Kathleen McLaughlin, president of the Walmart Foundation, told students at the University of Arkansas that the role of big business is to serve society by using its own strengths and working with other companies to improve the worldwide community.

She was the featured speaker Tuesday (March 3) at the Dale Bumpers College of Agricultural, Food and Life Sciences and the Honors Student Board in Hembree Auditorium at the University of Arkansas. 

McLaughlin was recruited by Wal-Mart in October 2013 from McKinsey & Company where she spent 20 years rising to senior partner working on sustainability and global social challenges. She joined the nation’s largest retailer after visiting Bentonville and meeting the company leadership, saying she was impressed that Wal-Mart was a “mission driven company.”

“You now see the leading companies go beyond to collaborate with others to replenish and sustain the different systems,” she said. “That’s the reason I joined Wal-Mart.”

In addition to role in the WalMart Foundation, McLaughlin is also senior vice president for Wal-Mart Global Sustainability.

Her nearly 75-minute talk to about 150 students and faculty focused on six key success factors for how a business can work toward strengthening the private sector:
• The program has to be relevant to the company’s business. 
• It has to draw on the particular elements of the company.
• The company must be innovative to drive a double bottom line. 
• It has to reshape the system for lasting improvement.
• Work with other companies to accelerate the transformation.
• Embed into the organization the double bottom line.

As she discussed the success factors, she pointed to strategies at Wal-Mart where the company is focusing its efforts to strengthen its responsibility to the world. McLaughlin noted Wal-Mart’s increasing employee wages and developing programs to encourage frontline employees to move up to the middle level. This investment will cost Wal-Mart about $1 billion this year and includes a plan to raise the hourly wage of all full-time employees to $10 an hour by February 2016. That said, the recent announcement resonated with analysts and retail trade groups. TJX Companies, the parent of T.J. Maxx, has followed suit announcing higher minimum wages on the heels of Wal-Mart’s move.

Wal-Mart critics say the wage plan falls short, and doesn’t do enough to provide workers more hours. Emily Wells, an organizational leader with OUR Walmart, says the group will still push for its $15 an hour goal.

“With $16 billion in profits and $150 billion in wealth for the owners, Walmart can afford to provide the good jobs that Americans need – and that means $15 an hour, full-time, consistent hours and respect for our hard work,” Wells said.

McLaughlin also cited promoting women entrepreneurship and revamping an internal workforce program to assist employees to move up the ladder of success as strategies underway at Wal-Mart.

The broad areas McLaughlin discussed are relevant to Wal-Mart where the retailer’s focused efforts of sustainability, opportunity and community, she said. In the sustainability arena, Wal-Mart is working toward improving the food chain to make food more affordable and healthy by monitoring ingredients, working toward the use of 100% renewable energy and eliminating the waste stream produced in its stores, she said.

The food chain is an example of the role a business like Wal-Mart can play in society with strategies to be sustainable, reduce waste, improve access, make healthy choices easy to achieve, she added.

McLaughlin said the goal is go beyond writing a check, such as the creation of a $40 million fund to provide nutrition education to help people learn to cook on a budget and with healthier foods. 

Another example is what she called the closed loop fund, developed after the chief executive officers from some the largest food producing companies in the country met in Bentonville. The group created a $100 million fund to promote recycling nationwide. Cities can borrow money from the fund to develop recycling facilities.

As with wages, Wal-Mart draws critics on the sustainability front.

“Wal-Mart has made remarkably little progress in moving to renewable energy, while other national retailers and many small businesses are now generating a sizable share of their power from clean sources,” said Stacy Mitchell, a senior researcher at the Institute for Local Self Reliance and co-author of a November 2014 report on energy and carbon pollution. “Despite making a public commitment to sustainability nine years ago, Wal-Mart still favors dirty coal-generated electricity over solar and wind, because the company insists on using the cheapest power it can find.”

Arkansas’ average jobless rate for 2014 was 6.1%, down 1.3% percentage points from the 7.4% average in 2013. It is the first time the annual average dropped below 7% since 2008, according to a report posted Wednesday (March 4) by the U.S. Bureau of Labor Statistics.

The report also showed that Arkansas’ labor force average fell but the number of employed rose in 2014. The average civilian labor force in Arkansas during 2014 was 1.301 million, down from 1.307 million in 2013. The peak for Arkansas’ labor force was 1.376 million in August 2008.

The average number of employed in Arkansas in 2014 was 1.221 million, up from 1.211 million in 2013. The peak for employment in Arkansas was 1.304 million in May 2008.

Following are Arkansas’ average annual jobless rates between 2014 and 2004.
2014: 6.1%
2013: 7.4%
2012: 7.3%
2011: 7.9%
2010: 7.9%
2009: 7.4%
2008: 5.1%
2007: 5.1%
2006: 5.3%
2005: 5.1%
2004: 5.6%

Average annual jobless rates fell in all 50 states in 2014, the first time all states had a decline since 1984, noted the BLS report. The largest average jobless rate decline was in Illinois with 2%, noted the BLS report. Colorado, North Carolina and Ohio were next with a 1.8% dip, and 20 states had average jobless rate declines of at least 1%.

North Dakota had the lowest annual average unemployment rate (2.8%) in 2014. Nebraska (3.3%) and South Dakota (3.4%) had the next lowest jobless rates. Rounding out the top five were Minnesota and Vermont, each with an average of 4.1% in 2014.

Mississippi and Nevada had the highest jobless rates (7.8%) among the states. Rhode Island (7.7%), California (7.5%) and Georgia (7.2) were also part of the bottom five states.

The BLS report also provides an employment-population ratio that provides context to the jobless rates. The ratio compares the number of employed with the “civilian noninstitutional population 16 years of age” or older. The range among the states was wide, with North Dakota having highest proportion of employed persons (70.8%) in 2014. West Virginia had the lowest employment-population ratio among the states at 49.7%. West Virginia has had the lowest employment-population ratio each year since the series began in 1976, noted the BLS report.

Arkansas’ ratio improved slightly from 53.2% to 53.4%, but was among the bottom five states on the ratio comparison.
• West Virginia – 49.7%
• Mississippi – 50.1%
• Alabama – 52.9%
• Arkansas – 53.4%
• New Mexico – 53.6%

Oklahoma’s ratio was 57.8%, and Missouri was at 60.8%

Arkansas’ average number of unemployed in 2014 fell to 80,000 from 96,000 in 2013. Coincidentally, the Oklahoma unemployment average fell by the same amounts in each year. The average number of unemployed in Missouri during 2014 was 187,000, down from the 202,000 average in 2013. U.S. ended the year with an average of 9.617 million unemployed, better than the 11.46 million average in 2013.

Arkansas ended the year with a December jobless rate of 5.7% compared to 7.4% in December 2013. The size of the Arkansas workforce in December – 1.324 million – fell by 0.2% compared to December 2013.

The number of employed in Arkansas during December was 1.248 million, up an estimated 19,586 jobs compared to December 2013. The number of unemployed was an estimated 75,757 during December, more than 23% below the 98,484 in December 2013.

Mary Mann is one of a growing number of workers in the U.S. who finds telecommuting convenient, productive and beneficial in terms of saving time and money.

Mann is a public relations and marketing professional for Samaritan House, a nonprofit assistance agency, in Rogers. She lives in Fayetteville. Her boss gave her permission to work from home on Friday mornings since the office in Rogers closes at noon. The upside is she only has to make the 30-mile commute on a congested Interstate 49, four days a week instead of five.

WalletHub, an online social network to help users make sound financial decisions, recently developed a Telework Saving Calculator, designed to calculate the savings from working at home. WalletHub estimates workers could annually save more than $900 billion and prevent 3.6 million tons of greenhouse gas emissions by allowing more people to work from home.

A 2010 survey of 50,000 households by the U.S. Census Bureau found that the percentage of workers who worked at least one day a year at home increased from 7% in 1990 to 9.5% in 2010. Other findings from the survey include:
• Percentage of workers who work the majority of the week at home rose from 3.6% in 2005 to 4.3% in 2010;
• Home-based work in computer, engineering and science occupations rose by 69% between 2000 and 2010;
• The Boulder, Colo., metro area had the highest percentage of workers (10.9%) who worked a majority of time at home; and
• Almost half of home-based workers were self-employed.

But there are benefits other than savings and pollution reduction, said Curtis Feimster of Fayetteville and Robert Freeman of rural Fort Smith. Feimster makes sales calls worldwide from his Fayetteville home for a company in New York. He sells loyalty reward programs for mobile users. Feimster said he concentrates better at home, saves money by not flying to make calls on potential customers and still gets plenty of daily interaction with other people with phone calls and emails.

For Freeman, working from home means he spends more time with his family and he has time during the day to attend to the needs on the farm where he lives. He works as a cultural health care consultant for a Tennessee based health system.

Both men are quick to note benefits from their arrangements with employers but agree on the downside: Neither knows when to quit.

“I don’t know when to turn it off, because I don’t even know I’m working,” Feimster said. 

Many of Feimster’s prospective clients are in India, Israel, Denmark and Canada or other countries in different time zones. That lends itself to working all hours.

Freeman said he converted his dining room to a home office, complete with French doors he closes at the end of his workday. The closed doors are a reminder that his office is closed for the evening.

'A DIFFERENT WORLD'
On the employer side, even the country’s largest employer, weighed in on telecommuting. Wal-Mart Stores, with 1.2 million workers, said it uses an informal, flexible work arrangement at times for positions within its corporate ranks. There are times when a manager can allow flexible work arrangements for an employee whether that is working remote on occasion or opting for flexible hours, said Wal-Mart corporate spokesman Randy Hargrove.

"It's not a one-size fits all with our home office teams," Hargrove said.

Chip Souza, sports editor at the Northwest Arkansas Democrat Gazette, has for the previous seven years supervised a staff of six sports writers who all work outside the office. The days when his employees spent their time in the office are gone, with the advent of laptop computers, cell phones and Hotspots – which allow the writers Internet access wherever they are.

“It’s a different world than 15 years ago,” Souza said. (Souza also is the husband of Kim Souza, who works for The City Wire from her home.)

He stays in contact with his staff by telephone and weekly staff meetings (in the office) when the group sets the budget and plans for the upcoming two weeks. For Souza, the downside is missing out on the one on one time with his staff or getting instant feedback on a story from a reporter sitting next to you. 

Kelly Services, a worldwide temporary employment agency, has a contract for hiring workers for Kraft Foods, including the Planter’s Peanuts in Fort Smith.  The recruiter for Planter’s lives near St. Joseph, Mo., said Scott Loveday, Kelly’s district manager in Fort Smith.

“In the role of the recruiter, you can get the same information by phone that you can get on an application. And, there are a lot of different ways to get face time with the applicant,” he said. “It works out well for us.”

TELEWORK CONCERNS, RULES
Global Workplace Analytics reports that telework began to grow in 2006 when the number of people working from home grew 26.2%. The pace has slowed, with the number of people working from home growing just 3.8% in 2012, the most recent year the company reports data.

One of the common reasons companies do not allow telework is trust. According to Global Workplace, 75% of managers say they trust their employees, but a third of those surveyed want the employees to be productive in a managed worksite.

Also, some employees may want to telecommute, but fear it will hamper their career rise with the company. Companies that allow telework must have clear rules and expectations in place. Also, telework should not be a solution for childcare needs, according to Global Workplace.

“Home-based employees need to understand that telecommuting is not a suitable replacement for daycare unless they can schedule work hours around their children’s needs,” the analytics company noted.

Community Bankers across the Natural State enjoyed a profitable 2014 accruing net income of $810 million among the 109 institutions. Profits rose from $707 million a year ago, according the Federal Deposit Insurance Corporation. 

The FDIC splits the banks into two categories — those with less than $100 million in assets and those above $100 million. There were 28 banks in the state in the small bank category and together their net income totaled $18 million as of Dec. 31, 2014, up from $15 million in the year-ago period.

Small banks saw their deposits shrink to $1.551 billion, down from $1.803 billion. Assets also decreased 12% to $1.677 billion among the 28 small banks last year. Analysts have said the small banking segment is having the toughest time handing the increased costs associated with burdensome Dodd-Frank regulation. 

Most of the smallest banks are the last of dying breed, with family-owned and mostly rural banks having toughest times covering regulatory costs, according to Gaines Dittrich, a banking analyst and founder of Joplin, Mo.-based Dittrich & Associates. He told The City Wire in 2014 that there would be more consolidations fueled by the higher compliance costs related to Dodd-Frank.

SMALL SURVIVORS
Smaller banks in Northwest Arkansas appear to be carving out a niche market amid an onslaught of competition from larger banks and non-banks entities introducing financial products.

Just barely over the $100 million level, Today’s Bank is one of the more profitable institutions in the region and state. With $102.66 million in assets the bank reported net income of $2.63 million last year, producing a return on asset ratio of 2.56%. The bank’s performance improved from $1.109 million in profits in 2013 with a ROA of 1.15%. Today’s Bank President Larry Olson said 2014 was a strong year, but he doesn’t expect to repeat performance in 2015.

“While we expect to have a decent 2015, it probably will not be as strong as last year. Reason being, we are expanding into the Springdale market this year, and will have additional fixed asset and staffing costs associated with that,” he told The City Wire.

Based in rural Huntsville, Today’s Bank had it’s largest branch in Fayetteville but broke ground on a new branch in Springdale this week that will be the fifth location for the bank that operates two branches in Huntsville and two in Fayetteville.

“The general business market continues to pick up speed. We are experiencing solid deposit and loan growth opportunities. It seems small businesses are now more willing to expand and/or make capital expenditures, which create financing demand,” Olson said. “I believe the small businessmen/women have been waiting on the sidelines for the last few years trying to get a sense of where the economy is going; but now feel better about the economy and think it is a safer time to make some strategic moves  — notwithstanding the seemingly continued gridlock coming out of Washington.”

Parkway Bank of Rogers is happy with its profits. President Bob Taylor told The City Wire that profits are improving along with the overall economy. The bank reported net income of $718,000 for 2014. In 2013, the bank showed net income of $1.476 million. Taylor said tax liabilities from previous years hurt the bottom line in 2014, but the good thing is that profits are already stronger year-over-year in the first two months of 2015.

Credit losses for the bank decreased to 61,000 last year, which was down from $465,000 in 2013. Non-performing loans were reduced to $578,000, down from $1.370 million in 2013. Taylor said loan demand is decent and deposits are up. The bank has grown its assets to $123.537 million, the largest it’s been in five years.

“We are forecasting growth this year building gradually on the momentum that began a couple of years back. The major reason profits are improving for the banking sector is that less money is being set aside for loan loss reserves. The lending climate is very competitive. We are boutique bank offering 4 to 5 products and we don’t try and compete with the larger banks. We are finishing up on a couple of vendor-related projects in Bentonville and are finding the construction lending market pretty good right now,” Taylor said.

Parkway Bank has one branch in Bentonville and two branches in Southern Arkansas in Monticello and Portland. Taylor said deposit growth is strong in southern Arkansas and loan demand is better in Northwest Arkansas. About 70% of the bank’s deposits are in the southern branches and about 65% to 70% of the loans made by the bank are for projects in Northwest Arkansas, Taylor said.

LARGER BANKS
The majority of banks in Arkansas (81) are larger than $100 million in assets. This group had net income of $792 million as of Dec. 31, 2014, rising 14.6% from the $691 million reported in the year-ago period.

"The banking industry continued to improve at the end of the year," FDIC Chairman Martin Gruenberg said in a statement. "Community banks across the country performed especially well during the fourth quarter. Their earnings were up 28% from the previous year, their net interest margin and rate of loan growth were appreciably higher than the industry, and they increased their small loans to businesses."

The largest bank based in Arkansas is Arvest, though the bank also does business in neighboring states. Arvest reported net income of $108.982 million for 2014. Profits declined 14% from $126.873 million reported in 2013. The bank’s return on assets was 0.74% to end 2014, down from 0.92% in 2013. That said, credit losses were trimmed to $15.28 million, down from $28.22 million in the prior year. Non-performing loans were also reduced to $125.85 million, down from $214.215 million in 2013. Arvest had assets of $14.75 billion at the end of 2014, up from $13.8 billion to end 2013.

Mike Jacimore, sales manager for Arvest Bank’s Fort Smith and River Valley market which runs from Russellville to Sallisaw, Okla., told The City Wire that loan growth in that large region is up from a year ago.

“Mortgage loans and business loans are growing in this market as our deposits are also picking up thanks to a better economy,” he said.

He said there has been compressed margins for some time given the low interest rate environment and he expects more of the same this year as long as rates stay down. 

“Consumers savings are picking up some and at the same time we are saw personal consumer loan demand higher in January and February to start this year compared to the prior year.” Jacimore said. “The lower fuel prices have been a positive for consumer attitudes so far this year.”

Fort Smith-based First National Bank Corp. operates in Fort Smith and Northwest Arkansas. This large bank grew its assets to $1.182 billion, up from $1.052 billion to end 2013. The bank reported net income of $15.665 million, down slightly from $16.786 million reported in 2013. Credit losses rose to $586,000 in 2014, which rose more than 100% from 2013. 

The bank still commands a respectable return on assets of 1.32%, as 1% is the benchmark for banks in normal economic climates. First National Fort Smith President Sam Sicard said loan demand is improving, but he still believes the bank’s customers are somewhat cautious.  

“It does appear that savings have improved due to the drop in gas prices. The latest national reports indicate the savings rate has improved over the last few months. Total deposits at First National Bank of Fort Smith have also increased over the last few months,” Sicard said.

He said banks have become more profitable over the past couple of years thanks to a stronger economy and the reduction in loan loss provisions. However, margins remain tough to expand, and that will likely be the story in 2015.

“I believe margins will continue to be compressed in 2015 due to the large number of willing lenders and with borrowers being more cautious than they were before the Great Recession,” Sicard said.
 
IN THE MIDDLE
Community banks with assets between roughly $300 million and $500 million fared well last year and those bankers in Northwest Arkansas are optimistic that 2015 will be better. Signature Bank and Legacy Bank formed ahead of the Great Recession, with each heavily investing in commercial real estate before the bust in 2008. Each bank has returned to profitability and shook off enforcement actions from their regulators. Signature Bank remains under a “memorandum of understanding” after having the stricter Consent Order removed by the FDIC in December.

Springdale-based Legacy National Bank reported net income of $2.087 million for 2014, up slightly from $2.028 million in 2013. The bank grew assets to $296 million, a gain of 11.3% from the prior year. The bank reduced its credit losses by 81% year-over-year and its real estate owned amounted to $5.239 million at the end of 2014, down from $7.395 million at the end of 2013.

Legacy CEO Don Gibson said the bank budgeted higher profits for 2015 and they are off to a good start being slightly ahead of budget for January and February. He also mentioned tighter margins from low interests, something he expects will continue through most, if not all of 2015. Gibson said the bank has seen its compliance costs more than double in the past year to comply with Dodd-Frank regulations.

“Increased capital requirements will be an issue if (Dodd-Frank is) not backed off which is a negative for the consumer because available monies for lending will be pulled back into capital,” Gibson said.

Fayetteville-based Signature reported $2.306 million in net profits for 2014, a 120% improvement over the $1.044 million reported in 2013. The bank showed assets of $488.9 million at the end of 2014, down slightly from the $490 million reported at the end of 2013. This bank continues to work through its troubled loan portfolio from a few years ago. Credit losses were $3.4 million, down slightly from the $3.7 million reported in 2013. 

Signature still holds $17.927 million in real estate, a large amount for the bank, and it’s an amount that is relatively flat with a year ago. Signature Bank President Gary Head told The City Wire that an improving Northwest Arkansas will help reduce the real estate holdings. He said since the December financial reports the bank has moved more of that property off the books.

“We had several lots in West Fork on our books for five years with no offers, but now they are selling,” Head said.

He expects 2015 to be better than 2014 for Signature Bank as loan losses are reduced. 

“Our 109-year-old bank in Brinkley had a tough time last year with farm losses. It was the worst year in some 45 years of farming according to one customer,” Head shared. “We are standing by those farmers as they work to restore their profits in 2015.”

He likes the prospects in Northwest Arkansas as all the major employers are doing well. Head said the fierce banking competition in Northwest Arkansas is good for businesses and consumers in this market.

“Homebuilding, single and multifamily still have some room to run in this market because there is hardly a house to rent and apartment occupancies remain low as the University of Arkansas continues to grow,” Head said.

The state Senate approved a healthcare related bill as debate over the issue was going on nearly 1,000 miles away at the United States Supreme Court. Meanwhile, a bill that would help high school students understand how to pay for healthcare insurance was filed Wednesday.

Senators voted 25-0 to approve Senate Bill 343, sponsored by Sen. Jim Hendren, R-Sulphur Springs. Hendren’s bill would “prohibit the implementation through state law of a state-based health insurance exchange in this state under the Patient Protection and Affordable Care Act … and the Health Care and Education Reconciliation Act of 2010 before the United States Supreme Court issues a ruling in King v. Burwell.”

Justices met in Washington, D.C. to hear both sides in the case. The main focus in the case is whether or not tax subsidies that are received by people in 37 states to buy insurance is constitutional, The Washington Post reported Wednesday. Debate over the issue has centered over the words, “Established by the State” and how they are interpreted.

Michael Carvin, an attorney for the plaintiffs, said in his brief that the words should be interpreted definitely, the paper reported.

“It would certainly be convenient, for an agency seeking to rewrite a statute, if an English phrase can become a term of art on the government’s mere say-so,” Carvin said. “It cannot.”

However, Solicitor General Donald Verrili said in his brief that the law’s intent should be considered.

“Determining the meaning of a statute duly enacted by Congress, particularly a statute as consequential as this one, by focusing on isolated phrases divorced from textual cross references, definitions and context – and with no regard for the statute’s structure and design – does not respect the rule of law,” Verrilli said.

Justices are expected to make a decision by the end of June, which coincidentally, is the end of the state’s current fiscal year.

INTENT OF BILL
In addition to the ban on implementing the exchange until a decision is made by justices, the bill also places a decision on the issue in the hands of the legislature.

“If a ruling in King v. Burwell modifies the eligibility requirements for subsidies in a health insurance exchange …., a state-based health insurance exchange should not be implemented in this state without the legal authority to establish and operate an exchange under state law and the approval of the General Assembly,” the bill noted.

The bill also has provisions if the court rules in favor of the Obama administration. If the court allows for subsidies for a state exchange but not a federal one, the decision on implementing one would be decided by a “future act of the General Assembly.”

If the court allows for subsidies for “a state-based health insurance exchange and a health insurance exchange operated by the federal government, then the authority of the Arkansas Health Insurance Marketplace to implement a state-based health insurance exchange shall not be affected.”

Senate Bill 343 now heads to the House, where it was referred Wednesday to the House Insurance and Commerce Committee. Hendren said Wednesday afternoon that he was happy to see the bill approved in the Senate. Hendren, who also serves as Senate Majority Leader, called the bill a “responsible approach” and that the court case in the nation’s capital could have a huge effect on a large number of people. However, Hendren said whatever happens, the bill “makes it clear” that the legislature will have a say on the issue.

PERSONAL FINANCE BILL FILED
The need for high school students to learn the basics of filling out a loan application or balancing a checkbook was the reason behind a bill that was filed Wednesday.

“It was the observation that our young people need some sort of financial literacy,” said Rep. Warwick Sabin, D-Little Rock, who filed House Bill 1622.

The bill would require students to have a course in personal finance as a requirement to graduate from high school; and would teach issues like creating a household budget, maintaining a checking account, consumer finance, debt and credit management as well as insurance and taxes.

The Department of Education, with the Department of Workforce Education, would be charged with creating the course content for the classes. Sabin said he and his cosponsor, Sen. Alan Clark, R-Lonsdale, have worked on the issue on a non-partisan basis for several weeks to craft the bill.

Sabin, who has worked on economic development related issues in the past, said students often do not understand the real world once they receive their diploma. He said students are often inundated with offers to get a credit card once they go to college and face student debt once they graduate. A similar bill was introduced by Sabin in the 2013 session, but there was some resistance by education officials over adding another class to the school day.

Sabin said he believes those concerns have been addressed in the new bill. The bill was referred to the House Education Committee Wednesday.

Sabin has also filed two bills this session that have become law. One bill, House Bill 1235 or Act 164, would allow businesses to use converted debt for equity; while House Bill 1278, or Act 281, would redefine how the state considers experience in the bidding process for state projects. Sabin said under Act 281, a person’s experience in an industry would also be considered.

“For instance, a person may have years of experience but the state would have required four or five years which is the age of the company,” Sabin said of the older law, noting a person who had 20 years of experience but only owned a company for three years would not have been eligible for projects.

FLOOR ACTION
The House voted 54-32 to approve a bill Wednesday that would allow the state to enter into a compact for a balanced budget.

Rep. Nate Bell, R-Mena, who sponsored House Bill 1006, said the bill was needed to help force federal lawmakers to control federal spending. Bell cited the nation’s $18 trillion debt as a reason for the compact, which would have to be approved by 38 states before moving forward with the plan.

However, Rep. Jana Della Rosa, R-Rogers, said the bill was the wrong approach and did not take into account the issue of emergencies.

The bill now heads to the Senate.

The involvement of Snow White and the Seven Dwarfs in the effort to change the form of Fort Smith government, improved sales tax revenue for Fort Smith and an effort to reduce the tax on coke – the soft drinks, not the nose candy – are part of The Video Wire this week.

Pantsless anchor Dawson Meadows also has trouble talking about people hiking. This week delivers a special “outtake” video. It’s silly, but may just be thing to bring a smile to your week of winter weather.

The Video Wire is a collaboration between The City Wire and Things to Do in Fort Smith.

Antibiotic use in animal production has long been an issue of debate among health officials and agricultural groups. But under consumer pressure, restaurant giant McDonald’s announced its commitment to end reliance on medially important antibiotics in its U.S. chicken supply.

Ironically both sides of the debate are claiming victory. McDonald’s move is a win for the consumer who might someday need an effective antibiotic, said Jonathan Kaplan of the Natural Resources Defense Council.

“Our customers want food that they feel great about eating – all the way from the farm to the restaurant – and these moves take a step toward better delivering on those expectations,” McDonald’s U.S President Mike Andres said Wednesday (March 4) in the release.

He said McDonald’s has worked with farmers for years to reduce use of antibiotics in its poultry supply and within the next two years all of the chicken supplied to the company for its 14,000 U.S. restaurants must adhere to the new antibiotics policy.

Springdale-based Tyson Foods is a large supplier of chicken to McDonald’s for its food service needs and company respects this move. Gary Mickelson, corporate spokesman for Tyson Foods, told The City Wire that Tyson’s chicken operations have reduced the use of antibiotics that are effective in humans by more than 84% since 2011. In addition, Tyson said it stopped using antibiotics at all of its 35 hatcheries last fall.

“We support McDonald’s decision and look forward to working with the company to meet its new standard. We believe in responsible chicken production and already limit the use of antibiotics in our chicken business,” Mickelson said.
 
The poultry industry has long claimed antibiotic use is necessary at times to treat and prevent disease within flocks. The debate emerged in recent years as health advocate groups became concerned that prolonged use of antibiotics in animal production could promote antibiotic resistance in humans. 

Siloam Springs-based Simmons Foods is revamping its use of antibiotics effective April 1. Simmons also provides chicken to restaurants and food service customers like Olive Garden.

“Simmons is committed to responsibly raising chickens as the foundation for safe, quality food. We’re concerned about the use of antibiotics and desire to do everything possible to preserve the effectiveness of antibiotics for humans and animals. In fact, we’re already reducing the use of antibiotics in our operations,” said Todd Simmons, CEO of Simmons Food.

He said the company will discontinue the use of antibiotics in all Simmons hatcheries by April 1. Since antibiotics used in hatcheries are often classified as important to human health, this is significant step in reducing overall usage of such antibiotics.

“We are supportive of recent announcements aimed at curbing the use of antibiotics that are important to human medicine. We also take our responsibility for animal welfare very seriously and are being careful to understand how these changes affect the health of our flocks,” Simmons told The City Wire.

NRDC reports that 80% of all antibiotics sold in the U.S. are used on cattle, pigs, poultry and other livestock, the vast majority to speed up growth and compensate for crowded, and often unsanitary conditions.

The Center for Disease Control brought more focus to antibiotic resistance risks in its 2013 “Antibiotic Resistance Threats” report.

“Up to half of antibiotic use in humans and much of antibiotic use in animals is unnecessary and inappropriate and makes everyone less safe,” the CDC noted.

Kaplan saod the poultry industry has relied on a loophole in the Food and Drug Administration guidelines that allows for medically important antibiotics to prevent disease with no real limit on how much or how often these drugs can be administered. He said McDonald’s seeks to do better for its U.S. stores with this commitment to phase out the use of medically important antibiotics over the next two years. 

“That’s a big deal,” Kaplan said. “Sick birds will be treated with antibiotics but not sold in company restaurants. Ionophores, which are technically antibiotics, will continue to be used to raise the McDonald’s chicken supply. However because ionophores are not used for treating people and there's little evidence that they contribute to the problem of antibiotic resistance in human medicine.” 

Mickelson said animal welfare is very important to Tyson Foods which is why the company sometimes use FDA-approved antibiotics in a small percent of its flocks to treat or prevent disease, but only when prescribed by a veterinarian. 

“We expect to continue reductions in our use of antibiotics that are effective in humans and encourage the industry to research alternatives,” Mickelson added.

The National Chicken Council also is supportive of McDonald’s move toward fewer antibiotics usage overall and none that are associated with human use. Ashley Peterson, vice president of scientific and regulatory affairs with the National Chicken Council, said chicken producers have a vested interest in protecting the effectiveness of antibiotics for the welfare of their animals. She said during the previous two years the companies have voluntarily worked to phase out the use of antibiotics that are important in human medicine.

The days of consumer product goods (CPG) companies relying on retailers like Wal-Mart for co-marketing help are fading. The retail giant reportedly has all but abandoned co-marketing trade promotions program it has used for the past few years.

CPG companies have responded by working to build direct and personal contact with consumers via membership loyalty programs, e-mails and newsletters that tout their product, provide consumer tips and product expertise on a regular basis.

Cereal king Kellogg’s continues to try and redefine itself and come out from under declining market share. Its iconic brands Frosted Flakes and Frosted Mini Wheats saw sales erode last year by 4.5% and 5%, respectively. While the company still spends a hefty $1 billion annually on advertising it’s also now more focused on connecting with families in a direct manner through a loyalty rewards program and coupon offers on its wide variety of products from cookies to Special K protein bars.

Like traditional loyalty programs, consumers earn bonus points from purchasing Kellogg products which can used to purchase items in the online store which include everything from branded items to retail gift card and donations made to charities and schools.

PRODUCT INSIGHT
S.C. Johnson launched its Right@Home site last year that provides consumers with direct dialogue about cleaning solutions and other other topics relating to the home. The CPG site sends regular emails to subscribers that feature S.C. Johnson products being used in certain household applications. The topic areas routinely discussed on the site include cleaning and organization, food and cooking, home design and family time.

The site also has a tool that allow consumers to create a shopping list for S.C.Johnson products. Right@Home also allows S.C. Johnson to provided targeted coupon offers to those consumers who are most likely to buy the product. The company also sends email alerts when certain products are on sale or being specially promoted at Wal-Mart and Target. S.C. Johnson sends an average of six emails per month to subscribers to its Right@Home subscriber base.

SUBSCRIPTION SALES
Neither Kellogg nor S.C. Johnson are offering consumers a direct purchase opportunity from their sites at this time, unlike Procter & Gamble who continues to grow its subscription direct to consumer service through its e-store which was launched five years ago. When P&G launched its e-store in March 2010, it was seen as bold move on the part of a supplier to cross into the retail space.

The Financial Times reported in 2010 that the e-store site was part of the company’s drive to increase its total online sales which at that time accounted for less than 1% of its $79 billion in revenue. P&G’s e-store business has grown to the point late last year that the CPG announced an $89 million distribution center of its own in Dayton, Ohio.

With Amazon.com and other pure online retailers offering discounted subscription and automatic shipment of staples like Tide laundry detergent to diapers, CPGs are seeing reduced margins from their iconic retail brands. One way CPGs can help bridge some of that loss is to offer direct-to-consumer, which takes time and substantial investment, according to Annibal Sodero, supply chain expert at the University of Arkansas.

“Win wherever people shop,” that's what Alex Tosolini, P&G's senior VP of global eBusiness, told eMarketer recently. "Our job is not to change consumer behavior. Our job is to follow consumers' behavior and be present with our brands."

ANALYST INSIGHT
Carol Spieckerman, CEO of newmarketbuilders, said there are several dynamics  converging that make it quite attractive for brand marketers to dial up their direct-to-consumer outreach.

“Although many retailers have played a great game of catch-up in the digital space, brand marketers can’t afford to cede all of their content marketing and consumer outreach to retailers. Retailers may still own the shelf but the dizzying number of digital outlets available to brand marketers is quite another proposition,” Spieckerman told The City Wire.

Dr. Stephen Needel, managing partner at Advanced Simulations, recently noted on RetailWire that the last forecast seen (from Steve Bishop) is that online for CPG might represent 11% to 17% in the year 2025. With that, he said CPGs still need retailers.

Spieckerman said the opportunity for CPGs to forge direct relationships with consumers, and to collect valuable data on their habits in the process, is too compelling to pass up. She said retailers have become more tolerant of suppliers’ direct-to-consumer efforts because it amps up brand equity and increases brand awareness which benefits retailers.

Providing a preview for the September murals event in downtown Fort Smith is the reason why internationally acclaimed Irish artists Maser and Conor Harrington are in Fort Smith after finishing up high-profile art events in Sydney, Hawaii and New York City.

Maser, the artist who painted the mural of General Darby in downtown Fort Smith and is now based in Fayetteville, and Harrington are working on a large mural on the backside of retail space in the Quarry Shopping Center in Fort Smith. The mural covers a wall that is the entrance to Boardertown Skate Shop.

Maser had an active role in New Year’s celebrations in Sydney, with his art being a focal point for activities near the famed Sydney Opera House. He was also part of the “Pow Wow Hawaii” art celebration that seeks the participation of cutting-edge artists.

“To get invited, you’re in the circle of leading artists,” Maser said. “It’s a notch in your belt to get invited.”

In addition to being a new father, Harrington recently wrapped up a New York City art show. His work fetches top dollars and can be found in the homes of famous musicians. It’s not unusual to find his work on the sale block at Sotheby’s.

“Harrington began his career as a street artist whose large-scale paintings grace walls around the world, from Bristol to Bethlehem,” noted a recent Sotheby’s review of his work.

‘THIS IS THE CITY I WANT TO LIVE IN’
Steve Clark, owner of Fort Smith-based Propak Logistics, brought the two artists to Fort Smith not only as a preview for the upcoming murals festival but because he believes art can be an economic development tool.

“The reason I’m into this is because this is the city I want to live in,” Clark said, with a finger pointing to the two artists working on the mural. “This is definitely a preview for what we hope to bring to Fort Smith, and what that is is that art plays a role in the revival of cities across America.”

The murals festival is set for Sept. 6-13, with several events – to include artist reception at the Fort Smith Regional Art Museum, emerging artists show, spoken word event, wine tasting, skateboard park, and sidewalk art collaborations between artists and area school students – to coincide with large murals painted or applied to between five and 10 downtown buildings.

John McIntosh, who has helped launch several events and event venues in Northwest Arkansas and Fort Smith, is leading the murals project for a newly formed group “64.6 Downtown.” In addition to McIntosh, the murals project team is Claire Kolberg, festival coordinator; Don Lee, head of the art department at the University of Arkansas at Fort Smith; Galen Hunter with Fort Smith-based MAHG Architects; and Jim Perry, a corporate marketing executive with Fort Smith-based ArcBest.

THE MASER AND HARRINGTON COLLABORATION
Maser told The City Wire that this is his second collaborative project with Harrington. He said the work is a “fusion of two styles” and is a “painting about relationships and trust.”

“This is also a lot about movement and body forms,” Maser said.

It is Harrington’s first time in Arkansas. He paused Thursday to step back and take a photo with his smart phone of the initial mural work. He joked that the photo was to prove to his wife he was really in Fort Smith and working on a mural project.

Harrington, who lives in London, was quick to mention the recent New York City art show when asked about his career highlight. He spent 13 months to provide 15 paintings for his well-received “Eat And Delete” exhibition.

“The distinctive showcase presents a comprehensive embodiment of Harrington's signature style to date, blending street art motifs with rich hyper-realist techniques reminiscent of Renaissance-era old master painting,” noted a Lazarides preview.

As Maser and Harrington dropped up and down on the lifts used to paint the mural, Clark turned to the reporter with an emphatic statement.

“This isn’t to be confused with graffiti. This is a big canvas ... and it’s inspirational. These artists, these mural artists are the fastest growing in terms of popularity.”

The two artists plan to complete the mural by Saturday.

Maser, who painted a large mural on a building at the Jones Center for Families in Springdale, is looking forward to a project with The Underground in Fayetteville.

“I really want to be more a part of that art community there,” he said.

Three key measurements of Arkansas’ leisure and hospitality sector ended 2014 in positive territory, with 16 of the 18 Arkansas cities reviewed showing year-over-year hospitality tax gains, according to the inaugural report of the Arkansas Tourism Ticker.

The ticker is managed by The City Wire, and uses the following three measurements to review the health of the state’s tourism industry. The ticker is using 2010 as the baseline of comparison.
• Hospitality tax collections – prepared food tax and lodging tax – of 18 Arkansas cities (cities listed below and in included image);
• Tourism sector employment numbers as reported by the U.S. Bureau of Labor Statistics; and
• Collections of Arkansas’ 2% statewide tourism tax.

Topline results for the December ticker report are:
• +3.7%
Gain in combined 2014 hospitality tax collections in 18 Arkansas cities compared to 2013

• +7.48%
2014 gain in Arkansas’ 2% tourism tax compared to 2013

• +6.5%
Increase in Arkansas’ tourism industry jobs from December 2013 to December 2014

The Arkansas Tourism Ticker will be produced every two months, or six times a year.

HOSPITALITY TAXES
The combined hospitality tax collections in the 18 cities totaled $41.415 million in 2014, up 3.7% compared to 2013. Collections in the 18 cities were up 15.78%, or $4.206 million, compared to 2010.

Restaurant (prepared food tax) tax collections among the 18 cities rose a combined 15.78%, or $4.206 million, between 2014 and 2010. Collections in the cities were up 2.97%, or $892,000, in 2014 compared to 2013.

Hotel tax collections among the 18 cities rose a combined 11.46%, or $1.087 million, between 2014 and 2010. Collections in the cities were up 5.91%, or $590,000, in 2014 compared to 2013.

STATEWIDE TOURISM TAX
Collections of Arkansas’ 2% tourism tax in 2014 totaled $13.677 million, up 7.48% compared to the $12.716 million collected in 2013. The 2014 tally sets a new record for the tax. Following are the past five years of 2% tax collections.
2014: $13.677 million
2013: $12.716 million
2012: $12.404 million
2011: $12.025 million
2010: $11.492 million

TOURISM JOB NUMBERS
Arkansas’ tourism sector (leisure & hospitality) employed 113,900 during December, up from 110,400 during November, and above the 106,900 during December 2013. The December number, if it stands, marks a new record for employment in the sector. Employment in the sector is up 23% in the past 10 years.

Of the eight metro areas in or connected to Arkansas, the Bureau of Labor Statistics provides tourism employment data on five. All five of the areas show employment gains in 2014 over 2013 and 2010. Following are the December tourism labor numbers for the five metro areas.
Northwest Arkansas
Dec. 2014: 22,300
Dec. 2013: 21,100
Dec. 2010: 17,800

Fort Smith
Dec. 2014: 9,500
Dec. 2013: 9,200
Dec. 2010: 8,600

Central Arkansas (Little Rock-North Little Rock-Conway)
Dec. 2014: 32,600
Dec. 2013: 31,000
Dec. 2010: 29,300

Memphis-West Memphis
Dec. 2014: 64,800
Dec. 2013: 63,300
Dec. 2010: 63,400

Texarkana (Arkansas-Texas)
Dec. 2014: 6,200
Dec. 2013: 6,000
Dec. 2010: 5,700

WHY THE TICKER?
Arkansas’ tourism industry is an important economic engine for the state, and is often cited as Arkansas’ second largest industry – behind agriculture.

There are many reports and economic indices to measure several areas of the the state’s economy. The City Wire issues a monthly housing report (The Arkansas Home Sales Report). The University of Arkansas issues a quarterly report on economic activity, and has published reports on the economic impact of the Fayetteville Shale Play. There are reports to measure public opinion on various social issues.

“Unfortunately, there is not a broad measure of the health of Arkansas’ tourism industry. Our goal with the Arkansas Tourism Ticker is to correct that oversight. We are confident that leaders in the tourism and travel industry will help us in that correction,” said Michael Tilley, editor and co-owner of The City Wire.

Richard Davies, executive director of the Arkansas Department of Parks and Tourism, said the three measurements used for the ticker are “probably the best barometers of tourism.”

“I think it’s a good idea,” Davies said of the ticker. “As we’ve talked about before, tourism seems to be forgotten about because it’s not in one place with a bunch of smokestacks. It’s urban and rural as well.”

Kalene Griffith, head of the Bentonville Convention & Visitors Bureau, said Bentonville uses its tax money to not only advertise the city, but to invest in “the city’s tourism infrastructure.” Such investments include soccer fields, renovations to the downtown square, the “Wayfinding Signage” project, and Lawrence Plaza Ice Rink and Splash Park.

“In the past 15 years, the Bentonville Advertising and Promotion Commission has invested over $7 million  into the city’s tourism infrastructure,” Griffith said.

Maryl Koeth, executive director of the Van Buren Advertising & Promotion Commission, appreciated that the ticker looked at collections from restaurants and hotels.

“As you know, prepared food is heavy on local customer revenue flow, whereas hotel receipts are exclusively new money from customers outside the area. The prepared food receipts speak more to the health of the overall economy,” Koeth said.

THE NEW GOVERNOR
The 41st annual Arkansas Governor’s Conference on Tourism is set for the upcoming weekend (March 8-10) in Texarkana, and will be the first conference for Gov. Asa Hutchinson (R).

Davies, Griffith and Koeth expressed confidence that Hutchinson will be, as have past governors, supportive of the industry. In a Jan. 23 letter addressed to state tourism industry supporters, Hutchinson said he looked forward to helping continue the “dynamic growth” of the sector.

“From the hills of my northwest Arkansas hometown to the rich cultural heritage of southeast Arkansas, we’ve been blessed with an unbelievable array of parks, museums, historic districts, festivals, lakes, rivers and forests,” Hutchinson said in the letter.

Davies said Hutchinson will be willing to try new things within the industry.

“From the conversations I’ve had with Governor Hutchinson, I think he is very supportive of tourism, and his general way of doing business seems to mesh with what it will take to stay ahead in the market – technology, trying new things, efficiency with dollars, research and working together as an industry,” Davies told The City Wire.

U.S. stocks took a hard fall in late trading on Friday as interest rate fears spooked the Dow Jones and S&P 500 indices, dragging down publicly-traded Arkansas concerns almost across the board.

Yet, out of Friday’s late market sell-off, Dillard’s again was one of the biggest Arkansas advancers, continuing its march upward following the Little Rock retailer’s robust fourth-quarter and full-year earnings report in late February. For the period ended Dec. 31, Dillard’s reported fourth-quarter and yearly profits of $130 million and $331 million, respectively.

A week ago, the Dillard’s board handed out a cash dividend of six cents per share, payable on May 4 to shareholders of record as of March 31, 2015. Since closing at $122.53 on Feb. 23, Dillard’s shares have gained 7.7% to close at $131.95 at Friday’s close.

Other winners in this week’s session included Arkansas’ regional banking rivals, Simmons First National, Bank of the Ozarks and Home Bancshares. Banking stocks rallied this week after 31 of the nation’s largest financial institutions passed the Federal Reserve’s so-called “stress test” that measures capital as a share of risk-weighted assets.

After Friday’s dip, still most banking stocks were back up in late trading Friday as several reports signaled that the Federal Reserve may raise interest rates between June and September.

ARCBESTLEADS DECLINERSFOLLOWING UNUSUAL MARKET BLIP
But Arkansas’ remaining publicly-traded concerns lost ground in this week’s choppy session. One of the biggest decliners was ArcBest Corp., which had an unusual blip in trading earlier in the week. The Fort Smith trucking and logistics company’s shares fell more than 7% in early trading on Tuesday, March 3, from a high of $43.59 at the opening bell to $39.35 by midday.

The trucker’s shares settled around the $40 mark for the remainder of the week, but company officials have given no explanation for the sudden four-hour disruption in its stock in the week’s earlier session. Incidentally, ArcBest President and CEO Judy McReynolds spoke to a group of institutional investors in Orlando, Fla., about the same time the company’s shares backed up seven percentage points on Tuesday.

Other decliners for the week were Wal-Mart, Murphy Oil, Murphy USA, J.B. Hunt, Acxiom, Carmart and Tyson Foods. Windstream, which recently spun off its network into a publicly-traded real estate investment trust (REIT), also lost ground in the weekly session, closing at a new 52-week low of $7.76.

Deltic Timber also failed to gain momentum as its shares fell from a high of $66.74 at Wednesday’s opening bell to $65 at Friday’s close. Deltic did have some insider activity as CEO Ray Dillon sold off nearly 9,000 of his shares in the El Dorado-based timber and real estate company.

BROADER MARKET
In the broader market, most of the major benchmarks closed lower on Friday, losing ground on Friday as investors’ took profits as strong employment figures stoked fears that the Fed will raise interest rates sooner than expected.

According to Reuters, the S&P 500 fell 1.6% while the Dow slid 1.5% and the Nasdaq dropped 0.7%. The S&P and the Dow both ended the day more than 2 percent lower than their March 2 records. The S&P saw its biggest percentage decline since early January on Friday.

The blue chip Dow Jones Industrial index includes market bellwether Wal-Mart and 29 of the nation’s largest public companies. Murphy Oil, Tyson and Windstream are all part of the broader S&P 500 index.

Walking more than a mile to work, Lisa Pietro, a produce handler at a Wal-Mart Store in Winter Haven, Fla., said the $8.95 per hour she earns after two years on the job barely covers her monthly shelter and utilities, much less food and transportation costs.

Single and 57, Pietro loves Wal-Mart, but does not like working for the retailer at times. She said her department is understaffed with just three employees, one of which is a new hire. She is one of 500,000 hourly workers at Wal-Mart in line for the $9 minimum wage come April, as recently announced by Wal-Mart CEO Doug McMillon.

Over the past year, Pietro has averaged between 32 and 36 hours of work per week, getting closer to 40 hours a week through the holiday season and now that the department is understaffed. Pietro is a member of OUR Walmart, saying she joined the union-backed group last fall to push for higher wages for workers like herself. She said a $15 hourly minimum wage would truly make a difference, and that’s still a long way from $9 or even $10 per hour.

(Wal-Mart spokesman Kory Lundberg told The City Wire that Pietro is automatically eligible for the $10 hourly rate in February 2016. He reiterated that the retailer has "tens of thousands of hourly associates all over the country earning in excess of $15 an hour.")

“I make $950 per month and Wal-Mart still classifies me as part-time through I work every chance I get, most of the time 32 or more hours a week. I have some critical care insurance but not a medical plan. I just can’t afford it. If I get sick enough that I have to see a doctor then it’s the emergency room for me,” Pietro said.

The bulk of Pietro’s income goes to housing costs as she pays $600 per month for a studio apartment about a mile and a half from the store where she works.

“I have to live near the store because I walk to work and back, I don’t have a car and can rarely afford to take a cab on bad weather days. I rely on friends to help me some; but when you have to be at work at 5 a.m. or your shift ends at midnight or 1 a.m. then you’re on your own. For me, that means walking the 1.5 miles in the dark by myself, which I do regularly,” Pietro said.

“Without my job I would be homeless,” she added.

She told The City Wire that the flexible scheduling promised by the retailer doesn’t help her because the produce jobs are not transferable to other departments.  

“I can’t pick up a shift from a cashier. I am not trained to run a register and the deli worker can’t pick up a shift in my department because they don’t have the training. The flexible scheduling might look good on paper but in reality it doesn’t work for most of the associates in specific areas,” Pietro said.

Over the course of two years, Pietro received two raises from her starting pay of  $7.55, being raised to $8.40 and then to $8.95. She could see a 5-cent per hour raise in April when the $9 minimum becomes effective.

“I don’t know what I would do without the food stamps, that’s how I eat. A nickel more per hour is not going to change that,” she said. “I shop for my clothes at Goodwill, including my shoes.”

NOT ENOUGH
Wal-Mart’s recent efforts to raise worker wages was applauded by retail analysts and the industry’s primary trade group as it was seen as a proactive move that might cause other retailers to follow suit. TJX, the parent of T.J. Maxx and Marshalls, announced the following week plans to raise its minimum hourly wage to $9 by June and up to $10 in 2016.

Claire McKenna, of the National Employment Law Project, said Wal-Mart and other retailers raising wages to $10 per hour is antiquated given that many states and cities are already mandating higher minimum wages. According to a January 2015 poll conducted by Hart Research Associates for the National Employment Law Project, in a representative national sample of 1,002 adults, three in four Americans, including 53% of Republicans support raising the federal minimum wage to $12.50, and 63% want the minimum wage increased to $15 per hour by 2020.

McMillon told CNBC recently that he too voted to raise the minimum wage in Arkansas in the general election last November.
 
McKenna said Costco’s base pay of $12 per hour and Ikea’s starting $11 wage are already setting higher standards than Wal-Mart, the nation’s largest private employer. 

“A concern just as important as the hourly minimum wage is the guarantee of service hours which can provide retail workers stable and sufficient incomes to maintain a decent standard of living,” McKenna said.

At least 50% of Wal-Mart workers are part-time – with many reporting not getting the hours they need, according to OUR Walmart information. A study released by the National Employment Law Project found that 9% of adult retail workers involuntarily worked part time in 2014, compared with just 5% of all working adults. Retail workers make up 11% of working adults but 18% of adults involuntarily working part time.

Wal-Mart is addressing added labor hours for its stores. However, store managers schedule the hours, and their incentive is to run an efficient and productive store because bonuses are paid on performance. Executives told the media Feb. 19 that store managers set worker hours based on the needs of the individual stores.

A HAND UP
McMillon and his predecessors at Wal-Mart have said it’s not necessarily where you start but what opportunities there are for advancement that are the most important factors in a retail career. Wal-Mart boasts that 160,000 employees each year are promoted and that 75% of its managers began as hourly employees. But not everybody can get promoted to a job that makes a middle-class salary. For example, there are only eight assistant managers per store, with a base salary of $35,000; plus four shift managers and one store manager, who make more. That comes out to about 62,500 positions, or less than 5% of the company's 1.3 million employees.

While there are plenty of back-office and supply chain related jobs at the retail giant there is a wide base in the retail pyramid. If all workers are the bottom are inherently competing with one another for better-paid positions, some of them won't get far, critics say.

Pietro said she is not interested in becoming a shift manager. She does not want the added pressure from higher management. But, she does want to earn a livable wage doing a job that requires physical stamina, social interaction and attention to detail.

LOW INCOME HELP
Janet Wills, retired manager for the Individual Development Account program at the Economy Opportunity Agency in Washington County, sees plenty of Arkansas families trying to survive on $9 per hour – which she says is incredibly hard to do even in a state like Arkansas that has a low cost of living. One of the largest underserved demographics in the U.S. is older adult workers, who are often employed full-time at low-paying service jobs or part-time jobs, Wills added.

“The working poor are quiet different from those who are broke. The IDA program has has great of success helping those who are broke, whether that is they lost a good paying job or they are trying to finish their college education. It’s much harder for the working poor to save the money they need to be part of our program,” Wills explained.

The EOA of Washington County has the funding to match 50 IDA members annually and there are income requirements which are 185% of the federal poverty level.

The IDA program is a saving plan where the participant works to set aside $667 of their own money for a particular expenditure, such as a down payment on a home, home renovation, college expenses or capital for a business launch. The program makes a 3:1 match of $2,000 for the IDA member and then disperses the $2,667 to cover the planned expenditure. Wills said when a working poor individual manages to get their $667 saved they are hesitant to let it go.

She said housing costs should never equal more than 35% of someone’s gross income. For a person earning $9 per hour, that would be a maximum $465 per month.

“The first thing I stress with our clients is that they must find affordable housing. Food clothing and shelter are the basics everyone must have. Someone earning $9 per hour would have to rely on government assistance like food stamps and utility vouchers and if they can get it, subsidized housing,” Wills said. “They would have no choice but to plug themselves into the system.” 

When asked why she doesn’t leave her job for opportunities elsewhere, Pietro said most of the smaller retailers in her neighborhood have closed. She said there are other retailers across town, but without transportation they are also out of the question.

Pietro was hoping to use her tax refund as a down payment on a car, but ironically the added hours she was so willing to take during the holiday season put her income just over the threshold for an extra tax credit she has received in recent years.

“I don’t know yet what my store bonus will be. I have been at Wal-Mart two years and we are supposed to get the bonuses quarterly but I have only received two so far. They are based on store profitability,” Pietro said.

The fact that a governor may cross the bridge at Memphis should not preclude him or her from doing their job, the state’s lieutenant governor told a House committee Monday. Lt. Gov. Tim Griffin, R-Ark., testified Monday before the House State Agencies and Governmental Affairs committee during a meeting at the capitol.

Griffin, who was elected last November, spoke in favor of House Joint Resolution 1024, sponsored by Rep. Julie Mayberry, R-Hensley. Mayberry has sponsored three proposed constitutional amendments involving the lieutenant governor’s office. Her husband ran in the GOP primary last year for the post on a platform of abolishing the office.

House Joint Resolution 1024 would allow the governor and lieutenant governor to run jointly on the same ticket starting with the 2022 election, while House Joint Resolution 1025 would cover the selection, powers and duties of the office. House Joint Resolution 1026 would seek to abolish the office as of Jan. 1, 2019.

Under state law, the lieutenant governor serves as president of the state Senate and acting governor when the governor is out of state, impeached or incapacitated.

On the joint ticket issue, Griffin said 26 states use the practice of picking governors and lieutenant governors together. Griffin also said the lieutenant governor has become governor twice in the past 20 years in the state. Then-Lt. Governor Jim Guy Tucker became governor when Bill Clinton became president in 1993. Also, Mike Huckabee, who succeeded Tucker as lieutenant governor after a 1993 special election, became governor when Tucker resigned in the aftermath of the Whitewater scandal.

Griffin also told the committee he would not “accept or recommend” for a pay increase before a commission studying the issue. After the committee meeting, Griffin released a statement reiterating his support.

“When the governor and lieutenant governor work as a team, Arkansans benefit. While they are in office, the governor can rely on the lieutenant governor as a trusted advisor and to oversee projects and execute tasks,” Griffin said. “Arkansans also benefit in the unlikely event that the lieutenant governor must step into the role as permanent governor, as has happened twice in the last two decades. A lieutenant governor will be better prepared to take over as governor because of the knowledge gained working with the governor.”

Griffin said he was recently appointed by Gov. Asa Hutchinson to chair a task force reviewing the state’s participation in Common Core, as well as participates in senior staff meetings.

NEXT STEP
Rep. Nate Bell, R-Mena, who chairs the committee, said the committee will work this week to narrow the amendments down on the House side.

Lawmakers filed more than 40 proposed amendments (currently 25 in the House and 16 in the Senate) during the filing period that ended in mid-February. Bell told the committee that the vast majority were so-called shell bills. Those bills were placed on a deferred list Monday, with the rest being reviewed this week.

The House committee will meet Wednesday afternoon to cull the remaining 11 on the House side to either five or six. A joint committee on constitutional amendments will start meeting March 16 to pare the amendments down to be presented to the legislature.

GUNS IN POLLING PLACES
The House voted 73-17 Monday to approve a bill that would allow people who have concealed carry permits to be able to carry concealed weapons into certain polling places. House Bill 1432, sponsored by Rep. Jeff Wardlaw, D-Warren, will head to the Senate. Wardlaw told the House he had received some calls from constituents in his district on the issue.

Wardlaw said the ban had an impact on people in his district because there were several “country stores,” which permit concealed carry weapons, in his district that serve as polling places.

Another bill was also sent to the Senate on Monday. The House voted 80-3 to approve House Bill 1495, sponsored by Rep. Dan Douglas, R-Bentonville. The bill would allow school boards to have an option of putting advertising on school buses as long as it meets state requirements. If approved, the money raised from the advertisements could only be used for school transportation needs including paying for trips, Douglas told the House.

The Senate also reversed course Monday by approving a bill to modify the eligibility requirements for the Arkansas Academic Challenge Scholarship. Senators approved Senate Bill 5 by a 22-12 margin after the bill narrowly failed Thursday by a 17-9 vote. Under the bill from Sen. Jimmy Hickey, R-Texarkana, a student would have to have a minimum 19 ACT score to receive the scholarship. The funding for the scholarship comes through proceeds from the state’s lottery.

The bill now heads back to the House.

Facebook doesn’t “like” two bills being considered by state legislators – one that would allow certain employers to require access to their employees’ social media accounts, and one that would give personal representatives access to a deceased person’s digital records.

House Bill 1087 by Rep. Nate Bell, R-Mena, would allow entities working with minors as well as religious entities to require access to employees’ social media accounts. Employers at schools, daycares, and summer camps could require their employees to “friend” them on Facebook, for example. The bill would amend a 2013 law prohibiting any employer from having that requirement. The bill passed the House, 91-1, on Feb. 23, with only Rep. Warwick Sabin, D-Little Rock, voting no. It has been referred to the Senate Committee on Public Health, Welfare and Labor.

“This bill was brought to me by summer camps because of the fear of hiring sexual predators, and so they need to have this extra ability to go in and make sure that this person that they are hiring isn’t actively involved in that subculture that exists. Nursing homes have a similar concern,” Bell told KATV News in an earlier report.

Bell was approached by Camp Ozark, a Mt. Ida residential Christian summer camp for children ages 7-17 that, prior to the 2013 law, used social media as a tool to evaluate the 650 college-aged workers it hires each summer. Owner Sam Torn said his camp has never had an incident involving a camp employee and wants to use social media to make sure it doesn’t have one. He said sexual predators are drawn to organizations that serve youth. Most predators don’t have criminal backgrounds, but they do use social media to prey on children, he said. By having access to those accounts, Camp Ozark might flag predators who could otherwise bluff their way through the hiring process.

“Social media is a criminal background check,” he said. “If we simply have to take someone at their word as to who they are and what they do, we’re not being allowed to build up the wall of safety that we would choose to build around our campers.”

But Jennifer Hanley, director of legal and policy for the Family Online Safety Institute, an organization whose purpose is to make the internet safer for young people, said the bill is well-intentioned but would have unintended consequences, particularly for young people seeking summer employment. Her organization advises young people not to friend adults who are not family members or close family friends.

“The worst-case scenario could be examples of someone kind of engaging in inappropriate behavior,” she said. “There could be sexual harassment over this. Older bosses could see a lot of personal information about kids – not just their email addresses or other things that they may not have to share, but pictures of family vacations, pictures of teenagers in a bathing suit or something like that that they wouldn’t normally see in a workplace situation.”

The bill has gotten the attention of Facebook. Spokesperson Andy Stone said, “Any legislation that requires employees to give employers access to their private communication is problematic, but this bill goes even further by compelling minors to provide an adult employee or supervisor access to their social media accounts.”

Facebook also is opposed to House Bill 1362, the Uniform Fiduciary Access to Digital Assets Act, by Rep. Matthew Shepherd, R-El Dorado. It would allow a deceased person’s personal representative access to his or her digital information. It passed 92-0 in the House Feb. 23 and has been referred to the Senate Committee on Judiciary. Sen. Jeremy Hutchinson, R-Little Rock, a co-sponsor, said digital records sometimes are needed for executors to fulfill their fiduciary duties. The bill was recommended by the Uniform Law Commission, a national organization of lawyers who draft laws meant to be uniform across state lines.

The federal Electronic Communications Privacy Act (ECPA) requires digital providers to obtain lawful consent before releasing electronic communications. That consent must come from an electronic communication’s originator, addressee or intended recipient, according to NetChoice, a trade association of businesses engaged in electronic commerce. Service providers who disclose communications are liable under federal law, NetChoice’s website says.

House Bill 1362 permits only the disclosure of information allowed under the ECPA. It also says that custodians of electronic communications are immune from liability for acts of omission done in good faith. NetChoice says that approach still would put businesses in the position of complying with either state or federal law.

Hutchinson said he is meeting Monday with a Facebook lobbyist. Facebook’s Stone said the bill “would effectively ignore the wishes of all of those people when they die, set aside a century of settled law, and override the innovative tools and options companies provide to protect those accounts.”

The Fort Smith Board of Directors did not have time to talk about changing the city administrator’s hire-fire authority, but they did have a lively discussion about how the city presents its budget – specifically as to how the city handles a prior-year general fund balance with respect to future budgeting decisions.

Several Fort Smith Directors, with Director Keith Lau being the most vocal, have argued that the “cyclical” budgeting method now used by the city does not provide clear guidance on expenses and revenue. For example, the city budgeted in 2014 to end the year with a $3.425 million fund balance. The actual year-end balance was $6.745 million, more than $3.32 million above the budget. Lau said during the Tuesday (March 10) Board study session that some of this money could have been used to pay down fire and police pension (LOPFI) obligations, and would have resulted in a smoother budgeting process going into 2014.

“It changes the tone of what we do ... if we know exactly how our resources are being allocated,” Lau said, advocating for consideration of a “structural” method of presenting city expenses and revenue.

Directors Mike Lorenz, Tracy Pennartz and Kevin Settle agreed with Lau. Settle noted during the discussion that a structural presentation would better allow the Board to be conservative with budgeting and control spending. Pennartz was more pointed with her assessment.

“I don’t think the current way of budgeting ... is an accurate picture of where the city is at any point in time,” she said.

However, Mayor Sandy Sanders and City Administrator Ray Gosack defended the cyclical method of budgeting.

A memo from City Finance Director Kara Bushkuhl noted that advantages of a cyclical budget include familiarity, conservative revenue estimates, multi-year perspective provides better future financial planning, spending for actual needs, and avoids negative changes in service levels because of changes in available funding. Her note did say a disadvantage of this budgeting is the possibility of “spending above current year revenues.”

“Many of the larger cities in Arkansas as well as the Fort Smith Airport and Public Library currently use the cyclical budgeting method for 2015,” Bushkuhl noted in the memo in which she recommended staying with cyclical budgeting. “The current practice allows for the use of unspent revenues from the prior year and the staff relies on the use of these funds to help provide the public with services in the subsequent year.”

Gosack, along with Jennifer Humphrey, deputy director of finance for the city, said a structural budget penalizes frugal spenders. For example, if a department head uses only 95% of their budget, the next year’s budget may reflect that lower amount. Humphrey said the downside of a structural budget is that it creases a “use it or lose it mentality” with respect to spending.

“The policies we put in place are going to affect behavior,” Gosack said.

Pennartz pushed back against the “use or lose it” note.

“If the department heads have that mentality, they need to get rid of that,” she said.

Later in the discussion, Humphrey outlined a hybrid budgeting model that uses a cyclical framework but uses a structural approach to keep tabs on expenses and revenue in order to make adjustments. Her hybrid note drew surprise and some consternation from several directors.

“If we’re not doing that already, then we have another problem,” Settle interjected.

The Board and city staff agreed to continue the discussion.

Home sales in Arkansas’ four large markets were down 2.55% in January after posting an almost 4% gain in all of 2014. Driving the January numbers lower was an almost 11% decline in home sales in the central Arkansas market.

However, the average price of a home sold in the four markets was up almost 9% in January.

The City Wire’s Arkansas Home Sales Report captures home sales data in the state’s 14 most populated counties within its four largest metro areas — Central Arkansas, the Fort Smith area, Jonesboro/Northeast Arkansas and Northwest Arkansas. The report, which records closed sales, accounts for between 70% and 75% of total Arkansas home sales.

There were 21,447 homes sold in Arkansas’ four largest markets in 2014, up 3.8% over 2013 and up 17.33% over 2012. The total value of home sold in the four markets during 2014 was $3.554 billion, up 3.24% over 2013 and up 18.97% compared to 2012. Gains in the number of homes sold in 2014 certainly varied by market. Sales totaled 9,904 in central Arkansas, up 2.32%. In the Fort Smith region, which has an economy not yet on stable footing, home sales were up a surprising 14.33% for the year.

JANUARY NUMBERS
January home sales in the four markets totaled 1,222, down 2.55% compared to January 2014, and up 5.98% compared to January 2013. The average price per home in the four markets during January was $157,090, up 8.72% compared to January 2014, and up 2.59% compared to January 2013. The total value of sales in the four markets during January was $191.964 million, up 5.94% compared to January 2014 and up 8.73% compared to January 2013.

There were 544 homes sold in central Arkansas, down 10.97% compared to January 2014, and down 5.56% compared to January 2013.

January home sales totaled 436 in Northwest Arkansas, up 8.19% compared to January 2014, and up 10.94% compared to January 2013.

Jonesboro area home sales totaled 124, down 2.36% compared to January 2014 and up 18.1% compared to January 2013.

In the Fort Smith area, home sales totaled 118, up 4.42% compared to January 2014, and up 49.37% compared to January 2013.

The total value of the sales during January were down 6.13% in central Arkansas, up 19.48% in Northwest Arkansas, up 14.9% in the Jonesboro area, and up 6.97% in the Fort Smith region.

THE REGIONAL PICTURE: 2015
Central Arkansas — Home sales
January 2015: 544
January 2014: 611
January 2013: 576

Fort Smith area — Home sales
January 2015: 118
January 2014: 113
January 2013: 79

Jonesboro area — Home sales
January 2015: 124
January 2014: 127
January 2013: 105

Northwest Arkansas — Home sales
January 2015: 436
January 2014: 403
January 2013: 393

The top five counties in terms of January 2015 home sales:
Benton — 257, down compared to 258 in 2014 
Pulaski — 239, down compared to 282 in 2014 
Washington — 179, up compared to 145 in 2014
Craighead — 98, down compared to 103 in 2014
Faulkner — 88, up compared to 67 in 2014

Link here for a PDF document of the January 2015 data.

MARKET OBSERVATIONS
Vicki Briolat, agent with Crye-Leike Real Estate in Northwest Arkansas, said buyer confidence is positive and there are far fewer low ball offers made as the foreclosure market continues to weaken.

“Some people were buried so long under flat to negative equity in their homes, but that is changing as property values continue to rise. We are looking for a strong spring season and with Walmart bonuses coming in March, now is the time for resellers to list if they want to move up or down,” Briolat said.

Kevin King, owner of Weichert King Realty Group in the Fort Smith area, said the reduction in mortgage insurance premiums is timely to help offset what is expected to be higher interest rates by the end of 2015.

“Three predictions I have heard recently is that interest rates will be 5% by the end of 2015, (with) most of that move coming in the back half of this year,” King said.

While 5% is historically a low mortgage rate, it is considerably higher than 3.5% to 4% rates now available.

It was meeting day Tuesday as several committees approved legislation, while a task force to study health care reform in the state met for the first time. The 16-member task force was formed after legislators approved Senate Bill 96 earlier in the session. The bill set a Dec. 31, 2016 expiration date on the Private Option in Arkansas as well as the task force.

The task force will meet this year to discuss ways to reform the system. The group has until Dec. 31, 2015 to present their ideas to Gov. Asa Hutchinson and the legislature.

State Sen. Jim Hendren, R-Sulphur Springs, and Rep. Charlie Collins, R-Fayetteville, will co-chair the task force, while Sen. Cecile Bledsoe, R-Rogers, and Rep. Reginald Murdock, D-Marianna, were selected as vice-chairs. The group said it would live-stream its meetings going forward.

911 COMMITTEE EXTENDED
The work of an existing legislative committee looking into the state’s 911 system will continue after lawmakers found issues around the state, Rep. Scott Baltz, D-Pocahontas, said Tuesday. The Senate voted 34-0 to extend the committee’s work until 2017.

Baltz, who served as fire chief in Pocahontas and as a Randolph County justice of the peace before being elected in 2012, said the committee found problems ranging from inoperability of systems to wireless communications being spotty in rural areas.
Another problem has been funding, Baltz said.

In the past 20 or so years, there have been a loss in the number of landlines due to people buying and using cell phones. Typically, counties receive funding from taxes on individual phone bills, with the money going toward 911 in a county. While the funding has decreased, Baltz said 911 taxes from cell phone bills are bringing in “pennies on the dollar.”

Baltz said the committee also found issues with dispatcher training. He said he would like to see dispatchers train on a level similar to police officers and firefighters, perhaps at the state’s two-year schools.

The bill was sent back to the House.

COMMITTEES
A federal candidate may be able to run for more than one federal office simultaneously, under a bill approved by a Senate committee. The Senate State Agencies and Governmental Affairs approved Senate Bill 803, sponsored by Sen. Bart Hester, R-Cave Springs. The bill would amend state law on the practice.

“The appearance on the general election of the name of a party nominee for the office of President or Vice President of the United States in lieu of the names of the candidates for electors for the offices shall not limit or restrict the party nominee so named from being a candidate in his or her own right for any office to be filled at the general election,” Hester’s bill noted. “A person may be a candidate for more than one federal office in the same primary or general election.”

Hester told reporters after the meeting that he had Sen. Tom Cotton, R-Ark., in mind when he filed the bill. However, Hester said Cotton did not ask him to file the bill. Under the original bill from Hester, a candidate could have run for both House and Senate seats simultaneously. However, he amended the bill to ban the practice.

When questioned by the committee, Hester brought up a situation in Texas over 50 years ago.

“This is certainly not a new idea. The Democratic Party did this for Lyndon B. Johnson in Texas many, many years ago. I think that whenever you have a candidate or a public servant that the people believe in, you’d like for them to have the opportunity to step up without losing their current position should they not be fortunate enough to win,” Hester said.

The bill now heads to the Senate.

HB 1450 AND HB 1626
The House Judiciary Committee also approved two safety-related bills Tuesday. House Bill 1450 would allow the director of the Arkansas Department of Correction to reward state prisoners for exhibiting good behavior.

Under the bill from Rep. Donnie Copeland, R-Little Rock, a prisoner could receive up to 90 days credit for completing a job training program and for not abusing infirmary privileges, 180 days for completing a general education program and up to a year for saving the life of a corrections employee or another inmate.

But, the prisoner could lose their good time credits if they escape, have illegal drugs, smuggle in contraband or are involved in a sexual-related violation under the bill. The bill was also amended March 4 to include language about the credits.

“Meritorious good time shall under no circumstances reduce an inmate’s time served in prison by more than one-half of the percentage required by law for transfer eligibility, unless the reduction by more than one-half of the percentage required by law for transfer eligibility is the result of the accumulation of meritorious good time,” the bill noted.

Copeland said while he supports the death penalty and “if you do the crime, you should do the time,” he said a program like this would build morale among prisoners.

The bill now heads to the House.

The committee also approved House Bill 1626 to allow an elected official who is a concealed carry permit holder to carry a concealed handgun in the courthouse where they work. Rep. Tim Lemons, R-Cabot, who sponsored the bill, said the reason he sponsored the bill was in response to a Sept. 2011 shooting at the Crawford County Courthouse in Van Buren.

According to published reports at the time, 48-year-old James Ray Palmer walked into the courthouse to see a circuit judge who heard his divorce case. Palmer, who was later shot and killed by police, shot an employee in the leg at the courthouse.

Lemons, who said Palmer fired at least 120 shots in and around the courthouse, told the committee that the bill was needed to help protect courthouses around the state. He said the courthouse in his county – Lonoke County – is nearly two miles away from the county jail, separated by I-30.

The bill, which has the support of the Association of Arkansas Counties, now moves to the House.

CUBA RELATIONS
The Senate Agriculture, Forestry and Economic Development committee approved a resolution supporting a plan to restore trade between the United States and Cuba.

The resolution, House Concurrent Resolution 1006, was sponsored by Rep. David Hillman, D-Almyra. The resolution also encourages President Obama, Congress and the state’s congressional delegation to work on the issue.

The resolution passed by a 52-36 margin in the House on March 3 after some interesting debate. Supporters of the resolution said it would help the state’s farmers trade cotton, rice and soybeans in the Caribbean nation, while opponents stressed the country’s human rights record and that trading with the communist nation would only benefit its leaders.

The resolution now goes to the Senate.

The one-time family-owned Allens Inc., of Siloam Springs has been sold to canning rival Del Monte Foods for $75 million in cash. The deal was with Sager Creek who purchased the Allens out of bankruptcy last year for $124.78 million.
 
San Francisco-based Del Monte Foods is one of the largest food companies in the United States and the Sager Creek business will add about $250 million in additional revenue from brands like Veg-all, Freshlike, Popeye, Trappley’s and Allen’s.

“This acquisition provides Del Monte the opportunity to expand on Sager Creek’s Foodservice business platform and new retail product offerings while driving significant operating synergies in our network of vegetable production facilities,” said Nils Lommerin, CEO of Del Monte Foods.

Allens, Inc. was founded in 1926 and owned and operated by multiple generations of the Allen family. Sager Creek employs about 1,000 people in Arkansas, Wisconsin and North Carolina facilities, which will be taken on by Del Monte.

The City Wire reported last year that Sager Creek, owned by a venture capital firm, would likely dismantle the 87-year-old food company or sell it off.

JOBS QUESTION
Del Monte’s move does raise the question of management jobs remaining in Siloam Springs. The city’s chamber leader is hopeful job losses will not result.

“The conversations we’ve had with Del Monte indicate that this well-known food company wants to make Sager Creek’s operations a subsidiary rather just merge operations,” said Wayne Mays, CEO of the Siloam Springs Chamber of Commerce. “They obviously did their homework and saw value in this business, which is a good thing for our community."

If there is any long-term concern regarding the deal, Mays said there is the risk some of the local management jobs could be pulled away, but there has been no indication of that.

One interesting aspect of the deal is Del Monte expects to utilize Sager Creek to bolster its foodservice business, and Sager Creek CEO Chris Kiser has experience in the foodservice industry. Kiser has more than 20 years experience in the food business, from his early years as a vice president for Campbell Soup Company to managing national accounts for Diago, to nearly seven years at Pinnacle Food as executive vice president of sales. He later spent three years as president of AdvancePierre Foods, overseeing the company’s retail and foodservice business.

Growers like Dave Chamberlain of Maysville are also happy about the deal.

“I think it’s a good thing. Del Monte knows the business and we have been told that we should no major changes under the new ownership. I am glad for that,” he told The City Wire.

Chamberlain is set to plant 144 acres of green beans for Sager Creek, not Del Monte this spring. The crop will be up from 80 acres of beans he planted last year.

“We didn’t have the opportunity to grow any fall beans last year, but maybe we will under this change. At one time I was growing 400 acres for Allens but things got so shaky there we backed off and grew more wheat and soy beans,” Chamberlain said.

He has raised green beans for Allens and Sager Creek for more than two decades and said most years it has provided steady income for the family farm.

CHALLENGING BUSINESS
Del Monte bought the Sager Creek business out of its revolving credit facility, but the canned food giant itself has struggled to turn a profit amid higher operating costs in recent quarters.

The canned food industry has been challenged by changing consumer preferences for fresh produce. Grocers from Wal-Mart to Kroger to Amazon are investing in fresh capabilities that draw consumers away from the center of the store to the fresh fruits and vegetables that line the perimeter of grocery stores.

The buy local movement has also taken root with farmer’s markets and other local grocers like Harp’s and Allen’s Foods in Bella Vista – no relation to the canning company – who routinely feature fresh fruits and vegetables from local farms.

In the most recent financial statement Jan. 25, Del Monte reported net annual sales of $1.282 billion, with net losses of $47.2 million. While net sales increased from $1.228 billion the cost of products sold also rose.

Allen’s was forced into bankruptcy in October 2013 after a 30% decline in revenue in 2012. Allens officials made several moves in 2012 to shore up business, including a March 2012 announcement that Allens was selling six frozen vegetable brands to the French company, Bonduelle Group.

The company also announced in early 2012 that the company would move operations and 150 jobs from Van Buren into an Allens canning operation in Siloam Springs. The company’s Van Buren warehouse operation was expected to remain open.

Consolidating the canning operations came more than 30 months after Van Buren operations were expanded. In June 2010 the company announced a more than $20 million expansion that included a $13.5 million investment in the company’s Van Buren operation. The $13.5 million investment in Van Buren expanded the company’s capacity to process sweet potatoes.

LINGERING BANKRUPTCY ISSUES
The Sager Creek business is not hindered by the lingering claims from suppliers to Allen’s who have sought payment for PACA claims during the past two years. The Perishable Agricultural Commodities Act (PACA) facilitates fair trading practices in the marketing of fresh and frozen fruits and vegetables in interstate and foreign commerce

On March 5, the PACA claims for immediate payment filed by D&E Farms, H.C. Schmieding Produce and Hartung Brothers were denied by U.S. Bankruptcy Judge Ben Barry.

The H5N2 “bird flu” strain has now been found in a Butterball turkey farm in Boone County. It’s been 11 years since the highly pathogenic strain of Avian Influenza has been found in commercial poultry flocks in the U.S.

After increased mortality on a Boone County Farm the Arkansas Livestock and Poultry Commission performed tests that were confirmed by federal labs in Aimes, Iowa, on Tuesday (March 10). The tests showed the H5N2 virus present on the Boone County turkey farm.

Bruce Holland executive director for the Arkansas Livestock and Poultry Commission., said immediate steps were taken when the lab results were known.

“We are taking this quite seriously. The entire flock on the infected farm will be depopulated and within a 3-kilometer radius a quarantine has been put in place to restrict the traffic to and from all poultry farms. Individual companies are responsible for enforcing the quarantine protocol,” Holland said in a statement.

He said this is first time a high pathogen virus has been detected in the state’s commercial poultry flocks. The virus is transported through migrant birds, namely geese and ducks. Holland said the state’s entire poultry industry has been on high alert since the H5N2 was discovered in neighboring Missouri two weeks ago. He said there is no threat to humans, but the viruses can be devastating to the industry.

A zone 2 radius was set up in a six-mile radius around the affected area. In this area Holland said every backyard flock will be tested and then retested 10 days later. Zone 3 which a broader area also requires backyard flocks be tested.

CARGILL RESPONSE
Cargill, which also has turkey operations in Missouri and Arkansas, implemented its avian influenza protocols last week when Missouri officials reported positive tests for H5N2.

“Our AI protocols include stepped up sanitation of vehicles and equipment and we have restricted movement of eggs, poults, adult turkeys, feed, litter and related materials,” noted Mike Martin, director of communications for Cargill. “We have been cooperating and working with state and federal agencies, trade associations, farms that grow our turkeys, suppliers, industry peers, customers and other important stakeholders to keep them informed and take whatever actions are necessary to contain H5N2. We are monitoring the situation closely.”

The company said a turkey flock that tested positive in Fortuna, Mo., will be “depopulated” by Thursday (March 12). Almost 80 other Cargill farms in the 12-mile test radius did not show an H5N2 positive.

“While there is a high mortality rate among infected flocks, sick turkeys never get to our processing plants and, therefore, all turkey meat for sale is safe from AI. This is not a food safety issue – it is an animal wellbeing issue,” Martin noted in the statement.

EXPORTS BANNED
Export contracts that contact certain triggers relating to Avian Influenza detection have shut off trade with more than 40 countries since this strain was first found earlier this year in the Pacific Northwest.

Toby Moore, spokesman for the U.S Egg & Poultry Export Council, said some countries like China ban the entire nation’s poultry exports from eggs to breeding stock and the chicken or turkey itself. He said other countries like Hong Kong restrict the ban to the county level and others like Mexico restrict to the state level. 

“It’s simply too early to know the true impact of the H5N2 detection in U.S. flocks. Every time there is a new confirmation the clock resets itself,” Moore said.

At the very minimum the discovery of Avian Influenza, especially a high pathogen strain, causes disruptions in exports for the entire poultry industry that recorded $5.501 billion in sales abroad last year, according to the Foreign Agricultural Service.

Moore said even large companies like Tyson Foods can’t always easily work around export bans restricted at the state or county level even though they may have plants in states that are not banned. He said each plant performs certain operations and not all of them are equipped or certified for export.

VIRUS ORIGIN
Moore said the H2N5 strain was tracked from Eurasia that followed the Pacificline flight pattern of migrant birds. It then moved along the Mississippi flyway which brought the virus to the south from Minnesota to Missouri and Arkansas.

“This doesn’t happen very often. It’s a random thing, a game of chance and it was just our time in the barrel. The industry does a good job with bio-security year round and follows the protocol in place one a region goes on alert,” Moore said.

Springdale-based Tyson Foods the largest poultry company in the U.S., based in Arkansas, said that no flocks grown for Tyson Foods have been diagnosed with avian influenza. 

“There are always biosecurity measures in place on poultry farms and we've been even more diligent since AI has been in the U.S. this winter,” said Worth Sparkman, spokesman for Tyson Foods.

Siloam Springs-based Simmons Foods did not respond to a request for comment.

U.S. GDP growth has improved and the national jobless rate fell to 5.5% in February, but rising consumer debt suggests that overall economic recovery is not resulting in a better financial position for many Americans.

The Federal Reserve has reported that household debt at the end of 2014 was $11.83 trillion, up $306 billion over the end of 2013. According to the Fed data, mortgage debt was up $39 billion and student loans were up $31 billion. Auto loan debt and credit card debt increased by $21 billion and $20 billion, respectively. Outstanding student loan balances now stand at $1.16 trillion.  

However, delinquency rates were unchanged at 4.3%.

“Although we’ve seen an overall improvement in delinquency rates since the Great Recession, the increasing trend in student loan balances and delinquencies is concerning,” Donghoon Lee, research officer at the Federal Reserve Bank of New York, said in the statement. “Student loan delinquencies and repayment problems appear to be reducing borrowers’ ability to form their own households.”  

CONSUMER ‘AMNESIACS’
A recent CardHub study showed a rise of $57 billion in credit card debt during 2014, up 47% over 2013, and up a 55% compared to 2012. The fourth quarter marked six consecutive quarters with year-over-year debt load increases, noted CardHub.

“While defaults are at a six-year low, the average household’s credit card balance – nearly $7,200 as of the end of 2014 – is growing dangerously close to the $8,300 tipping point previously identified by CardHub as being unsustainable,” noted the CardHub report. “Consumers have now racked up close to $180 billion in credit card debt following the nearly debt-neutral years of 2009 and 2010.”

John Taylor, with Sterne Agee in Fort Smith and a market watcher for many years, said the rise in consumer debt proves true the old saying that “the only thing we learn from history is that we don’t learn from history.” He said stagnant wage growth makes worse the rise in consumer debt.

“Consumers are amnesiacs and have forgotten the end result of being over leveraged. Another piece of data is that auto loans currently have the largest amounts financed over the longest terms in many years. With no wage growth over the last seven years how will the consumer retire all of this new credit card and auto debt?” Taylor noted.

Debt levels are not expected to improve. CardHub projects consumers will incur more than $60 billion – up 5% – in new credit card debt during 2015. Consumer debt levels during the fourth quarter of 2014 were up 6% over the same period in 2013, up 4% over the 2011 period and up 102% compared to the same quarter of 2008.

“The bad news is that while economic gains are making our spending habits sustainable for now, attitudes toward debt have not improved since the Great Recession,” noted the CardHub report.

SOME POSITIVES
Compared to pre-recession markers, household finances were improving during the first months of 2014, according to the Federal Reserve. The average inflation-adjusted wealth of U.S. households in the first quarter of 2014 was up 9.3% compared to the same quarter of 2013, with 23% of that gain the result of “rapid gains in the value of assets. The improvement also came through a 12.5% decline in average household debt.

Fortunately, mortgage delinquency rates are improving. In December, the “seriously delinquent rate – mortgages behind by 90 days or more, or in foreclosure – was 3.99%, one of the lowest rates since before the recession. The Arkansas rate in December was 4.36%.

While housing related debt is the majority of debt carried by the average consumer, a report from the U.S. Federal Reserve branch in St. Louis shows that homeownership is declining. The homeownership rate for families with a head of household between 40 and 61 years old fell from 76.9% in 2005 to 72.1% in 2013. Ownership among families with a head of household younger than 40 fell during the same period from 50.1% to 42.2%.

Home ownership among families with a head of household older than 61 grew by 1% during the same period.