A study group recommended changing the state’s Common Core test provider before it made its other recommendations because of timing issues and certainty, the group’s chairman, Lt. Gov. Tim Griffin, told members of the House and Senate Education Committees Monday.

Earlier in the day, Gov. Asa Hutchinson’s office and the Department of Education announced that Arkansas would terminate its contract with the Partnership for Assessment of Readiness for College and Careers (PARCC), only months after Arkansas students participated in the PARCC test for the first time this year. The state will replace the test with the ACT and the ACT Aspire tests. The State Board of Education, the final decision maker, will be asked to approve the new arrangement Thursday.

The change comes as the result of a recommendation by the Governor’s Council on Common Core Review, chaired by Griffin. Hutchinson appointed the council earlier this year to consider changes to the Common Core, the controversial set of standards adopted by most states.

Griffin said the council’s charge is to provide both initial and final recommendations and that this initial recommendation needed to be made apart from others to be “helpful.”

Education Commissioner Johnny Key later told educators that the Department of Education has been planning for various testing alternatives, including continuing with PARCC and using another provider such as ACT. Professional development training on PARCC was scheduled to begin this week but now will be rescheduled.

Griffin said the council’s decision to replace PARCC with ACT was “not unanimous, but not far away. We were pretty confident as to where we were going on this, and we knew that a decision was going to be made, and in order to be helpful, we wanted to make that.”

The Common Core is a set of standards shared by most states that has become a political lightning rod – especially the PARCC test, which originally involved 24 states but has since been reduced to nine, including Arkansas, plus the District of Columbia. A bill that would have ended Arkansas’ participation in PARCC passed the House this year but failed in the Senate Education Committee until it was amended to allow Arkansas to enter into no more than a one-year contract with PARCC.

Asked by Sen. Eddie Joe Williams, R-Cabot, why the council had recommended ACT over PARCC, Griffin said the PARCC takes too much time from classroom work and has logistical issues. ACT is a well-respected brand familiar to both teachers and students that has been used in Arkansas for decades, and it brought together those who both supported and opposed PARCC.

“ACT, I think, represents a lot of common ground between both sides and allows for a new start with a known quantity,” he said.

Griffin said that while Hutchinson had asked for final recommendations in the fall, “I’m shooting by the end of June, this will be done. Speed matters in this particular instance.”

Griffin said the council has listened to 40 hours of testimony and is in the process of conducting listening sessions across the state, with stops in Batesville, Pine Bluff and Fort Smith remaining. Attendance at the listening sessions has been disappointing.

“We have had people at these events. I wish we had more,” he said. “I wish we had a lot more, but we have not.”

He said many of the public’s concerns – though certainly not all – are related to communication and implementation. He estimated that about 75% of the criticisms he has heard involve members of the public mistakenly associating other problems with the Common Core.

For example, many complaints about Common Core math are really about a type of math known as Cognitively Guided Instruction that is aligned with the Common Core, but is not required.

The Common Core standards were originally adopted by 46 states as well as the District of Columbia. Texas, Nebraska and Minnesota were among the states that didn’t adopt the standards. Since 2010 when Arkansas adopted the standards, several states, including Oklahoma, Indiana, Tennessee and Kentucky have repealed the standards or the use of the accompanying assessment, PARCC or Smarter Balance.

Several educators in the state recently told The City Wire that they hope officials give them more time to assess Common Core.

“This isn’t something that just happened. It’s been four-year implementation process.” Bentonville has created parent understanding and buy-in during that time through collaboration,” said Bentonville Superintendent Mike Poore.

Educators who spoke to The City Wire also made it clear that PARCC and Common Core are not connected. Some of the opposition to Common Core seems to intertwine Common Core with PARCC.

“Don’t confuse Common Core with PARCC,” said Barry Owen, assistant superintendent for instruction in the Fort Smith School District. “Common Core is like a Cadillac being driven down a dirt road, called PARCC, which is now being paved.”

Rental of more than 2,000 Fort Smith area hotel rooms and more than $250,000 spent locally by the U.S. Army are just two examples of the economic impact of a large three-week training exercise at Fort Chaffee.

Going on now is the “eXportable Combat Training Capability” exercise hosted at Fort Chaffee by the Army National Guard. The program is one the Army National Guard has used since 2005 to train its brigades. This is the first year Fort Chaffee Joint Maneuver Training Center will host the exercise and the economic benefit is being felt well outside installation’s front gate, according to a press release from the Arkansas National Guard.

Lt. Col. Dwight Ikenberry, Chaffee operations officer, said prep for the event began several months ago. He said more than 250 local people have been hired to perform jobs such as role-players, special effects coordinators, fuel and logistical personnel, equipment maintainers and other specialized positions. Some of the jobs were hired in April with salaries ranging from $12 an hour up to $28 an hour.

“It takes a lot of additional people and equipment to make this happen,” said Col. Troy Galloway, commander of Fort Chaffee Joint Maneuver Training Center. “This is a tough, but realistic training exercise that is very beneficial to our Soldiers.”

The Arkansas Army National Guard’s 39th Infantry Brigade Combat Team is the focus of the training but an additional 500 active duty and National Guard Soldiers from other units are at Chaffee to support XCTC.

“At its peak we will host almost 4,500 soldiers, civilians and contractors.  All the uniformed Soldiers are staying on Fort Chaffee,” Galloway said. “It will stress our infrastructure but we are up to the Challenge.”
 
The unusually large number of additional people at Fort Chaffee means additional life support areas are needed. Tents and shower and laundry facilities were brought in to support the Soldiers during the exercise.  
 
“Rentals are huge,” said Ikenberry. “Light sets, trucks and vans, generators, tents and other equipment rentals were brought in for this. I would estimate over 250 thousand dollars easily on local purchases.”

Local purchases are a big part of the impact to the Fort Smith-area economy. Money spent at businesses in Barling, Charleston and other towns are filling the accounts of business owners.
 
“This exercise is giving a substantial economic benefit to the city,” Fort Smith Mayor Sandy Sanders said in the Army statement. “It’s like having several conventions in the city all at one time.”

Sanders estimated that more than 2,000 hotel rooms have been booked by contractors during their 4- to 6-week stay and contractors are eating in local restaurants while they stay here.
  
“Fort Chaffee is a key part of the City,” Sanders said. “Chaffee has so many assets. It’s a great opportunity for our warfighters and Fort Smith is pretty pleased with the increase in traffic.”

Continuing, he said: “This first XCTC exercise is a great benefit for our Soldiers and our businesses too. When this is over Fort Smith will be ready for XCTC #2.”
 
Galloway hopes the people involved with XCTC will view Chaffee in a whole new way and see the post for the excellent training base that it is. 
 
“The Guard benefits from great training and the economic benefit is significant.” Galloway said. “When it is over we estimate almost $8 million will have been spent for XCTC.”

Wal-Mart has in recent years spent billions on its e-commerce focus. The investments have included numerous acquisitions and significant internal growth at the retailer’s @Walmartlabs group. The investments have cut into earnings, and equity analysts are now wanting to know when the investments will pay off.

The question was the first one asked of Wal-Mart’s top execs when they met with analysts following the retailer’s annual shareholder meeting in Fayetteville on June 5.

Earlier this year Wal-Mart Chief Financial Officer Charles Holley said that the full year earnings per share guidance includes between 6 cents to 9 cents per share in e-commerce investment.

“We are focused on creating an endless aisle and appealing to our customers’ changing needs. (This year) we expect capital investments in e-commerce worldwide to be between $1.2 and $1.5 billion ... and these investments will include technology, infrastructure and other areas to support e-commerce and digital initiatives to serve customers,” he explained during the company's February earnings call.

Last year Wal-Mart spent $1 billion on its e-commerce business. Holley said the greatest investment of capital for the e-commerce operations will come over the next 18 to 24 months, and then the investment should begin to moderate in fiscal 2018.

PROGRESS UPDATE
In defense of the spending, Walmart Global e-Commerce CEO Neil Ashe told analysts on June 5 that in the past three years the retailer has doubled the size of its e-commerce business.

“We’ve built out a new technology platform in the U.S. and built a new fulfillment network. We have also built thriving businesses outside the U.S. in Brazil, China and the U.K. We feel good about our progress,” Ashe said. “Now we are starting to use that infrastructure to try and transform the shopper experience in e-commerce and in stores and clubs.”

Ashe said to build out a new online platform at Wal-Mart’s global scale that handles global e-commerce, digital commerce and integrate in the supply chain fulfillment in just 2.5 years is “pretty special.”

“It was engineered with next generation architecture that is built to scale and now can have an impact on not only e-commerce business, but also throughout the rest of the enterprise,” he said.

Ashe also said part of the reason the investment is higher is because “we are building out a lot of businesses from the ground up, digital and e-commerce at one time. If we could build them one at a time they would fund each other, but doing all that at once raises our cash outlay.”

SALES, M&A
This year @WalmartLabs said it expects global e-commerce sales of $12.5 billion, but driving e-commerce sales higher is not the only focus of its operations. Ashe reiterated that new technology innovations are starting to permeate the entire organization with the goal of better customer service.

“Looking forward we expect an increase in global e-commerce sales of around 25% in fiscal year 2016, and we anticipate growth over the three-year period from fiscal years 2016 through 2018 to average 30 to 40%,” Holley said.

In the past five years, Wal-Mart has acquired 14 startups to the tune of roughly $2 billion according to Wall Street estimates. Ashe told reporters during shareholders week that @WalmartLabs is always looking for possible tech acquisitions because it will never have all the pieces in place given the constant changes underway.

“We have made a number of tech acquisitions since I’ve been here, but more interestingly we have found pieces of technology, capabilities, talent and groups of people that we have integrated into our enterprise. You should expect to see even more of those going forward,” Ashe said.

INNOVATION FOCUS, PATIENCE REQUIRED
Wal-Mart CEO Doug McMillon told the analysts that progress is being made to build the infrastructure needed to help the retailer integrate online and in-store capabilities. Now he said the focus is more on innovation looking forward to those applications that shoppers do not yet know they want.

“These are innovations that will help customers save time as well as money. “We are all aware that we have a 52-year-old model that historically performed on the backs of supercenters. Today we must integrate technology and find the best ways use these assets while also improving the overall customer experience,” McMillon said.

In the short-term he said the company is excited and comfortable about the cash allocations and investments in technology.

“We understood when we made them that it would take time to pay off. We can’t magically answer for you which date these investments will return profits. It will be quarter to quarter improvements,” he said.

McMillon said the retailer’s overall spending is putting pressure on short-term earnings, but said Wal-Mart has to “get this right” which is why they have become more flexible in testing new ideas simultaneously. He said the nimbleness is allowing them to the test and learn quickly and hopefully fail less often. McMillon told the analysts that tech spending would be higher for three years and they would just have to wait and see how this pays off in the months, quarters and years ahead.

A French manufacturer plans to set up shop in West Memphis to supply glass insulators for a multi-state renewable energy project that is expected to deliver wind powered electricity from Oklahoma to markets in Arkansas and other southern states.

Executives with Clean Line Energy Partners LLC and the Paris-based Seves Group announced the agreement Monday between their respective subsidiaries, Plains & Eastern Clean Line and Sediver, at a signing ceremony in West Memphis.

The deal is another step in the extended progression of the so-called Clean Line project – an electric transmission line project that officials say will deliver up to 3,500 megawatts (MW) of wind power from the Oklahoma Panhandle region to communities in Arkansas, Tennessee and other states in the Mid-South and Southeast.

The pact signed on Monday calls for Sediver to build and operate a manufacturing facility and test lab in West Memphis that will make high voltage electrical insulators and glass blocks for use in electricity lines, substations and other power grid applications.

For its part, Sediver’s Arkansas operations will employ more than 70 workers when the manufacturing facility comes online in late 2016, company officials said. Sediver and Clean Line officials said that the West Memphis facility is positioned to serve other utilities across the country. In past few years, the French manufacturer has restructured its core businesses to strengthen its global reach and return operations to the U.S., where it has maintained “a sustained double-digit growth over the last five years,” company officials said.

HOLDING PATTERN
Besides the Sediver agreement, Clean Line said it also has a pact with General Cable in Malvern to manufacture conductor parts for the project. That agreement has been in place since in 2011, but the Malvern plant is still waiting to begin production as the multi-state project continues to move through necessary state and federal regulatory and permitting approvals.

Clean Line’s commitment to purchase all of the insulators and conductors for the transmission project from the West Memphis and Malvern manufacturers represents more than $160 million in projected procurements for Arkansas-made products, company officials said.

The Clean Line project has been in the works now well over five years. In May 2010, Plains and Eastern Clean Line filed an application with the Arkansas Public Service Commission to become a public utility in Arkansas as a first step in the development of the multi-state transmission project.

In 2011, the Arkansas PSC denied Clean Line’s application without prejudice and cited the language of the relevant statutes limiting the jurisdiction of the PSC. However, the order recognized the importance of transmission infrastructure to facilitate the delivery of renewable energy and praised Clean Line’s efforts as “laudable and its work is to be commended.”

In August, Plains and Eastern Clean Line LLC obtained regulatory approval from the Federal Energy Regulatory Commission (FERC) to sell transmission service to customers at negotiated rates and to negotiate bilateral agreements for 100% of the line’s capacity.

In addition, Clean Line has proposed an intermediate delivery converter station in Central Arkansas that would have the capacity to deliver up to 500 MW of power, but that has yet to receive regulatory approval. When first announced, Clean Line officials said the project would take five to seven years to complete and cost nearly $3.5 billion. Clean Line has said it expects to fund all development costs, but does not plan to seek cost recovery through the electric rates paid by consumers in the state.

While supporters of the project tout its environmental upside – the transmission of wind energy, opponents are fighting it in part due to the eminent domain issues related to land acquisition for the project. “Block P and E” is one of the larger opposition groups and uses this Facebook page to deliver its message and gather support.

In Arkansas, the 200-foot right-of-way enters in Crawford County north of Van Buren and travels below Alma and Dyer before dissecting Mulberry to follow a line with Interstate 40 through most of Franklin County. From there, the line travels through Johnson County, Pope County, northern Conway County, southern Van Buren County, southern Cleburne County, White County, Jackson County, Poinsett County, Cross County, and exiting Arkansas through Mississippi County north of Memphis.

If built, the project will enable an additional $12 billion in investments in new wind projects which today cannot be built because of the lack of transmission, officials have said. Those projects could possibly power over 2.1 million American homes, they said.
Based on current estimates, company officials said the project is expected to begin construction as early as 2016. Under that scenario, it could be commercially operational as early as 2018.

ALTERNATIVE ENERGY
The Clean Line project was one of the first full-scale renewable energy projects that will affect Arkansas power consumers in the next decade. The Arkansas Electric Cooperative Corp. (AECC) has also recently inked several long-term agreements to bring Oklahoma-based wind power to Arkansas.

The latest came in May when the Arkansas electric cooperation said it was purchasing 108 megawatts of wind energy from the planned Drift Sand Wind Farm, located 60 miles southeast of Oklahoma City. It is scheduled to be in service by Dec. 31, 2016.

There have also been major developments in the area of solar energy in Arkansas. Last week, Silicon Ranch Corp. began construction on a 12-megawatt (MW) solar energy project planned for the Highland Industrial Park in East Camden. The South Arkansas solar facility, which officials said will support between 250 and 350 direct and indirect jobs, is expected to come online in late 2015.

In April, Entergy Arkansas announced plans to build an 81-megawatt photovoltaic solar energy generating facility in Arkansas County. That emissions-free solar energy facility is not expected to be connected to Entergy Arkansas’ transmission grid until the end of the decade.

Private label is an important metric of the grocery business, but getting it right is not as easy as slapping a lower price on a can of Great Value green beans placed next to 
Del Monte or Green Giant.

In fact, private label sales have been largely stagnant across the grocery industry since 2011, according to IRI. Private label sales of food and beverage accounts for about one-fifth of total market dollars, or $530 billion in 2013, the last number available, according to Nielsen market research.

A few retailers like Costco, Aldi and Wegmans have got the formula right for private label. As part of their overall effort to improve financials, top execs at Walmart U.S. and Sam’s Club told the media last week they too are focusing on their private label business.

Retail experts with Nielsen noted in a 2014 report that there are missed opportunities with private label sales. Manufacturers should adopt a collaborative mindset and help retailers win across the total store with both private label and name brands, the report noted.

“Manufacturers should consider joint promotion opportunities. For example, if one group of consumers prefers a name brand in a category while another prefers private label, consider promoting them both in the same week. In addition, manufacturers could create integrated shelf sets to help retailers lay out their store shelves. Finally, manufacturers should look for areas where private label doesn’t have a presence, and discuss placement options with retailers in categories where they don’t already have a private-label presence,” noted Todd Hale, former senior vice president and consultant, consumer and shopper insights, Nielsen.

REDUCING PRIVATE LABEL
Rosalind Brewer, CEO of Sam’s Club, told the media that her buyers are in the process of streamlining their private label offerings from 15 to 2. She said two years ago, Sam’s Club was bloated with as many as 20 different private labels.

Sam’s Club is now converting Simply Right into the Members Mark label, in the its health and wellness area.

“We are narrowing our focus in private label. You will see us do more with private label going forward. Our focus will be on better quality and value. Working toward an elite private label brand will be one of the levers you see us pull going forward,” Brewer said.

Retail expert Carol Spieckerman, CEO of newmarketbuilders, said that Sam’s decision to consolidate its private brand is a positive move.

“Costco serves as an obvious example of how creating a power brand and really getting behind it can move the needle and more importantly, drive destination shopping,” Spieckerman said. “Costco has built a tremendous amount of trust and loyalty for Kirkland over the years – it is the envy of the industry.”

She said building brand loyalty like Costco has done with the Kirkland label takes time. 

“Sam’s can’t expect Members Mark to hit Kirkland-esque proportions right away. Still, it makes sense for Sam’s to narrow its private brand portfolio and focus. One of the reasons Kirkland has been so successful is because Costco has continued to raise product quality while keeping prices stable or even lowering them. It will be important for Sam’s to maintain high standards and continue to bring on the value as it integrates more products into fewer brands,” Spieckerman said.

Clint Lazenby a supplier development consultant in Bentonville, said consolidation is a good move for Sam’s Club.

“Suppliers for private label understand these shifts will happen and they will adjust accordingly. Sam's and Walmart do a great job of partnering with their suppliers to ensure the transition is as smooth as possible and minimizes incremental cost,” Lazenby told The City Wire. “I would say the key for Sam's Club, as for any brand, is to ensure they have a clear long term strategy for the brands they are going to get behind. Creating brand equity is extremely hard and expensive, so focusing this on fewer brands should be advantageous.”

He said the challenge suppliers and Sam’s Club have to navigate is that of the consumer does not always "understand" this disruption to their lives. Consumers also must feel confident that the items and brands they want in the future are going to be there, he said.

“They see this as a commitment to them. It is important that these changes are made with clear focus and understanding of what is important to the consumer and will drive loyalty and consumption over the lifetime of the consumer,” Lazenby said.

Jason Long, CEO of Shift Marketing Group in St. Louis, said Costco’s success with Kirkland is a hard act to follow on private label.

“It’s a brand that stands for quality and value and allows Costco pricing and distribution leverage when negotiating with CPG suppliers. So anything that Sam’s can do to emulate this business model is a good start,” Long told The City Wire. “I like the idea of Sam’s focusing their efforts behind a few private brands. It gives those brands an increased likelihood of resonating with the consumer – especially if Sam’s is vigilant and focused on delivering high quality and value behind those labels.”

Long said the supplier community will likely be on notice regarding Sam’s efforts.
 
“Costco has pushed back hard on packaged goods stalwarts including Tide as its Kirkland Brand grows in strength. It will be interesting to see if Sam’s can build the same cachet around its private brands,” Long said.

WALMART STRATEGY
Walmart U.S. CEO Greg Foran was also recently asked by media to comment on efforts to tweak private label under his watch.

“You are going to see us lean into private label where it makes sense. It can be a great addition to any assortment where there is a gap in quality or price. We have not set goals toward expanding or reducing private label offering at this point. I just want buyers to make sure that our customers get the right proposition in front of them,” Foran said in a media conference June 4.

In some categories Foran said it’s a good idea to offer a value which can accomplished by a private label. 

“When I walk the store and when I do line reviews I see opportunities to tweak the types of products we’re selling, how it’s packaged or how it’s displayed and we are challenging ourselves to do better where we can,” Foran added.

SUPPLIER ADVICE
Steve Bratspies, executive president of grocery for Walmart U.S., said private label is already a big program within the company, but said there are opportunities to capture more of it as well as improve upon the brands already offered.

Bratspies recently spoke to suppliers in Bentonville about Wal-Mart’s food business. During that May 20 speech Bratspies told suppliers that Wal-Mart is serious about low cost and innovation.

He said the retailer is also serious about re-energizing the center of the store with varied product offerings that are innovative in nature or offer tangible value to cost-conscious shoppers. He said buyers are not looking for more line extensions, varied flavorings etc. But, they are instructed to seek out quality food offerings like Alaskan King Crab and sometimes private label is the best solution.

Bratspies also told suppliers to bring their most innovative food ideas to their buyer’s table. He said if capital outlay is a hurdle then let the buyer know because a purchase order might help, adding that buyers are there to buy.

He said other product areas Wal-Mart is focusing on include adult beverages, organics, gluten-free and sugar-free, and premium frozen.

Northwest Arkansas was buzzing in 2012 because of its unique startup accelerator dubbed ARK Challenge. The program, made possible from $2.15 million in federal funds, allowed 15 startups from the globe access to mentoring and seed money to try and launch their business ventures following a three-month bootcamp experience.

ARK Challenge was a partnership between Winrock International, the University of Arkansas and NorthWest Arkansas Community College.

Three winners emerged from the competition were Btiques of Fayetteville, StackSearch of Fayetteville and MineWhat of Bangalore, India. Two of these companies are still up and running three years later, but it’s been anything but an easy road, they recently told The City Wire. (MineWhat will be included in the next story in this series.)

QBOX STAMINA
Mark Brandon, co-founder of StackSearch, now known as Qbox, said the path from winner to profits has been a long and arduous journey, despite the fact his venture has been able raise enough capital ($600,000) to stay afloat thus far.

Brandon’s co-founder Sloan Ahrens who helped build StackSearch’s platform is no longer part of the venture. Brandon said his dreams of building out the entire company in Fayetteville and adding local tech jobs to this region have also changed. His tech team of three developers relocated to San Francisco. He has since added a manager of special projects who resides in Fayetteville, as does Brandon. The company’s head of sales lives in Austin, Texas, and the content curator offices in Boulder, Colo. 

“Our original product had some problems trying to cater to e-commerce retailers. Our sales cycle with them was typically about 8 months of trial and tests before they would buy. That is a problem if you only have six months of cash in the bank,” he said.

Brandon said the company retooled its product and began selling the technology further upstream to developers so it could be integrated into the retailer’s websites and e-commerce capabilities.

“We changed the name to Qbox and this platform has been successful in part because of Ben Hundley, whose startup, Mass Vector, didn’t win the ARK Challenge in 2012. Ben shelved his project and joined us. He has been elevated to co-founder of Qbox,” Brandon said.

ALCHEMIST ACCELERATOR
Brandon said Qbox was fortunate enough to be accepted into the Alchemist Accelerator in San Francisco recently. Having fast tracked the program Brandon has already made his pitch to investors in that market via a Demo Day presentation May 21.

He told investors “Qbox is on fire” with sales rising exponentially over the past year.

“In April we finished with $130,000 in recurring revenue which was up 30% over March which was up 55% over February. In May, the company was at $250,000 in monthly recurring revenue,” Brandon told investors.

He also told investors that he could confidently predict $450,000 in second quarter revenue, which is already in the books, while he shared the revenue report from the past year:
• $204,000, Q1- 2015
• $162,000, Q4- 2014
• $92,000, Q3- 2014
• $59,000, Q2 -2014

Brandon told The City Wire that he keeps thinking the law of big numbers will eventually catch up to him but the company continues to sign on more big users of their hosted data base as a service offering. Qbox has brought on clients such as Home Depot, Nissan, H-E-B, Nordstrom, Williams-Sonoma, Trip Advisor, The Dallas Morning News, The Seattle Times, Adobe and CBRE Real Estate, Johns Hopkins University and Columbia University. 

WHAT’S NEXT
Brandon said the mother of all trends is Big Data and their service helps a company improve the search capabilities which has resonated with data scientists at prestigious research centers such as Johns Hopkins and other areas outside of retail.

“We said the company is also gaining steady footing in e-commerce retail because its product is being integrated into the retailer’s own sites at the development stage which allows it to run seamlessly while providing better search optimization that allows for speed and precise filtering,” Brandon said.

He told analysts that Qbox is a solution provider in a $40 billion market. While he knows there are competitors, Brandon said there is ample room to grow Qbox to as much as $4 billion in revenue over the next few years.

Brandon said after presenting to investors at the Alchemist Accelerator his phone and email were busy with potential interest from investors and he is confident Qbox will be able to raise more operating capital and expand its team.

SAN FRANCISCO BASE
Whether Brandon relocates to San Francisco with his family is still up in the air. 

“I love living in Fayetteville, but the interest and investment opportunity for my company is stronger in Silicon Valley. I had no trouble convincing my developers to move out there. Their office is next to the Twitter headquarters and the energy around tech startups is so much higher,” he told The City Wire.

That said, Brandon believes Northwest Arkansas has adequate talent to support his company going forward but he said the capital funding and fundamental understanding are still absent. Brandon said the mentoring he received from the ARK Challenge was stellar but he said the local investors by and large are too dilutive and act too slowly to support entrepreneurial growth around technology-based companies.

He lauded he efforts of Jeff Amerine and Kristian Anderson, active investors in Gravity Venture and mentors to the ARK Challenge participants. But he said there is not enough interest from investors locally compared to epicenters like San Francisco and Boulder.

Brandon said the recent efforts of John James to try and launch Hayseed Ventures to provide seed money to local startups is notable, but unless the investor base rethinks the way it values companies based in Northwest Arkansas there won’t be enough money flowing to companies in need.

Valuations here are about one-fifth of what they are in the San Francisco Bay area, according to Brandon. Investors in true tech hubs are willing to pay more, he added.

“Right now Northwest Arkansas does a pretty good job nurturing new borns, but when the kid is growing and needs some reinforcement they are often left to fly the nest to other regions who then reap the benefits of continued growth,” he said.

B’TIQUES INACTIVE
The one winner from 2012 that has shelved their venture told The City Wire the ARK Challenge experience was worthwhile.

"Being a part of the early startup scene in 2012 was really about being a part of an amazing community collaboration; an epic adventure of learning,” said Sara Beck, cofounder of Btiques. 

“Following mobile sales across thirty-five (35) boutiques, we are currently inactive, yet, super accessible to those individuals and seed companies who might benefit from our takeaways," Beck told The City Wire.

Beck shelved Btisques around 18 months after named a winner in the ARK Challenge 2012 in part because of her growing family and lack of capital.

“I am currently spending time on-the-go with my family, and working on branding and marketing projects with a handful of local small-business owners,” she said.

Her brother and co-founder Will Carter took a marketing position with Sam’s Club and has since moved to Little Rock to be an account manager for the design firm Made by Few.

“My advice to future NWA entrepreneurs is to network with purpose and partner with intention," Beck said.

April U.S. manufacturing technology orders totaled $384.81 million, according to The Association For Manufacturing Technology (AMT). The numbers were down 8.1% from March and 1% from the previous April report.

Year-to-date manufacturing technology orders in 2015 totaled $1.459 billion, down 8.5% when compared with 2014.

These numbers and all data in this report are based on the totals of actual data reported by companies participating in the U.S. Manufacturing Technology Orders (USMTO) program. The USMTO summary includes metal cutting and forming machine orders by region in a continually revised 13-month table format that tracks aggregate trends in the machine tool market.

“Right now capital equipment makers are feeling the effects of a stronger dollar, which creates a drag on exports, and lower oil and natural gas prices, which means less spending on equipment investments from the energy industry,” said AMT President Douglas Woods.

Woods said the sour news should be short-lived. He suggested that savings are stockpiling for manufacturers and that upcoming activity should lead to growth.

“What is a negative now should help us later – imported components for capital equipment are costing less, and businesses will accumulate savings from lower fuel prices in the coming months, meaning more money for capital investment. We believe investment in manufacturing will remain steady, and overall performance for the year will be as strong as we saw in 2013 and 2014,” Woods said.

The USMTO report, compiled by the trade association representing the production and distribution of manufacturing technology, provides regional and national U.S. orders data of domestic and imported machine tools and related equipment.

REGIONAL LOOK
U.S. manufacturing technology orders are also reported on a regional basis for six geographic breakdowns of the United States. The South Central region includes Arkansas, Louisiana, New Mexico, Oklahoma and Texas.

Northeast Region
Northeast Region manufacturing technology orders in April stood at $65.95 million, 11.5% less than the $74.55 million total for March but 6.9% more than the $61.71 million for April 2014.

Southeast Region
Year-to-date manufacturing technology orders for the Southeast Region totaled $127.35 million, down 14.3% from the 2014 total at the same time.

North Central-East Region
With an April total of $127.57 million, North Central-East Region manufacturing technology orders were up 4.1% from the $122.53 million tally for March and up 29.9% when compared with April a year ago. Year-to-date orders totaled $417.42 million, down 10.5% from the comparable figure for 2014.

North Central-West Region
Manufacturing technology orders in the North Central-West Region in April totaled $69.14 million, 4.8% more than in April 2014.

South Central Region
South Central Region year-to-date manufacturing technology orders for 2015 totaled $124.44 million, down 47.9% from the comparable figure for 2014.

Pulaski County Circuit Court Judge Wendell Griffen ruled Tuesday (June 9) that same sex couples who married May 10-16, 2014 in Arkansas, must be provided the same access to state employee benefits as male-female married couples.

The ruling is from a case in which Angelia Frazier-Henson and Katherine Henson and Markett Humphries and Dianna Christy sued Larry Walther, director of the Arkansas Department of Finance and Administration (DFA), because he would not allow them to jointly file their 2014 Arkansas income tax return. Also, Humphries and Christy sued because Walther and the DFA would not allow Christy to enroll as a spouse on Humphries’ health insurance plan. Humphries is a state employee.

Creating the need for the lawsuit was the May 2014 ruling by Pulaski County Circuit Judge Chris Piazza that Arkansas’ ban on gay marriage – through Amendment 83 approved by voters in 2004 – was unconstitutional. Licenses were issued briefly in some counties across the state, but a stay was eventually issued halting same sex marriages in Arkansas while the case goes through the appeals process. It was estimated that as many as 500 marriages were performed between May 10 and May 16 before the stay was issued.

Walther argued that Piazza’s ruling and subsequent stay did not remove the state’s authority to ban same-sex marriage, and as such the marriages are not legal and should not be recognized by the state. However, Walther’s arguments were panned by Griffen – who is also a Baptist preacher and who officiated at some of the same-sex marriages held in the May window. In one section of the ruling Griffen said Walther’s position was one of “logical absurdity.”

“With shameless disrespect for fundamental fairness and equality, Director Walther insists on treating the marriages of same-sex couples who received marriage 13 licenses between May 9 and May 15 as ‘void from inception as a matter of law,’” Griffen wrote in the ruling.

In his conclusion Griffen noted: “Plaintiffs' prayer for injunctive relief is HEREBY GRANTED in all respects. Specifically, Director Walther is hereby and immediately (a) enjoined from denying the validity of Plaintiffs' marriage licenses, (b) enjoined from denying the validity of Plaintiffs' status as married persons, (c) enjoined from denying Plaintiffs from filing joint tax returns as married persons, and (d) enjoined from refusing to enroll same-sex spouses in the state health insurance plan on the sole basis that the applicant is a same-sex spouse.”

Continuing, he wrote: “Furthermore, Director Walther is HEREBY, and expressly mandated to (e) accept joint income tax returns and accept applications for state health insurance from same-sex couples who were married between May 10 and May 16, 2014, and (f) to henceforth extend to same-sex couples married between May 10 and May 16, 2014 the same rights, privileges, and benefits recognized for heterosexual marriages performed during those dates.” (Link here for the complete ruling.)

Arkansas Attorney General Leslie Rutledge did not agree with Griffen’s ruling, but did not say what legal response she would have.

“These marriages do not fall within the State’s definition of marriage as between one man and one woman,” Rutledge said in a statement. “I am evaluating the ruling and will determine the best path forward to protect the State’s interest.”

Arkansas’ ban on same-sex marriage also has federal problems. U.S. District Judge Kristine Baker also has ruled that Amendment 83 is unconstitutional under the 14th amendment of the U.S. Constitution. Then-Arkansas Attorney General Dustin McDaniel appealed Baker’s ruling, but the U.S. Eighth Circuit Court of Appeals said in April that would delay a decision on the constitutionality of Arkansas’ ban on same-sex marriage pending the outcome of a case before the U.S. Supreme Court. A ruling from the federal high court could come at any time.

Discussion of a proposal to create a citizen committee to provide input into the city’s capital improvement plan became somewhat testy at Tuesday’s (June 9) Fort Smith Board of Directors study session, with a city department head pushing back against Board members who want the committee.

Talk of a citizen committee to help prioritize infrastructure spending first arose during the recent runup to the May 12 special election to renew the city’s 1% sales tax for street, bridge and drainage work. That tax generates around $20 million a year, and was renewed by almost 80% of those who voted in the special election.

Since 1985, the money has been spent based upon priorities set in a five-year “Capital Improvement Program” (CIP) developed by city staff and approved by the Board. In a memo from Deputy City Administrator Jeff Dingman to City Administrator Ray Gosack, the purpose of the proposed committee “would be to serve in an advisory capacity to the Board of Directors regarding prioritization of capital improvement projects funded by the 1% sales tax dedicated to streets, bridges and associated drainage.”

Dingman said the seven-member committee would not have input on special economic development projects.

“Site selectors and companies evaluating investment in Fort Smith periodically solicit incentive packages from cities, and quite often public infrastructure improvements funded by the 1% sales tax revenues are including in that mix. This process, while still requiring approval from the Board, would necessarily operate outside the scope of the CIP Advisory Committee,” Dingman wrote in the memo.

Stan Snodgrass, director of engineering for the city, addressed the Board and opposed creation of the committee. He said the CIP already receives much input from the Board and the public, and added that working with a committee is “another layer that we have to go through” and could cause delays in getting the plan to the Board.

“I don’t see that we’re going to gain more public input by having a committee,” Snodgrass said, adding that it will add a “huge amount of time and effort” to city staff to coordinate with a committee.

Snodgrass noted in a memo on the issue that public input is already a big part of the effort to update the plan each year.

“Citizen input including 12 Town Hall meetings, 4 Ward meetings and 2 citizen’s academy meetings annually. We also receive numerous phone calls, emails, office visits, etc. from citizens.”

Director Tracy Pennartz disagreed with Snodgrass, telling him that the “attitude you have expressed” is all the more reason for a citizen committee to help oversee the process. She said the public does not get to have input in the process prior to the CIP being unveiled to the Board.

“It’s never a mistake to receive public input from our citizens,” Pennartz said.

She said the committee may cause more work on the front end, but in the long run will give the public more access and input.

Directors André Good and Mike Lorenz also supported the idea of a citizens committee. Good said “no one is wanting to step on staff’s toes,” but a committee will provide a way for more citizen education about the millions spent each year on infrastructure.

Director Don Hutchings came to Snodgrass’ defense, saying the committee is “more micromanaging” and will add “another layer and time delays” on the process.

“This is what is wrong with government,” Hutchings said of creating a committee to address an issue he said is not a problem.

The Board is set to vote June 16 on an ordinance creating the committee.

The combined value of building permits fell 26.8% during May in Fort Smith, Greenwood and Van Buren. However, permit values in the three cities are up more than 16% during the first five months of 2015.

Permit values in the three cities during January-May total $82.042 million, up 16.28% over the $70.55 million in the same period of 2014.

The early 2015 numbers were pushed higher in March when a $22 million permit was issued in Fort Smith for construction of the Arkansas College of Osteopathic Medicine. Located on 27 acres at Chaffee Crossing. The college is expected to open in the fall of 2016. College officials on Friday at 11 a.m. are holding a topping out ceremony on the $32.4 million project.

HOUSING STARTS DIP IN FORT SMITH
The city issued permits valued at $77.387 million in the January-May period, up 13.87% compared to the $67.959 million during the same period in 2014.

May marked the second consecutive month of permit value declines for Fort Smith. The city issued 64 permits for a total value of $9.291 million during the month, below the 180 permits valued at $13.494 million in May 2014.

A big decline came from new home starts. Permit values for new home construction in the city totaled just $453,640 in May, well below the $2.498 million in May 2014. New home starts during the first five months of 2015 total $13.255 million, essentially flat compared the $13.261 million during the same period of 2014.

New commercial construction also was off the pace in May. Permits during the month totaled $6.327 million, down from $9.354 million in May 2014. The biggest permit in May was $3.85 million for the Burlington Coat Factory store at 5721 Rogers Ave.

GREENWOOD, VAN BUREN PERMITS
Building permit values in Greenwood totaled $355,157 on five permits in May, below the $532,466 in May 2014. Activity in the city is trending higher in 2015. Permit values during the first five months of the year total $3.976 million, better than the $2.299 million during the same period of 2014.

A majority of the permit values in Greenwood are for residential construction. For example, of the $355,157 in total permit values in May, a new home permit was valued at $235,440.

Van Buren permit values totaled $2.307 million in May, with commercial projects accounting for $1.76 million of that. The May total is just below the $2.319 million in May 2014 permit values.

For the first five months of 2015, Van Buren permit values total $7.615 million, well below the $12.748 million in the same period of 2014. A $4 million Legacy Heights addition and $3.567 million Van Buren police station were permitted in the first quarter of 2014, which results in the tough comparison.

2014 BUILDING PERMIT VALUE TOTALS
Building permit value gains in Fort Smith and Van Buren helped push regional permit values up almost 6% in 2014 compared to 2013. Several taxpayer-funding projects – water park, police station and schools – helped boost the 2014 regional numbers.

For the year, Fort Smith permit values were up 6.61% and Van Buren permit values were up an impressive 85.7%. Greenwood had a 4.4% decline in permit values compared to 2013.

Fort Smith
2014: $189.445 million
2013: $177.687 million
2012: $136.248 million

Greenwood
2014: $7.918 million
2013: $8.283 million
2012: $8.609 million

Van Buren
2014: $16.813 million
2013: $9.049 million
2012: $9.983 million

Combined total for the three cities
2014: $214.176 million
2013: $195.019 million
2012: $154.840 million

The state’s congressional delegation – Sens. John Boozman (R-Ark.), Tom Cotton (R-Ark.), Reps. Rick Crawford, R-Jonesboro, French Hill, R-Little Rock, Steve Womack, R-Rogers and Bruce Westerman, R-Hot Springs — on Tuesday requested that the Department of Energy (DOE) extend the comment period for the need and feasibility review of the Plains & Eastern Clean Line Transmission Project.

U.S. Sen. Lamar Alexander, R-Tenn., also requested more time.

Clean Line is a proposed multi-state renewable energy project that is expected to deliver wind powered electricity from Oklahoma to markets in Arkansas and other southern states. Some landowners in Arkansas have expressed concerns about eminent domain land acquisition as part of the project.

In a letter to Secretary of Energy Ernest Moniz, the legislative delegation asked for a minimum of 60 additional days for comments citing inadequate communication to let stakeholders know they can submit their input on this project.

“The Department is engaged in a new process that justifies a deliberative and thorough review, with greater transparency and public participation,” the members wrote. “The 45-day comment period has proven inadequate.”

The comment period is scheduled to end on June 12.

In January, members urged Secretary Moniz to extend the comment period for the environmental review of the project for additional input from stakeholders. The comment period was extended for one month. The Congressional delegation letter stated, “We strongly urge you to extend the comment period regarding the Department of Energy’s Non-NEPA Review for the Plains & Eastern Clean Line Transmission Project by at least 60 days so that our constituents will have an adequate opportunity to share their views and/or concerns.”

Calling the 45-day comment period “inadequate,” Arkansas Congressional leaders said many stakeholders have not been “effectively communicated” as to the potential impact.

Officials with Clean Line Energy cautiously weighed in.

“Clean Line appreciates that major infrastructure projects like the Plains & Eastern Clean Line should follow processes that allow for substantive public input,” said Mario Hurtado, co-founder and Executive Vice President of Development for Clean Line Energy.

“To date more than 3,500 comments have been made to the Department of Energy about the Plains and Eastern Clean Line. We’re aware of the request for an extension of the comment period that was submitted to Secretary Moniz and the Department of Energy today. To our knowledge, the Department of Energy followed all requirements for public notice on this comment period. As of now, the comment period is scheduled to end on June 12. We will continue to monitor the schedule for any changes and update our stakeholders accordingly,” Hurtado added.

Despite the political maneuvering at this point, Clean Line has continued to advance aspects of the project outside of the regulatory realm. On Monday, French manufacturer Sediver announced plans to set up shop in West Memphis to supply glass insulators for the Clean Line project.

Michelle Gloeckler says Wal-Mart Stores remains focused on helping return manufacturing jobs to the U.S., with the number of success stories growing and the 2015 manufacturing summit being moved to Bentonville to better connect buyers with products “that are ready to go.”

“It is still alive, well and very strong,” Gloeckler, executive vice president, consumables and health and wellness and U.S. manufacturing lead, said when asked about Wal-Mart’s focus on the manufacturing push.

Then Walmart U.S. CEO Bill Simon was the initial champion of the 2013 pledge to buy $50 billion in U.S. made products in 10 years. At the time, Wal-Mart estimated that over the next decade the investment would total $250 billion. The Boston Consulting Group predicted that the $250 billion investment would create one million jobs, including the jobs in manufacturing and related services.

The effort included a series of national television ads with popular pitch man Mike Rowe that ran in early 2014 during the Winter Olympics. Wal-Mart conducted a manufacturing summit in Orlando, Fla., in August 2013, with an estimated 500 suppliers attending and representatives from 38 state governments, including eight governors. Then Arkansas Gov. Mike Beebe was one of the eight attending. A 2014 summit was held in Denver, Colo.

However, when Doug McMillon was selected over Simon as CEO of Wal-Mart Stores to succeed the retiring Mike Duke, Simon eventually left the company, and the focus on manufacturing was pushed down the corporate chain of command.

‘BETTER FILTER’
Gloeckler said it is a mistake to think the company has reduced its commitment to the manufacturing push. She said the manufacturing summit planned for Bentonville will include a “better filter.” She said in years past they met with people who had product ideas, but this year they will focus on meeting with people and companies who “have a manufacturing plan” and can begin almost immediately to put products on shelves.

The 2015 Walmart U.S. Manufacturing Summit is themed “Investing in American Jobs,” and is set for July 7-8. The event will be held in the Arend Arts Center at the Bentonville High School. Arkansas Gov. Asa Hutchinson and Walmart U.S. CEO Greg Foran are scheduled to speak. Also expected to attend is Harry Moser, founder of the Reshoring Initiative, a group founded in 2010 to help manufacturers and others in the supply chain find cost-effective ways to return production to the U.S.

“Walmart will offer the unique opportunity to meet with buyers across our formats, as well as facilitate meetings for current and potential suppliers with key state economic development officials with knowledge of available U.S. manufacturing locations,” Wal-Mart noted on one of its websites touting the event.

Information requested by Walmart in the 8-page “supplier initial questionnaire” includes detail on the cost to produce item overseas compared to the U.S., why the company is interested in moving production back to the U.S., any plans or ability to add production capacity, and consumer demand for the product(s).

RECENT SUCCESSES
Wal-Mart officials said in October 2014 there were 150 projects being worked. Recent successes touted by Wal-Mart include a $16 million hosiery plant in Hildebran N.C., and a $21 million investment by Korona Candles in Dublin, Va.

The PEDS plant in Hildebran is expected to employ 150 in 2015 and grow to 205 jobs by 2018, according to the March 11 announcement. Socks made at the plant are also expected to be sold in Mexico and South Korea.

The April 15 announcement from Korona said the new plant will employ up to 175 by 2017.

“KORONA Candles have made tremendous efforts to bring Walmart customers quality, U.S.-made tealight candles to our more than 5,000 stores across the country,” Gloeckler said in the Korona announcement. “We are proud to support manufacturers who share our passion to create jobs for American workers and strengthen local economies.”

Wal-Mart also provides this report on “some of the announcements made so far.”

Some critics of Wal-Mart’s push say the $250 billion number is a small percentage compared to overall sales in the 10-year period. Wal-Mart is on track to reach $500 billion in annual sales. Others say Wal-Mart alone can’t make a significant impact on returning manufacturing jobs. Adrienne Selko, in a June 9 column in IndustryWeek about Wal-Mart being a trendsetter in reshoring, said other retailers will need to do more.

“Returning back to the original question however, it remains to be seen if Walmart can push the needle of reshoring in a major way, and in fact become a trendsetter. They need to be joined by other big box retailers,” she noted

THE RESHORING TREND
The Reshoring Initiative said 2014 was the first net gain of U.S. manufacturing jobs in at least 20 years. Moser said at least 10,000 jobs were added during the year. Better innovation and research and development, higher productivity, shorter supply chains,  and faster response to changing market conditions are some of the reasons touted by the Reshoring Initiative as why reshoring makes sense.

American manufacturing has seen a steady gain in jobs since hitting a low of 11.453 million in February 2010. However, millions more jobs will have to be added to return to job levels of just 10 years ago. According to the U.S. Bureau of Labor Statistics, U.S. manufacturing employment in May was 12.335 million, up from 12.154 million in May 2014, but below the 14.256 million in May 2005 and well below the 17.279 million in May 2000.

Arkansas’ manufacturing sector has not fared as well as the national trend. April manufacturing employment in the state was 154,600 in April, up from 153,500 in April 2014, but down 3.7% compared to 160,600 in April 2010. The number of Arkansas manufacturing jobs is down significantly from 10 years ago when April 2005 employment was 201,700.

A recent statewide prescription drug Take Back effort cleared more than 20,000 pounds of drugs from medicine cabinets with the help of volunteers across the Natural State., Department of Drug Enforcement, and local law enforcement agencies.

Scooping up more than 10 tons of drugs was a major victory, according to state and federal officials who said it was the second largest take back in the program’s 10-year history.

Prescription drug abuse is a family disease as 42% of teens have misused or abused a prescription drug found in their parent’s medicine cabinet, according to Takeback.org.
Every day in the U.S., 2,500 youth (12 to 17) abuse a prescription pain reliever for the first time, the organization noted on its website.

The beginnings of drug use often aligns with access and family medicine cabinets are among the first place curious adolescents gain access. Prescription medications are the drug of choice among 12 and 13 year olds, according to local, state and national data.

Prescription drug abuse is the fastest growing drug problem in the U.S. today, according to TakeBack.org. The abuse of medicines by teens often results in medical emergencies or fatal overdoses. Most abusers of medicines, including teens, get the drugs from a friend or relative – not from a drug dealer.

Following the collection day on April 25, the Arkansas National Guard’s Counterdrug Program and U.S. Drug Enforcement Administration transported the medications to Covanta Energy in Huntsville, Ala., where they were destroyed at no charge as a part of the Prescription for Safety program.

TakeBack.org also notes that medications returned in Take Back events are removed as potential sources of theft, diversion, and accidental ingestion in homes.

Over the past decade the collective results of statewide Take Back events have removed more than 72 tons of unneeded medication, or approximately 201 million pills. Arkansas ranks No. 4 in the nation for the per capita weight collected.

Drug abuse prevention advocates said there are more than 150 permanent prescription drug drop boxes in Arkansas, and individuals with medications to dispose can find the site nearest them online.

There are 12 permanent drop box sites in Benton and Washington counties. There are six permanent drop off sites in Sebastian and Crawford counties.

Benton County volunteers rounded up 147 pounds during its collection day which was held April 25 at the Boys and Girls Club on Central Avenue in Bentonville. Local participants said turnout among the student volunteers was a nice surprise since prescription drug abuse often starts as early as 11 years of age.

The Drug-Free Benton County Coalition reported 24 teen volunteers hailing from high schools and middle schools throughout the county participated in the four-hour event. The Northwest Arkansas Take Back event also took place the same day as the Komen Race for the Cure, the Red and White Game at the University of Arkansas and the Walmart FLW.

Arkansas’ real gross domestic product (GDP) output lost momentum in 2014 as the Natural State’s economic growth fell well below the rest of the nation and surrounding states, according to info released Wednesday by the U.S. Bureau of Economic Analysis (BEA).

In 2014, Arkansas’ economic growth advanced only a weak 0.8%, well behind overall U.S. growth of 2.2% and an overall GDP growth of 1.7% for the vast 12-state Southeast region that encompasses most of the Southern states, according to statistics from the U.S. Department of Commerce analysis arm.

Since touching a robust 2.4% growth in 2011, Arkansas’ economy has struggled to gain momentum, bouncing between good and bad years, BEA statistics show. In 2012, state GDP fell 67% from the previous year to 0.8% before climbing back up to revised 1.9% in 2013. Originally, the BEA pegged Arkansas’ GDP growth at 2.4% a year ago, before revising the state’s growth level downward five points as more detailed economic data became available.

AGRIIMPACT
Marc Fusaro, associate professor of economics at Arkansas Tech University in Russellville, said the lagging income growth – particular in the state’s farming, utilities and other key sectors – played a major role in Arkansas’ economy falling behind the national GDP in 2014. An industry's GDP by state is calculated as the sum of incomes earned by labor and capital and the costs incurred in the production of goods and services. It includes the wages and salaries that workers earn, the income earned by individual or joint entrepreneurs as well as by corporations, and business taxes.

Fusaro, who manages the Arkansas Tech Business Index (ATBI), said personal income for the state’s expansive farming sector declined a whopping 19.9% in 2014.

“This is not out of line with the farming sector for the whole country which had a 17.1% decline,” Fusaro said of the farming sector, which includes agriculture, forestry, hunting and fishing. “(But) the difference is that farming is a much more important component of our economy than it is for the nation as a whole. Arkansas represents 0.8% of the nation’s personal income, but it represents 2.1% of the farming income.”

Fusaro also said utilities and transportation sectors, which substantially declined in 2014, also suffered similar fates as farming.

“Both (are) weak sectors, and both are proportionately more important sectors to the Arkansas economy than to the national economy,” he said. “In short, Arkansas suffered because our more important sectors were the same sectors which suffered.”

ECONOMIC SECTOR NUMBERS
Nationwide, real GDP increased in all eight BEA regions in 2014. Contributions from mining in Oklahoma and Texas led growth in the Southwest region (4.3%) – the fastest growing BEA region.

Professional, scientific, and technical services was the largest contributor to U.S. real GDP by state growth in 2014. This industry grew 4.2% in 2014 compared with 0.7% in 2013 and contributed 0.29 percentage point to U.S. real GDP growth. It was the leading contributor to growth in the New England and Far West regions and contributed to growth in 46 states and the District of Columbia. It was a large contributor to growth in three states — California, Massachusetts and Utah.

Nondurable goods manufacturing grew 4.2% in 2014 compared with 1.1% in 2013 and contributed 0.23 percentage point to U.S. real GDP growth. In 2014, this industry was the largest contributor to growth in the Great Lakes region and contributed to growth in 41 states. It made a substantial contribution to growth in Louisiana and Montana.

Real estate and rental and leasing grew 1.5% in 2014 down slightly from 1.6% in 2013 and contributed 0.20 percentage point to U.S. real GDP growth. In 2014, this industry was the largest contributor to growth in the Southeast region and contributed to growth in 32 states and the District of Columbia.

Although mining was not a significant contributor to real GDP growth for the U.S. economy, it did play a key role in several states. This industry was a large contributor in the five fastest growing states — North Dakota, Texas, Wyoming, West Virginia, and Colorado. By contrast, mining continued to decline in Alaska due to lower output on the state's North Slope.

Agriculture, forestry, fishing, and hunting declined in six of eight BEA regions in 2014. The industry declined in all seven states in the Plains region and subtracted significantly from growth in four states — South Dakota, Iowa, Nebraska and North Dakota.

PERSPECTIVE ON ARKANSAS ECONOMY
Despite the slow growth, Arkansas’ economy still ranked 38th, something that Little Rock economist Greg Kaza said is not to be taken lightly.

“The good news is that the days of being ranked 49th and 50th with Mississippi are long gone,” said Kaza, executive director of the Arkansas Policy Foundation.

Overall, Arkansas’ economy is valued at $121 billion economy, accounting for 0.7% of the national total of $17.3 trillion, the Department of Commerce report shows. Besides the utilities and farming, which includes agriculture, forestry and utilities, growth in construction, and information services were largely flat or fell behind of the rest of the state’s economy.

The biggest advancer in Arkansas was mining, which grew by 0.52%. However, those numbers are expected to decline in 2015 as oil and gas companies primarily operating in the Fayetteville Shale have cut capital spending and hiring. Other sectors with nominal growth were finance and insurance, durable and nondurable goods, wholesale and retail trade.

Nationally, mining also drove growth in the fastest-growing states, North Dakota and Texas, which grew 6.3% and 5.2%, respectively. Wyoming and West Virginia followed at 5.1% GDP growth.

Alaska was the biggest decliner, shrinking by 1.3%. Mississippi did not move out of its traditional spot near the bottom at 49th, with GDP down 1.2%. Virginia, at 47th, was the only state that remained flat, while all other states did see some growth.

On Oct. 1, the coding system used by Arkansas medical providers for billing insurance companies and the government will change. Many providers probably won’t be ready, and if they aren’t, they will have trouble getting paid.

The federal government is requiring medical providers, including 38,000 in Arkansas, to switch from the ICD-9 system to ICD-10. Those who submit bills using ICD-9 after Sept. 30 will have their claims rejected, said Tami Harlan, deputy director of the state’s Medicaid program.

Harlan said anecdotal evidence suggests many providers won’t be prepared. She expects a scramble after Oct. 1 as providers accelerate their changeover while requesting paper checks, which will take time to process and deliver.

She has good reason to be concerned.

David Wroten, executive vice president of the Arkansas Medical Society, said of the 95 clinics that have responded so far to a survey, only 16% said they are ready to implement ICD-10 today, and almost 30% do not believe they will be ready in October.

About 60% said they had provided training for coding staff, while about 40% have trained clinical staff. He said some are waiting on software vendors, while others are delaying the switch because vendors are charging excessively high rates. Wroten said providers may assume that the switch to ICD-10, already delayed twice from its initial planned start in 2008, will be delayed again. The Arkansas Medical Society hopes Congress will create a grace period of one to two years where providers would not be penalized if they haven’t made the switch.

Harlan said a delay is not likely. The federal Center for Medicare and Medicaid Services seems determined to enforce the change, and no federal legislation is being debated that would delay the changeover a third time. She said DHS has been working on the switch to ICD-10 since 2012 and as of late has been working “feverishly.”

“I think it’s some people just don’t think it’s going to happen,” she said. “I think some people think it doesn’t apply to them. I think some people just have been slow to get ready. They just are not taking this seriously enough to make sure that their practice is ready.”

“ICD” stands for International Classification of Diseases. Its earliest version was adopted by the World Health Organization in 1893, and it has been updated periodically since.

ICD-9, which has been in use in America since 1979, categorizes all medical ailments and procedures into 13,000 codes. The ICD-10 system, which was endorsed by the World Health Organization in 1990, categorizes those procedures into 68,000 far more specific codes that detail the exact ailment (for example, which arm was broken) and its cause. The greater specificity allows for better collection of data that can spot waste and fraud, said Harlan.

But Wroten said the switchover is costly and the codes so specific as to be comical.

A study initiated by the American Medical Association estimates the cost of a medical practice switching to range from $56,639 to more than $8 million, depending on the practice’s size. According to the fact-checking site Politifact, ICD-10 includes nine separate codes for injuries related to turkeys, including one for being struck by a turkey and another for being pecked by one. Then there’s the concern that IT-related problems will occur.

“Physicians are being advised by a lot of consultants to set aside three to six months of receivables expecting there to be a lot of problems when it first switches over,” he said.

Wroten said that despite the complexity of the switch, “It’s not going to save the health care system one penny. It’s not going to improve health care services one iota. There’s no benefit to the patient. There’s not benefit to the institution. The only benefit this is for are researchers and number-crunchers, yet we’re the ones having to pay for it.”

Wroten would prefer that the United States skip ICD-10 entirely and wait for ICD-11, which the World Health Organization’s website says will be finalized in 2017.

Anchor Dawson Meadows gets the news slightly screwed up on stories about military training at Fort Chaffee and discussion of a new committee to help oversee Fort Smith’s street tax program.

Also “50 Shades of Grey” is not, we repeat, is not playing at Tilles Park’s Movies in the Park series.

The Video Wire is a collaboration between The City Wire and Things To Do In Fort Smith.

Gov. Asa Hutchinson will depart Saturday for the world’s largest airshow in Paris and a side trip to Germany where he and a delegation of state economic development and business officials hope to make new aerospace and steel industry contacts, and bring back new jobs prospects back to Arkansas.

“The purpose of this (trip) is to market Arkansas,” Hutchinson told a roomful of reporters at a “pen and pad” meeting on Thursday at the Governor’s Mansion in Little Rock. “It is very important that the governor of this state competes with other states in bringing business to state and showcasing Arkansas and talking about what we are doing in the steel industry and aero-defense, agriculture, and as well as in the retail world.”

“My hope as governor over the course of the next four years is to not to make just one of these trips, but a number of these trips to various venues to market this state.”

In a question from Talk Business & Politics, Hutchinson said there are some possible economic development prospects that will be discussed with business executives during the upcoming European trade mission.

“There are some opportunities close at hand that this trip can bear upon, as well as simply planting seeds and cultivating the soil for future developments."
 
He added that it may be six to eight years down the road before some of these contacts bear fruit, offering that he is benefitting now from past economic development projects started by his predecessor, former Gov. Mike Beebe.

Scott Hardin, spokesman for the Arkansas Economic Development Commission, said Gov. Hutchinson will work the Arkansas booth during the first two days of Paris show, and then make a detour to Germany on June 16 to meet with prospective steel industry executives and companies at the 9th Metec International Metallurgical Technology Trade Fair in Düsseldorf.

At both trade shows in France and Germany, Gov. Hutchinson said his staff has scheduled 17 meetings with business prospects and executives at companies that have operations in Arkansas, including Dessault Falcon, Lockheed Martin and a number of other French that have large workforces across the state.

Hutchinson said he also plans to have an extended conversation with executives at software and technology giant SAP Inc., which is headquartered in Wallforf, Germany. Hutchinson said he previously meet with SAP executives in the U.S. during a recent trip to Silicon Valley.

“These are great opportunities to really introduce myself as governor to key executives in the aerospace and steel industry,” he said. “This gives the state of Arkansas a great opportunity, first to expand our companies here and then obviously to recruit and showcase Arkansas to other prospects.”

THE DELEGATION
Hardin said the Arkansas delegation will include the AEDC staff and representatives from both the private and public sector who will man “the Arkansas booth,” sponsored by the Arkansas Aerospace and Defense Alliance and State Chamber of Commerce.

Although the air show at the tarmac of Paris-Le Bourget Airport runs from June 15-21, the first three four days are set aside only for trade show visitors and business participants. From June 19-21, the show is then opened up to the public.

“The other members of the Arkansas delegation will remain in Paris to work the show,” Hardin said. “A couple members of AEDC’s staff will travel with the Governor to Germany.”

While the Aerospace Alliance and State Chamber are sponsoring the trip, no representatives from those organizations will travel to Paris. However, officials from World Trade Center of Arkansas, the Arkansas Aeroplex and the state two largest airports (Bill and Hillary Clinton National and Northwest Arkansas Regional) will be part of the official delegation.

The AEDC team will include Executive Director Mike Preston; Danny Games, deputy director of global business; Bentley Story, director of business development; Lenka Horakova, director of European business development; Shelly Short, director of marketing; and Robin Pelton, sector manager of aerospace and defense.

Also making the trip are representatives from Springdale-based nanotechnology manufacturer NanoMech of Springdale, and Galley Support Innovations, a Sherwood-based manufacturer that makes locks, hinges, latches and other interior parts for Dassault Falcon, Gulfstream and other luxury aircraft builders.

Hardin said two members of AEDC’s staff left for Paris on Wednesday to do some prep work in advance of the Governor’s arrival. The rest of the Arkansas delegation is expected to make the half-day trip Friday or Saturday.

Dassault, based in Paris, has been a major sponsor and participant over the history of the European air show. The company’s largest industrial facility is located at the Little Rock Airport, where the French luxury jet maker operates its main completion facility center for all Falcon jets worldwide, and the company-owned Service Center that is dedicated solely to Falcon customers.

Over the past three years, the French aerospace giant has spent more than $60 million in new construction and the refurbishment of existing facilities. Besides Dassault, other industry giants such as Boeing, Lockheed Martin, FedEx and Airbus are also expected to have a major presence at the airshow that will span 183 acres.

Lockheed Martin is in the running to build the military’s next-generation, armored tactical vehicle for the U.S. Army and Marine Corps at its industrial side in Camden. That contract, worth $30 billion over the next 25 years, is expected to be announced in July.

THE BIG ATTRACTION
In a recent interview with Talk Business & Politics, Preston said having a booth presence at the event should be helpful in landing more business in state.

“The aerospace sector is Arkansas’ number one export, totaling more than $1.62 billion in 2014,” Hardin said. “This is a statistic the Arkansas delegation will mention many times while talking to prospects at the Paris Air Show.”

According to Paris Air Show officials, more than 2,260 exhibitors from 47 countries will attend this year’s show. Also, in efforts to promote the aerospace industry to youth across the global, the world finals of the Rocketry Challenge will take place on June 19 at the airshow.

The competition consists of shooting mini-rockets holding two raw eggs at least 230 meters up in the air, and slowing the descent so the egg won’t break on the landing, officials said. Participants will be judged by an international panel on the quality of the rocket, the final state of their eggs and their project presentation.

In 2013, the last year for the event, there were more than 7,000 organized business meetings held at the event as nearly 140,000 trade officials from every continent were part of the exhibition. There were also more than 3,000 accredited journalists that made the trip to Paris two years ago.

This year’s show in Paris is focused on recruiting and training young people for jobs in the aerospace industry, something Gov. Hutchinson has also spotlighted during the first six months of his administration.

According to Angelo Fiataruolo, president of KCAC Aviation in Olathe, Kan., the general aviation business in the U.S. is responsible for 1.1 million jobs and $219 billion in output, “including direct, indirect, induced, and enabled impact. Arkansas ranks in the top 10 in total output impact per capita with $989 and a total output impact of $2.9 billion, he said.

Fiataruolo said events such as the International Paris Air Show serve as excellent forums to meet high-level executives in both the business aircraft manufacturing and aerospace component manufacturing industries.

“These events provide an opportunity to network efficiently, as they attract global executives industry-wide,” said the aerospace consultant and executive. “In the United States, business aviation and aerospace remains one of the strongest sectors for high-paying manufacturing jobs, whether it be a foreign company or a U.S. based company like Piper Aircraft, as well as increasing state exports.”

The Metec steel trade in Germany will last from June 16-20. Nearly 2,000 exhibitors are expected at the Düsseldorf steel conference, where officials expect approximately 100,000 visitors from 83 nations to attend the industrial trade show.

The swollen Arkansas River has forced Marty Shell to use his small trucking fleet to haul raw materials from Mississippi River ports to customers in the Fort Smith and Northwest Arkansas areas. He said the trucks are keeping the doors open for a Northwest Arkansas customer that employs around 600 people.

Unusually heavy rains during May forced the closure of many locks along the Arkansas River waterway from Tulsa down to where the waterway connects with the Mississippi. May tonnage on the river totaled 347,336 tons, down more than 61% compared to the 898,523 tons shipped in May 2014, according to figures from the U.S. Corps of Engineers.

“June tonnage will probably be the same, to be honest with you. We are in week five, and financially it hurts a lot,” said Shell, who owns Van Buren-based Five Rivers Distribution and operates the Port of Fort Smith and port operations in Van Buren.

Shell said barring more heavy rains it will likely be June 30 before barges can move again on the Arkansas River.

For the first five months of the year, Arkansas River tonnage has totaled 4.065 million tons, down 18% compared to the same period in 2014. All major categories have double-digit percentage declines in the year-to-date comparison. Sand, gravel and rock shipments, often the largest tonnage category, is down 17% on the year with 1.035 million tons shipped January-May. The iron and steel category, a sign of construction and manufacturing activity, is down 15% with 601,725 tons shipped January-May.

Without gains in the remainder of the year, the river system could see two consecutive years of shipping declines. Tonnage totaled 11.719 million tons in 2014, down from the 12.139 million in 2013 but better than the 11.687 million in 2012 and the 10.6 million in 2011.

The Arkansas River system (The McClellan-Kerr Arkansas River Navigation System) is 445 miles long and stretches from the confluence of the Mississippi River to the Port of Catoosa near Tulsa, Okla. The controlled waterway has 18 locks and dams, with 13 in Arkansas and five in Oklahoma. The river also has five ports: Pine Bluff, Little Rock, Fort Smith, Muskogee, Okla., and the Tulsa Port of Catoosa in Oklahoma. 

Shell said most of his customers try to keep 30 days of inventory on hand for such disruptions, but it will be “really really close” if that strategy works for companies that depend on goods shipped via the river. One company in Northwest Arkansas is already using Shell’s trucks to haul in materials from other ports.

“We’re dead heading them (sending empty trucks) to Rosedale (Miss.) and to New Orleans and taking them up to Northwest Arkansas to keep those operations running, to keep more than 600 people from having to be out of work,” Shell said.

Shell said it’s been around 20 years since he’s seen river levels create this level of disruption. With that kind of time between events, Shell said people often take for granted the importance of river traffic on the economy.

“You might not live on the river and you might not work on the river, but in some shape, form or fashion, what happens on this river will impact you, directly or indirectly,” Shell said.

Delays and slow activity will be the norm for a few months even when water levels allow shipping to continue. A combination of a shortage of barges and high demand from companies who need to get materials in and out of Arkansas will create bottlenecks, Shell said.

“July and August will be tough. ... We will see a backlog of barges and everyone will want everything at once,” he said.

However, he is optimistic about conditions returning to normal by September.

Clinging to the core operating principles of Sam Walton, but also retooling Wal-Mart Stores for the future is always on the mind of CEO Doug McMillon who has one foot in the past and one in the future.

McMillon was one of the speakers at the University of Arkansas’ Center for Retail Excellence annual conference on Thursday (June 11) at the Northwest Arkansas Convention Center. This marks the 15th year for the conference which drew about 350 of the top retail and supplier professionals from around the country for the day-long event. The event was moved to the NWA Convention Center this year because of capacity given that McMillon was on the agenda.

In an interview format conducted by Richard Smucker, CEO of J.M. Smucker, McMillon discussed Wal-Mart’s past and present challenges. Described as a merchant at heart, McMillon told the audience that his and his executive team being in U.S. stores regularly is the basis for many of the recent changes that include wage increases and adding back department managers.

“That image of Sam Walton on one knee among store associates is authentic. He knew the best ideas came from those associates serving our customers every day,” McMillon said.

McMillon said Walton had been known to take one of his ideas to the store and pitch it to associates. If they liked it he would write it down on a yellow pad and bring it back to the home office to say he heard a good idea from a store associate.

He said one of the things the new management team is working on includes reducing the Wal-Mart bureaucracy that has developed over the years. He said the layers have created a disconnect that prevents necessary communication. He said people will tell you what you don’t want to hear if you ask, but too often executives don’t ask. 

“We have a lot of room to improve,” McMillon said.

WAGE, DEPARTMENT MANAGER CHANGES
McMillon said while visiting a Denver store he was talking with store management and workers about what could be done to help instill a sense of ownership in the company. 

“They pointed to an independent burger joint in the parking lot and said their starting wage was $10 per hour and we pay $9, and that can’t happen,” McMillon said.

He said the planned $1 billion investment in wages is a long-term effort and he can’t magically tell Wall Street when the pay-off will happen. McMillon said the board of directors understands it’s a long-term commitment.

McMillon said during his speech Friday (June 5) at the Wal-Mart Shareholders meeting that he is constantly amazed at how many principles Sam Walton got right. He said serving customers, saving people money and valuing your workforce while also acting with integrity have stood the test of time.

That said, McMillon said Thursday that “Sam Walton would not want us looking back all the time, it would ruin our business. ... But our culture matters.” He said as an organization grows larger it can lose touch with its base, which is why Wal-Mart spends so much time and effort to keep their culture at the front and center of mind.

McMillon said being out in the stores he heard from managers that managing multiple departments was complicated and sometimes logistically challenging. He said part of the supercenter’s success through the years was related to the fact that department managers ran their departments like stores within a store.

“We lost something over years when it was our associates in the stores that continue to help us know what works and what doesn’t,” he said,

PRICES, ‘CREATIVE’ PRODUCTS
McMillon told suppliers in the room that Wal-Mart’s focus on Everyday Low Price and innovation are top areas they are seeking from their vendor partnerships. 

“Too many of our stores lack excitement. It’s just about doing a better job executing modulars ... about 15% of merchandising is creative, getting those items that customers don’t expect to see,” he said.

Years ago, McMillon said a huge tennis ball was sold in stores that was not functional for many things, but it sold like crazy for pet toys and child’s play. 

“When our numbers got bigger over the years we weeded out some of the risk takers which are important to the equation. You can manage a department to death,” he added.

During a brief question and answer segment a participant asked McMillon what he would ask IBM’s Watson to fix or help fix at Wal-Mart. With a laugh, McMillon responded, “How do I get comp store sales up?”

Not so fast on the move to end controversial PARCC testing in Arkansas. The Arkansas State Board of Education voted 7-1 Thursday (June 11) against allowing a state contract with the ACT and in favor of keeping the Common Core standards tied PARCC test it implemented this year.

Earlier in the week, Gov. Asa Hutchinson’s office and the Department of Education announced that Arkansas would terminate its contract with the Partnership for Assessment of Readiness for College and Careers (PARCC), only months after Arkansas students participated in the PARCC test for the first time this year. The state will replace the test with the ACT and the ACT Aspire tests. The State Board of Education, the final decision maker, was asked Thursday to approve the new arrangement. They rejected Hutchinson's request with the solid 7-1 vote.

Gov. Hutchinson issued this statement after the vote: “I’m disappointed the state Board of Education rejected the recommendation for student assessment for the next school year. The recommendation was based on the conclusions reached by the Common Core Review Council, a 16 member council made up of teachers, administrators, business leaders and students from all over the state.

“The legislature had directed through Act 1074 that the current PARCC contract not be renewed long term and for the State Board to consider a change for the 2016-17 school year. I determined it best to make the change for the next school year for the sake of long-term stability for the teachers, school districts and for the sake of our students.

“In the coming days, I will work closely with Commissioner Key and the Board to determine the best guidance we can provide our students, teachers and administrators as to the next steps in student assessments.”

BOARD PUSHBACK
State Education Board member Jay Barth said frequently changing tests makes it difficult to assess districts in distress.

“We knew it was going to be complicated with one transition in assessments. How can a board truly make a decision that is non-arbitrary when there have been that many alterations in assessments?” asked Barth.

Deborah Jones with the Arkansas Department of Education told the board the ACT would be a good assessment to use with Common Core.

“We have to make a decision and we have to be consistent for a number of years, if you do anything. And by years, seven years, let’s get a good quality assessment and let’s stick with that for a period of time,” said Jones. “As far as setting cut scores and determining school status, that can be done with the assessment. But we have to determine the assessment we want to give and not debate back and forth about it.”

Other board members expressed concern that Common Core math and other subject areas are not adequately aligned with the ACT. State Board member Vicki Saviers said the assessment vetting process had been rushed.

“You guys, you’ve got assessment folks who are very qualified at the department. ... It’s a concern for me because at any moment, anyone might decide we need to change assessments for whatever reason and truthfully it feels a little political,” said Saviers.

Other board members expressed concern about pursuing a contract with ACT on such a short timeframe without undergoing a more standard bidding process with competing assessment providers.

COMMON CORE REVIEW
The request to end PARCC and move to ACT testing was the result of a recommendation by the Governor’s Council on Common Core Review, chaired by Lt. Gov. Tim Griffin. Hutchinson appointed the council earlier this year to consider changes to the Common Core, the controversial set of standards adopted by most states.

Griffin said the council’s decision to replace PARCC with ACT was “not unanimous, but not far away. We were pretty confident as to where we were going on this, and we knew that a decision was going to be made, and in order to be helpful, we wanted to make that.”

The Common Core is a set of standards shared by most states that has become a political lightning rod – especially the PARCC test, which originally involved 24 states but has since been reduced to nine, including Arkansas, plus the District of Columbia. A bill that would have ended Arkansas’ participation in PARCC passed the House this year but failed in the Senate Education Committee until it was amended to allow Arkansas to enter into no more than a one-year contract with PARCC.