Furniture Factory Outlet is moving its corporate headquarters from Muldrow to Fort Smith, locating operations in a 180,000-square-foot part of a former Whirlpool warehouse that is now owned by Spartan Logistics.

The company said the move will bring 64 new jobs to Fort Smith.

“Moving our operations to Fort Smith provides the strategic foundation for our aggressive long term growth plans, and further builds on our commitment to Arkansas. I want to thank our partners Spartan Logistics, Arkansas Economic Development Commission and the Fort Smith Chamber of Commerce for making this a reality,” Larry Zigerelli, president and CEO of FFO Home, said in a statement.

FFO opened its first store in Fort Smith on Rogers Avenue in 1984. The company now owns and operates 36 retail stores in the midwest, including 17 in Arkansas employing 151 people.

"It's always encouraging to have a company decide to locate a corporate headquarters in Arkansas," said Gov. Asa Hutchinson. "Companies from across the U.S. and internationally realize that our central location and versatile workforce make Arkansas an ideal location.”

Hutchinson told a crowd gathered Tuesday afternoon at the Fort Smith Regional Chamber of Commerce for the announcement that having FFO move its headquarters to Fort Smith also provides a "footprint for the future" as the company grows.

BOLD MOVES
Columbus, Ohio-based Spartan Logistics acquired the 620,000-square-foot warehouse facility adjacent to the large manufacturing facility. Spartan and its associated companies provide “one-stop shopping” to many Fortune 500 companies with package handling, light manufacturing, packaging assembly, inventory controls, shipping and other needs. Earlier this year Spartan founder Ed Harmon said the entire space is now occupied by four companies who employ up to 300 people.

Tim Allen, president and CEO of the Fort Smith Regional Chamber of Commerce, said Spartan’s “bold move” to acquire the warehouse from Whirlpool helped set the stage for the FFO move.

“Today, FFO Home (Furniture Factory Outlet, LLC.) made another bold move by locating their corporate headquarters and manufacturing operations in the Spartan Logistics building,” Allen said.

Allen thanked the Arkansas Economic Development Commission and Bob Cooper with R.H. Ghan & Cooper Commercial Properties for their work on the FFO project.

The FFO move will help economic activity in Fort Smith, but with Muldrow a part of the Fort Smith metropolitan statistical area the move does not bring new jobs to the area. The number of employed in the Fort Smith region totaled 114,596 in May, down from 114,943 in April, but up 3,217 jobs compared to the 111,379 employed in May 2014, according to the U.S. Bureau of Labor Statistics. The number of employed in the metro area is down 8.6% compared to the revised high of 125,426 in June 2006 – or 10,830 fewer jobs than the peak metro employment.

REMAINING WHIRLPOOL PROPERTY
The future of the 1 million square foot former Whirlpool manufacturing site and its 95 acres remains uncertain.

Benton Harbor, Mich.-based Whirlpool Corp. closed the refrigerator manufacturing plant in June 2012, which at the time employed about 1,000, but was home to more than 4,500 jobs at its peak. Later that year it was made public that trichloroethyclene – a cancer-causing chemical – was found in and around the plant. Whirlpool has worked to monitor and remove the chemicals, with ongoing oversight handled by the Arkansas Department of Environmental Quality.

Jeff Noel, Whirlpool vice president of communications, told the Fort Smith Board of Directors on May 12 that a successful redevelopment plan for the company’s shuttered manufacturing plant will likely require “strategic demolition” and a plan to “repurpose” the property into 12 smaller parcels. He told the Board it is not likely to find a single buyer who will use the entire site.

It’s the classic right time, right place story. A system glitch prevented Nicole and Hugh Jarratt of Fayetteville from presenting their tailgate plate to Walmart U.S. buyers at the retailer’s Open Call event held Tuesday (July 7) in Bentonville. But then Walmart U.S. CEO Greg Foran walked by as they were waiting to pitch another product.

“We didn’t want to miss an opportunity like that to speak directly to the CEO,” Nicole Jarratt said. “It’s easy to pitch a product you are passionate about and these products are kind of like our babies. We have spent a great deal of time and our own money perfecting them. We hope to meet with Walmart about these plates a little later, but today we have our hands full with the wader socks presentation.”

The tailgate plate is made with 100% recycled plastic that comes from Wal-Mart Stores. It’s almost the perfect story for a company that spends a lot of time and money pushing global sustainability. Foran told the Jarretts he was impressed with the concept and is eager to hear more. The Jarratts then rushed to their 10:45 a.m. buyer meeting on their wader socks. A few minutes later the couple emerged, grinning from ear-to-ear on confirmation that the wader socks will start in 300 stores later this year.

“We are lucky to be here, the fact that we get into a store is big deal much less 300 to start,” Hugh Jarratt told The City Wire immediately after the meeting. “What goes through my mind first is that we have a lot of work to do. The first thing I want to do is call my manufacturer in North Carolina and tell them, they already made some products for Wal-Mart so they know the ropes. Off the bat we have some packaging work to do right away, but we could not have asked for more than we got,” he added.

Last year Fayetteville-based Jarratt Industries successfully pitched Walmart a unique taco plate. That product is now delivered to Walmart stores through 49 distribution centers. The taco plate is made PolyTech Plastic Moldings in Prairie Grove. PolyTech also makes the tailgate plate.

Peggy Knight and Murray Fleming of Bentonville-based Glucose Health met with buyers at 10 a.m., on Tuesday. Glucose Health is a powdered tea mix that helps Type 2 diabetics maintain blood sugar balance. The product is compounded by John Lykins, a local pharmacist and owner of Natural Solution Labs in Gravette. He also operates pharmacies in Lowell and Lincoln.

Knight said the presentation went well and they are excited to follow up with the category buyer who could not attend Tuesday’s event.

“The feedback we got was encouraging, they liked the taste and there is room in this category for new products. We feel really good about our next meeting which should happen in the next few days,” said Fleming, who is the CEO of Glucose Health.

DOG NOT GONE
Julie and Bill Swain, owners of Dog Not Gone, traveled to Bentonville from Skowhegan, Maine, for their 20-minute meeting with Walmart buyers. The couple pitched a safety dog vest which also repels insects and ticks. The flourescent colored vests are made in their small factory located near Skowhegan.

“We are incredibly excited to be here pitching this product which started out primarily as a safety vest for the hunting dogs in our region. But because it also repels ticks and fleas it has now become a more mainstream product for avid dog walkers,” Julie Swain told The City Wire, before they made their presentation.

Bill Swain said the couple ecently purchased Maine Stitching Specialities which allows them to control the quality and output of production. The product is already sold in specialty online and catalog retailers like L.L. Bean, but rolling into big box retail is brand new world.

After the presentation, the couple told The City Wire their dog vests were accepted into Walmart Stores on an side-kick display which was beyond their “wildest dreams.”

“We could not be happier. We have more meetings to attend this evening to sort out some more details but we are thrilled to be in,” Bill Swain said after the meeting.

DREAM BIG
Jennifer McCullough, a Memphis native and Wal-Mart supplier, took the stage in Bentonville at the Open Call to announce eight new products recently approved for sale at the retail giant. It’s been one year since McCullough (Chef Jenn) first pitched her gourmet seafood entrees at the retailer’s inaugural Open Call. She’s back in Bentonville with a new line of product mixes, batters and sauces which were on display at the summit.

“I’m proud to say my sales so far are almost $500,000 on the products sold at Wal-Mart. It has changed my life. Because I have been able to get my entrees in Wal-Mart, it has allowed me the opportunity to invest in new products for outside the freezer,” McCullough said.

Earlier this year Wal-Mart extended McCullough’s frozen seafood entrees into 800 stores that stretch across the Southeastern region of the U.S. from Texas to the Carolinas, with the exception of Florida. The new line of breading and sauces will hit the shelves of 500 stores in the coming weeks.

She told Michelle Gloeckler, executive vice president for U.S. Manufacturing at Wal-Mart and the standing room only crowd, that a year ago she had no idea what to expect at her 20-minute buyer meeting.

“I went from making soup in my kitchen ... to putting deep freeze units in high-end nail and hair salons and selling my dips and crawfish and crab cakes out of there. (It was) one of the best methods I found for moving my product before I got into Wal-Mart,” McCullough recently told The City Wire.

Tuesday she told the hundreds of prospective suppliers to ask questions and soak up all they could from the day-long meetings. She said there is a lot to learn but the team she’s worked with over the past year were ready to help at every turn.

WAL-MART COMMITMENT, CRITICISM
Gloeckler said the Wal-Mart’s commitment to buy $250 billion in additional U.S. made products by 2013 is alive and well. She said the reshoring product from abroad is difficult but it’s feasible in many categories today. She said the retailer will host about 1,000 meetings in Bentonville over the two-conference which concludes Wednesday. 

“We have 30 state governments represented tomorrow and 400 meetings between manufacturers, suppliers and governments. It’s fiercely competitive among the states, but it’s exciting to see the interest from so many in this long-term initiative,” Gloecker said.

Roughly two-thirds of products on Wal-Mart shelves are made already made in the U.S., but she said there is room for more innovative products that help provide solutions to customer needs.

There is criticism of the retailer’s manufacturing push  – as it often is with anything to do with Wal-Mart.

Making Change At Walmart, a union-funded group, has been critical of the retailer’s reshoring push. The group recently alleged that Wal-Mart Stores Inc. has $76 billion in assets held abroad to avoid paying U.S. income taxes.

The group also said in a “7 Key Facts” website that the reshoring push is ironic because Wal-Mart helped “destroy America’s manufacturing sector to begin with.” They also say the $250 billion pledge is “negligible” considering how much Wal-Mart purchases a year.

“Walmart's manufacturing summit is an insult to the countless of American workers who have lost their jobs because of their failure to buy American,” Jess Levin, communications director for Making Change at Walmart, said in a statement. “This ‘summit’ is nothing more than a desperate attempt to distract from the real truth that Walmart helped destroy America's manufacturing sector and still remains the nation's number one importer. If Walmart wants to create jobs, it must buy American and pay its American taxes.”

Arkansas ended its fiscal year on June 30 with a nearly $200 million surplus, but lawmakers and the Governor aren’t yet unified on how it should be spent.

Sen. Jake Files, R-Fort Smith, who chairs the Senate Revenue and Taxation committee, and Rep. Joe Jett, D-Success, who chairs the House Revenue and Taxation Committee, said the surplus amount was a good thing, but also requires patience in determining its distribution.

According to a report from the Department of Finance and Administration, the state collected nearly $6.5 billion in gross tax collections during the fiscal year that ended June 30. Individual income tax revenues, sales tax and corporate tax revenues all were up during the year, the report noted. Gross tax revenues were up nearly 4% over FY 2014 and about 1% above forecast, officials said in the report.

Of the $6.5 billion, nearly $5.25 billion in collections were in net general revenues. Of that amount, net general revenues were up about 4.5% compared to the year before.

The surplus was $191.6 million, with nearly $65 million of it coming from one-time funds from the Attorney General’s office and the Arkansas Insurance Department. The Arkansas Insurance Department moved $51 million to the state budget, while the state received $14.4 million from a lawsuit settlement received from the Attorney General’s office. The one-time revenue totaled $65.5 million. The surplus would have been $126.1 million without such revenue.

FILES: EASY TO TALK TAX CUTS
Files said the surplus was in part due to conservative budgeting in the last budget done by the legislature and former Gov. Mike Beebe. But, there seems to be a push by state government to “ensure that all of the money is spent,” Files said.

That being said, Files said state officials must work to rein in spending.

“It is easy to talk about and campaign about,” Files said of the debate on the issue. “But when you start talking about it, you talk about someone’s livelihood.”

Citing an example, Files said lawmakers during the session this winter had questions about contracts issued by state government. Those questions brought up in media reports over contracts with the Department of Human Services, which have included millions of dollars, have put the issue at the forefront.

“It has not had much to do with impropriety, but simply not knowing where the money went,” Files said, noting he believes there will be a lot more oversight over state contracts and spending by the legislature.

As for taxes, Files said he is a “champion for tax cuts involving job growth and creation.” Files said there is a “finite” amount of dollars to be applied to tax cuts and officials have to look for ways to get the best bang for the buck.

Files also said he does not believe Arkansas will be in the same predicament as other states, like Kansas, that are now dealing with deficits.

JETT CALLS FOR A DEEP BREATH
Rep. Jett said state officials will face a number of issues in looking at the surplus.

“Everyone needs to take a deep breath,” Jett said of the discussion of how to spend the surplus.

Jett said the state must address several key funding issues, including highways, prisons and the Private Option. On highways, Jett said he believes Arkansas may be on its own to help deal with projects in light of the debate over a highway bill in Congress.

“We cannot rely on the feds. We may have to rely on ourselves,” Jett said, citing that other states like Nebraska have increased taxes to pay for roads. “Eventually, Arkansas will have to do something.”

Jett, who represents a rural, agricultural district in Northeast Arkansas, said the highway issue has an impact on agriculture.

“Agriculture is one-third of Arkansas’ GDP and we need infrastructure …. Whether you do poultry, row crop or timber,” Jett said.

Commodity prices have dropped in the past year, Jett said, with small, agricultural towns facing tough times. However, one possible bright spot in the region is the construction of PECO Foods. The project in Clay and Randolph counties is expected to create around 1,500 jobs, both direct at the plant and indirect with truck drivers, Jett said.

Any highway construction project is also likely to “translate to immediate jobs,” Jett said.

The next step regarding the surplus involves budget hearings this fall and the state’s fiscal session next April.

GOVERNOR: TOO EARLY TO TELL
In a statement Tuesday morning, Gov. Asa Hutchinson said budget plans, spending and future tax cuts will face a lot of scrutiny and receive ample debate.

“It’s too early to tell. We’re a long way from the fiscal session. A lot of needs will have to be addressed between now and then,” Hutchinson said.

His former staff budget director, Duncan Baird – now budget director at the Department of Finance and Administration – said one-time funds, by state law, go to capital projects and one-time needs. The money in the past has gone to fill Medicaid gaps, Baird said. The income and sales tax revenues were “pretty solid” in the past year, Baird noted.

As for spending, Baird said there are definitely areas of needs. However, he said there has been a push by the Hutchinson administration to do things better in an efficient manner, not to mention taking a look at spending tax dollars.

As for highways, Baird chairs the Governor’s Working Group on Highway Spending. He said each state is struggling with funding for projects. The group is expected to come up with options by December of this year.

Miami-based Ryder Systems recently expanded its compressed natural gas (CNG) truck fleet services into Arkansas, with Fort Smith-based Boyd Metals and Greenwood-based Alpha Packaging being the first two customers.

Robert Cook, who works in Ryder’s Fort Smith office, said the CNG trucks are made by Volvo in North Carolina and have a Cummins 12-liter engine. The cabs do not have a sleeper berth, and are used for daily roundtrips of less than 300 miles. The vehicles are more expensive. A truck that might cost $100,000 will cost about $160,000 with CNG. He said the prices are falling as more developments are made in CNG and as more companies convert to CNG.

The payoff, Cook said, is in the cost to operate the trucks. They estimate the extra cost of the vehicles is recovered by the third year – even with the lower price of diesel fuel.

“Those company’s (Boyd, Alpha Packaging) return on investment won’t be as great as we hoped when diesel was a $3.60 a gallon ... but both companies are in this for the long haul,” Cook said.

POWER MOVE
Boyd Metals Transportation has signed a full service lease agreement for seven CNG tractors. The new tractors will replace Ryder leased diesel powered trucks now used by Boyd Metals.

Boyd Metals Transportation General Manager Michael Cooper said the company may add more CNG vehicles if the seven new tractors meet expectations. Tom Kennon, president of Boyd Metals, said the power equivalence of CNG-fueled tractors was also a big draw.

“It basically got to the point where the power is the same in a diesel truck. That’s really the thing, because you don’t want to put a truck out on the road that doesn’t have the power,” Kennon told The City Wire.

Alpha Packaging also signed a full service lease agreement for seven CNG trucks, and the trucks will replace diesel powered rigs. Trucks for Boyd and Alpha are expected to be delivered in August, Cook said. According to Ryder, Alpha Packaging is building an natural gas fuel station at its Greenwood corrugated box manufacturing plant. The Fort Smith region is also served by two public CNG stations operated by Arkansas Oklahoma Gas Corp.

“Even with the recent drop in diesel fuel prices, the stability of natural gas fuel costs, along with the environmental benefits of natural gas vehicle technology, bring significant value to our fleet operation,” Alpha Packaging President Mike Stec said in a statement provided by Ryder.

ENVIRONMENTAL CONSIDERATION
Kennon also said the drop in diesel prices didn’t come close to negating the benefits of CNG.

“The savings were incredible when diesel was at $4 a gallon, but it’s still a good deal now,” he said. “There also is the environmental side, which is what everybody is doing, but it also saves us money.”

Not only are there fuel savings with CNG, Cook said more company owners and fleet managers recognize the value in lower maintenance costs, quieter vehicles and operating vehicles that are “a lot cleaner on the environment.” He also said many like the idea of using American-made vehicles and domestic energy.

“They are very partisan about the U.S., and like to have trucks built in the U.S., and obviously, the natural gas is ours,” Cook said.

Cook said Ryder plans a marketing event in August when the trucks arrive for Alpha Packaging and Boyd Metals. He said they plan an open house in Fort Smith and will invite existing and hopefully future customers.

Prior to the agreements with Boyd and Alpha Packaging, Ryder had fleet customers in Arizona, California, Georgia, Louisiana, Maryland, Michigan, New York, Texas, Utah, and Quebec, Canada. Ryder has 17 natural gas vehicle maintenance facilities, and more than 2,200 NGV trained technicians. The company operates liquefied to compressed natural gas (LCNG) operations in Fontana and Orange, Calif.

NATIONAL CNG TRENDS
Use of CNG for truck and delivery fleets has grown in recent years. UPS is using more than 600 CNG vehicles and has plans to add 1,400 more. The company recently contracted with TruStar Energy to build 15 CNG stations in 11 states. Construction has begun on a station in Oklahoma City and New Orleans.

The Anheuser-Busch distributor in Houston has worked with Ryder to convert its fleet of 66 tractors to CNG. The trucks are being leased by Anheuser-Busch from Ryder and operated by Lowell-based J.B. Hunt Transport. The deal is part of a larger goal by St. Louis-based Anheuser-Busch to reduce emissions and fuel costs in its private fleet of more than 600 vehicles.

CNG sales in Texas during 2014 rose 78% over 2013. Texas Railroad Commissioner David Porter said CNG vehicles “are becoming mainstream faster than expected.”

Oklahoma Gov. Mary Fallin recently signed a law that provides interest-free, 5-year loans to county governments that buy CNG vehicles or convert their fleet vehicles to CNG use.

However, sales of alls natural gas vehicles in the U.S. fell 6.5% in 2014 because of the drop in gasoline and diesel fuel prices, according to NGVAmerica. Sales of heavy-duty CNG vehicles was up 30% compared to 2013.

The federal Department of Labor published this week a proposed rule to extend overtime protections to nearly 5 million white collar workers, which the Obama administration says is a critical first step toward ensuring that “hard-working Americans” are compensated fairly and have a chance to get ahead.

But several industry groups, including the U.S. Chamber of Commerce and the National Association of Manufacturers, lambasted the proposed rules as “counterproductive” to high-paying, good jobs and employment growth.

“Today, the Department of Labor announced the demotion of at least 5 million Americans. Manufacturers are proud of the modern workplaces and high salaries they offer their workforce, and this proposed regulation is another in a long list of regulatory roadblocks to healthy and robust economic growth and job creation,” Joe Trauger, NAM’s vice president of human resource policy, said in a statement.

The Atlanta-based Job Creators Network, led by former Home Depot co-founder Bernie Marcus, said the Labor Department rules are symptomatic of a troublesome trend caused by “government overreach” and too many onerous regulations.

On Friday, the year-old advocacy group that includes a number of business and industry trade associations such as the National Restaurant Association, Americans for Prosperity and National Federation of Independent Business (NFIB), said the Labor Department’s robust June jobs report was overshadowed by the troubling first quarter report on U.S. productivity growth.

“A nation working harder to create less needs to question whether its economy is really in recovery,” said Jamie Richardson of White Castle System Inc., a member of the Job Creators Network. “A large number of economists tell us our problem is a lack of business investment due to too much regulation, and we saw a fresh example just this week with these new overtime rules.”

Richardson said it will cost White Castle between $8 million and $12 million annually to comply with the new overtime rule.

“This is on top of burdensome health care regulations and a potential minimum wage increase,” he said.

The U.S. Chamber of Commerce said the Obama administration was “completely divorced from reality and adding more burdens to employers and expecting them to just absorb the impact.”

“Making more employees eligible for overtime by severely restricting the exemptions will not guarantee more income, but instead will negatively impact small businesses and drastically limit employment opportunities,” said Randy Johnson, the chamber’s senior vice president of labor, immigration and employee benefits. “Additionally, many reclassified employees will lose benefits, flexibility, status, and opportunities for advancement.”

Despite mounting criticism from business groups and industry executives, the Obama administration did have allies on the proposed overtime rule. United Steelworkers (USW) International President Leo Gerard called the Obama administration proposal “a win for workers and a win for the economy by raising the threshold under which overtime must be paid.”

“The likes of the U.S. Chamber of Commerce and fast food CEOs will whine that businesses can’t pay workers more, no matter how many hours a week they work.” Gerard said in a statement. “Workers should point out that every year, corporations find tens of millions to hand over to CEOs demanding excessive pay increases.”

FULL SPEED AHEAD
Meanwhile, the Department of Labor on Monday was moving full speed ahead with plans to implement the new rules, creating a new infographic on its website that explains how the overtime regulations will benefit the middle class and working families.

In a notice of proposed rulemaking released last week, Labor Department officials said failure to update the overtime regulations has left an exception to overtime eligibility originally meant for highly-compensated executive, administrative, and professional employees now applying to workers earning as little as $23,660 a year.

In one example cited on the agency’s website, Labor Department officials said a convenience store manager, fast food assistant manager, or some office workers may be expected to work 50 or 60 hours a week or more, making less than the poverty level for a family of four, and not receive a dime of overtime pay.

The White House Office of Management and Budget (OMB) reviewed and approved the Notice of Proposed Rulemaking (NPRM) for the new overtime regulations. Upon publication of the proposed rule, interested parties will be invited to submit written comments on the proposed rule.

The comment period will close on Sept. 4, 2015. Only comments received during the comment period identified in the Federal Register published version of the NPRM will be considered part of the rulemaking record.

Wal-Mart officials opened the second day of their manufacturing summit with a video of legendary co-founder Sam Walton saying in a speech years ago that “buying American-made products should be what all retailers are doing.”

Michelle Gloeckler, executive vice president of Walmart U.S manufacturing, followed that by telling a crowd of around 2,000 suppliers and economic delegations from 30 states that the retailer’s effort to return manufacturing jobs to the U.S. is not a marketing ploy as some skeptics have suggested.

“We are proving them wrong, the evidence speaks for itself and this is not a PR stunt,” Gloeckler said with conviction. 

Wednesday (July 8) was the second and final day of the retail giant’s third annual U.S. Manufacturing Summit held in Bentonville.

Gloeckler said for every one U.S. manufacturing job that is created, three jobs are supported, according to the Boston Consulting Group. Roughly two-thirds of products on Wal-Mart shelves are now made in the U.S., but she said there is room for more innovative products that help provide solutions to customer needs. She said half of the products come from women-owned businesses.

Wal-Mart execs have said efforts to help onshore manufacturing jobs is not an easy task, but it is feasible for many product categories and will grow as the supply network – which has shrunk for three decades – for manufacturing begins to catch up.

Todd Siwack, CEO of Ferrara Candy, took the stage to share how his company that makes private label confections for Wal-Mart spent the past 18 months preparing two new facilities near Chicago after they decided to return some production from Canada and Mexico. Siwack described the process as initially daunting because the commercial candy-making production moved offshore 25 years ago. He said the first thing they had to consider was if they could piece together an ecosystem to provide the raw materials needed to support an American facility.

He said the tipping point for Ferrera was the price and long-term commitment from Wal-Mart as well as the bond of trust established that allowed it take the leap. But, then it also had to sell that trust level and commitment to its material suppliers who were also asked to invest in American production.

CASE FOR ONSHORING
Mike Zinser, of the Boston Consulting Group, spoke at the Open Call ceremony on Tuesday (July 7). He said the economics of manufacturing abroad have tipped in favor of the U.S. for many industries. He said a floor care product company found that it was 3% cheaper to manufacture in the U.S. when considering the entire supply chain and transport costs.

On average he said the labor costs in China are about 61% of those in the U.S., but when factoring in supply chain costs the comparison levels out. That said, Zinser said the U.S. manufacturing supply chain remains fragmented for some industries and it will take time to mend those gaps. He said it took the Japanese automakers a few years to build out the supplier network in the southern U.S., but now they turn out cars and trucks with parts sources mostly from the U.S.

“We are still at the very early stages of this manufacturing shift. It’s more like a 10- to 20-year cycle. U.S. manufacturers and suppliers have to innovate, apply technology and robotics where they can and they will figure it out,” Zinser said.

WAL-MART, ARKANSAS CHALLENGES
Mike Harvey, chief financial officer of the Northwest Arkansas Council, told The City Wire following the summit that Wal-Mart has realized in the past two years there are significant challenges for onshoring manufacturing. He applauds the Wal-Mart effort to ramp up the help and said holding meetings like the two-day event in Bentonville provides Arkansas a front-row seat to recruiting future business.

A delegation of economic development officials from around the Natural State had three booths at the summit expo hosting prospective businesses and fielding inquiries from suppliers looking for U.S. manufacturers and component parts.

Harvey said there are real challenges in trying to recruit product manufacturers to Arkansas, namely in the areas of skilled workforce numbers and available facilities for acquisition. He said there is good work underway in high schools and junior colleges across the state to provide a career track in manufacturing for students, if they can be convinced to sign on.

He also said Northwest Arkansas’ economy is like riding a bull in terms of its growth, but it’s important to keep local leaders aware of the need for manufacturing as a middle-class option for future generations.

In terms of real estate options for attracting manufacturing, Harvey said Fort Smith has advantages over Northwest Arkansas. Also, there is a skilled workforce there displaced in recent years from the loss of Whirlpool’s refrigerator manufacturing plant and its supporting companies.

SEEKING A ‘SHARE OF ATTENTION’
Gov. Asa Hutchinson (R) did his job plugging his home state during a presentation at the summit. He said any company looking to reshore manufacturing should put Arkansas on the short list of possible homes.

“No state knows Wal-Mart better than the state of Arkansas. ... It’s a competitive climate for business and we are in the center of the U.S. and middle of the commerce stream. Businesses like Big River Steel have told me part of the reason they chose Arkansas was that the agricultural background also promotes a strong work ethic in its people,” Hutchinson said.

He added that with sales tax and payroll tax rebates in place that Arkansas can be competitive on tax structure. He said the state is committed to workforce training as well as mandated technology and computer coding taught in all high schools because robotics and technology are necessary to skilled manufacturing jobs today.

“We have a long, relationship with Wal-Mart and its supply chain drivers. I know Wal-Mart operates in lots of states and it loves all its children equally, but we (Arkansas) are the oldest child and we want our share of attention,” Hutchinson said.

Danny Games, deputy director of global business for the Arkansas Economic Development Commission, told The City Wire that his delegation believes Arkansas is competitive in key areas required by manufacturing such as energy costs, logistics and labor. Games said third party evaluators typically rank Arkansas in the top quartile, if not the top 10 states for tax structure. He said many times it comes down to company specifics on the final selection. 

That said, Games was energized by the amount of interest the state has received from summit participants. On Tuesday evening the AEDC and the Northwest Arkansas Council hosted a reception for the suppliers and government officials taking part in the two-day event. Games said the reception was well-attended and there was a genuine appreciation from suppliers and manufacturers visiting in Bentonville.

“I am optimistic that alone went a long way in showing our visitors what a business friendly environment we have in Arkansas,” Games said.

Wal-Mart Stores on Wednesday (July 8) unveiled its “Jobs in U.S. Manufacturing Portal” (JUMP) website that will provide updates on the retailer’s effort to reshore manufacturing and allow suppliers to upload product ideas.

Cindi Marsiglio, Walmart U.S. vice president, said JUMP is much like a 24/7 open call for suppliers and potential suppliers. The announcement was made at the second and final day of the retailer’s U.S Manufacturing Summit held in Bentonville. It’s the third year for the summit, with the first summit held in Orlando and the 2014 summit held in Denver.

The portal is free but requires registration. There a step-by-step process outlined on the portal site for suppliers seeking to upload a new product for evaluation. The portal also encourages suppliers that meet certain diversity guidelines to specify those and to register on the retailer’s supplier diversity portal.

This new two-way line of electronic communication provide suppliers an avenue to submit documentation such as made in USA certifications as well as other product information and success stories which can be re-shared. 

Marsiglio said JUMP will also be a place where suppliers may learn more about the U.S. manufacturing industry. There are external links available from JUMP that provide additional information on issues like funding, reshoring support as well as state and federal incentives programs.

She said a question often asked is how well the retailer is doing with the initiative. The new portal will be one way interested parties can keep track.

JUMP already includes info on some of the progress the retailer has made in its 10-year initiative to grow U.S. manufacturing jobs by investing $250 billion in American-made products. That initiative was launched in 2013 by then Walmart U.S. CEO Bill Simon.

Wal-Mart said it has analyzed 1,300 categories for the economic viability of products made in the U.S. It also prioritized its work plan to ramp up efforts across 71 categories. To date, Wal-Mart says it has 150 unique projects approved which range in value from $1 million to $370 million across 42 departments. Marsiglio said JUMP also will provide a link to ThomasNet.com, which is used by suppliers and manufacturers to help them locate capacity and component materials across the supply chain.

Mike Zinser, of Boston Consulting Group, told suppliers at Tuesday’s Open Call (July 7)
that the ThomasNet.com portal is a work in progress. He said there are still big gaps in some of the support ecosystems required for on-shoring manufacturing jobs but as more people register and use the portal its effectiveness will improve.

Marsiglio also said Wal-Mart would fund its next round of innovation grants to research institutions, manufacturers and cities involved in reviving the U.S. textile industry. Textiles are one of the more challenging industries to bring onshore, but Wal-Mart said it’s making small improvements in that sector.

Andy Barron, vice president of merchandising, said it’s been a long time coming but in the past two years Walmart buyers have worked to find sheets made in the U.S. from American grown cotton. Ellison of New York was making a higher end sheet in the 300 and 400-thread count varieties. He said later this summer Wal-Mart stores will unveil a 200-thread count U.S. sheet product in time for back-to-college sales which is being made by Ellison. 

Michelle Gloecker, executive vice president of U.S. manufacturing at Walmart, said the sheets are a major accomplishment and a right step in the onshoring direction in which the retailer is hoping to take textile manufacturing in the next few years. Gloeckler said apparel is a challenge, but it’s not impossible as the retailer has begun sourcing ladies sweaters – and Gloeckler was wearing one of the sweaters – from a small sewing operation in Brooklyn, N.Y.

“We can do better in pets and babies (categories), and even though Wal-Mart makes eyewear in the U.S., all of the frames are imported which is a huge opportunity for a frame supplier,” she said.

In its three optical labs the retailer turns out 2.5 million pair glasses annually for Wal-Mart customers and Sam’s Club members.

A survey of eight of Arkansas’ larger cities shows Conway as the only city other than Fort Smith not collecting a business license fee.

Reinstating a business license fee is one of the options Fort Smith city staff has presented to the Fort Smith Board of Directors to cover a shortfall in the city’s pension contributions for police and fire employees. The fee was dropped more than 30 years in exchange for business support of a sales tax increase.

According to City Administrator Ray Gosack, the city’s LOPFI (police and fire pension) fund will be insolvent by 2021. And that insolvency was pushed from 2019 to 2021 by a recent Board vote to reduce benefits under the pension plan.

During a June 23 study session, the Board looked at three options on reinstating a license fee. The first option could generate $1.976 million. It would collect $20 per employee for businesses with employees from 1 to 500. The fee would be capped at $10,000.

The second option could raise at least $1.435 million with a plan that would charge a business $20 per employee from 26 to 500 employees with a cap at $10,000 a year. Businesses with 25 or fewer employees would not pay a fee.

The third option would charge a flat fee of $150 for all businesses and raise an estimated $761,550 a year. The cost to manage all three options is estimated to be $107,000 a year.

The survey, conducted by city staff, looked a the fee structure in Conway, Fayetteville, Hot Springs, Jonesboro, Little Rock, North Little Rock, Rogers, and Springdale. As noted earlier, Conway is the only city to not have a fee. Following are some of the details in survey from cities who have a business license fee. Fort Smith staff did not ask each city for annual revenue from the fees. However, Springdale did report that its fees generated $137,699 in 2013, and $133,419 in 2012.

• Fayetteville
Home-based fee of $22 per year
Non home-based fee of $35 per year

• Hot Springs
Fees are based on business category and range between $75 and $1,500 a year.

• Jonesboro
Fees are based on business category and range between $25 and $2,500 a year.

• Little Rock
Fees are based on business category and range between $75 and $2,700 a year.

• North Little Rock
Fees are based on business category and range between $90 and $1,000 a year.

• Rogers
Fees are based on business category and begin at $40 and increase based on factors such as employees, hotel rooms, and restaurant seats.

• Springdale
Fees are based on business category and range between $40 and $300 a year.

Many of the cities have a lengthy list of business categories and various fees for each. Hot Springs has a $75 fee for a business that sells fireworks, a $100 annual fee for “couriers and messengers,” a $200 fee for a business in poultry or egg production, and a $1.50 fee for businesses “primarily engaged in the seasonal parking of automobiles on open air lots.”

Jonesboro has a $35 annual fee for barber shops with one chair and a $10 fee for each additional chair. A hotel in Jonesboro with 150 rooms or more has a $400 annual fee. Manufacturers in the city employing more than 300 pay a $2,500 annual business license fee. Restaurants with 20 “chairs or stools or less” pays $50 a year. Restaurants with more than 300 chairs or stools pays $300 annually. And if you plan to operate a Turkish bath in Jonesboro, be prepared to pay a $35 annual business license fee.

In Rogers, manufacturers pay a $50 base plus $3 for “each employee or owner working 25 hours or more per week.” A restaurant in Rogers with more than 75 seats pays an annual business license fee of $150. Hotels with one to six units pays $50 a year, plus $3 for each unit above six.

A majority of the Board members have told The City Wire they either do not support reinstating a business license fee or want to see more budget cuts before they consider new fees or taxes.

City staff is expected to present refined options to address the pension shortfall during a July 14 study session. The Board could vote on other options at a July 21 board meeting.

Dawson Meadows reports that some suppliers to Wal-Mart Stores are now sitting on golden thrones on their personal yachts. He also gets a comment from Moses on efforts to keep 10 Commandments monuments on Arkansas and Oklahoma Capitol grounds.

Next week we have plans to adjust Meadows’ medication.

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

John Simone, the USA Truck boss who managed what is considered by many to be an impressive financial turnaround by the Van Buren-based company, has resigned to focus on his battle with lung cancer.

The company announced April 6 that Simone, 53, was on indefinite leave from the company to deal with a “serious medical condition.” On May 7 Simone said he suffered from strokes and lung cancer and would take an indefinite leave of absence. Simone said the lung cancer was discovered while searching for the cause of strokes.

Thomas Glaser, who was in charge during Simone’s leave of absence, has been named president and CEO of USA Truck.

“Although it has been a very difficult decision, after consultation with my doctors, who continue to be optimistic about my recovery, I have concluded that I need to concentrate full time on my treatments and recovery,” Simone said in a statement the company issued Thursday (July 9). “I leave knowing that a solid foundation for profitability and growth has been put into place at USA Truck. Working with the Company and its outstanding employees has been a very rewarding experience, and I look forward to watching USA Truck’s continuing progress.”  

In late 2012 the USA Truck Board of Directors reached out to Harvard graduate Robert Peiser to chair the Board and get the company back in the black. Peiser, known in corporate circles as someone able to rescue a company for future growth or acquisition, hired John Simone in early 2013. He had a reputation in the trucking and logistics sector for tidying up troubled operations.

Peiser and Simone began making wholesale changes to USA Truck’s corporate philosophy, management and strategy. Officials with the long-haul trucking and logistics company announced 2014 net income of $6.033 million, a more than $15 million swing from the $9.11 million loss in 2014, and a gain that ended five consecutive years of losses.

The company’s trucking segment is still struggling, however. The trucking division posted a $3.532 million operating income loss in 2014 – although it was a big improvement over the $17.66 million operating income loss in 2013. Driving the gains are the non-asset side of USA Truck’s operation. The company’s Strategic Capacity Solutions (SCS) – logistics and freight brokerage – division posted operating income of $20.775 million, more than double the $9 million in 2013.

Peiser said the Board understands Simone’s decision and praised his time with the company.

“We fully support John’s decision to resign so he can devote his time and energy to improving his health. During his tenure of more than two years, he reinvigorated the Company, began the process of unlocking its earnings potential, and instilled every employee with the desire to maintain its forward momentum. All of us wish John continued success with his recovery,” Peiser said in the statement.

Peiser also said the USA Truck Board is “confident” that Glaser will “continue to drive USA Truck’s turnaround and implement the Company’s multi-pronged growth strategy.”

Glaser is a member of the USA Truck Board and served as the company’s COO from January 2013 to June 2013. He returned to the company as a Board member as part of an early 2014 agreement between USA Truck and investment firms Baker Street Capital and Stone House Capital Management. He has more than 30 years of management experience in the trucking industry, including serving as president of two truckload carriers, Arnold Transportation Services from 2008 to 2010 and Celadon Trucking Services, Inc. from 2001 to 2007.  Between 1988 and 2001, Mr. Glaser served in various positions as a vice president in operations, marketing and sales at Contract Freighters, Inc. (now Con-way Truckload).

An estimated $1.3 million charge to third quarter earnings will cover severance and other costs of Simone’s resignation.

The company is set to announce second quarter earnings on Aug. 4. The consensus estimate is that the company will post net income of 22 cents per share on revenue of $142.5 million. In the second quarter of 2014, the company reported 20 cents per share on revenue of $153.3 million, although 13 cents were set aside to cover $2.2 million in legal costs related to a hostile takeover attempt by Knight Transportation.

USA Truck shares (NASDAQ: USAK) were trading early Thursday at $21.06. The share price closed Wednesday at $20.69. During the past 52 weeks the share price has ranged from a $32.14 high to a $13.90 low.

The number of homes sold in Arkansas’ four largest markets during the first five months of the year is up more than 7% and the value of the homes sold is up almost 14%, thanks to continued growth in the Northwest Arkansas and central Arkansas metro areas.

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.

The number of homes sold in the four markets in the January-May period totaled 8,870, up 7.49% from 8,252 in the same period of 2014, and up 11.7% compared to the same period in 2013. In the January-May period, home sales were up 4.59% in central Arkansas, up 4.49% in the Fort Smith metro, up 2.43% in the Jonesboro metro and up 14.22% in Northwest Arkansas.

The total value of January-May home sales in the four markets was $1.5 billion, up 13.91% compared to the same period in 2014 and up 14.84% compared to the 2013 period.

Average sales prices continue to rise. The average price for homes in the four markets was $169,120 in the January-May period, up 5.98% compared to the same period in 2014, and up 2.81% compared to the same period in 2013. For the year-to-date period, the average sales price in the four large markets ranged from a high of $197,864 in Benton County to a low of $93,618 in Jefferson County.

The average days on market during the January-May period was 96.33, down slightly from the 96.77 in the same period of 2014, and up from 94.06 in the same period of 2013.

TWO UP, TWO DOWN IN MAY
May home sales in the four markets totaled 2,236, up 7.66% compared to May 2014, and up 11.35% compared to May 2013. The average price per home in the four markets during May was $175,631, up 2.36% compared to May 2014, and up 3% compared to May 2013. The total value of sales in the four markets during May was $392.71 million, up 10.2% compared to May 2014 and up 14.7% compared to May 2013.

Home sales during May were up in Northwest Arkansas and central Arkansas, but down in the Fort Smith and Jonesboro metro areas.

There were 1,063 homes sold in central Arkansas, down 6.73% compared to May 2014, and up 13.33% compared to May 2013.

May home sales totaled 785 in Northwest Arkansas, up 19.3% compared to May 2014, and up 10.25% compared to May 2013.

Jonesboro area home sales totaled 196, down 11.31% compared to May 2014 and down 2.97% compared to May 2013.

In the Fort Smith area, home sales totaled 192, down 4.95% compared to May 2014, but up 23.08% compared to May 2013.

Thanks to higher average home prices, the sales value was up in three of the four markets. The total value of the sales during May were up 7.47% in central Arkansas, up 20.26% in Northwest Arkansas, down 10.57% in the Jonesboro area, and up 2.41% in the Fort Smith region.

‘A GOOD MONTH’
Kathy Deck, director of the Center for Business and Economic Research at the University of Arkansas, said the market reports are all about jobs -- those areas of the state with strong jobs growth are seeing markets improve while those still having unemployment problems are seeing weaker markets.

“When we look from a year-over-year perspective or a month-to-month perspective, quantities and prices are both up," Deck said. "Some markets are still struggling, but things are looking good on this whole. Really, this is a good month. A continuation of the strong economic performance we've seen throughout the year.”

She said the overall economy in Arkansas is improving and that is moving all segments of the economy forward. She said even housing markets in struggling parts of the state are starting to stabilize and show signs of improvement.

THE REGIONAL PICTURE: January-May 2015
Central Arkansas — Home sales
Jan.-May 2015: 4,126
Jan.-May 2014: 3,945
Jan.-May 2013: 3,759

Fort Smith area — Home sales
Jan.-May 2015: 791
Jan.-May 2014: 757
Jan.-May 2013: 635

Jonesboro area — Home sales
Jan.-May 2015: 885
Jan.-May 2014: 864
Jan.-May 2013: 761

Northwest Arkansas — Home sales
Jan.-May 2015: 3,068
Jan.-May 2014: 2,686
Jan.-May 2013: 2,786

The top five counties in terms of January-May 2015 home sales:
Benton — 1,927, up compared to 1,737 in January-May 2014
Pulaski — 1,906, up compared to 1,850 in January-May 2014 
Washington — 1,141, up compared to 949 in January-May 2014
Craighead — 731, up compared to 688 in January-May 2014
Saline — 682, up compared to 668 in January-May 2014

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

THE 2014 PICTURE
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 homes 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.

Wal-Mart is making a habit of Christmas shopping in early July with its Open Call event that invited 340 suppliers into its backyard for a chance to pitch their nearly 600 inventions. While the retail giant has not released an officials list of products chosen, executives have spent the past two days touting their favorite finds from Tuesday’s (July 7) open dall.

Greg Foran, Walmart U.S. CEO, said he was excited about the range of new products he found in the seven or eight supplier meetings that he attended Tuesday.

“Our customers tell us they love to buy products made in the USA, they can feel good about that,” Foran said. “Each new product will help generate growth, for our stores, the suppliers and their communities.”

Memphis’ Jennifer McCullough whose Chef Jenn frozen seafood entrees were selected last year’s at Open Call, said sales have risen to nearly $500,000 after her contract with Wal-Mart. She was back in Bentonville this week and had eight new breading and sauce products accepted. Those products will soon be in 300 stores.

It can take anywhere from six to 18 months for products to go from Open Call to the store shelves but in some cases seasonal products are fast-tracked through the system.

Hugh Jarratt, with Fayetteville-based Jarratt Industries, and whose taco plate made locally and accepted at last year’s open call, said it took several months to get the product on the shelves. His wading socks, selected at this year’s Open Call are likely to be fast-tracked so they can be in selected stores this fall as the target buyers are duck hunters and fly-fishermen.

Some of the other new products chosen at Open Call by merchants range from spray-on sunblock to pizza ovens and 5-minute meat marinades.

Foran touted some of his favorite finds at the U.S. Manufacturing Summit (July 8). He said the Kettle Pizza oven that attaches to Weber grills, also sold at Wal-Mart caught his eye.

“It’s a great little invention. It comes complete with the stone and works with your Weber grill to create wood fired pizza in your own backyard,” he said. “And it’s made in Massachusetts.”

Foran also liked a 5-minute meat marinade container made in Erie, Penn. The plastic container comes with a pump that removes all the air from within the container and speeds up the marinating process to roughly five minutes.

“I also had the opportunity to meet Julie and Bill Swain and look at this safety dog vest that Julie first began stitching together in her garage. Its bright color keeps the pet safe and it repels ticks at the same time. We are excited to get this product (Dog Not Gone) in our stores soon,” Foran said.

Another innovative product coming soon to select Wal-Mart is a tuna pack processed in the U.S. by Fishpeople, an Oregon-based processor. Foran said 90% of the commercial fish caught in the U.S. today is shipped abroad for processing and then imported back. 

Seasoned albacore tuna caught off the coast of Oregon and processed there will feature a photo of the fisherman on the cover of the package. Foran said the new product provides better transparency on processed fish products which also should resonate with consumers. He said because the fish is processed in the U.S. the secondary fish products not used are sent to a pet food manufacturer in California that makes private label pet food for Wal-Mart.

“It’s transparent, made in the U.S. and sustainable which is makes it a great new find,” Foran said.

Michelle Gloecker, executive vice president of Walmart U.S. manufacturing, said one of her favorite finds in Tuesday’s Open Call was from Blamtastic of Atlanta. She said Blamtastic sold Wal-Mart its sunscreen lip balm last year. But the new pitch was for a spray-on sunblock. That is not a new item, but Wal-Mart merchants were impressed with the packaging of the spray-on sunblock because it allows the lip balm to snap easily into a slotted groove on the side to the can. 

“This packaging design means that consumers can easily have their sunblock and lip balm protector all together. The pump design sprays a very fine mist of sunblock and it has a great scent,” Gloeckler said.

Sam’s Club Chief Merchandising Officer Charles Redfield shared some of the new items Sam’s Club buyers recently signed up. He said the “better for you” health and wellness category is popular with consumers which is why buyers selected products from Austin, Texas-based Sassy Lassi at the recent Open Call. He said the yogurt packs are infused with live probiotic cultures from pasture feed cow milk with fruit or vegetable flavors.

“It’s a woman-owned business, it’s made in the U.S., and it’s good for you. We are excited to continue our talks with this company and get this product in our clubs,” Redfield said.

Redfield also mentioned a vertical gardening kit which is also popular with customers, particularly in urban areas. He said the kit was tagged by Sam’s Club buyers as an item they want to see in clubs early next year.

Walmart.com also had buyers at the recent Open Call and Michael Bender, chief operating office at Wal-Mart Global eCommerce, said one of his favorite finds at Tuesday’s event was a K’Nex build and blast toy that can shot foam darts up to 75 feet.

“When a product goes up on Walmart.com then anyone with an Internet connection around the world can purchase it. It has incredible reach. We can also move more quickly to get products on our site. The build and blast toy is being fast-tracked and will be on our site next week,” Bender said during his comments at the manufacturing summit.

A group of around 25 people gathered Thursday (July 9) for a public meeting about a proposed public enrollment charter school in Fort Smith. Area business leaders are working with the Fort Smith Public School District and the University of Arkansas at Fort Smith to open by August 2016 a charter school for students in grades 10-12.

Trish Flanagan, founder of the effort to create Future School of Fort Smith, has said they hope to have the charter application to the Arkansas Department of Education’s (ADE) Charter Authorizing Panel by the end of this summer. They plan to complete presentations to the ADE and get the charter approved by the end of 2015.

Flanagan said Thursday night during the presentation at Elm Grove Community Center that they would like to take a bus of educators, business leaders and others in the community for the ADE presentation. If all goes well, student recruitment would begin in the spring/summer of 2016.

Flanagan has experience also in connecting education to the business and entrepreneurial worlds. She has 14 years experience working as an educator working with communities around the United States and abroad. She is the co-founder of Noble Impact, a K-12 education initiative integrating public service with an entrepreneurial mindset. Noble Impact is supported by Steve Clark, founder of Fort Smith-based Propak Logistics.

She said the school will be open to “extremely marginalized students” and those on a college prep path. Flanagan said she has toured more than 30 charter schools in six states, including the WATC program managed by UAFS.

“We found a lot of exciting models out there,” Flanagan told the audience, adding that the goal is to incorporate the best practices into what will work best in Fort Smith. “We are adamant that our school provides a service to the community.”

The school concept is being built on three “pillars,” according to Flanagan. Those are “real world collaboration,” “project-based learning,” and the use of integrated technologies. Concepts underneath those pillars include industry-focused curriculum, internships, mentors, project management skills and concurrent college credits. She said the school attempts to make education relevant and fun for the “diverse learning styles” among public school students.

Part of what makes the Future School concept unique is the partnership with the local school district and UAFS. Flanagan said the school has a memo of understanding with UAFS, but does not yet have a formal agreement with Fort Smith Schools.

In responding to a battery of questions from the audience, Flanagan said the school must comply with curriculum standards and other requirements of public schools, including common core. The school does have the ability to seek waivers on some rules, such as teacher certification. She said the state requires full transparency of the process, and said every aspect of the school’s structure and operations will be made public by the Arkansas Department of Education when the final draft of the application is filed. State education officials then begin their hearing process after the draft is filed.

Flanagan said the school will accept 100-150 students the first year for the 10th grade class, with the same amount for the following two years until a full cohort is reached for the school. If more applications are made than openings, the Arkansas Department of Education will conduct a lottery system, she said. Also, students from around Arkansas may attend the school, not just students from the Fort Smith district.

Funding comes from state money only, with no local millage or building funds available for charter schools. Flanagan said the school would start with a line of credit to fund start up costs, with those costs fully reimbursable by the state. With no access to local millage funds, Flanagan said the budget is roughly 30% smaller per student than a traditional public school.

Zartashia Javid, from Fort Smith, is hopeful her younger brother might attend the proposed charter school. Javid graduated in 2012 from the math and science charter school in Hot Springs that is under the University of Arkansas at Little Rock umbrella. She is now pursuing a biology degree at the UALR.

“I think it’s good that they are partnering with UAFS. That’s what really interested me in this,” Javid said when asked what she thought about the concept.

Two more hearings are set for 6 to 7:30 p.m., July 16 and 28, at the Elm Grove Community Center. The group is encouraging students, parents and educators to attend.

Fort Smith City Administrator Ray Gosack has resigned, with Friday (July 10) his last day on the job. He has worked for the city 16.5 years, with almost five years of that as city administrator.

His letter sent to Mayor Sandy Sanders and the Fort Smith Board of Directors did not indicate why he chose to resign.

“I’m blessed to have worked with one of the most professional and progressive municipal staffs in Arkansas. From top to bottom, the city’s work force is committed to providing exceptional citizen service. They will continue to serve residents, businesses and visitors well,” Gosack wrote in the letter.

The Fort Smith Board of Directors has set a special meeting for 2 p.m. Friday. The City Wire will update this story or post a new story after the meeting.

Gosack, 56, included list of accomplishments in the letter that he was “proud to be part of” during his time with the city. List items included:
• Adoption of Fort Smith’s first-ever comprehensive plan and its update;

• Development of water supply and landfill capacities that will meet regional needs beyond 2070;

• Redevelopment of the former Fort Chaffee Army post resulting in hundreds of jobs and hundreds of millions in private investment;

• Revitalization of downtown;

• A new, sustainable mission for the 188th wing; and

• Remedying the chronic wet weather sanitary sewer overflows.

After serving almost 12 years as a Fort Smith deputy city administrator, Gosack was hired Jan. 4, 2011 as city administrator.

Gosack had served since Nov. 2, 2010 as the acting city administrator following the board’s firing of Dennis Kelly. The “acting” job was his third time to work in that capacity, in having managed city operations after former city administrators Bill Harding and Randy Reed.

Prior to returning to Fort Smith, Gosack served during 1988-1999 as the assistant village manager and director of management services for the Village of Homewood, Ill.

He also worked as administrative assistant for the city of Fort Smith between 1985 and 1988. Gosack earned a bachelor’s degree in political science and a master’s degree in public administration from the University of Arkansas. He was recognized as the outstanding 1985 graduate of the MPA program.

Link here to read the two-page resignation letter from Gosack.

After a more than two hour executive session, the Fort Smith Board of Directors on Friday (July 10) voted 7-0 to named Jeff Dingman the acting city administrator following the surprise resignation Friday morning of City Administrator Ray Gosack.

Dingman, who has been the city’s deputy city administrator since June 2011, said he plans to apply for the job.

After the executive session Mayor Sandy Sanders asked Richard Jones, head of human resources for the city, to identify headhunter firms that could help with a search for qualified candidates. In an interview after the meeting, Dingman said he believes the job will attract many applicants.

Prior to moving back to Fort Smith in 2011, Dingman was the city administrator in Baldwin City, Kan., (pop. 3,400). He served as a management intern in 1996-1997 with the city of Bonner Springs, Kan., and between May 1997-June 1999 was an aide to the city manager of University Park, Texas. Between June 1999 and July 2003, he worked as the assistant county administrator for Sebastian County Judge David Hudson. He left that job for the city administrator post in Baldwin City.

Dingman said the Board has “big expectations” of his role as the acting boss, and said he is excited to be “part of the solution-finding process.”

Solutions are needed.

The city faces a shortfall in its contributions to a pension fund for police and fire employees. The Board is now working to find more than $2 million a year in cuts or new revenue to keep the fund from becoming insolvent by 2021. Reinstating a business license fee, pushing a prepared food tax and making 3% budget cuts are some of the ideas discussed between top city staff and the Board.

City officials are also in the early stages of implementing an estimated $480 million in federally mandated sewer system improvements between now and 2026. The Board recently approved funding for hiring 28 people to improve the city’s “Capacity, Management, Operations and Maintenance” (CMOM) programs. The 28 new jobs would be realized in 2015, and are part of a plan to hire 75 new people by fiscal year 2017.

The Board and city staff recently disagreed on how the city should structure its annual budget. After several meetings that included frank exchanges, the Board voted to change from a cyclical to a structural method. However, Mayor Sanders vetoed the ordinance, and the Board was not able to override the veto.

The pension fund problem, sewer system work and budgeting dispute have created tension between top staff and some of the Board members. Dingman admitted Friday after he was named acting city administrator that part of his job is to manage through any conflict.

“The staff is restless, and they have been for awhile,” Dingman said, adding that he plans to communicate and be open with employees, citizens and Board members.

Retail giant Wal-Mart Stores and its Sam’s Club division are in the process of cutting up to 1,000 corporate headquarter jobs by Nov. 1, according to several sources familiar with the situation. The cuts would happen through layoffs and attrition, and may include up to 200 vice presidents.

Wal-Mart Stores did not confirm nor deny the layoffs are planned and would not provide a statement. This is the second local corporate layoff by the retail giant this year after about 50 positions were eliminated in February.

New executive management under the leadership of Walmart U.S. CEO Greg Foran is leaving no stone unturned in the effort to run an efficient operation. His boss, Wal-Mart Stores CEO Doug McMillon, recently made it clear to analysts following the shareholders meeting that the top priority of the home office is to serve the stores.

“There are no cash registers in the home office,” McMillon said.

The paring down of corporate jobs aligns with other restructuring moves recently by Foran. Wal-Mart management has vowed to add lower level managers back its 4,500 stores as well as bump up hourly worker pay to the tune of a $1 billion impact to the retailer’s bottom line.

A highly competitive retail climate, lackluster comp-store sales and heightened spending on e-commerce fulfillment capabilities also recently prompted the retailer to raise its contract fees with its supplier base in an attempt to expand margins on slower moving products.

Company shares (NYSE: WMT) have also had a tough few months. The share price closed Friday at $73.12, up 34 cents but near its 52 week low. During the past 52 weeks the share price has ranged from a $90.97 high to a $70.36 low.

The home office restructure also is on trend with what other retailers are doing. Target, recently announced 1,700 jobs eliminated at its corporate headquarters in Minneapolis. That came on the heels of 1,500 jobs cuts announced in January. Dallas-based J.C. Penney cut 300 corporate jobs earlier this year, and last week American Apparel announced plans to slice $30 million in operating expenses over the next 18 months with corporate layoffs and store closures.

NORTHWEST ARKANSAS ECONOMIC IMPACT
When higher-income jobs are eliminated in a region like Northwest Arkansas there is cause for concern. Benton County was recently tagged as one of the fastest income growing metros in the country, no doubt because of Wal-Mart, Sam’s Club and the retail mini-sector that surrounds it.

Kathy Deck, director for the Center for Business and Economic Research at the University of Arkansas, did not have comment on the layoffs but said retail is a sector in flux because of the shortening of supply chains, online fulfillment and increased efforts to bridge online with brick and mortar. 

Deck said a 5% cutback would be normal in terms of what companies today are making but that if the number is higher the impact would have wide negative implications on the region and state.

“It’s unclear if the supplier community would need to respond immediately or proportionally to the Wal-Mart, Sam’s Club moves,” Deck said.

Mike Harvey, chief operating officer for the Northwest Arkansas Council, said Benton County has played to its strengths over the years which has been retail and its supporting suppliers. That said, Harvey adds that the main reason the Council began advocating for a diversified region economic plan was because the business giants of Wal-Mart, Tyson Foods and J.B. Hunt Transport are cyclical in nature.

Though Harvey had no information about the Wal-Mart and Sam’s Club layoffs, he did say the headlines often read worse than the net effect especially given that there is a tight labor market in Northwest Arkansas.

“Every HR director I know is clamoring for qualified candidates,” he said.

Australia-based BHP Billiton on Tuesday (July 21) announced broad spending cuts that will see only $200 million spent in Arkansas’ Fayetteville Shale Play to maintain ongoing production at 45 natural gas wells the company has already drilled and completed.

BHP’s Fayetteville Shale drillings program has essentially come to a halt with plans to operate “zero” rigs operating in the Arkansas play in fiscal 2016, which began July 1.

The Sydney, Australia-based mining and industrial conglomerate will make further spending cuts to its U.S. onshore oil and gas development, pushing the Australia industrial giant’s current U.S. shale play budget down nearly 60% from $3.7 billion to $1.5 billion for the upcoming fiscal year.

Last week, BHP said that it expected to take a $2.8 billion pretax write-down of its U.S. shale gas operations, essentially mothballing its Fayetteville Shale drilling operations until natural gas prices return to higher levels.

BHP Billiton Chief Executive Officer Andrew Mackenzie provided an operational review of the company’s global operations after the close of market on Tuesday, which is about the same time the stock market opens on Wednesday in Australia. In his 22-page report, Mackenzie emphasized that BHP would go back to a “simpler portfolio” in fiscal 2016 by focusing on its core iron ore and copper mining businesses.

“Our businesses performed well over the 2015 financial year. We have improved the performance of our equipment, reduced costs, and increased volumes despite a significant reduction in capital spend,” Mackenzie said. “Our simpler portfolio following the demerger of South32 will help us maintain the pace of operational improvement, further supporting cash generation, margins and returns.”

Mackenzie added: “Although our decision to cut spending in the onshore US will mean deferring gas volumes in the near term, we expect to realize greater value by developing our acreage later.“

THE GAME PLAN
During the company’s six-month review in January, Mackenzie told analysts that the industrial mining giant was speeding up plans to reduce costs and invest in more profitable businesses by cuttings its previously announced U.S. shale capital budget by 50% from $4.2 billion to $2.1 billion.

Still, BHP’s total U.S. petroleum production for 2015 increased by 4% to a record 256 million barrels of oil equivalent (MMboe). However, petroleum production is forecasted to decrease by 7% in the upcoming fiscal year to 237 MMboe.

“We anticipate a 19 percent decline in the combined production of the predominantly gas-rich Haynesville, Fayetteville and Hawkville fields as we continue to defer development of these assets for longer-term value,” the company said. “Conventional volumes are expected to decrease by approximately four per cent to 125 MMboe as a result of planned maintenance programs and natural field decline.”

BHP’s U.S. operated rig count has declined 54% from 24 to 10. During the 2015 financial year, the Australian industrial conglomerate said it moved quickly in response to lower prices and benefited from significant productivity improvements. And although the company has no rigs operating in the Fayetteville Shale, it has still been able to increase production from fewer wells – down to 45 from 71 a year ago.

In late 2011, shortly after the Australia mining giant landed in Arkansas, BHP said it planned to quadruple production from its onshore U.S. shale operations, adding nearly 20 new rigs in the Fayetteville Shale region and increasing natural gas production four-fold by the end of the decade. At the time, BHP said its U.S. capital spending program would jump from $4.5 billion to $6.5 billion annually by 2020, with the lion’s share targeted toward its Arkansas natural gas development.

BHP’s leasehold position of 487,000 net acres makes it the second-largest Fayetteville Shale operator behind Southwestern Energy Corp. with an average operating stake of 58%. Those pricey assets were originally purchased from Chesapeake Energy Corp. in early 2011 with an average per well drilling and completion cost of $3.5 million.

THE OUTLOOK
Although Mackenzie indicated that BHP plans to ramp up U.S. production again once commodity prices improve, Wall Street and U.S. Department of Energy forecasters don’t see that happening in the near-term.

In its most recent short-term outlook, the DOE’s Energy Information Administration forecasts that international Brent crude oil prices will average $60 per barrel in 2015 and $67 per barrel in 2016. West Texas Intermediate, the benchmark U.S. crude, is forecasted to average about $5 a barrel less than its international market rival.

The Henry Hub natural gas spot price averaged $2.78 per million British thermal units (MMBtu) in June, a decrease of 7 cents per MMBtu from the May price. EIA expects monthly average spot prices to remain lower than $3 per MMBtu in July, and projects Henry Hub prices to average $2.97 per MMBtu in 2015 and $3.31 per MMBtu in 2016.

In Tuesday’s session on the New York Mercantile Exchange, natural gas futures rose 5.9 cents, or 2.1%, to $2.882 per MMBtu. West Texas light, sweet crude for August delivery closed at $50.36, up 21 cents.

The Fort Smith Regional Airport is in the final phases of a $10 million project to build a new taxiway on the northwest side of the main runway that will meet Federal Aviation Administration specs, and improve safety and convenience for commercial and general aviation.

John Parker, executive director of the regional airport, said the final phase should be complete within four months. He said the final $5.5 million phase will create a “true parallel” taxiway to the runway that is common on most U.S. commercial runways.

When finished, the true parallel taxiway will support a new CRJ-700 jet that Delta Airlines plans to use in Fort Smith beginning Sept. 1. Delta is reducing its service into Fort Smith by one flight a day, but the new jet has almost double the seating capacity of the planes now used. The new jet also has a first-class cabin option.

“That’s (first class) something we have not had before in our market,” Parker said.

Although activity has taken a recent dip, enplanements at the regional airport have grown in recent years. Enplanements at the Fort Smith Regional Airport total 36,065 for the first five months of 2015, down 0.74% compared to the same period in 2014. Enplanements at Fort Smith totaled 92,869 in 2014, up 9.87% compared to 2013.

May enplanements at Fort Smith totaled 7,688, down 8.15% from May 2014. The airport offers flights to Atlanta and Dallas-Fort Worth through Delta and American Airlines, respectively.

By way of comparison, enplanements at the Northwest Arkansas Regional Airport totaled 251,389 for the first five months of 2015, up 3.05% compared to the same period in 2014. The Bill & Hillary Clinton National Airport in Little Rock posted enplanements of 379,831 for the first five months of 2015, down 8.67% compared to the same period in 2014.

A parallel taxiway is not the only feature designed to boost convenience and safety at the Fort Smith field. Also on the northwest side of the regional airport is a dual fence system along Savannah Street and Old Greenwood Road. Parker said the outer fence is a “sacrificial fence” – or, he joked, the “NASCAR catch fence” – that prevents auto accidents from entering the perimeter of the airport.

Before the catch fence, an auto accident could threaten to halt airport activity until the perimeter was secured.

“Now when something like that happens, it does not impact our security profile,” Parker said.

Wal-Mart continues to look for ways to differentiate its growing number of Neighborhood Markets within Northwest Arkansas, which is often a testing ground for all other stores. The newest Neighborhood Market located on North Walton Boulevard in Bentonville provides an updated example of the retailer’s “store-of-the-community” program that has been part of Wal-Mart’s DNA for many years.

Located roughly one-mile from the retailer’s home office and Supercenter No. 100 and another mile or so from the relatively new Neighborhood Market on Central Avenue, the newest Neighborhood Market is testing its own pizza service in the deli department at the back of the store.

Wal-Mart told The City Wire that take-and-bake pizzas are made fresh in that store and are available 24/7. Corporate spokesman John Forrest Ales said the store also offers made-to-order pizzas while customers wait. The shopper has the option of having it baked by Wal-Mart or simply wrapped for baking at home.

Store associates told The City Wire that the pizza is popular with shoppers, many who call ahead and place their order and pick it up a few minutes later while also grabbing a six pack of beer or some other beverages.

Ales said Wal-Mart’s store management teams are looking at each store and what it could offer within that community. He said teams from within the home office work together with store management teams deciding what special products they may offer which are unique to the neighborhoods they serve. For instance, Ales said a number of Neighborhood Markets across the region carried Arkansas-grown blueberries this year as part of the store-of-the-community and buy-local push.

While Ales could not say if pizza services would be added in other stores, retail analyst Budd Bugatch, of Raymond James & Associates, said the option for shoppers to order pizzas online and pick-up in the store is likely to catch on.

RICK’S BAKERY
Another new feature in the North Walton Boulevard store is a pastry counter supplied by Rick’s Bakery, which is based in Fayetteville.

Store workers told The City Wire the baked pastries are popular with shoppers and the best selling item to date are the petit fours. The separate pastry case at the back of the store is restocked as needed daily or every other day. It contains cake pops, gourmet cupcakes, petit fours and single-serving cake slices.

Rick’s bakery has been a local favorite for sugary confections since 1980 and is owned by Rick Boone of Fayetteville. This is the first time Rick’s pastries have been sold outside his flagship bakery on South College Avenue in Fayetteville. Boone did not respond to calls from The City Wire in time for this story.

OTHER TWEAKS
Given the popularity of gourmet cheese among home office employees, the new store also has a fixture devoted to a wider cheese selection, according to Bugatch.

The store also offers smaller carts that are easier to navigate, while larger carts are also available if the customer needs the added space. Retail management also has moved the site-to-store pickup counter to the front of the stores which is easily seen from anywhere within the store.

Wal-Mart also increased its use of "top stock" methodology to facilitate restocking shelves. Neighborhood Markets have small backrooms. This methodology facilitates a more rapid restocking when customers pick stock from the shelves, Bugatch said.

The retailer also is using the top of its modulars in these grocery stores to highlight its general merchandise items like baby strollers that can be purchased online and picked up in-store.

In this new Neighborhood Market format Wal-Mart is also highlighting its organic produce at a separate aisle location in the front center of the store near the registers. Bugatch said store management are culling older produce more quickly than previously in an effort to carryout it’s promise for fresher produce year round.

Lastly the new Neighborhood Market format utilizes split aisles, so customers do not have to walk a long aisle from the front-to-back of the store. The split aisle concept which is commonly seen in competitors H-E-B and Kroger.

Walmart U.S. CEO Greg Foran said the new model for Neighborhood Markets will have fueling stations and mini convenience stores. At the new store on North Walton Boulevard the fueling station has two separate entrances for added customer service.

RETURNING TO THE COMMUNITY FOCUS
Carol Spieckerman, CEO of newmarketbuilders in Bentonville, said store-of-the community was a prominent push at Wal-Mart a few years back, at least from a buzz-generating perspective, but it seemed to have taken a back seat to other e-commerce and other initiatives in recent years.

“This is a good time for Walmart to ramp it back up as masters of localization such as Whole Foods expands their footprint and as localization laggards like Target begin to take localization more seriously,” Spieckerman told The City Wire.

On the grocery front, she said Whole Foods has been known to spend months conducting localized research, fostering community engagement and developing supplier procurement strategies prior to opening stores. She said Whole Foods often uses these insights to incorporate store design elements that will resonate with local shoppers.

“Target has long been a one-size-fits-all retailer but it too is waking up to the localization movement, having just forged a partnership with designer Todd Snyder to craft collections that will resonate with specific markets. Neighborhood Markets are a perfect localization vehicle for Walmart. The name says it all,” Spieckerman added.

Tom Gordon dreamed of becoming a stockbroker when he graduated from Texas Christian University in Fort Worth with a degree in finance and accounting. Greg Smart, 41, started law school after graduating from the University of Mississippi with a degree in English. He quit after two days.

The men, who have been fast friends since they were 16 in their hometown of Little Rock, were destined to become fry cooks and cashiers, forming a partnership that started Slim Chickens, a popular fast casual restaurant chain in the upper and lower Midwest.
www.slimchickens.com

The first Slim Chickens opened in 2003 at 2120 N. College Ave. in Fayetteville to a slim start, Gordon, now 40, recalled.

“It took a long time to educate customers,” Gordon said of the restaurant’s key menu items — chicken tenders and Buffalo wings, lightly hand breaded and battered from scratch.

“It was a concept we felt was a need in this market,” said Smart, chief marketing officer.

Gordon, chief executive officer, added, “A hand breaded chicken product.”

He moved to Fayetteville from California to join the start up.

Soon after, a restaurant was opened in Rogers and “we became multi-unit operators,” Smart said. That was the original goal: To have more than one location. The third location was in Conway which “opened to overwhelming success in 2008 and continues to be one of the high performing stores,” Gordon said.

Today, the Slim Chickens' brand can be found in 23 stores with nine more planned this year.  The stores extend from Lubbock, Texas, to Lincoln, Neb., to Tennessee to Cincinnati, Ohio. Of those 23 stores, 13 are corporate owned and the rest are franchise stores. The franchise segment began about three years ago when the first franchised location opened in Texarkana.  The company employs about 600 team members system wide including 26 at the home office and about 75 to 80 at each store.

LOCAL SEED MONEY, GROWTH PLAN
The Tonic Fund, supported by StartUp Junkies Consulting in Fayetteville, recent led an investment of $250,000 in Slim Chickens, said Brett Amerine, operations director of StartUp Junkies.

“They have a world class management team and they have a huge market potential, to be the Whataburger of chicken,” Amerine said.

They have a good business plan and can grow and be successful, he added.

“Franchising is the next wave of our growth,” Smart said.

Two corporate stores are expected to open this year and another six next year. Additionally, 20 to 25 franchise stores are expected open next year, he said. They look for large scale developers and target those who are interested in opening five to 18 stores. Smart said that is for the efficiency of operating more than one or two locations. In return for buying into the company, the franchise buyers receive “all the service and support for a viable brand and viable product,” Gordon said.

That includes five to seven weeks of training at the corporate headquarters on Millsap Road in Fayetteville, complete with its own kitchen, where they learn the secret recipe and how to lightly bread the chicken in the preparation. Additionally, Slim Chickens sends a full training team to the new franchise store for the first two weeks of its operation, Gordon said.

“We always wanted bigger,” Gordon said.

He said there are 94 franchise units in the pipeline at the present time.

“We’re growing very fast,” Smart added. “Franchisers are coming to us. We’re a unique brand.”

Potential franchisers mostly learn about the company through word of mouth and the company’s presence at trade show.

COMPETITIVE BIZ
“The restaurant competition has always been hard,” Smart said. “Fast casual restaurants are one of he the fastest growing segments of the restaurant industry.”

The restaurant industry’s share of the food dollar is currently 47%, compared to only 25% in 1955, according to the National Restaurant Association. Restaurant industry sales are projected to total $709.2 billion in 2015, the association projects. That includes sales in all segments of the restaurant industry, including Slim Chickens' category as a fast casual restaurant.

The friends and partners attribute their success because of the vast talent pool in Northwest Arkansas, the company’s broad appeal, extensive screening for locations and franchisers.

“We’re the largest restaurant franchiser and the fastest growing chain in Arkansas. We’re glad to be based in Arkansas. It’s a good success story for us,” Gordon said.

“It’s been a 12-year long road,” Smart added.