.

The retail giant reported fiscal second quarter net income of $4.069 billion, up 1.3% compared to the 2012 quarter, with earnings per share of $1.24 just a penny below the consensus analyst estimate of $1.25. Absent a 1-cent charge relating to a non-income tax matter, earnings would have met Wall Street expectations, the company said.


Total revenue of $116.945 billion for the quarter also missed the consensus estimate of $118.47 billion. However, the revenue in the quarter was up 2.3% compared to the 2012 quarter.

"The retail environment remains challenging in the U.S. and our international markets, as customers are cautious in their spending," Wal-Mart Chief Financial Officer Charles Holley said in pre-recorded call.

Wal-Mart's commentary is in line with what other retailers, like Macy’s, Kohl’s and American Eagle, have also said this week.

Consumers have become deep value seekers and they need a strong catalyst to prompt spending outside of consumables, said Patrick McKeever of MKM Partners. He said while Wal-Mart does offer value, it is still facing increased competition with the dollar stores who have their own value propositions in very convenient store formats.

Wal-Mart updated its full-year earnings guidance to a range of $5.10 to $5.30 from the previous range of $5.20 to $5.40. This new range includes third quarter EPS guidance of $1.11 to $1.16. Guidance was lowered on expectations of flat same-store sales in Walmart U.S. for the third quarter, and a flat to 2% comps at Sam’s Club.

This cautious growth forecast sent some investors packing as Wal-Mart’s stock price fell to $74.25 in heavy trading. Shares were trading down nearly 3% following the lackluster growth report from Wal-Mart.

Budd Bugatch, analyst with Raymond James & Associates, said the pullback in price is an opportunity for investors wanting to own Wal-Mart shares to buy in. Wal-Mart’s share price has risen 7.9% since Jan. 2. The Dow Jones Industrials, of which Wal-Mart is included, has gained 18.3% his year. He said the retailer is a good place for investors to hide amid some volatile market swings expected in this yo-yo economy.

U.S. SLUMP
Walmart U.S., which accounts for a lion’s share of company’s gross sales, posted net revenue of $68.728 billion in the quarter ending July 31. Sales grew by 2.1% from a year ago. But through the first half of this year, sales have risen a dismal 1.2%.

In the recent quarter, Wal-Mart posted a 0.3% decline in same-store sales, recording less traffic with a slightly higher average ticket.

“While I'm disappointed in our comp sales decline, I'm encouraged by the improvement in traffic and comp sales as we progressed through the quarter. The 2% payroll tax increase continues to impact our customer," said Bill Simon, Walmart U.S. president and CEO. "Furthermore, we also expected an increase in the level of grocery inflation, which did not materialize in a meaningful way. We were pleased that both home and apparel had positive comps.”

He said the company gained some market share in food and consumables during the quarter, based on Nielsen data.

For the 13-week period ending Oct. 25, Walmart U.S. expects comp store sales to be relatively flat. Last year, Walmart's comp sales rose 1.5% for the comparable period.

Meanwhile Walmart U.S. continues to roll out more stores. In the second quarter the retailer added 49 net new units, including new stores, expansions, relocations and conversions. The new units were composed of 29 supercenters and 35 small formats, most of which were Neighborhood Markets. In the third quarter, Wal-Mart plans to open approximately 90 units, more than half of those are Neighborhood Markets.


Analysts have said Wal-Mart efforts to saturate its U.S. markets is helping to cannibalize the firm’s same-store-sales growth.

Also concerning some analysts is the 6.9% increase in inventory levels reported by Wal-Mart in the quarter. Wal-Mart said the increase is primarily driven by softer than anticipated sales trends, the delay in summer weather and timing shifts in the receipt of merchandise for back to school and the upcoming holiday season. Analysts said higher than normal inventory levels at time when consumers are spending less ultimately means deeper discounting or price rollbacks which will likely further erode margins in the back half of this year.

“While we’re not concerned about the quality of the inventory, it will continue to be an area of focus in the coming months, as we get ready for the key holiday season and continue to balance in-stock and an expanded assortment,” Simon said during the call.

On a positive note, Wal-Mart said it has seen strong back-to-school sale in ongoing quarter, which was no surprise to Citi analyst Deborah Weinswig.


Weinswig recently reiterated a "buy" recommendation for Wal-Mart noting,“We believe Wal-mart will be at the head of the class in a competitive back-to-school season as our retailers fight for share of a smaller wallet.”

GLOBAL HEADWINDS
Wal-Mart International posted $32.956 billion in sales revenue for the second quarter, up 2.9% from a year ago.

"Across our International markets, growth in consumer spending is under pressure," said Doug McMillon, Walmart International president and CEO. "Consumers in both mature and emerging markets curbed their spending during the second quarter, and this led to softer than expected sales. While this creates a challenging sales environment, we are the best equipped retailer to address the needs of our customers and help them save money.

Currency fluctuations trimmed $444 million from the firm’s International sales results. On a constant currency basis Wal-Mart said its international sales increased 4.4% from a year ago. McMillon said he expects third and fourth quarter results to be better than the first half of this year.

International operations are being negatively impacted by charges related to the ongoing Federal Corruption Practices Act investigations. With probes underway in Mexico, India, China and Brazil. Holley estimates spending related to FCPA and internal compliance efforts will top $310 million this fiscal year. Already this year he said the company has spent $155 million in FCPA and compliance matters. The company expects to dole out another $155 million in the back half of the year on these efforts.

Holley said in the third quarter roughly $75 million will be spent on FCPA matters and $80 million on internal compliance protocol. He expects the same expenditures in the fourth quarter as well.

SAM’S CLUB
Sam’s Club was a bright spot in the retailer’s otherwise challenging quarter. The warehouse club reported net sales of $14.532 billion, up 2.6% from a year ago.

Sam’s returned positive same-store sales of 1.7% in the quarter, in a challenging economic environment. A year-ago Sam’s posted comparable sales growth of 4.2%.

"Sales were up, traffic continued to improve, and comp sales were within our guidance. Response to our recent membership enhancements has been favorable, resulting in solid membership income growth and positive response to our Instant Savings Book. We were pleased with our improvement in business member traffic, reversing the decrease from the prior quarter," said CEO Rosalind Brewer.

Sam’s raised its membership fees in the recent quarter for the first time several years.

Brewer said membership and other income grew 9.2% in the quarter.

E-COMMERCE OPPORTUNITY
While Wal-Mart does not break out its e-commerce sales, the company did say it continues to invest heavily in this segment.


“During the second quarter, we had a hiring blitz which ramped up our visibility in the Bay area and added nearly 200 associates. We saw an offer acceptance rate well over 90%. People in Silicon Valley are excited to come to Wal-Mart, said Neil Ashe, CEO of Walmart Global eCommerce.


The company closed four acquisitions in the quarter — Tasty Labs, OneOps, Inkiru and Torbit. 


“E-commerce is important to our customers and our company’s future. Year to date, the incremental impact from e-commerce investments is approximately 5 cents per share. We anticipate the incremental impact to third quarter earnings will be about 2 cents per share,” Holley said.

With earnings reports from major U.S. retailers indicating a slowdown in discretionary spending, it’s not a surprise to see declines in hospitality tax collections in the Fort Smith and Van Buren areas.

Collections in Van Buren during the first six months of 2013 total $213,288, a slight decline of 0.3% from the $212,704 in the same period of 2012. June collections in Van Buren were $36,523, just slightly below the $36,527 in June 2012. The city collects a 1% tax on lodging and a 1% prepared food tax.

Maryl Koeth, executive director of the Van Buren Advertising & Promotion Commission, continues to believe that vacation and business travelers are spending less – fewer nights in hotels, fewer restaurant visits, etc. – while on vacation or business trips. The concern is that the trend will begin to result in a growing year-over-year decline.

“As you can see, the June 2013 tax receipts were even with last year's numbers. I'm hoping to see this trend continue through the end of the year,” Koeth said.

During 2012, Van Buren hospitality tax collections totaled $425,554, up 5.2% compared to the 2011 collections. Hospitality tax collections in Van Buren during 2011 totaled $429,561, up 2.34% compared to 2010. The 2011 collections ended a two-year skid in Van Buren.

FORT SMITH NUMBERS
Collections in Fort Smith during the first half of 2013 totals $370,590, down 3.9% compared to the same period in 2012. June collections were $68,552, down 8.5% compared to June 2012. The city collects a 3% tax on lodging.

“Last year we hosted one Jehovah’s Witnesses conference in June and two in July. The lack of hosting that conference, as well as the United Methodist Church event resulted in lower occupancy for June of this year,” said Claude Legris, executive director of the Fort Smith Convention & Visitors Bureau. “Looking ahead to July, we had a solid month of events with two Jehovah Witnesses events (they held two large vents this year instead of three), with the Arkansas Sheriff’s Association in between.  Following the second Jehovah Witnesses conference this year we hosted the 12th District African Methodist Episcopal church Youth Conference, so I expect to see this year’s July collections compare favorably with 2012, helping us to make up some of the ground on the year to date figure.”

During 2012, Fort Smith hospitality tax collections totaled $746,182, up 5.37% compared to the 2011 period.

Employment in the region’s tourism industry was 9,600 during June, up from 9,400 in May and above the 9,200 in June 2012. The sector reached an employment high of 9,800 in August 2008. The monthly average employment in 2012 was 9,000, higher than the 8,800 in 2011 and 8,700 in 2010. However, employment averages peaked in 2007, 2008 and 2009 at 9,300.

STATE, NATIONAL DATA
Arkansas’ tourism sector (leisure & hospitality) employed 102,500 during June, up from the 102,300 during May and slightly less than the 102,600 during June 2012. At a revised 103,700, January 2013 marked a new employment high in the sector.

Arkansas’ 2% tourism tax receipts totaled $4.954 million for the first five months of 2013, up 2.58% compared to the same period in 2012. The increase is a shift from a year-over-year decline of 0.11% during the first quarter of 2013.

Arkansas’ 2% tourism tax receipts totaled $12.405 million during 2012, up 3.16% compared to the $12.025 million during 2011. The gains marked the third consecutive year of improving tourism tax revenue.

The June STR report posted at HotelNewsNow.com shows a slight decrease nationally in hotel demand.

The U.S. hotel industry’s occupancy fell 0.3% to 69.9%, and the average daily rate was up 3.3% to $111.27. The evenue per available room increased 3% to $77.76.

“The hotel industry reported the highest monthly room revenue ever in June (US$11.5 billion), a clear indicator that the U.S. hotel industry is healthy and that most benchmark metrics are recovering to their old highs,” Jan Freitag, senior VP of strategic development at STR, said in this report. “With that said, demand only increased 0.5 percent in year-over-year comparisons, and RevPAR only increased 3 percent.”

It was just last June that Rep. Greg Leding, D-Fayetteville, was hosting a forum on human trafficking at NorthWest Arkansas Community College after Arkansas was named among the worst states in efforts to prevent and prosecute human trafficking, which more often than not involves abduction and selling young girls into sex slavery.

But in just one year, Arkansas has gone from the bottom of the rankings to near the top, with the state recently being placed in the top tier of states fighting human trafficking by the Polaris Project, an organization whose goal is to eliminate human trafficking through education and legal remedies.

Leding said last year's rating and forum served as a wake up call for legislators as they met in January for the 89th General Assembly.

"We were really among just a handful of states that didn't have the proper laws on the books," he said. "We worked together with Polaris and other groups to prepare legislation (to combat human trafficking)."

To achieve the improved ranking, Leding and two other legislators, Republican Rep. David Meeks of Conway and Democratic Sen. Joyce Elliott of LIttle Rock, crafted and pushed through three different pieces of legislation that not only increased penalties for human trafficking in the state of Arkansas, but also worked to increase awareness and reporting while also stopping the prosecution of underaged victims.

"With my bill, a lot of times people who are rescued are in prostitution situations, but it's forced," Leding said. "In the previous legal climate, they would still be prosecuted even though it was by force. So we wanted to create a safe harbor, which was Sen. Elliott's bill."

The bill grants immunity to underage individuals who authorities can prove were forced into prostitution, allowing the victims to testify against their assailants without the fear of being charged with a crime themselves.

That portion of the bill was crafted with the help of prosecuting attorneys from across the state, Leding said, in order to prevent any loopholes from appearing "that we'd later regret."

Legislators also worked with local police departments to include provisions in the new laws that may not have been previously considered, Leding said.

"They had a problem where they arrested a John who they felt was guilty of (being involved with prostitution). The way the law read, that person had to pay for the prostitution. A loophole would have guys who hadn't paid yet (not being convicted or having charges dropped). Now, (the law says) if you've paid or plan to pay (for sex). … We definitely wanted to go after the people who are trafficking, but they wouldn't be going after these women if there wasn't a market. we wanted to do all we could to reduce the market for these trafficking victims."

In a press release, Polaris highlighted all of the work done by legislators in Arkansas, naming the state as "most improved."

"Arkansas catapulted from Tier 4 to Tier 1 after passing legislation which  allowed for asset forfeiture from traffickers, provided law enforcement training, mandated posting of the National Human Trafficking Resource Center hotline, provided victim services, and more."

The move not only in Arkansas, but in many other states, was historic according to Bradley Myles, CEO of the Polaris Project.

"We’ve witnessed a historic turning point now that all fifty states have passed laws criminalizing human trafficking. However, criminals are trafficking women, men, and children from coast to coast at horrendous rates. In every state, we need to give prosecutors and law enforcement the right tools to stop traffickers, and state agencies must have the ability to protect survivors and help them reclaim their freedom."

In Arkansas, Polaris has said one area needing improvement on is the area of vacating convictions for victims of human trafficking. It's something Leding said he will continue to work on with his colleagues in the General Assembly should he win re-election next year.

"It doesn't quite have all of the teeth that Polaris would have liked to have seen, but they are things we could eventually see down the road. It depends on the number of human trafficking cases in Arkansas," he said. "We were the last southern state to have these laws on the books. There had been cases in the state and we didn't want it to get worse. It could have been a problem if we hadn't done anything."

Leding also said as part of the new laws taking affect this year, Polaris' human trafficking hotline is now posted in areas across the state, such as truck stops and bars. He said it is important for the public to understand that the number of human trafficking cases reported to Polaris, and in turn reported to authorities, was likely to go up due to the increased awareness of the problem.

"We may see the number of reported cases go up if people become aware of the issue," he said. "It may have been happening all along, just not reported. It's possible we could see an uptick, though there are no additional cases of the crime (being committed). I think we'll see more calls to the hotline."

If you know of or suspect human trafficking, the Polaris Project's human trafficking hotline can be reached at (888) 373-7888.

Wal-Mart Stores continues to integrate its e-commerce platform with stores to create what company officials hope is a unique shopping experience.

Walmart U.S. CEO Bill Simon said the company recently launched the locker test for site-to-store in the Washington, D.C. area.

“While this test is still in the early stages, the initial read on customer satisfaction and acceptance is very encouraging, with 90% of the customers who have used the service providing positive feedback,” Simon said during Thursday’s (Aug. 15) pre-recorded earnings call.

Washington D.C. is an interesting market for the test lockers, given that the retailer is battling the city council over a new wage law that requires big box retailers to pay a minimum of $12 an hour in wages and benefits. Wal-Mart warned the city council it would withdraw several of the six new stores planned if the law wasn’t vetoed, but the first of those stores opened earlier this week.

Mayor Vincent Gray has not yet signed or rejected the bill, but he’s expected to do one or the other within the next week.


In the meantime, Wal-Mart is optimizing its online fulfillment centers to work in conjunction with Wal-Mart’s shipping network, distribution centers and stores, according to Neil Ashe, CEO of Walmart Global e-Commerce.


Carol Spieckerman, CEO of New Market Builders in Bentonville, has said locker-sites and e-Commerce, could be the way Wal-Mart wins entry into those tougher markets like New York City and Washington. She said the final mile delivery is made easier for Wal-Mart if it can leverage its massive physical footprint to act as fulfillment centers across the country. 


Two-third’s of the nation’s consumers live within 5 miles of a Wal-Mart Store. Using these stores to fill online orders and putting lockers in urban areas give the retailer some really good options for tackling delivery and final mile challenges, according to Spieckerman.


Now that Wal-Mart has a new store open in D.C. the retailer has foothold in that market. Two other stores are set to open in the coming weeks, but three of the six stores have been put on hold pending the mayor’s decision to sign or veto the wage bill.


Simon said Wal-Mart views its physical presence as a significant competitive advantage for its Walmart.com business. In the past quarter Wal-Mart has expanded its “Ship from Store” program. 

He said a steadily increasing percentage of all items shipped to customers’ homes are now fulfilled through the “Ship from Store” program. The majority of orders are delivered in two days or less and at a lower cost.


Ashe said the company is now using 35 stores as additional nodes in the online fulfillment network.

“Those stores now handle a double-digit percentage of Walmart.com orders, and the majority of those are delivered in two days or less at a significantly lower cost,” Ashe said.

The company’s “Pick Up Today” option gives customers the ability to buy a item online and pick it up in a store that same day.,

“We have more than tripled the items available for ‘Pick Up Today’ since the beginning of the year. We have also developed a new capability that automatically searches our broader inventory for an item if that item isn’t available in a customer’s primary store. That has significantly improved our fill rate,” Ashe said, during the call.

He said the pilot program to deliver groceries in San Francisco and San Jose is gleaning interesting results.

“We’ve proven we can successfully use a supercenter for online grocery delivery, and we’re getting high marks from customers. Many of these are new customers. Some 75% of the customers say they would have purchased through another retailer other than Wal-Mart. And, 83% would recommend Wal-Mart grocery delivery,” Ashe said.

Benton County resident Robert McCurry filed suit this week against the state’s Alcoholic Beverage Control Division after his application for a liquor store permit was denied last month.

The case was filed Tuesday (Aug.13) in U.S. District Court Eastern District. It’s the second lawsuit filed in federal court challenging state law liquor store limits since Benton County became "wet" and the hearings for liquor store permits were held last month.

McCurry applied for a retail liquor store permit in April for The Fine Wine & Spirits Store which was to be located at 2503 S.E. J. Street in Bentonville. On that application, he stated that he had an interest in another liquor store in Missouri. McCurry was chosen in a lottery drawing and allowed to pursue his permit through a hearing process held last month in Little Rock.

During that hearing, the ABC asked McCurry if he held or owned an interest in Gild Corporation, which has liquor permit for Macadoodles in Springdale. McCurry told them he owns a minority interest in Gild Holdings and Gild Corporation. The ABC then denied his application on the basis that he already owned an interest in the Macadoodle franchise and state law prohibits anyone person from owning more than one liquor store in the state, and that includes fractional shares of franchises.

The suit claims the state law passed in 2011, violates the commerce clause and “substantially interferes with interstate commerce.”

If the law is truly applied as written, then anyone who owns a share of Wal-Mart Stores Inc. or Walgreens could also be prohibited owning a liquor store in Arkansas. The suit states that Wal-Mart and Walgreens’s each own one liquor store permit in Fayetteville and West Memphis, respectively. And their shareholders have fractional financial interests in those operations.

The complaint states that the law interferes with interstate commerce as it prevents or restricts the trading of stock of publicly held corporations because it prevents people who own any interest in a retail liquor permit from owning any stock in a publicly traded corporation such as Wal-Mart or Walgreens.

The compliant also charges the law is unconstitutionally vague and violates due process.

Plaintiff counsel Jim Lyons also represents Gild Holdings and Steven Cherry who filed a similar case against the ABC last month.

Lyons said there have been no new developments in the Gild Holdings suit at this time, both sides are waiting on a judge’s ruling to continue or dismiss.

Many Fort Smith area residents got their first introduction to the Affordable Care Act through a presentation at St. James Missionary Baptist Church on Thursday night (Aug. 15).

The session, "The Affordable Care Act - What does it mean to Arkansans," was presented by the Arkansas Minority Health Commission to about 120 individuals in attendance at the Fort Smith church.

According to Idonia Trotter, executive director of the AMHC, the goal of the program was to clear up misconceptions about what the ACA does and does not do.

"The Minority Health Commission saw a great need for the grassroots community to be learning about what's happening with the Affordable Care Act, not just when it was implemented or signed into law, but early on. So for about a year now, we've been educating citizens about this law is, about the benefits that are currently available and about what benefits that will be available in the future so that they can get connected."

Trotter said by having the public insured, it would improve overall health. And that, she said, was the point of the ACA and the more than 17 informational meetings the AMHC has hosted across the state prior to tonight's event.

During the event, Trotter and Marquita Little, director of policy and planning at the Department of Human Services, presented information and answered questions.

Backing up Trotter's assertion that an insured populous would improve overall health, Little told the crowd of the risks if they did not sign up for healthcare, as required by the act signed into law by President Barack Obama in 2010.

"Having insurance makes the difference between having regular medical and dental care and not," she told them, adding that about 500,000 Arkansans are currently uninsured.

With the high number of individuals who are uninsured across the state, Little said, hospitals and medical clinics often times treat patients who have no way to pay for their treatments, which she said was the cause for what many say are increasing health insurance premiums year after year.

Little said the group AMHC caters to, minorities, are the most disproportionately affected by a lack of health coverage, either through circumstances such as joblessness or by employers not offering coverage. According to Little, 21% of African Americans and 32% of Hispanics were uninsured in 2009.

"It tends to be disproportionate impact on minorities, but we know it's an issue that affects us all," she said.

As part of her presentation, Little informed residents that the ACA provided many benefits, including:
• Children can stay on their parents insurance policy until the age of 26;
• Insurance companies can no longer deny coverage of a child under the age of 19 due to health conditions;
• Lifetime benefit limits are eliminated and annual benefit limits on insurance coverage are regulated until 2014;
• Rescinding coverage by insurance companies is prohibited unless due to fraud;
• Premiums can only be increased due to age, geography, tobacco use, and type of coverage (in the future);
• No out-of-pocket cost to the consumer for preventative care, such as wellness visits, mammograms, colonoscopies, etc.; and
• Coordination of care improvements will be implemented, such as electronic health records.

For business owners in the crowd, Little pointed out that tax credits could be a part of the ACA - if business owners shopped for coverage on the new health insurance marketplace.
www.arhealthconnector.org/homepage.html

She said individuals would have the option to shop on the marketplace if they did not have an employer-provided health care option, though only if the plan made available through their employer exceeded 9.6% of their annual income.

Most of the crowd listened without questions or with questions clarifying points made by either Little or Trotter.

Fort Smith resident George Willis said he came to the meeting because "normally there's a loophole. I just want to see what it is." Willis said he has not had many questions about the act after calling an information hotline tied to the Arkansas Health Connector, or the marketplace. He said he was a supporter of the ACA because it would require that all American citizens obtain insurance.

"(I supported it) because I believe insurance should be available to everybody that needs it. Most of the industries have cut people out of jobs and when they lose their jobs, they lose their benefits."

Trotter said she was impressed with the work passing not only the Affordable Care Act at the federal level, but also the expansion of Medicaid in Arkansas (also known as the private option), which is expected to move hundreds of thousands of uninsured Arkansas into the privately insured category, initially at federal government expense.

"I think the legislative body should be commended for …the tough work that they had to engage in during the session to get us where we are today. It's not a perfect law, certainly there's going be as we all go along, and we're going to see some things that need to be changed. However, it's a step in the right direction we believe."

The same day a new Board of Directors was seated for Health Management Associates, the hospital company announced it would move 75 jobs from a service center in Knoxville, Tenn., to the service center under construction in Fort Smith.

A new board is the result of a successful effort by New York City-based Glenview Capital Management to seek shareholder approval of a plan to “Revitalize HMA” by changing board and executive leadership.

Naples, Fla.-based HMA is the parent company of Sparks Health System in Fort Smith and Summit Medical Center in Van Buren.

On June 25 Glenview formally requested that HMA shareholders vote for a complete overhaul of the HMA board of directors. Officials with Glenview said financial and structural problems at HMA are so deep that they believe a new Board was required to provide the experience to make changes.

It was announced Aug. 12 that the board nominees submitted by Glenview, which owns 14.6% of HMA shares, had received more than 50% of shareholder support.

The new members of the Company's Board of Directors are Steven Epstein, Mary Taylor Behrens, Kirk Gorman, Stephen Guillard, Joann Reed, John McCarty, Steven Shulman and Peter Urbanowicz. Link here for bio information on the new board members.

The hospital industry is waiting to see if the board will reject, adjust or move forward with the Community Health Systems plan to acquire HMA in a deal valued at $7.6 billion that could close in the first quarter of 2014.

A new board and the Community Health Systems deal delivers a level of uncertainty to the planned regional service center now under construction in Fort Smith. HMA officials announced in April that the center would be housed in what was once a portion of Phoenix Village Mall. HMA said at least 500 will be employed at the center, and estimated the annual payroll at $21.5 million, with the center at full employment within 12 months. The facility is scheduled to begin operations in early September.

However, Lance Beaty said construction on the HMA service center continues and he sees no hint that the service center will not open. Beaty, general manager of FSM Redevelopment Partners and owner of the property HMA is leasing for the Fort Smith service center, said crews are working an expedited schedule to open the center as soon as possible.

On Friday (Aug. 16) officials with Tennova Healthcare, based in Knoxville, Tenn., and a system owned by HMA, said 75 jobs in the Knoxville service center will be moved to the Fort Smith operation.

“In a further response to this challenging economic environment and the pending implications of the Affordable Care Act, we will be consolidating some of the activities at our Knoxville regional service center into our center in Arkansas. That will result in 75 positions being moved from the Knoxville center to Arkansas,” noted an HMA statement.

The jobs will be moved by October, according to this report by Channel 6 ABC affiliate WATC in Knoxville.

HMA said the Knoxville employees will be offered opportunities to move to service center jobs in Arkansas, Florida, North Carolina and Mississippi, or apply for positions in Tennova hospitals.

The HMA statement said the job consolidations and service centers are part of efforts to improve overall hospital operations.

“With major changes underway in healthcare and the strong economic pressures that have resulted, Health Management Associates must now, more than ever, work to improve the effectiveness and efficiency of our hospitals’ operations. One way we have done so has been to create regional service centers that consolidate hospital business office operations.”

Wal-Mart said this week it will take unwanted iPhone, Galaxy S3 or other electronic gadgets in exchange for gift cards that can be spent in its stores or online. The big box giant joins Amazon, eBay and other retailers wanting consumers’ cast-off electronic gadgets, a mission that analysts said is two fold.

Wal-Mart’s “Gadgets to GIft Cards” program was announced less than a month ahead of the next iPhone release on Sept. 10. The retailer has continued to expand its smart phone offerings and subscription plans at a time when the broader electronic category is struggling.

Perhaps consumers who trade working phones will upgrade to a new phone purchase from Wal-Mart. They might even subscribe to Straight Talk, which is now compatible with iPhones and Android devices.

The company recently posted negative same-stores sales in its entertainment division. Bill Simon, CEO of Walmart U.S., said Thursday (Aug. 15) the sales in the entertainment category posted a mid single-digit negative comp for the quarter ending June 30.

“Our performance was pressured by soft results in both electronics and media and gaming. Mid single-digit industry deflation and softer discretionary spending continued to be significant headwinds for these categories, while the anticipation of new video game consoles caused further delays in spending for gaming,” Simon said.

He said while the retailer lost market share in its TV category during the quarter there was a bright spot in wireless sales. He said Wal-Mart is the number one handset retailer in unit share, according to NPD.

Analyst said the retailer’s move to accept a broad range of electronic gadget trade-ins will also provide the company with a rich data source from consumers who may or may not already be Wal-Mart shoppers. In the process of completing a trade with Wal-Mart, consumers will give the retailer valuable data such as brand allegiance, personal information such as address and even credit history for those consumers who choose the “pay me now” option.

On the surface the Wal-Mart program appears similar to others except that the retailer will grant the seller credit on the honor system, providing the seller can pass a credit check first.

The program accepts a wide range of makes and models of iPhones, smartphones, tablets, MP3 players, game media, laptops, GPS devices and cameras. Popular Apple products are wanted whether they work. For instance, the Apple iPhone 4S in nonworking order will fetch $75. In working order the offer is $205 with AT&T as the provider. However, the price falls to $162.50 if Verizon is the carrier.

Wal-Mart said the worldwide demand for certain carriers has an impact on the price offered.

Lackluster brands of late, like Blackberry, are also approved for trade-in. They fetch anywhere from $3.50 for an old Blackberry Curve to $234 for the newest version Blackberry Q10.

Insiders said Wal-Mart is also offering better deals for some popular devices until Aug. 25, like $175 for a Samsung Galaxy S3 16GB, and $250 for an iPad.

When accessing the exchange site, consumers may get quotes for the devices they wish to trade. If they find a deal they like, Wal-Mart will pay via e-card within minutes. The consumer then has 10 days to send the device to the retailer, who provides a free shipping label in the deal.

The devices are sent to CExchange, a leading provider of electronic trade-in, recycling and asset recovery services who partners with Wal-Mart on this program, said Bao Nguyen, Wal-Mart spokesman.

The deal also hinges on the retailer extending the consumer credit until the device is received. For those who don’t want to share their credit history with retailer, a gift card will be mailed once the device is received and verified. Wal-Mart estimates a three to five-day time period for gift cards to be mailed once the device is received by its program partner.

The Wal-Mart program details can be found its dedicated site.

Arkansas Gov. Mike Beebe (D) endorsed Democratic gubernatorial hopeful Mike Ross on Saturday (Aug. 17) at the State Capitol in Little Rock.

The endorsement comes as little surprise as Beebe and Ross have a long-standing working relationship from their days in the Arkansas State Senate as well as their political affilation.

Ross may be on a clear path to the Democratic nomination now that former Arkansas Lt. Governor Bill Halter exited the race last month. No major challenger is expected to contend with Ross for the nomination.

Beebe said he thinks Ross’ emphasis on education and economic development – two linchpins of his administration’s focus – make him the best candidate in the race.

“I have known Mike since we served together in the State Senate,” Beebe said. “He’s a close, personal friend and I am proud to support and endorse Mike Ross to be this state’s next governor. Arkansas has made too great of strides in education and economic development to allow our state to turn back that progress now. Mike Ross will unite this state with a bipartisan focus on education, job creation and tax reform, and he will serve as the hardworking, compassionate leader we need to continue moving Arkansas forward.”

“I am proud and honored to accept Governor Beebe’s endorsement – someone I have admired since the days when we worked side-by-side in the State Senate,” said Ross. “Governor Beebe has served this state well and the reason he’s the most popular governor in America is because he always puts good public policy over partisan politics and he always puts Arkansas first.”

While Ross appears to have a clear field, his likely Republican challenger, Asa Hutchinson, faces a GOP primary battle next spring with Rep. Debra Hobbs and businessman Curtis Coleman.

DO ENDORSEMENTS MATTER?
Endorsements do and don’t matter, said Dr. Jay Barth, professor of political science at Hendrix College, polling partner for Talk Business Arkansas.

“In addition to today’s high-profile announcement, I’m sure we will hear Mike Ross tout the support he has from Beebe in every speech he gives between now and November 2014. That is because, as our polling and others have shown the governor’s approval numbers have never dipped from the high 60s and early 70s,” Barth said.

In the latest Talk Business-Hendrix College Poll, taken in late February, Beebe’s job approval rating found that 68% approved of the Governor’s performance while only 19% disapproved.

In that poll, Beebe performed extraordinarily well with Democratic and Independent voters. Even 57% of Republicans approved of the job Beebe, a Democrat, was doing.

“While endorsements historically have little impact on the outcome especially when they are from fellow partisans, this does suggest Beebe does plan to campaign actively for his possible successor and he does seem to be the one Arkansas politician who breaks through the increasingly polarized Arkansas political environment. Beebe’s visibility could matter in what is likely to be a very close race,” Barth added.

In the same Talk Business-Hendrix College Poll referenced earlier, Asa Hutchinson had a 5-point lead over Mike Ross among 675 likely Arkansas voters.  The poll found that 43% supported Hutchinson, while 38% supported Ross and 19% were undecided.