With a close vote in both bodies, the Fort Smith Board of Directors and the Sebastian County Quorum Court voted to approve “Parrot Island Water Park” as the name of the aquatics park now under construction at Ben Geren Regional Park.

The $10.9 million facility will include three bodies of water, a 500 foot lazy river and four water slides for a total footprint of more than 20,000 square feet. It is on track for a Memorial Day 2015 opening, and should be a larger facility than those recently opened in Rogers and Clarksville, Ark.

The closest larger water parks are in Branson, Tulsa and Little Rock.

Erie, Pa.-based American Resort Management was hired by the city and county to operate the park. Company officials recommended the “Parrot Island” moniker, but it was not immediately welcomed by the city. Most social media commentary opposed the idea, and Quorum Court Member Danny Aldridge said he was overwhelmed by constituents who opposed the name.

Most opposition was based on the name not having a regional connection, he said.

Fort Smith city staff recommended the Fort Smith Board approve Parrot Island as the name. City Administrator Ray Gosack said the name would create a unique identity because no other water park has the name.

City Director Philip Merry Jr., said he also heard from citizens who mostly opposed Parrot Island. He said other names recommended to him included “Fort Splash,” “Frontier Falls,” and “Marshal Islands” – with Marshal being a reference to the U.S. Marshals Museum planned for downtown Fort Smith.

Also opposed to Parrot Island was City Director Pam Weber.

“Parrots don’t have a connection to this community,” she said, adding that the Board shouldn’t “name a $12 million investment” something that does not connect to the community.

City Directors André Good and Keith Lau said they did not like the name, but also did not want to slow the process to market the facility for an opening in May 2015. Director Kevin Settle said he didn’t like the name but the Board should trust the marketing experts, allow the process to move forward, and not get caught up in a naming contest that could go bad.

Weber countered that seeking a new name doesn’t slow the process. She said the naming process could generate interest and marketing right up to the opening day.

“I think we can turn this into a big positive ... and create a lot of excitement with (a naming contest),” Weber said.

Eventually, the Board voted 4-3 to approve the name, with City Directors George Catsavis, Merry and Weber voting no.

The Sebastian County Quorum Court, which needed seven votes to approve the measure, voted 6-4, with one abstention. However, the abstention, according to rules of the body, is a vote with the majority – in this case giving the Parrot Island name its needed vote.

Gov.-elect Asa Hutchinson (R) made several key appointments to his upcoming administration. Brigadier Gen. Mark Berry was named as the 52nd Adjutant General of Arkansas, Rep. Allen Kerr will be the new Insurance Commissioner, and Sheila Sharp will remain the director for the Department of Community Correction.

Berry’s career spans more than 40 years, including more than 20 years of active-duty service. In 1992, after completing his active-duty service, Berry joined the 188th Fighter Wing in Fort Smith where he served until his appointment as Chief of Staff, Arkansas Air National Guard in 2012.

Berry enlisted in the Air Force in 1974, attended Officer Training School in 1985, and has been stationed in Nevada, Oklahoma, South Korea, and Arkansas. This is the first time in recalled history that Arkansas’s Adjutant General has been appointed from the Air Force.

“It is my pleasure to announce Brig. Gen. Mark Berry as the new Adjutant General of Arkansas. Brig. Gen. Berry is a principled leader who, over the course of his 40 year career, has served our state and country – at home and overseas – with honor and integrity. Those traits, accompanied with his experience and extensive knowledge of Arkansas and our military, make him the obvious choice for this new role,” Hutchinson said.

Berry’s appointment was praised by U.S. Rep. Steve Womack, R-Rogers.

“I applaud Governor-Elect Hutchinson’s appointment. His selection of an Air Guardsman to lead the Arkansas Guard is a reflection of the joint nature of today’s military, and I am wholeheartedly confident in General Berry’s ability to be an effective commander during this time of great uncertainty in the Guard,” Womack said in a statement.

Former Rep. Kerr served six years in the Arkansas House of Representatives. He has 34 years of insurance experience with a background in financial services, where he holds several professional licenses.

“Along with his experience in the legislature and his breadth of knowledge in the insurance industry, Allen will also bring with him a fresh look at the department,” Hutchinson said of the appointment.

Sharp has worked in state government almost 40 years and has more than 15 years experience with the state prison system. She has served as director for the Department of Community Correction since August 2013.

“Sheila has done an outstanding job in her current role as director at the Department of Community Correction. As a former prosecutor, I recognize how critical this role is to our law enforcement community, and I have no doubt she will continue to serve the department and the people of Arkansas well,” Hutchinson said.

Gov.-elect Hutchinson’ inauguration is set for 10:30 a.m., Jan. 13, in the chamber of the Arkansas House of Representatives.

While not broad, improvements in employment, sales tax collections and tourism sector employment helped push positive economic trends during the third quarter of 2014 for Arkansas’ three largest metro areas.

Data gathered and analyzed as part of The Compass Report showed gains and stability during the third quarter of 2014 compared to the same period in 2013. The quarterly Compass Report is managed by The City Wire, and is sponsored in the Fort Smith area by Arvest Bank. The report is the only independent analysis of economic conditions in Arkansas’ three largest metro areas.

Compared to the third quarter of 2013, economic conditions were improved in Northwest Arkansas and the Fort Smith metro area, and unchanged (stable) in central Arkansas.

To underscore the impact of the three largest metro areas, for June of this year the unemployment rate for the rest of the state was 6.4 percent, down 1.7% from September 2013. The statewide unemployment rate with the three largest metros added back in was 5.7%, down 1.5% September-on-September.

Rodney Shepard, president and CEO of Arvest Bank in Fort Smith and the River Valley Region, said it is nice to see the ongoing improvements in the Fort Smith area and hopes the growth can be sustained.

“We are pleased that there is an improvement in our overall grade from last quarter,” Shepard said. “Part of that stems from a slight increase in year to year employment gains. While encouraging, we are hopeful these jobs are permanent for the area.”

Jeff Collins, economist for The City Wire, said Arkansas’ metro areas should benefit from “slow but steady” improvement in the U.S. economy.

“With the mid-term elections over, we have the Presidential election season to look forward with the New Hampshire primary and Iowa caucuses only 14 months away. In the meantime, most Americans will enjoy lower gas prices, and slow but steady improvement in employment and housing markets. The most important government policy action impacting the economy will continue to come from the Federal Reserve. The greatest risk appears to come from slow international growth impacting exports,” Collins noted.

NORTHWEST ARKANSAS
Continued employment gains and increases in sales tax collections are signs of a metro economy on a clear growth trend. The third quarter 2014 grade of B+ was better than the B in the second quarter of 2014 and unchanged compared to the third quarter of 2013.

The grade of B+ indicates an economy that is growing. Non-farm employment in the region was 219,800 in September, well ahead of the 216,800 in September 2013. Countywide sales tax collections in the three-county metro area totaled $21.982 million in the quarter, ahead of the $20.889 million in the third quarter of 2013.

Although the Northwest Arkansas metro continues to be the fastest growing metro in Arkansas and one of the most dynamic regional U.S. economies, the pace of growth is slowing.

“The Northwest Arkansas regional economy, as measured by change in non-farm employment, slowed noticeably. Growth rates had regularly exceeded 2% annually but current rates based on month-on-month comparisons are closer to 1.5%,” Collins said.

However, the size of the labor force in Northwest Arkansas is more stable than that of the other two metro areas. According to data from the Bureau of Labor Statistics the labor force declined by 1.7% September-on-September in Northwest Arkansas. The labor force declined in Central Arkansas by 2.2%. In the Fort Smith area the labor force declined by roughly 3.5%.

FORT SMITH REGION
The Compass Report for the Fort Smith area posted a C+ grade for the third quarter, better than the C in the second quarter of 2014 and unchanged compared to the third quarter of 2013.

Holding back the improving trend continues to be relatively flat employment gains in the year-over-year period, and a decline in sales tax collections. Non-farm employment in the metro area hit 116,600 in September, up slightly from 116,500 in June 2013. County sales tax collections in the four-county area totaled $10.302 million in the third quarter, down from $10.34 million in the 2013 quarter.

For the quarter, employment growth was concentrated in a handful of service sectors.  The following service sectors had increased employment September-to-September: trade, transportation, and utilities (700), leisure and hospitality services (700), business and professional services (200), and government (100). In percentage terms, leisure and hospitality gained the most during the period (7.4%).

Still lagging is the region’s manufacturing sector.

“The critical manufacturing sector performed poorly September-on-September losing 500 jobs. An estimated 17,900 people worked in the sector in September 2014 compared to 26,500 in September 2007,” Collins wrote.

Although employment and sales tax collections struggle to post consistent improvement, Collins said the regional economy is doing well considering the loss of major employers in recent years.

“While the metro area economy continues to struggle with the decline in manufacturing, given economic performance at the state and local levels, the data for the Fort Smith area economy implies the regional economy has been somewhat resilient,” he said.

CENTRAL ARKANSAS
Economic conditions in central Arkansas, the state’s largest metro area, received a grade of C in the third quarter, unchanged compared to the second quarter but better than the C- in the third quarter of 2013.

Improvements in overall employment and ongoing gains in the construction sector helped maintain the C grade. Non-farm employment stood at 348,900 in September, better than the 345,900 in September 2013. There were an estimated 18,500 jobs in the region’s construction sector in September, well ahead of the 16,600 in September 2013.

“Improvement in the unemployment rate was evident in the nonfarm employment data.  The Central Arkansas economy added 3,000 jobs, or 0.9% since September 2013. Given recent job creation data for the Central Arkansas metro, this was an above average improvement,” Collins noted in his report.

Like the Fort Smith metro area, Collins said central Arkansas struggles to stay on a positive track.

“The Central Arkansas regional economy has slowly improved since late 2010. While the local economy benefits from diversity and concentration of healthcare and government employment, it has yet to regain its pre-recession trajectory,” Collins said.

NATIONAL ECONOMY
Output growth in the U.S. has been very good over the last two quarters. This coupled with relatively strong employment growth has reduced the economic concerns of U.S. households and businesses.

The unemployment rate has steadily declined since reaching a seasonally adjusted peak in October 2010 of 10%. The current rate stands at 5.8%. This is still well above what most economists historically consider the “full employment” unemployment rate of 4%.

However, the better job numbers have not resulted in clear gains in consumer confidence.

“Despite the positive employment data public opinion polls continue to show most Americans are concerned about the direction of the U.S. economy and generally dissatisfied with policies coming out of the federal government,” Collins noted.

Other national economic notes from Collins’ included:
• Despite persistently high unemployment rates, consumer spending has picked up since the first two months of the year. Real retail and food service sales grew at an annualized rate of 2.6% in September. Again, lower gas prices are increasing household buying power. This unexpected windfall is likely to impact holiday sales. Look for a better than expected retail season in the fourth quarter.

• The economic outlook is unlikely to be impacted by governmental policy choices given Republican control of the legislative branch and Democrat control of the executive. Factors likely to have significant impact include reduced monetary stimulus offset by lower petroleum prices, the net of which remains to be seen.

• Ironically one man’s silver lining is another man’s cloud. Low oil prices will negatively impact oil producing regions of the U.S. as well as returns for energy companies. The rapid growth of shale oil in places like the Dakotas is likely to slow as the local economy experiences the primary hazard of a commodity-based economy—falling prices.

• Consumers, on the other hand, are likely to return to larger and more powerful cars and trucks, a clear boon for automobile manufacturers.

• The U.S. economy remains heavily dependent on the consumer. It remains to be seen if consumers will maintain purchasing at current levels with persistently high unemployment and modest wage growth.

REGIONAL GRADE HISTORY
FORT SMITH REGION– Fort Smith regional economy
3Q 2014: C+
2Q 2014: C
1Q 2014: C
4Q 2013: C+
3Q 2013: C+
2Q 2013: C
1Q 2013: C-
4Q 2012: C
3Q 2012: C-
2Q 2012: C-
1Q 2012: C-
4Q 2011: C-
3Q 2011: C
2Q 2011: C
1Q 2011: C-
4Q 2010: C-/D+
3Q 2010: C-
2Q 2010: C-
1Q 2010: C-
4Q 2009: D
3Q 2009: D
2Q 2009: D-
1Q 2009: D+

NORTHWEST ARKANSAS– Northwest Arkansas regional economy
3Q 2014: B+
2Q 2014: B
1Q 2014: B-
4Q 2013: B+
3Q 2013: B+
2Q 2013: B
1Q 2013: B
4Q 2012: C
3Q 2012: B+
2Q 2012: B-
1Q 2012: B-

CENTRAL ARKANSAS– Central Arkansas regional economy
3Q 2014: C
2Q 2014: C
1Q 2014: C-
4Q 2013: C-
3Q 2013: C-
2Q 2013: C-
1Q 2013: C-
4Q 2012: B-
3Q 2012: C-
2Q 2012: C+
1Q 2012: C-

DATA AND REPORT DOCUMENTS
Link here for the raw data used to prepare The Compass Report for the three metro areas.

Link here for more narrative about regional and national economic conditions.

UNDERSTANDING THE COMPASS REPORT GRADES
A key factor in understanding The Compass is in understanding the “grading” approach used to measure the current and leading economic indicators.

The strategy is to place the most recent data in historical context. Average values for the percent change over the referenced time period were calculated, as were standard deviations for each measure.

The more similar current values are to historic averages the more likely the indicator grade is to be a “C.”

The farther away the observed value, as measured by the standard deviation of the data, the more divergent the grade from “C.” In other words, “C” reflects no change in economic activity. The grades “B” or “A” indicate improvement above the historical average, and “D” and “F” indicate a decline in economic activity compared to the historical average.

More road construction is on tap for Springdale. The Arkansas Highway and Transportation Department agreed Wednesday (Dec. 17) to pay nearly $101 million for the construction of the first section of the U.S. 412 Bypass of Springdale.

This is one of the region’s highest priority projects as it will facilitate an easier drive to Northwest Arkansas Regional Airport from Interstate 49 and also provide another east-west corridor for traffic through north Springdale, according to the Northwest Arkansas Council.

The Phase I project is slated to begin early next year. The $100.62 million bid went to Eutaw Construction of Aberdeen, Miss., to build the four-mile, four-lane section of the highway that will make the drive to the Northwest Arkansas Regional Airport more accessible from I-49. 

This project is part of the overall transportation infrastructure that has been made possible because statewide voters approved a half-cent sales tax in November 2012. That sales tax is supporting the Connecting Arkansas Program (CAP).

The CAP is paying for major projects across the state, including three key Northwest Arkansas projects. Widening sections of I-49 to six lanes, building a two-lane version of the Bella Vista Bypass and construction of the four-mile section of the U.S. 412 Bypass of Springdale are the largest CAP projects in Northwest Arkansas. 

PRIORITY PROJECTS
The three Northwest Arkansas projects for more than a decade have been listed as top priorities for state and Northwest Arkansas leaders, according the Northwest Arkansas Council.

U.S. 412 Bypass construction crews will cut a path that heads west from I-49 near the Wagon Wheel Road exit. They’ll build bridges over creeks and secondary roads on their way to where the bypass will connect with Arkansas Highway 112. The work is scheduled to be complete in late 2018, according to the Northwest Arkansas Council.

The ultimate goal of the U.S. 412 Bypass is to run from just west of Tontitown to the community of Sonora, which is east of Springdale. The completed highway will allow east-west travelers to avoid U.S. 412 (Sunset Avenue/Robinson Avenue) through Springdale, which can be one of the region’s most congested roads.

Other projects already undertaken by Northwest Arkansas communities and the state Highway Department include:
• Springdale’s Don Tyson Parkway and its access to I-49; and
• Fayetteville’s construction of the the Flyover ramp that allows easier access from College Avenue to connect to the Fulbright Expressway and ultimately I-49.

Northwest Arkansas communities and the state Highway Department have taken major steps over the past few years to improve the region’s east-west connectivity. Among the projects that improved east-west connections were Springdale’s Don Tyson Parkway.

Arkansas 265 has also been widened to four lanes providing another north to south route from east Fayettteville to east Springdale as well as improvements to Pleasant Grove Road in Rogers and the widening of U.S. 412 through Siloam Springdale. Bentonville has also planned to add another route from I-49 to downtown via a widening and extension to 8th Street which will begin construction late next year. 

THE NEED FOR MORE INFRASTRUCTURE
Fueling the need for more roads and wider roads is the more than two decades of strong population growth in the region and the continued growth of the metro economy.

Population has grown by 1.9% to 491,966 in the region. GDP has lifted by 5.6% in the last five years to $22.593 billion. The region's per capita personal income and annual wages have also risen, which has led to a small decline – 0.4% – in the area's poverty rate, which stands at 16.8%.

Enplanement traffic at the Northwest Arkansas Regional Airport (XNA) likely broke a new annual enplanement record on Dec. 5, and could end the year with around 640,000 enplanements. Travelers flying out of XNA during November totaled 49,222, up 6.47% compared to the 46,229 during November 2013. For the first 11 months of 2014, enplanements at XNA total 591,480, up 10.37% compared to the same period in 2013. The year-to-date 2014 traffic is up 7.17% compared to the same period in 2007 – the year XNA reached its record enplanement of 598,886.

The Northwest Arkansas jobless rate in October dipped below 4% for the first time since October 2008. The region’s rate also was the lowest metro rate in Arkansas. Metro employment during October of 224,698 was above the 223,532 in September, and also above the 222,492 in October 2013. The October numbers are subject to revision.

An NWA Interstate 49 Corridor Report compiled by CBRE brokers David Erstine and Clinton Bennett and released in September also pointed to dynamic economic growth in the region.

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

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

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

Arkansas public schools can have necessary broadband internet at no extra cost to the state and without connecting to a “backbone” such as ARE-ON, the House and Senate Education Committees were told Wednesday.

Jody Craft, lead project manager for CT&T, an engineering and consulting firm hired to examine public school broadband needs, told legislators that connecting to a backbone such as ARE-ON isn’t cost-effective at this time. ARE ON is the Arkansas Research Education Optical Network, a private network used by universities and hospitals but prohibited by Act 1050 of 2011 from being used by public schools.

Instead, CT&T offered a “no backbone” option where schools simply connect to the internet through internet service providers. Craft reported that internet access costs are falling more rapidly than direct transport costs such as through an ARE-ON backbone.

After the meeting, Craft said, “We’re not against the thought of a backbone. We just don’t feel that’s needed at this time. … It’s not needed, and it’s just an expense that’s not going to help the economics of the situation until the access is dealt with.”

After the meeting, House Speaker Jeremy Gillam, R-Judsonia, said the study showed that repealing the law to make ARE-ON an option isn’t a cost-effective solution. Based on his reading of the room, “there doesn’t seem to be an appetite to pursue that option any longer.”

Craft said the state needs centralized planning and procurement but with “decentralized execution.” A small central body should establish standards and provide leadership, but that could be contracted to private providers. He said while district-level information technology managers had displayed an encouraging level of competence and collaboration, no one at the state’s Department of Information Systems (DIS) seems capable of statewide technology planning and technology expense management.

The issue of broadband connectivity gained greater importance when it became clear that some Arkansas schools lacked the ability to take advantage of online learning tools or to participate in online tests administered as part of the Common Core.

Craft reported that 65% of schools are offering 100 kilobits per second per student, the generally recognized standard for 2015. The remaining schools could be connected within 12 months at a cost of $5.3 million, but with help from federal E-rate discounts, that number falls to $1.1 million. E-rate is the federal program funded by telecommunications fees that reimburses Arkansas schools at about an 80% rate.

That $1.1 million can be covered by reallocating expenditures by the statewide Arkansas Public School Computer Network, managed by DIS, which offers 75% of its connectivity through outdated and expensive copper wiring instead of fiber optics, from which school districts obtain 64 percent of their broadband. APSCN is spending $283 for a megabit of connectivity versus $10 for local school districts.

Meanwhile, 95% of school district requests in 2013 were funded by E-rate, compared to only 33.6% of E-rate requests by DIS. In 2012, only 11.8% of DIS’s E-rate requests were funded. About $8.9 million in potential DIS reimbursements are on hold for various reasons, Craft said.

By reallocating APSCN resources, the state would save $8.52 million. That, along with increased E-rate discounts, would enable schools also to reach the accepted standard of 1 megabit per second per student by 2018 at no extra cost.

Craft emphasized that broadband connectivity is not necessarily a function of location or enrollment. Districts in east Arkansas’ Great Rivers Co-op enjoy the state’s highest connectivity rate, including Hughes, Marvell-Elaine, Brinkley, Clarendon, Palestine-Wheatley, Barton-Lexa and Lee County; along with Arkansas School for the Blind.

CT&T’s assessment of the state’s broadband situation is similar to one by the nonprofit group EducationSuperHighway, which also recently has reported that all Arkansas schools can be brought up to speed using existing resources. EducationSuperhighway said ARE-ON should be one of several options.

Wal-Mart is reportedly mulling a purchase of Nook from Barnes and Nobles as the Bentonville-based retailer continues to explore ways to expand its footprint and service offerings against Amazon.

Wal-Mart Stores in recent years has recruited some of the brightest talent in Silicon Valley with a dozen tech acquisitions since 2011. But the retail behemoth has yet to put its name on a hardware device or ebook service to date. TheDeal.com recently reported that WalmartLabs is considering a purchase of Nook from Barnes and Noble which is looking to stem losses and appease investors.

Sean deLone, an analyst with Seeking Alpha, noted in his Dec. 16 blog that “Nook is a cheap way for Wal-Mart to enter the content and E-Reader industry, hoping to break up Amazon’s monopoly on lucrative E-book sales.” He said the rumor that Wal-Mart could buy the beleaguered Nook division from Barnes & Noble is a clear indication that Wal-Mart intends to heat up the retail rivalry with Amazon.

“You need go no further than Wal-Mart's own book section on their website to understand their motivation for acquiring Nook. Prominently featured at the top of the page is a banner ad for "Great Gifts" promoted by the “Hatchette Book Group."

Hachette is the publisher that had a very public fight with Amazon during the past year over E-Book pricing. 

Wal-Mart has not publicly commented on a desire to purchase the Nook business, but  the retailer continues to invest heavily in its technology arm with earmarked funds expected to range between $1.2 billion and $1.5 billion in fiscal year 2016, up from approximately $1 billion, estimated for this year.

“Wal-Mart hates other retail monopolies, watching their most formidable competitor, Amazon, hold 60% market share in E-Books must be agonizing,” deLone said.

He said a case could be made for Wal-Mart to buy the Nook business based on the most obvious strategic motivation — to take online traffic and market share away from Amazon. He adds that besides being a lucrative business, E-Books and the Kindle also support the other functions of Amazon's business. They drive traffic for other items, help Amazon develop technologies, and work as a vehicle to uphold Amazon's reputation for outstanding customer service. He notes that Wal-Mart would benefit from that as well if it owned the Nook business.

The second reason Wal-Mart may be considering Nook is because of the profitability of digital book sales. 

“Platforms like Amazon's E-Book store or Apple's ITunes can essentially print money, once they are scaled, and even bully content producers to raise prices,” deLone notes.

He warned that the barrier to entry is the ultra-capital-intensive and competitive device business, which has produced huge losses for Amazon outside of the Kindle. He said Apple is an anomaly that no other device company can hope to replicate. To illustrate, Barnes and Noble's content sales (E-Books) rose by 16.2% in 2013 even though hardware sales declined 16.4%. 

“It remains to be seen whether or not Wal-Mart has the savvy or wherewithal to break into this industry,” deLone said. “If Wal-Mart truly likes Nook's business and cannot resist getting into the hardware and content businesses, then this would be an opportunistic time to get in cheaply.”

Carol Spieckerman CEO of newmarketbuilders, said the potential for Wal-Mart to acquire the Nook business is “fascinating and if executed, it would represent another future-focused move from the retail giant.”

Spieckerman said hardware is enjoying a bit of a heyday in retail right now because devices like readers, smart phones, media boxes and scanners are all potential gateways to retailers’ content, service and product ecosystems. 

“That’s why Amazon has continued to launch these types of devices, with little concern about the profitability of the devices themselves. It’s why Dell is doubling down on its low-margin PC business even as others run away from the category in droves. PCs are a pathway to its higher-margin service offerings. Although it’s easy to think of the Nook as merely a family of devices, the opportunity in play is all of Nook Media which also includes its online bookstore, e-content publishing and college business, all of which would integrate nicely with Wal-Mart’s platform and power up its content marketing aspirations and digital entertainment portfolio,” Spieckerman said.

While Barnes and Noble hasn’t been able to make the most of these assets because of its narrow focus and dwindling customer base, Spieckerman said Wal-Mart could  better integrate the Nook business into its platform. She said Walmart has no trouble assimilating multiple technology acquisitions over a relatively short period of time. 

“WalmartLabs and the Global Ecommerce teams would be great stewards of the Nook ecosystem. Certainly Wal-Mart is more prepared than most to take it on,” Spieckerman said.

Agricultural opinions were upbeat about President Obama's plan to move towards normalizing relations between the United States and Cuba, but political attitudes were mixed.

On Wednesday, Obama announced a plan to re-establish some diplomatic and economic ties between the U.S. and the communist island nation using Presidential authority and actions.

The move comes on the news that the administration had secured the release of an imprisoned U.S. contractor, Alan Gross, in exchange for the U.S. freeing three Cubans. Negotiations tied to the release have been ongoing for nearly a year.

Obama announced a list of possible changes to improve relations between Cuba and the U.S. Some of those issues include Cuba’s designation of being a state sponsor of terrorism, trade issues, increasing telecommunications links and expanding travel to the country, Obama said in a midday speech at the White House.

While trade issues were mentioned, the long-standing U.S. trade embargo to Cuba, which has been in place since the early 1960s, is in federal law and would have to be repealed by Congress.

Obama said the new rules he's proposing will allow agricultural equipment for small farmers to be sold.

AGRICULTURE, DELTA SUPPORTERS WEIGH IN
Locally, the possible change in the 54-year old policy could have an impact on Arkansas agriculture.

“The announcement that the United States is moving to normalize trade relations with Cuba is good news for Arkansas’ farmers and ranchers,” said Zac Bradley, director of public policy-national affairs for the Arkansas Farm Bureau. “For years, Arkansas Farm Bureau has sought an easing of trade restrictions with Cuba. This announcement should make it easier for this important market to purchase Arkansas agricultural products, in particular, rice and poultry.”

Bradley said it has been a hardship for U.S. farmers to compete with other countries because American exporters have to use third-party banking resources to transact deals, while other countries can deal directly with Cuba. A normalization of relations could alter that detrimental factor.

“Arkansas leads the nation in rice production and is a leading producer of poultry products, two commodities that are an important part of the Cuban diet. We did a good amount of trade with Cuba before the embargo and would stand to regain a foothold there when trade is normalized,” he said.

The president of the Poultry Federation, Marvin Childers, agreed the policy change could create a much more efficient, less expensive way to trade. Childers, a former Republican state representative from Blytheville, said producers have been able to trade with Cuba since 2001, either through third-parties or paying up front. Childers said on average, at least nine million pounds of poultry is sent to Cuba each month.

Lee Powell, Delta Grassroots Caucus director, said while his group does not support the authoritarian policies of Cuba, the American embargo has not worked and it is time for new thinking.

"The embargo has done absolutely nothing to change Cuba's authoritarian regime, and when a policy has not worked for 50 years it's just common sense that it's time for a change," Powell said. "Once capitalism starts infiltrating Cuba, this will undermine the communist regime.”

Cuba's economy is small compared to other world import-export opportunities. Cuba has a population of around 11.28 million, or just 0.16% of the world total. In 2013, it imported $13.6 billion worth of goods.

The GDP per capita (measure of productivity and lifestyle) in Cuba is $10,200, well below that of top U.S. trading partners (Mexico, $15,600; Euro area, $34,500; Canada, $43,100), according to the CIA World Factbook. The U.S. per capita GDP is $52,800.

ELECTED OFFICIALS RESPOND
The announcement Wednesday also brought different responses from state and federal officials with ties to Arkansas.

U.S. Sen. John Boozman, R-Ark., called the announcement a “step in the right direction,” saying he has supported lifting the embargo since he was a House member.

“I feel like you have to be consistent,” Boozman said of the United States’ trading with China, Saudi Arabia and Vietnam, but not with Cuba.

Boozman, who serves on the Senate Agriculture Committee, said the opportunity to trade can “change the world” by trading in commerce as well as ideas. Boozman, who will become the state’s senior senator in January, said the state’s rice farmers and poultry producers would benefit from a possible change.

U.S. Sen.-elect Tom Cotton, R-Ark., said a possible change in policy would be troubling.

“I welcome the news that U.S. aid worker Alan Gross is free after five long years of wrongful imprisonment in Cuba, but his inclusion in a prisoner swap with men convicted of espionage and other crimes is deeply concerning,” said Cotton, who will serve on the Senate Armed Services and Intelligence committees in the new Congress.

“This exchange and the broader changes in U.S. policy toward Cuba announced today are more troubling examples of President Obama’s tendency to seek peace through appeasement. This is a dangerous approach. Little has changed in Cuba over the past five decades, yet we’ve given into their demands," Cotton said. "This type of diplomacy hurts America’s leadership and sends the wrong message to our enemies around the world. Normal diplomatic relations with Cuba can only truly exist when they recognize the principles of freedom and democracy.”

U.S. Rep. Steve Womack, R-Rogers, also echoed the statement made by Cotton.

“While I share in the joy of Alan Gross and his family, I am concerned with the President’s willingness to trade the values of our nation. Too many Americans have paid the ultimate sacrifice for our freedom and the freedom of other nations to negotiate with a communist dictator notorious for the oppression of his people,” Womack said.

Meanwhile, other officials took a wait-and-see approach with the announcement.

“While I welcome the restoration of trade between the U.S. and Cuba on behalf of Arkansas agriculture and manufacturers, Congress must proceed with caution and deliberation in response to the president’s decision," said Rep. Rick Crawford, R-Jonesboro, who sits on the House Agriculture Committee. "I pledge to lend my voice and the voice of Arkansas businesses to what promises to be a thorough and robust debate."

Matt DeCample, spokesman for outgoing Gov. Mike Beebe, said Beebe has supported a review of the trade policy.

“Governor Beebe has continued to encourage a re-evaluation of American trade policy with Cuba since his visit there in 2009. If today’s developments lead to more open markets, it will mean only good things for Arkansas agriculture and our state’s economy,” DeCample said.

The good vibes that Arkansas and U.S. consumers are getting from lower pump prices this holiday season will also make for hectic highways and busy airports as Americans with more disposable income plan getaways for Christmas, AAA officials said Wednesday.

“Tis the season for holiday travel, and this year more Americans will join with friends and family to celebrate the holidays and ring in the New Year than ever before,” Marshall Doney, AAA President and Chief Operating, said in a statement. “While the economy continues to improve at an uneven pace, it seems more Americans are looking forward with increasing consumer confidence, rather than looking back at the recession. This is helping to drive expected travel volumes to the highest level we have seen for the year-end holidays.”

AAA projects 98.6 million Americans will journey 50 miles or more from home during the year-end holiday season, up 4% from the 94.8 million people who traveled last year. Air travel is forecast to grow 1% from 2013, with 5.7 million travelers taking to the skies.

This upward trend marks the highest forecast growth rate for the year-end holiday season since 2009 and the highest travel volume for the holiday period on record. Low gas prices continue to boost disposable income this holiday season, the AAA said, with today’s national average price of gas at $2.53 per gallon, 70 cents less than a year ago.

“Lower gas prices are filling stockings with a little more cash to spend on travel this year as travelers are expected to pay the lowest prices since 2009,” Doney added. “Lower prices are increasing disposable income and enabling families to set aside money for travel this year.”

ENERGY PRICES BOOST ECONOMIC EXPANSION
At the same time, an economist with a top Wall Street investment and banking group said the sliding crude oil and pump prices will boost the current economic expansion at both the local and national level well into the New Year.

"The fall in energy prices could hardly have come at a better time,” James Marple, senior economist at Cherry Hill, N.J.-based TD Economics, told Talk Business & Politics. “Just as the job market is hitting its stride and wages are moving up, energy prices are falling, reducing inflation and leaving more money in consumers' pockets."

The optimism in the U.S. economy is also reflected in TD Economics’ updated economic outlook released on Wednesday. The Wall Street research firm forecasts that the U.S. economy will grow by 3% in 2015 and also predicts the U.S. unemployment rate will fall to 5.5% by the end of next year.

So far in 2014, real gross domestic product (GDP) – the value of the production of goods and services in the United States, adjusted for price changes – increased at an annual rate of 3.9% in the third quarter, according to the U.S Bureau of Economic Analysis. In the second quarter, real GDP vaulted to 4.6% after contracting in the first quarter to -2.1%.

Overall, U.S. Commerce Department officials expect fourth quarter GDP growth to come in at 3.5%, closing the year out at a modest expansion of 2.3%. The final numbers will be tallied just ahead of Christmas, when Commerce Department officials release quarterly GDP estimates on Dec. 23.

Marple said it was hard to ignore the improving fundamentals and momentum of the U.S. economy over the past two quarters. He named off a long list of positive developments in the U.S. economy as key reasons why the current expansion will not fizzle out. 

“Consumer and business confidence is steadily recovering and balance sheets look increasingly healthy. The labor market recovery is built on a strong foundation of rising job openings and increasing turnover,” Marple said. “This is the recipe for stronger wage growth.”

Still, the TD Economics forecaster said the “tide is turning” in the U.S. economy largely because falling price of crude oil and energy prices are lifting the outlook for consumer spending. He said energy prices over the past three months will save the average American household $500 a year.

“By far the biggest change to the economic outlook over the past three months has been the decline in energy prices,” Marple wrote in his economic forecast. “The price for a barrel of crude oil had already been declining at the time of our last forecast in September, but the descent has turned into a rout over the last several weeks.”

SOME ARKANSAS PUMP PRICES BELOW $2
According to U.S. Energy Department, the price of crude oil has dropped more than 40% since June, when both international Brent and U.S.-based West Texas Intermediate crude oil futures were price well over $100 a barrel (bbl). In trading Wednesday on the New York Mercantile Exchange, crude oil futures for January delivery fell as low as $54.21 in early trading, the lowest level since May 2009. Prices settled to close at $56.47.

In its short-term forecast on Dec. 9, the U.S. Energy Information Administration forecasted that international Brent crude oil price will average $68/bbl in 2015, $15/bbl lower than projected only a month ago.

Like Brent crude oil prices, U.S. West Texas Intermediate (WTI) prices have decreased considerably, falling by more than 28% since reaching their 2014 peak at an average of $106/bbl in June. The EIA now expects West Texas premium light crude to average $75/bbl in the fourth quarter of 2014 and $63/bbl in 2015.

Those lower crude oil prices, of course, are the primary driver for declining pumps prices that Arkansas drivers and travelers across the state will see during the busy holiday season. On Wednesday, the national average price for regular unleaded gasoline dropped to $2.50 per gallon, 72 cents cheaper than a year ago.

In Arkansas, motorists today are paying in average of $2.36 per gallon to fill up their tank across the state, according to AAA’s daily fuel gauge. Pump prices in the state’s metropolitan areas range from a low of $2.17 per gallon in the Fayetteville-Springdale-Rogers area to a high of $2.50 in the Pine Bluff area.

Motorists in the Fort Smith area are seeing prices at an average of $2.20 per gallon, and travelers and residents at the Texarkana state line are paying about $2.23 per gallon. Residents in the Little Rock-North Little Rock area are paying an average of $2.44 a gallon to fill up their tanks.

Drivers choosing to fill up the tanks with a higher-grade of gasoline should expect to pay an average premium of $2.74 a gallon across the state. Big rig drivers and other diesel fuel users will see pump prices at about $3.16 a gallon, down five cents from only a week ago.

LOWER WINTER HEATING BILLS
Despite the lower stocks at the start of this winter's heating season, the EIA expects the Henry Hub natural gas spot price to average $3.98 per million British thermal units (MMBtu) this winter compared with $4.53/MMBtu last winter, reflecting both lower expected heating demand and higher natural gas production this winter.

The EIA also expects the average household heating bill in all regions of the country will be lower this winter. Homes that heat with propane and heating oil will see the biggest savings, with propane expenditures down 27% and heating oil bills down 15% from last winter.

Average natural gas bills will be 5% lower, while households that rely on electricity for space heating will see their costs decline by 2%. The expenditure forecasts are based on EIA projections of residential prices and the National Oceanic and Atmospheric Administration forecast of winter heating degree days, which average 12% lower for the United States compared with last winter.

A private group of Fort Smith investors has helped recruit to Fort Smith an advanced manufacturing company created through a Fayetteville-based venture firm that has plans to be operational by 2017 and employ around 100 workers – to include scientists – by 2019.

TiFiber Inc., which is managed by Fayetteville-based VIC Technology Venture, has received $500,000 in funding, with $300,000 coming from a private group of Fort Smith investors who have asked to remain anonymous.

“This project is a collaborative effort of the Fort Smith Chamber, local Fort Smith business owners, and TiFiber. A group of local business owners are making a financial commitment to this company for the betterment of our community,” said Tim Allen, president and CEO of the Fort Smith Regional Chamber of Commerce. “The Chamber is proud to play a role in securing this opportunity; high-tech and innovative projects like TiFiber are exactly what Fort Smith needs more of today. We are thrilled with TiFiber’s decision to move their operation to our community and we welcome their leadership and staff to Fort Smith.”

The company has developed and plans to produce “innovative new materials that safely and effectively control dangerous microorganisms,” noted a statement from VIC. Products patented by TiFiber are based on a family of antimicrobial polymers (AMPs) “with potent, broad-spectrum activity towards both bacteria and fungi.” The VIC statement said such polymers possess “strong antimicrobial activity,” are safe and kill E. coli, S. epidemidis, P. aeruginosa and S. aureus (including MRSA), and other forms of dangerous bacteria.

FORT SMITH PRODUCTION
TiFiber is seeking approval from the federal Food and Drug Administration for a production facility with hopes to begin “significant production” by 2017.

“Fort Smith was chosen not only because of its historic, strong support for manufacturing, but also due to regional leaders’ efforts to attract leading edge, technology-based companies such as TiFiber,” noted the VIC statement.

Sources from Fort Smith who spoke with The City Wire hope TiFiber has a success story similar to that of NanoMech, an advanced manufacturing birthed from research out of the University of Arkansas that just recently expanded its operations in Springdale. The company, which has raised almost $15 million for research and production within the past 10 years, recently completed a 29,000-square-foot addition to its facility that triples the capacity for the high tech manufacturer. The company will employ 37 engineers by year-end, nearly all who are University of Arkansas graduates.

Any growth in the Fort Smith metro manufacturing sector will help. The sector employed an estimated 17,800 in October, down from 17,900 in September, and below the 18,400 in October 2013. Sector employment is down 37.5% from a decade ago when October 2004 manufacturing employment in the metro area stood at 28,500. Annual average monthly employment in manufacturing has fallen from 28,900 in 2005, 19,200 in 2012, and to 18,300 in 2013.

TIFIBER PRODUCTS, COLLABORATION
TiFiber’s work is partially in response to growing concerns about the use of triclosan and similar ingredients in bacterial soaps and body washes. The VIC statement said the FDA and the U.S. Environmental Protection Agency are in the process of reviewing the effects of triclosan on humans and the environment.

“Triclosan has been shown in animal research to alter hormone regulation, and may also contribute to the development of antibiotic-resistant strains of bacteria,” according to VIC.

TiFiber is working with West Warwick, R.I.-based Bradford Soap Works to develop soap formulations using TiFiber’s patented products. Founded in 1876, Bradford is the world’s leading manufacturer of bar soaps, and also offers a broad range of liquid soaps, lotions, specialty chemicals, and bath accessories. Bradford’s development laboratories are working with TiFiber to provide custom formulations, product development, and testing services. Bradford also was the first U.S. soap company to recieve organic certification. That certification was made in 2001.

“TiFiber’s business outlook is very positive, as the company’s AMP technology meets urgent market needs. The company is highly likely to create numerous science and engineering jobs in Arkansas,” Dr. Calvin Goforth, interim CEO of TiFiber, said in the statement. “We are very appreciative of financing and tax credits received from the Arkansas Science and Technology Authority, the Arkansas Development Finance Authority, and the Arkansas Economic Development Commission, that are targeted to help create these types of jobs in Arkansas, and which have played a critical role in TiFiber’s launch and rapid progress.”

Possible uses of TiFiber’s products include:
• Soaps;
• Disposable and non-disposable medical plastics;
• Dental cements;
• Wound care (acute and chronic wounds);
• Medical devices (biofilm protection);
• Cosmetic preservatives; and
• Textiles.

Initial development work has been supported by a combination of private investment and economic development incentives from several Arkansas economic development agencies.

VIC Technology Venture Development is a private, for-profit, technology venture development firm that works to form new technology companies with the purpose of commercializing licensed technologies. VIC provides business development teams to help launch companies and also provides various management services. As a business becomes successful, the VIC support is phased out.

Arkansas’ November labor report show a positive trend in terms of labor force growth and shows a gain of almost 12,000 jobs compared to November 2013. The report included a significant decline in the number of unemployed, and a year-over-year gain of 5,300 jobs in the state’s manufacturing sector.

Arkansas’ November jobless rate fell to 5.8% compared to 7.5% in November 2013, and down from a revised 6.1% in October, according to figures released Friday (Dec. 19) by the U.S. Bureau of Labor Statistics, are subject to revision. The November numbers are subject to revision.

Arkansas’ annual average jobless rate fell from 7.9% during 2011 to a revised 7.5% during 2012. The initial annual average jobless rate for Arkansas during 2013 is 7.5%.

The size of the workforce – 1.315 million – fell by 0.81% compared to November 2013, but was better than the 1.307 million in October. The peak for Arkansas’ labor force was 1.367 million in May 2008.

The number of employed in Arkansas during November was 1.238 million, above October employment of 1.228 million, and up an estimated 11,844 jobs compared to November 2013. The number of unemployed was an estimated 76,920 during November, below the 79,102 in October, and well below the 99,546 in November 2013.

The closely watched nonfarm payroll number was 1.201 million in November, the first time the category has topped 1.2 million since September 2008. The nonfarm category does not include farm workers, private household employees, non-profit employees and “general government” employees. Investopedia estimates that the nonfarm category represents about 80% of the total workforce that contributes to national GDP.

Nonfarm payroll during November was better than the 1.194 million in October and up over the 1.181 million in November 2013. Nonfarm jobs reached a high in Arkansas of 1,209,800 in February 2008.

ARKANSAS SECTOR NUMBERS
In the Trade, Transportation and Utilities sector — Arkansas’ largest job sector — employment during November was an estimated 244,900, up from 242,900 in October and ahead of the 243,400 during November 2013. Employment in the sector hit a high of 251,800 in March 2007.

Manufacturing jobs in Arkansas during November totaled 157,100, up from 155,800 in October and above the 151,800 in November 2013. Employment in the manufacturing sector fell in 2013 to levels not seen since early 1968. Peak employment in the sector was 247,300 in February 1995.

Government job employment during November was 215,400, up from 214,600 in October and below the 215,700 during November 2013.

The state’s Education and Health Services sector during November had 177,100 jobs, up from 176,500 during October and up from 173,400 during November 2013. Employment in the sector is up 22.8% compared to November 2004.

The construction sector employed an estimated 50,200 in November, up from 48,800 in October and above the 46,300 in November 2013. November was the first time the sector was above 50,000 since June 2010. The sector is off the employment high of 57,600 reached in March 2007.

Arkansas’ tourism sector (leisure & hospitality) employed 109,400 during November, up from 109,200 during October, and above the 106,600 during November 2013. The November number, if it stands, marks a new record for employment in the sector.

Weather for holiday travel prior to Christmas should be good in large parts of the country, but those traveling in the upper midwest, large parts of the Northeast U.S. and a part of the Northwest U.S. may suffer delays in ground and air travel, according to AccuWeather reports.

AccuWeather reports a storm bearing strong winds, heavy snow, torrential rain, thunderstorms and fog will converge on the Northeast and Midwest on Christmas Eve and will likely create major travel delays, both on the roads and at airports.

The early stages of travel problems from patchy rain and fog will develop on Tuesday. The most widespread travel disruptions and the worst weather conditions in terms of windswept rain and travel-impairing snow will be centered on Christmas Eve.

For many people traveling by ground and air, rain will be an inconvenience. However, enough rain can fall at times to cause poor visibility and increase the risk of hydroplaning for those traveling at highway speeds.

Heavy rainfall in the South and Midwest will tend to be spotty, but as the storm moves northward on Christmas Eve, heavy rain will become widespread progressing through the mid-Atlantic and New England.

FLIGHT DELAYS
One of the most common causes of flight delays is strong winds, especially where they blow perpendicular to runways.

Gusty winds blowing from the south and east may lead to flight delays in the mid-Atlantic, New England and eastern Great Lakes region Tuesday night and Wednesday.

The strongest winds are likely in New England Wednesday into Wednesday night, when gusts could reach 60 mph along the coast and over mountains across the interior. Gusts could approach 50 mph around New York City Wednesday into Wednesday evening.

Increasing winds from the west and northwest may cause similar problems throughout the Midwest and mid-Atlantic on Christmas Day. Turbulence during and in the wake of the storm could be a problem on some flights.

The storm system may become strong enough to produce thunderstorms from Florida to Maine.

"The greatest risk of severe thunderstorms is from the eastern part of the Carolinas to Delmarva," said AccuWeather Senior Meteorologist Henry Margusity.

SNOW ISSUES
While much of the South, mid-Atlantic and New England will be spared travel problems from snow with this storm, significant travel delays and dangers will develop in the Midwest and perhaps the Appalachians from Christmas Eve through Christmas Day.

The greatest risk of an all-out snowstorm is over northern Michigan and central Ontario. It is during the transition to colder air following rain, when the greatest dangers for travelers may develop farther south.

While not a huge amount of snow is forecast for the Ohio Valley states, the lower Great Lakes and central Appalachians with the storm itself, snow showers or a quick burst of snow could lead to a rapid covering of snow on the highways.

From parts of Illinois, Kentucky and lower Michigan, eastward to western Pennsylvania, western New York and West Virginia, motorists should be prepared for rapidly changing weather conditions on Christmas Eve. This could occur during the day over the Midwest and toward evening around the central Appalachians as temperatures fall.

Two national freight reports suggest that 2014 may be one of the best years for shippers since the end of the Great Recession, and that tonnage is up and moving despite “costly freight bottlenecks” at the nation’s largest port resulting from on again, off again union contract negotiations.

The American Trucking Associations’ Truck Tonnage Index was up 3.5% in November after a 0.5% increase in October. Year-to-date, tonnage is up 3.3% compared to the same period in 2013.

However, the not-seasonally adjusted index, which represents the real change in tonnage hauled by the fleets, was down 10.5% compared to October.

“With strong readings for both retail sales and factory output in November, I’m not surprised that tonnage increased as well,” ATA Chief Economist Bob Costello noted in the November report. “However, the strength in tonnage did surprise to the upside.”
 
Continuing, he noted: “The index has increased in four of the last five months for a total gain of 6.4%. Clearly, the economy is doing well with tonnage on such a robust trend-line.”

According to the ATA, trucking serves as a barometer of the U.S. economy, representing 69.1% of tonnage carried by all modes of domestic freight transportation, including manufactured and retail goods. Trucks hauled 9.7 billion tons of freight in 2013. Motor carriers collected $681.7 billion, or 81.2% of total revenue earned by all transport modes.

The Cass Freight Index reported that shipments were up 4.2% in November compared to November 2013, and freight expenditures were up 5%. However, November shipments were 0.2% below October numbers, and expenditures were down 0.7% compared to October.

Cass uses data from $22 billion in annual freight transactions to create the Index. The data comes from a Cass client base of 350 large shippers.

November’s slight decline compared to October was not a surprise, said Rosalyn Wilson, a supply chain expert and senior business analyst with Vienna, Va.-based Delcan Corp., who provides economic analysis for the Cass Freight Index.

“This was not unexpected given the fact that retailers stocked up early in anticipation of problems at the West Coast ports. While November is generally a slower month for freight movement, the last several years have shown dramatic drop-offs in November. So, in context, this slight downward shift is an encouraging improvement that is helping to cap off a good year for freight,” Wilson said.

Wilson said the shipping industry has had possibly its best year since the Great Recession.

“The first eleven months of 2014 have shown this to be the best year for freight that we have experienced since the recession. Freight volumes are up and costs to move that freight are also trending up. This is good news for the nation’s carriers in spite of the headwinds being battled (port congestion, throughput capacity, and port labor problems),” Wilson noted in her report.

She also said the port congestion problems in Los Angeles/Long Beach and Oakland will likely continue into next year. The port issues will also have an impact on the holiday shopping season.

“Not all shippers were able to avoid deliveries to West Coast ports in November and they are experiencing three week – or longer – delays in receiving their goods. Labor issues, chassis shortages and inefficient chassis distribution, port throughput limitations due to heavily loaded, larger TEU ships, and rail capacity problems have combined to create costly freight bottlenecks at the ports of L.A., Long Beach and Oakland,” Wilson noted.

Following are other economic notes from Wilson’s November freight report.
• “It remains to be seen how this year’s holiday season will shake out, but there is no doubt that consumers are spending again, both on goods and services.”

• “Early estimates show that store traffic was down 5.2% compared to last year’s Black Friday totals and sales are expected to be 11% lower than last year. Lower gas prices were expected to fuel more spending, but consumers are still behaving conservatively and holding out for even further discounting.”

• “Manufacturing production slipped somewhat in November, but new orders, order backlog and exports all rose during the month. Unlike the last six years, the fourth quarter of 2014 is not going to show a precipitous slide downward, only the normal seasonal slowdown we experienced in the years prior to the recession. 2014 will prove to be the banner year that was predicted and 2015 should be looking at a strong start.”

• “The weather forecast for this winter does not look much better than last year, so the transportation system could be faced with the same problems the railroads faced in the Northwest last year. Aggressive capital investment programs announced by UP and BN will eventually improve the situation, but rail lines are not laid overnight and the necessary new equipment and trained personnel will also take time to bring into action.”

Retailers from Wal-Mart to Kohl’s and Target each ramped up their seasonal hirings ahead of an expanded promotional holiday throughout 2014. Shoppers armed with more cash from lower fuel costs are still out trying to wrap up their holiday purchases in store and online as of Monday, Dec. 22.

Wal-Mart said it ramped up its seasonal workers by 60,000 this year, a 10% gain from 2013 as well as adding more hours for employees already on staff.

“We know this is the busiest time of year for our stores and we are going to make sure we are delivering for our associates and customers. We will have more registers than ever open during peak shopping hours between Black Friday and Christmas,” Gisel Ruiz, former chief operating officer for Walmart U.S, said in September.

The retailer declined to break out what that meant on a per-store basis. Scott Swenson, store manager at the Bentonville Walmart Supercenter, told The City Wire that he hired enough workers to fulfill the promise of opening all check-out lines during peak shopping hours.

“We also added staff to the toys and electronic departments to make sure our customers could get the service they need during this busy time,” Swenson said.

The promotional season at Wal-Mart and in retail at large began a full week ahead of Thanksgiving this year as they layered on additional savings for Black Friday, Small Business Saturday, Cyber Monday and most recently Super Saturday.

Swenson admitted the promotions have been broader this year but said the added staff has helped his store operations run smoothly. He said shoppers come in asking about the deals which are being well received from the public.

“It’s been a very good season but we are ready to wrap things up this week so we can enjoy the holiday with our own families,” Swenson said. 

Kohl’s added 34% more holiday staff this year hiring an estimated 67,000 temporary workers nationwide. Target said it hired about 70,000 workers which is on par with 2013 season employment.

United Parcel Service said this week it is turning some of its larger parking lots into sorting centers for added speed during crunch time.

“It all goes back to 585 million packages in the month of December,” said corporate spokesman Dan Cardillo. “It’s a lot more packages than we usually handle.”

UPS said It expects six days this month to surpass its single-busiest shipping day of last year. Things should peak Dec. 22 with an estimated 34 million items dropped off at homes and businesses. UPS announced back in September it would hire 95,000 seasonal workers, almost twice the amount in 2013, to help avert the repeat of last year when thousands of packages were not received until after Christmas.

HOLIDAY JOBS
According to the most recent jobs report from the Bureau of Labor Statistics, the nation’s retailers added 434,500 people to their payrolls in November.

Pew Research notes that retail payrolls surge in November and December as stores hire for holiday shopping, typically jumping 3% to 4% between October and December. 

Locally that has helped the state jobless rate dip to 5.8% in November. In Northwest Arkansas the jobless rate also fell to 3.9% in October, while Fort Smith’s unemployment rate slid to 5.4%. Holiday hirings could help these local rates dip lower when the November and December reports are revealed. But rates could tick back up in early 2015 if history holds true.

The November numbers were positive in Arkansas. In the Trade, Transportation and Utilities sector — Arkansas’ largest job sector — employment during November was an estimated 244,900, up from 242,900 in October and ahead of the 243,400 during November 2013. Employment in the sector hit a high of 251,800 in March 2007.

Last year, Pew notes that retailers added 626,200 jobs in November and December, representing a 4.1% gain. While the pre-holiday hiring surge is impressive, the post-holiday drop is even more dramatic. 

“Retail payrolls typically fall 5% to 6% between December and February, as retailers with disappointing holiday sales lay off staff and close unprofitable stores. This past year, retailers shed a combined 880,000 jobs in the two months after Christmas,” noted the Pew Research Center report.

HOLIDAY 2014
Wal-Mart reports that 22 million customers shopped in stores on Black Friday, which is more people than visited Disneyland in an entire year. The retailer said Thanksgiving Day was its second highest sales day in company history.

Retail analyst Liz Dunn, with Talmage Advisors, said the big box stores did well with Black Friday door buster deals on electronics. She said this came at the expense of lower-end mall retail traffic early in the holiday season. Dunn said that changed this past weekend on Super Saturday as the malls across the country were packed with last-minute shoppers purchasing mostly clothing and jewelry.

“Over the past few years, we’ve noticed a trend in customers waiting until the last minute to finish their shopping,” said Scott McCall, senior vice president of merchandising for Walmart U.S. “While many customers start their Christmas shopping in November, the majority don’t put their lists away until Dec. 24.”

Dunn said online has also been huge this year, but at this point if consumers want to guarantee they have the gift by Christmas they are likely to head out to their local mall or favorite big box retailer.

Gov.-elect Asa Hutchinson will conduct a national search for the next Arkansas Economic Development Commission executive director and will ask for legislative authority allowing the independent foundation supporting AEDC to supplement that official’s salary, Hutchinson announced in a press conference Monday.

Hutchinson said he was appointing Danny Games, manager of corporate affairs at BHP Billiton and a former president of the Arkansas Economic Developers Association, as deputy director. Games will lead the search for the director.

Hutchinson also announced that Daryl Bassett will serve as director of the Department of Workforce Services. Bassett is a former DWS division chief and is the secretary of state’s director of business and commercial services.

Hutchinson said he had decided to conduct a national job search for the AEDC job after consulting with his steering committee, legislators and industry leaders.

He said he had spoken to Sen. Jonathan Dismang, R-Searcy, the incoming Senate president pro tempore, about the need to amend state law to allow the Arkansas Economic Development Foundation to provide a salary supplement to the executive director’s current taxpayer-paid salary. He said a regionally competitive salary is necessary for Arkansas to compete with states such as Texas, Florida and Alabama.

“The consensus in my talking with economic developers in Arkansas, they encouraged me to make sure we get someone that would compete in the national arena on job creation,” he said.

Dismang said in a phone interview that he supports amending the law and that it would likely have the support of other legislators.

Hutchinson said he wants someone with experience in creating packages for attracting industry, someone who understands the importance of workforce readiness, someone who understands the South, and someone who appreciates the need to increase employment among existing employers. He said it was possible that an Arkansan could be named to the post.

Hutchinson said a study would be done to determine the optimal salary level.

The current executive director, Grant Tennille, has an annual salary of $139,706.11. Hutchinson guessed that the salary might need to increase to the $200,000 range.

Games has been tasked with helping determine that range. Hutchinson said the compensation package could include performance incentives. He said he had not identified a potential director yet.

“This is a true search, and it will be a competitive review process that will be led by Danny Games,” he said.

A wide range of economic data has been released by the federal government in the days prior to the holiday break, with some figures showing a gain in Arkansas’ combined personal income during the third quarter and a healthy increase in third quarter U.S. GDP.

Figures released Dec. 19 by the U.S. Bureau of Economic Analysis show the estimate for Arkansas personal income at $112.5 billion, better than the $109.264 billion in the third quarter. It was also a gain over the $109.74 billion in the second quarter of 2014.

Several components of personal income in the third quarter had significant change compared to the second quarter. Net earnings were down $55 million, or 0.1%. Income from dividends, interest and rent was up $230 million, or around 1%. Transfer receipts, typically payments to individuals from government sources, were up $543 million, or 2.1%.

NATIONWIDE PERSONAL INCOME
Nationwide, personal income growth slowed 1.2% compared to the second quarter of 2014.

“The slowdown in personal income growth in most states is primarily accounted for by smaller increases in net earnings and property income (dividends, interest, and rent) in the third quarter of 2014. Increases in personal current transfer receipts were also smaller in most states,” noted the BEA report.

The report noted changes in several key categories of personal income.
• Earnings grew $85.8 billion in the third quarter after growing $97.9 billion in the second quarter. Earnings grew in 21 of the 24 industries for which BEA prepares quarterly estimates, but farm earnings fell $10.2 billion, military earnings fell $1.2 billion, and forestry earnings fell $0.1 billion.

• Healthcare earnings growth in the third quarter exceeded that of all other industries in 19 states, including New York, where earnings increased $1.1 billion, and Florida, where earnings increased $0.6 billion. Healthcare also contributed the most ($12.3 billion) to national earnings growth.

• Construction earnings growth ranked third for the U.S., increasing $8.5 billion. However, construction accounted for only 5.7 percent of earnings nationally, down from an average of 6.2 percent since 1998.

• In Alaska, North Dakota, Oklahoma, Texas, and Wyoming, the mining industry (which includes oil and gas extraction) contributed the most to third-quarter earnings growth. North Dakota, Oklahoma, and Texas have been the 3 fastest growing states, as measured by percent growth of earnings, since the recession troughed in the second quarter of 2009.

• Earnings growth in the durable-goods manufacturing industry in the third quarter exceeded that of all other industries in Indiana and Michigan. The earnings increases, $358 million in Indiana and $300 million in Michigan, were exceeded only by the $404 million increase in California.

U.S. WAGES, GDP REPORTS
The BEA reported on Dec. 23 that personal income nationwide increased $54.4 billion, or 0.4%, and disposable personal income (DPI) increased $42.4 billion, or 0.3%, in November.

Personal consumption expenditures (PCE) increased $67.9 billion, or 0.6%. In October, personal income increased $49.8 billion, or 0.3%, DPI increased $39.7 billion, or 0.3%, and PCE increased $31.3 billion, or 0.3%, based on revised estimates.

The report also noted that private wages and salaries increased $38.7 billion in November, compared with an increase of $24.9 billion in October.

Goods-producing industries' payrolls increased $7.3 billion in November, the same increase as in October. Other anufacturing payrolls increased $3.9 billion in November, compared with an increase of $4.6 billion in October. Services-producing industries' payrolls increased $31.5 billion, compared with an increase of $17.6 billion.

Government wages and salaries increased $1.8 billion, compared with an increase of $1.2 billion.

The BEA also reported Dec. 23 that the U.S. real gross domestic product (GDP) grew at an annual rate of 5% in the third quarter. It was the third estimate for the closely watched economic report. The second quarter GDP grew at an annual rate of 4.6%. The GDP rate was 4.5% in the third quarter of 2013, 2.5% in the third quarter of 2012 and 0.8% in the third quarter of 2011.

Non-residential capital investment, federal government spending and exports were cited as the primary reasons for GDP growth in the third quarter.

Arkansas Attorney General Dustin McDaniel said Tuesday (Dec. 23) that he would appeal a federal judge’s ruling that struck down Amendment 83, the state’s constitutional ban on same-sex marriage.

U.S. District Judge Kristine Baker ruled last month that the ban was unconstitutional, but she stayed her ruling allowing for an appeal.

The Arkansas Supreme Court is also considering a decision on the law thanks to a similar lawsuit, but it has yet to make a determination.

McDaniel said he is filing a notice of appeal with the 8th Circuit U.S. Court of Appeals in St. Louis regarding Baker’s decision ahead of a pending deadline and, in part, due to the fact that the state’s highest court has yet to make a ruling.

“I had hoped that the Arkansas Supreme Court would rule in Wright v. Smith prior to the deadline to file notice of appeal in the federal case. Had they done so, their guidance would have been helpful,” McDaniel said. “Because it appears that the Arkansas Supreme Court will not announce its decision before December 26, which is the deadline to submit a notice of appeal in the federal case, I believe it is necessary to file this notice, in keeping with my obligation to oppose all challenges to our State Constitution.”

In May, Pulaski County Circuit Judge Chris Piazza ruled that Arkansas' ban on gay marriage – approved by nearly 75% of voters in 2004 – was unconstitutional. Licenses were issued briefly in some counties across the state, but a stay was eventually issued halting same sex marriages in Arkansas while the case goes through the appeals process.

A resolution approved by the Arkansas Legislative Council on June 20 included language to "explore legislative remedies to prevent the Arkansas Constitution and the will of the people of this state from being negated by judicial activism which violates the separation of powers ensured in our form of government."

Same sex couples are able to receive marriage licenses in most counties across the state of Oklahoma following the United States Supreme Court's decision on Oct. 6 to not hear arguments in five different federal cases in which lower federal court judges found state bans on gay marriage to be unconstitutional.

While the Supreme Court's refusal to hear the cases from Oklahoma and four other states has opened the door to gay marriage in those states, the ruling had little impact in other states where gay marriage has been ruled unconstitutional by state or local courts, including in Oklahoma's eastern neighbor of Arkansas.

The Arkansas Department of Environmental Quality issued on Dec. 19 a revised plan for addressing pollution in and around Whirlpool’s Fort Smith plant that says pollution has reached the Fort Smith Boys and Girls Club facility but does not necessarily present a direct health hazard.

The revised Remedial Action Decision Document (RADD) is another step in the process in which officials at ADEQ and Benton Harbor, Mich.-based based Whirlpool Corp. disagree about the extent and danger of pollution.

Whirlpool closed its Fort Smith refrigerator manufacturing plant in June 2012, resulting in the loss of about 1,000 jobs. The company had employed as many as 4,600 at the plant in the mid-2000s.

POLLUTION PLAN HISTORY
ADEQ issued its first RADD in December 2013. Whirlpool said in May that contamination in some areas is worse than originally thought and would require soil removal. The ADEQ said Whirlpool and its consultants knew about the contamination at Whirlpool’s former Fort Smith manufacturing operation even as it was presenting a remediation plan to the agency late last year and early this year.

In July, Jeff Noel, Whirlpool's corporate vice president of communications and public affairs, told the Fort Smith Board of Directors that the company had made meaningful progress on remediation during the last six months.

"You'll see that we have, I think, advanced the ball very nicely in terms of the remediation," he said.

Just a few weeks later it was learned that more testing would be needed to see if TCE and/or other chemicals from the Whirlpool plant were underneath or near the Boys and Girls Club property. Whirlpool said the pollution near the club posed no risk.

In September, ADEQ Engineer Mostafa Mehran said the Whirlpool pollution plume is growing and it could not be certain that no health risk existed with pollution near the Boys and Girls Club site or in other areas of the plume.

"Given the apparent shape of the plume, ADEQ requires an additional monitoring well in the northwest corner of City of Fort Smith property (three properties)," Mehran wrote.

Whirlpool said in October that the plume is decreasing rather than growing. ADEQ documents released in early November again expressed disagreement about the status of the pollution plume and asked Whirlpool for more data to support the claim that the plume was shrinking.

THE REVISED PLAN
The revised ADEQ plan suggests the Boys and Girls Club is not clear of the pollution plume.

“Additionally, groundwater with TCE concentrations slightly above the MCL (maximum contaminant levels) has been detected on Boys and Girls Club property, immediately northeast of the Whirlpool site,” noted the ADEQ report.

Although TCE is the chemical of concern (COC), the ADEQ report said “several other volatile organic compounds” were found in the site have been “retained for evaluation.”

However, none of the chemicals in the analysis “exceed USEPA (Environmental Protection Agency) acceptable cancer risk range of 1E-06 to 1E-04.” The report said “on-site routine workers” and construction workers could be exposed to the chemicals via “vapor intrusion” and “on-site groundwater.”

The revised RADD outlines a detailed plan to deal with surface, subsurface and other areas of pollution. The plan also includes “institutional controls” to “further protect human health and prevent groundwater use from the aquifer,” with such controls including information in the land records and other deed protocols and land-use restrictions.

“The elected alternative(s) should assure protection of human health and the environment and should eliminate the exposure pathway to the COCs (chemicals of concern),” according to the revised ADEQ plan. (Link here for a PDF copy of the report.)

FORT SMITH BOARD NOTE
On Friday (Dec. 26), Fort Smith City Administrator Ray Gosack sent a note to the Fort Smith Board and the media about the revised ADEQ plan the city received on Dec. 19.

“The revised draft RADD appears to focus on changes since the original RADD was approved. Specifically, it includes provisions for the removal of soils in the most heavily contaminated area near the plant; and recognizes the presence of TCE underneath a portion of the Boys and Girls Club property to the northeast,” Gosack noted in the e-mail.

Gosack’s note said the remediation actions now include:
Radiation and thermal conduction of the contaminated soils to increase the soil temperature, thereby resulting in the removal of contaminants through vaporization. The vapors will be collected into a vapor treatment device;

Removal of contaminated soils in areas near the plant building; and

The previously approved chemical oxidations of the contaminated groundwater are still part of the plan.

Gosack said Whirlpool’s Noel is scheduled to be at the Board’s Jan. 27 meeting to present an annual report on the TCE clean-up effort. Gosack said he is not sure if the public will have a chance to comment on a revised plan.

“I’ve asked the ADEQ staff if public comments are being received on the draft revised plan, and if they plan to conduct any public meetings. I’ll let you know what I hear from ADEQ,” Gosack said.

A more than $30 million medical college with a reserve of more than $100 million, a significant expansion of a large employer with a global footprint and an unsettling settlement to address federal Clean Water Act violations were the biggest headlines for the Fort Smith metro area in 2014.

1. Arkansas College of Osteopathic Medicine
Kyle Parker, president and CEO of the Arkansas College of Osteopathic Medicine, said recently that dirt is literally being moved to prepare for the planned fall 2016 opening with a first cohort of 150 students.

The new osteopathic school will be housed in a three story, 100,000-square-foot building valued at more than $31 million. The building will house classrooms, administrative offices, two auditoriums, an electronic resource library, dissection labs and could eventually house a proposed physicians assistant program.

A fully operational osteopathic college is expected to serve about 600 students, and employ around 65 (full-time equivalent jobs) with an average salary of $103,000. That impact does not include adjunct professors that will be needed for the school. The school is located on Chaffee Crossing land (200 acres) donated by the Fort Chaffee Redevelopment Authority.

Parker said construction pads are finished on 27 acres, and $32.5 million has been placed in escrow as part of the COCA requirements. The college will get the money back after the first class graduates. The COCA staff has reviewed and approved a feasibility study, according to Parker, with a site visit planned for early 2015. The next stage of review with COCA is set for April, with “provisional” approval hoped for in August.

The proposed osteopathic school will be housed in a 100,000-square-foot building that will house classrooms, administrative offices, two auditoriums, an electronic resource library, dissection labs and could eventually house a proposed physicians assistant program.

Funding for the school from donations and other funding sits at $106.9 million, Parker said. The largest amount of funding - $60 million - is being provided by the Degen Foundation. Also, the college has hired 13 employees, including senior staff.

2. ArcBest announces expansion
The announced addition of 975 jobs with the ArcBest corporate expansion in Fort Smith could result in a total of 1,907 jobs created in Arkansas, according to an economic modeling analysis conducted by the Institute for Economic Advancement at the University of Arkansas at Little Rock.

Fort Smith-based ArcBest Corp. – formerly known as Arkansas Best Corp. – announced May 30 a $30 million plan that will see the construction of a new office building and data center at Chaffee Crossing and the addition of an estimated 975 corporate jobs by 2021.

The company will retain its high-profile, 195,000-square-feet corporate headquarter building on Old Greenwood Road in Fort Smith. That facility, which opened in early 1995, is expected to provide space for the consolidation of ABF Freight and ArcBest Technologies offices. Moving corporate and logistics jobs out of the existing corporate headquarters will allow room for expansion at ABF Freight and ArcBest.

There are now between 1,300 and 1,400 ArcBest corporate jobs in the Fort Smith area.

An economic impact model prepared by Gregory Hamilton, senior research economist at UALR, indicates that the fully realized 975 jobs would result in 484 new “indirect” jobs in the region and 404 “induced” new jobs – or a total of 1,863 jobs in the region by 2021. The ArcBest jobs would also create more than 44 jobs outside the Fort Smith region.

ArcBest’s largest subsidiary is less-than-truckload carrier ABF Freight System. The non-asset subsidiaries are Panther Premium Logistics, ABF Logistics, FleetNet, ABF Moving and ArcBest Technologies (formerly known as Data-Tronic.). ArcBest officials have said growth in the non-asset businesses are necessary to diversify the company’s revenue stream and to help reach a goal of $3 billion in revenue in 2014.

3. Fort Smith settlement with the DOJ/EPA
The Fort Smith Board of Directors on Dec. 16 accepted the controversial settlement with the Department of Justice that may require an estimated $480 million investment by 2026 to improve the city’s water and sewer system.

The costs – which could result in a tripling of water and sewer bills for all city customers on the Fort Smith system – are part of a possible agreement between the city of Fort Smith and the Department of Justice related to Clean Water Act violations with the city’s water and sewer system. The U.S. Environmental Protection Agency turned the matter over to the DOJ in 2006.

Of the $375 million capital costs, 39% ($145 million) is for defect remediation, 17% ($63 million) for capacity remediation, 12% ($45 million) for pumping improvement and 10% ($37 million) for engineering and professional services. Treatment, capacity assessment and current projects are also included in the capital costs.

Of the $104 million in operations and maintenance costs, 26% ($27 million) is estimated for collection system maintenance and repairs, 23% ($24 million) for extra staff and management support, 13% ($14 million) for treatment and pumping maintenance, and 13% ($14 million) for information management. The remainder will cover project management, root removal and pre-treatment work.

While the proposed settlement between the city and the DOJ is complex, the primary purpose of action is to increase capacity to eliminate wet weather overflows and address remedial defects to eliminate dry weather overflows. The time frame outlined in the city's presentation of the proposed consent decree terms extend for 12 years, giving the city time to invest the needed funds to bring the sewer system up to standard.

Under the agreement, the city must begin to monitor overflows in wet and dry weather situations and report all overflows to the Environmental Protection Agency. The assessments must focus on finding the dry weather blockages and intrusions in lines that cause overflows during dry periods. These can include grease blockages and roots that have grown into water lines over periods of years or decades. Testing private lines of residential and commercial users could involve smoke testing.

4. Whirlpool pollution problems
Much of 2014 included efforts by the Arkansas Department of Environmental Quality and Whirlpool Corp. agree on a plan to contain and remove a toxic plume of trichloroethylene (TCE) that has leaked into the groundwater from the now-shuttered Whirlpool manufacturing plant in south Fort Smith.

Whirlpool closed its Fort Smith refrigerator manufacturing plant in June 2012, resulting in the loss of about 1,000 jobs. The company had employed as many as 4,600 at the plant in the mid-2000s.

ADEQ issued its first RADD in December 2013. Whirlpool said in May that contamination in some areas is worse than originally thought and would require soil removal. The ADEQ said Whirlpool and its consultants knew about the contamination at Whirlpool’s former Fort Smith manufacturing operation even as it was presenting a remediation plan to the agency late last year and early this year.

In July, Jeff Noel, Whirlpool's corporate vice president of communications and public affairs, told the Fort Smith Board of Directors that the company had made meaningful progress on remediation during the last six months.

"You'll see that we have, I think, advanced the ball very nicely in terms of the remediation," he said.

Just a few weeks later it was learned that more testing would be needed to see if TCE and/or other chemicals from the Whirlpool plant were underneath or near the Boys and Girls Club property. Whirlpool said the pollution near the club posed no risk.

In September, ADEQ Engineer Mostafa Mehran said the Whirlpool pollution plume is growing and it could not be certain that no health risk existed with pollution near the Boys and Girls Club site or in other areas of the plume.

"Given the apparent shape of the plume, ADEQ requires an additional monitoring well in the northwest corner of City of Fort Smith property (three properties)," Mehran wrote.

Whirlpool said in October that the plume is decreasing rather than growing. ADEQ documents released in early November again expressed disagreement about the status of the pollution plume and asked Whirlpool for more data to support the claim that the plume was shrinking.

Also, An attempt to settle a class action lawsuit against Whirlpool by residents in and around the TCE plume was denied Dec. 3 by U.S. District Judge (Western District of Arkansas) P.K. Holmes III.

5. Warplanes leave 188th, new mission installed
Several hundred members of the 188th Fighter Wing, former unit members, their families, dignitaries and the media attended a June 7 “Conversion Day” ceremony in which “Fighter” was removed from the 188th Fighter Wing moniker.

Broad cuts in U.S. defense spending – possibly up to $500 billion over 10 years – included the removal of 20 A-10 Thunderbolt fighter planes from the 188th Fighter Wing in Fort Smith. It was announced in 2012 that the A-10 Thunderbolt fighters of the 188th would be lost and the unit’s mission would change to an intelligence, surveillance and reconnaissance (ISR) mission.

The primary component of the new mission for the 188th Wing is the 188th ISR (Intelligence, Surveillance and Reconnaissance) Group. The 188th ISR is comprised of the 123rd Intelligence Squadron, the 153rd Intelligence Squadron, the 223rd Intelligence Support Squadron, and the 288th Operations Support Squadron.

The 123rd role is to conduct “near real time exploitation of imagery intelligence data, collected by” ISR units with that info then delivered in a useful manner to “combatant commanders and war fighting forces.” The 153rd provides “targeting production capability” based on gathering data and other intelligence from “a number of sources.” The 223rd group “develops and trains Cyber systems professional and provides critical cyberspace communication services” for the 188th’s missions. The 288th group “provides support to the daily operations of the 188th ISR Group, including training, plans, mission management, and weapons and tactics functions for the AN/GSQ 272 ‘SENTINEL’ weapons system.” This unit is also part of the Distributed Common Ground System of the U.S. Air Force.

Overall, the 188th ISR Group will have 347 members, and at some point will operate from a planned $12.5 million, 40,000-square-foot facility to be built on the 188th base that Col. Anderson has said could help the 188th become an “ISR Center of Excellence.” Counting operations, security, medical and other groups, the 188th will have more than 900 personnel who will train and operate from the Air National Guard base in Fort Smith.

Politics certainly dominated the headlines in Arkansas during 2014, with the GOP sweep in Arkansas likely to be noted by future historians as a pivotal event in the state’s history. But big changes in Arkansas’ banking sector, and improvement in the state’s economy also created much news buzz during the year.

Following are the top five Arkansas stories, as determined by The City Wire, during 2014.

1. The 2014 election cycle and GOP sweep
Led by resounding victories at the top of the ticket, Republicans made unprecedented gains at the federal, state and local levels in November 2014.

U.S. Rep. Tom Cotton, R-Dardanelle, trounced incumbent U.S. Sen. Mark Pryor, D-Ark., capping off a grueling 18-month battle that saw tens of millions of dollars spent by in-state and out-of-state groups. For more than a year, the race was positioned to tip control of the U.S. Senate into one party’s control. In the end, Cotton won by more than 17 points as the last month proved pivotal for opening up his lead after the national mood toward President Barack Obama and Washington, D.C., swung solidly in the Republican column.

The top of the ticket was also aided by a near-flawless campaign from Gov.-elect Asa Hutchinson (R), who also easily defeated former U.S. Rep. Mike Ross, D-Prescott. The governor’s race also saw unprecedented spending from inside and outside the state, although not nearly of the magnitude as the Senate race.

Republicans easily won all four congressional seats, giving them control of all of the federal offices in Arkansas. U.S. Reps. Steve Womack, R-Rogers, and Rick Crawford, R-Jonesboro, cruised to easy re-election victories, while newcomers French Hill, R-Little Rock, and state Rep. Bruce Westerman, R-Hot Springs, won open seats by defeating solid Democratic rivals.

The GOP gains filtered down-ballot with Republicans taking commanding control of the state house. Republicans increased their margins in the 100-member House of Representatives from 51 seats to 64 seats, and in the 35-member state Senate from 22 to 24 seats.

They also won all of the remaining constitutional offices – including lieutenant governor, attorney general, secretary of state, auditor, treasurer and commissioner of state lands – giving Republicans the title of “majority party,” which includes controlling local election commissions in all 75 counties.

2. Arkansas bank industry changes
Arkansas banks churned through another year of restored health and several trendsetters went on a tear with acquisitions.

The Federal Deposit Insurance Corp. (FDIC) reported that Arkansas’ banking segment grew its employment to 18,930 full-time workers in the third quarter, despite more bank consolidation. The state had 111 financial institutions as of Sept. 30, down from 120 reported at the end of 2013. Total assets in Arkansas-based banks grew to $64.94 billion as of Sept. 30, a gain of $2.89 billion or 4.6%. Assets rose 6% since 2012 and 11% since 2011.

Other aspects of banks’ balance sheets also improved leading to growth through acquisition for several publicly traded financial institutions. Little Rock-based Bank of the Ozarks nabbed Summit Bank of Arkadelphia in a $216 million deal. Bank of the Ozarks would later acquire a Florida bank, Intervest Bancshares, in a $228.5 million purchase.

Simmons First continued its surprise streak of bank buyouts. While closing on the Metropolitan National Bank deal, Pine Bluff-based Simmons bought Little Rock’s Delta Trust & Bank for $66 million in March.  In May, Simmons added two more huge acquisitions to its portfolio, buying Community First Bancshares of Tennessee in a $243.4 million deal and Liberty Bancshares of Springfield, Mo., in a transaction valued at approximately $207 million.

Home Bancshares (parent company of Centennial Bank), which has grown its footprint in Arkansas and Florida through acquisitions, was a little more low-profile in 2014. Still, the Conway-based bank bought Broward Financial Holdings, Inc., a financial institution in Fort Lauderdale, Fla., in a $33 million transaction.

A fourth Arkansas bank that is publicly traded, Bear State Financial, sent a signal that it intends to be a player on the Arkansas banking scene. Formerly First Federal Bancshares, the name change for the Harrison-based financial institution also marked its intention to raise more capital for growth. With former Alltel Corp. executives Scott Ford and Rick Massey as shareholders and board members, expect to see activity in the near future.

3. Private Option rollout, results
The politics of the private option has been ongoing since its inception in 2013 and it promises to continue to be a political battle in 2015.

The GOP-crafted, bipartisan-supported legislation created a health-insurance exchange that allows federal Medicaid expansion funding from the Affordable Care Act to be used to supplement private health insurance for lower-income workers.

In 2014, the private option survived its first test for funding in the fiscal session. With three-fourths votes needed by both chambers of the Arkansas legislature, the PO barely cleared the hurdle and only after intense negotiations and multiple tries.

GOP gubernatorial candidate Asa Hutchinson described the PO as a “pilot program” during his campaign. Since his victory in November, he’s said he is studying the private option.

Two days after his win, Hutchinson said he would work with leaders in the Legislature and in state government to look at benefits and costs and to determine if the program should be continued and, if so, what changes should be made. He said he would not commit to a decision “at least through the end of January.”

Many legislative candidates, particularly conservative Republicans, campaigned against the private option in the general election. Those candidates’ victories have many suspecting that a major reshaping of the private option is in the works for 2015 if supporters and Gov.-elect Hutchinson want to keep the federal funding coming. The Legislature could choose to eliminate the program altogether and wind it down before the state has to pick up a larger share of its costs.

4. Same-sex marriage, other legal rulings
Three major legal battles involving abortions, voter ID and same-sex marriages occurred in different stages throughout 2014.

The 89th General Assembly passed two major anti-abortion bills in the 2013 regular session over constitutionality objections by Democratic Gov. Mike Beebe. The GOP-led chambers overrode Beebe’s vetoes and in 2014, a legal ruling struck down a portion of one of those laws.

In April, Federal Judge Susan Webber Wright ruled that a law prohibiting abortion after 12 weeks was unconstitutional and in violation of the 1973 Roe v. Wade decision. Wright’s ruling did leave a provision of the law intact that requires a doctor to notify a pregnant woman when a fetal heartbeat is detected. The lawsuit is on appeal.

Democrats and Republicans fought tooth-and-nail over a law requiring voter IDs to be presented at the polls in the 2013 session. Again, the GOP-led legislature overrode a veto from Beebe. A legal ruling on the state law, however, struck down the controversial measure three weeks before Election Day 2014.

The Arkansas Supreme Court determined that the voter ID law did not pass constitutional muster because it required an “additional qualification” beyond four requirements currently in the state’s Constitution. Look for a constitutional referral in 2015.

For supporters and opponents of same-sex marriage, 2014 was a roller coaster ride. The state’s courts allowed, disallowed and ultimately were still considering the constitutionality of a 2004 voter-approved amendment defining marriage as between a man and a woman. The state Supreme Court had yet to issue its final determination on the suit by the end of 2014.

A concurrent federal lawsuit also worked its way through the court system with U.S. District Judge Kristine Baker determining the law unconstitutional. That ruling is on appeal.

5. Arkansas economy improves
While not broad, improvements in employment, sales tax collections and tourism sector employment helped push positive economic trends during the third quarter of 2014 for Arkansas’ three largest metro areas.

Data gathered and analyzed as part of The Compass Report showed gains and stability during the first three quarters of 2014. The quarterly Compass Report is managed by The City Wire, and is sponsored in the Fort Smith area by Arvest Bank. The report is the only independent analysis of economic conditions in Arkansas’ three largest metro areas.

The third quarter, the most recent, showed that economic conditions were improved in Northwest Arkansas and the Fort Smith metro area, and unchanged (stable) in central Arkansas. To underscore the impact of the three largest metro areas, for June of this year the unemployment rate for the rest of the state was 6.4%, down 1.7% from September 2013. The statewide unemployment rate with the three largest metros added back in was 5.7%, down 1.5% September-on-September.

Arkansas’ November labor report showed a positive trend in terms of labor force growth and shows a gain of almost 12,000 jobs compared to November 2013. The report included a significant decline in the number of unemployed, and a year-over-year gain of 5,300 jobs in the state’s manufacturing sector.

The closely watched nonfarm payroll number was 1.201 million in November, the first time the category has topped 1.2 million since September 2008.

Muskogee, Okla-based Armstrong Bank has entered the Fort Smith and Northwest Arkansas banking markets with the planned acquisition of Benefit Bank. Terms were not disclosed in the statement issued Monday (Dec. 29), and the deal is expected to close in the first quarter of 2015.

Technically the deal is between Ironhorse Financial Group, the parent company of Armstrong Bank, and Benefit Financial Group. The banks are expected to fully merge operations and change signs on Benefit Bank locations until mid 2015.

“We have wanted to be in Arkansas for some time and could not have found a better partner than Benefit Bank,” Dr. Sinclair Armstrong, board chairman of Armstrong Bank, said in a statement. “We have a strong retail franchise of branch offices just across the state line so this presents a great expansionary opportunity for us. We are similar in our approach to community banking which makes this a good fit for both banks. I want to assure Benefit banking customers that we are committed to continue to provide the same excellent customer service they have come to expect.”

Armstrong Bank, established in 1934, has 17 banking locations in northern and eastern Oklahoma along the Interstate 40 corridor. Benefit Bank, organized in 1999, has four full-service branches in the Fort Smith area and a loan production office in Springdale.

According to the statement, customers of Benefit Bank and Armstrong Bank will receive notifications in advance of changes to their accounts. Until the transaction is complete and the two banks are merged, Benefit Bank customers should continue to conduct business as usual.

Rod Coleman, chairman and CEO of Benefit Bank, told The City Wire he and the bank owners were not wanting to sell the bank to a large regional bank or publicly held financial company, but found it palatable to sell to another community bank.

“There is a family that owns it (Armstrong) and is interested in being a local, a community bank,” Coleman said. “Dr. Armstrong grew up here (Fort Smith) and … it was just a great opportunity for all of our goals to be met.”

In the official statement from Armstrong, Coleman also noted the “community” aspect of the deal.

“Armstrong Bank is a financially sound community bank with a long and rich history of community involvement and personalized customer service. We wouldn’t have it any other way for our customers and employees,” Coleman said in the statement.

Based on asset size, Armstrong is almost 3.5 times larger than Benefit Bank. As of Sept. 30, Armstrong had $652.777 million in assets and $556.606 million in deposits. Armstrong posted net income of $12.284 million through the first three quarters of 2014, ahead of the $10.985 during the same period in 2013, and well ahead of the $8.832 million during the same period of 2012.

Benefit Bank had $187.4 million in assets as of Sept. 30. Net income for the bank during the first three quarters of 2014 was $761,000, below the $830,000 during the same period of 2013 and more than the $585,000 during the same period of 2012.

Benefit Bank has a 3.61% of marketshare by deposits in the Fort Smith metro as of June 30, 2014. The bank also has a loan production office in Northwest Arkansas.