The supply chain that serves today’s complex consumer will face major turmoil in the next two years as the crossroads of change are expected to radically impact business fundamentals that have been common place for more than three decades.

That was is a central message business professionals heard Thursday, (April 11) at a full-day supply chain conference at the University of Arkansas. The focus of the conference centered on how the supply chain players could collaborate to win in an omni-channel world.

Clearly, the challenges have never been greater, according to James Tompkins, founder and CEO of Tompkins International. Looking back to the holiday season of  2012, he says the “lunacy retailers showed from matching prices and rushing home deliveries” was a nightmare for supply chain logistics, but it looks like those two services are here to stay.

Tompkins urges supply chain executives to brace themselves as the chaos is expected to continue for the next several years. He says the tipping point is certain given the pressures companies feel to grow profits following the sluggish recovery.

“I expect to see more business bankruptcies in the next years than any other two-year period of recent history,” Tompkins told the around 100  professional attending the conference.

He and other logistics experts said for too long the supply chain has been a clunky system built around retailers controlling and storing inventory in distribution centers and then hauling it to physical stores in full truckloads. This multiple chain link system is obsolete in a world where consumers want a great variety of products, delivered to their homes on any given day.

Tompkins says there are six levels of measurement within the supply chain and for the past 13 years most companies have been able to achieve success in the first two of those phases. The average of the entire supply chain is roughly 2.6, he said, and that is a long way from 6.0 where onmi-channel retailers or consumer products companies should be today.

Getting from 2.6 to 6.0 won’t be easy but Tompkins says it’s necessary for the next generation and the quickly evolving world of omni-channel retail. For far too long the players within the supply chain have had a mine-only mentality, but Tompkins says the only route to a 6.0 is through visibility and collaboration, which means sharing without fear.

It is only when collaboration happens that excess links can be taken out of the chain and provide a more  seamless flow of products. Tompkins and other speakers said the collaboration conversation has been taking place for roughly 10 years but it has only recently been put into action as retailers, manufacturers and logistics firms felt pressure to raise profits in a stagnant economy.

David Vehec, senior vice president of GENCO, a private third party logistics firm, told the audience that Hershey’s and Ferrero Rocher recently came together to share transportation costs in the final leg from a GENCO warehouse to the same retailer.

“A few years ago this would have never happened, but it saved both firms money and they signed on to do it,” he said.

Brenda Hambleton, chief marketing officer for ES3, an East coast-based third party logistics firm, said her company convinced regional grocery retailers to close their own distribution centers and outsource via shared services everything from storing inventory to pallet packing and final shipment to the retailer’s back room. She said competing grocers share warehouse and truck space which provides a cost savings to both.

The experts say they are just scratching the surface in terms collaborative possibilities.

Tompkins says there is no time to waste in getting supply chain fluidity, with Amazon expected to take its Prime offering to next-day delivery by 2014.

“Whether you like it or not, Amazon sets your customer’s expectations for you. I don’t care if you are a retailer or a consumer products company, Amazon is out in front,” Tompkins said. “My wife gets three boxes from Amazon a week, mostly re-orders, and if this grandmother is comfortable buying online so is most of America."

He says retailers have to ready their supply chain to compete in the next generation, which is already here.

Hambleton said the technology is here to get supply chain companies from the average 2.6 level to the 6.0 – technology that didn’t exist five years ago.

“We have to take the collaboration and automation processes across the entire supply chain to address product from the factory, through delivery, to the in-store display using on-shelf-availability models while also figuring out home deliveries,” she said.

Tompkins agreed, saying companies that want to be relevant in the next few years will have to maneuver these crossroads from a retailer centric to a customer centric world, because it is the consumer who is driving expectations.

Emily is about celebrate her Sweet 16, and mom is busy with work but turns to her mobile phone for help.

In a matter of seconds she has opened an event planner application, got suggestions for snacks and the estimated cost for 25 guests, ordered a custom birthday cake, asked for top gift suggestions and compared online prices all while she is making dinner for the family.

When she gets to Wal-Mart her “in-store mode” application takes over and tells her where to find the items on her shopping list. She scans each item as it goes into shopping cart with the Scan & Go application and saves $25 on a laptop computer when presenting an online price comparison from a competitor, via her smartphone. Headed for the check-out, this savvy consumer pays for her purchases via a credit card stored in the system and is quickly on her way home.

The perfect cake is delivered to her house, just in time for the party.

Gibu Thomas, senior vice president of mobile & digital at Wal-Mart, says this is the happening today as mobile technology is changing the way we live, work and play.

“It’s hard to believe the iPhone is just seven years old, but it has truly changed the world because the iOS was so superior to any other operating system. Its developer tools allowed software programmers to easily engine applications which are radically impacting every faucet of our lives today,” Thomas said to a room of business professionals at the University of Arkansas’ supply chain conference on Thursday (April 11).

A resident of San Francisco, Thomas says he hails his taxi cabs using Uber, a mobile application that deploys the nearest taxi to your present location and traces the cabs route right to your door. Credit card information is stored on the application so paying for the ride is more convenient.

“How hard is to program an electronic thermostat, not a problem when a mobile app can do it for you and then allow you to turn it off and on from your smart phone.” he said.

It’s no wonder mobile is having such a disruptive effect on traditional retail, but Thomas says it will be the retailer who best integrates mobile with brick & mortar and social contexts that will win the hearts and minds of consumers.

Analysts like Carol Spieckerman, CEO of New Market Builders, says Wal-Mart is out front in this regard. She says they are leveraging their brick and mortar assets with the mobile technology and turning up interesting results.

While some big box retailer fears “showrooming” Wal-Mart is using mobile technology to enhance in-store experiences. Spieckerman says Wal-Mart has embraced this opportunity to get closer to their customers, through a series of mobile applications that facilitate the in-store shopping experience.  

Thomas says e-commerce brought store to the web, but it is mobile that brings web to the store. Wal-Mart is doing that with site-to-store deliveries, digital couponing with shopping in the physical store and testing storage lockers for online purchases within physical stores.

“We also fill online orders from stores, roughly 50% of our e-commerce sales are filled from stores,” Thomas said.

With data collected via electronic receipts Thomas said tests are being done to create future shopping lists based on prior trips.

“We can get to 80% accuracy on the things a shopper will buy on their next trip. Not accounting for special events,” Thomas said. “The best shopping lists are those you don’t have to make.”

He said Wal-Mart continues to search for ways to transform shopping experiences with the help of mobile.

“Say your toaster breaks and you need to purchase a new one. You go online from your PC and our search engine brings up several options for you to chose from. But if you search from a mobile application, we know where you are geographically, so that search is enhanced to tell you to order online, and then you can pick it up 2 hours later at a store 3 miles away,” Thomas said. “This is mobile bringing retail to the store.”

From a purely analytical standpoint, the Fort Smith region ended 2012 on a positive note.

Fourth quarter 2012 economic conditions were improved compared to the 2011 period, with gains in building activity and gains in specific sector employment balancing out the continued workforce shrinkage in the metro area. Also, the fourth quarter marked the end of four consecutive quarters of relative economic decline in the Fort Smith region.

The 2012 fourth quarter economy in the Fort Smith region showed slight gains compared to the third quarter of 2012. The fourth quarter 2012 grade of C was up from the C- recorded in the third quarter of 2012, and the fourth quarter of 2011.

The quarterly Compass Report is managed by The City Wire and presented by Fort Smith-based Benefit Bank. The report is the only independent analysis of economic conditions in the metro area.

Joe Edwards, president of Benefit Bank, said data in The Compass Report adds more importance to the recent announcement that Health Management Associates will add 500 jobs in a new regional service center to be located in Fort Smith.

“While this data is reflecting a stabilized jobs picture, we can all be really thankful for the latest new job announcements that will improve our future economic data,” Edwards said.

Year-on-year tax collections at the county level show that consumer spending as of November reflect the persistent unemployment problems. A recent report from the city of Fort Smith shows that the lag has continued into 2013. Fort Smith’s share of the county 1% sales tax in the February report is $1.187 million, down 4.37% compared to February 2012. The collection was down 6.76% compared to the revenue estimate.

While there is a lag in sales tax collection reporting by the state, the data suggest local retail activity is struggling to maintain the past year of relative stability following the sharp downturn experienced during 2009.

Ironically, the region’s troubled manufacturing sector was improved during fourth quarter. The sector added 300 jobs year-on-year (December 2012 compared to December 2011).

Growth in manufacturing employment is welcome news and the fourth quarter report is the second consecutive quarter of stability in the manufacturing sector. However, for the Fort Smith MSA to recover employment growth will have to be broad based and prolonged.

In December the total number of employed (non-farm employment) in the Fort Smith metro was an estimated 110,200, a slight improvement over the 109,900 in December 2011.

“While the local economy appears to have stabilized, a return to trend growth does not appear to be imminent,” noted economist Jeff Collins, who conducts the data collection and analysis for The Compass Report. “Hope for returned growth lies in the surprising ability of the manufacturing sector to add employment. If this trend continues, other sectors should benefit such as housing and retail.”

FORT SMITH REGION
OVERALL GRADES — Fort Smith regional economy (per quarter)
4Q 2012: C
3Q 2012: C-
2Q 2012: C-
1Q 2012: C-
4Q 2011: C-
3Q 2011: C
2Q 2011: C
1Q 2011: C-
4Q 2010: C-/D+
3Q 2010: C-
2Q 2010: C-
1Q 2010: C-
4Q 2009: D
3Q 2009: D
2Q 2009: D-
1Q 2009: D+

DATA AND REPORT DOCUMENTS
Link here for the raw data used to prepare The Compass Report for the Fort Smith area, Northwest Arkansas and central Arkansas.

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

SECTOR DATA
Non-farm employment — D+
Non-farm employment in the area has stabilized, with employment in the metro area at 110,200 in December compared to 109,900 in December 2011.

Non-farm employment is an often quoted measure of employment growth. Moreover, it is disaggregated into various employment sectors such as manufacturing, education and health services, etc. Change in employment drives population growth. The type of employment being created also determines in large part the change in income that drives growth in retail.

Goods-producing employment — B-
The decrease in manufacturing jobs as a percentage of the overall workforce helps diversify the economy. The percentage of manufacturing jobs in the overall workforce was 23.3% in December 2012, down from the 23.4% in December 2011.

This measure tells us about the risk to the local economy from being heavily weighted toward sectors that have been under economic pressure.

One of the fundamental principles of reducing risk is diversification. The Fort Smith economy has been based on manufacturing for decades, but this heavy reliance on one sector for employment and wealth creation has left the region vulnerable. For several years the manufacturing sector in the U.S. has shed employment as technology and international trade have redefined the production process.

As the economy of Fort Smith becomes more diversified the risk of a downturn in any one sector causing a catastrophic loss of employment diminishes.

Metro area Unemployment rate — C+
The area unemployment rate, an important gauge in the health of the metro labor market, posted declines in the fourth quarter. Unemployment in December was estimated at 8.1%, compared to 8.5% in December 2011.

Like non-farm employment, the local unemployment rate is also often quoted. Increases in the unemployment rate are correlated with declines in consumer confidence. The unemployment rate is an important gauge of the health of the local labor market.

Sales and Use tax collections — D+
Sales tax collections in the region and the city of Fort Smith began to show weakness in the fourth quarter of 2009. That weakness began to improve in the fourth quarter of 2010, was on a stable pace, but began to cool in the second half of 2012. The tax collections, which are good indicators of regional consumer confidence, were up in Crawford, Franklin, Logan and Sebastian counties to $3.11 million during November 2012 — compared to $3.28 million in November 2011. During the September-November period, overall collections were down 4.34% compared to the same period in 2011.

Sales and use tax collections provide an insight into both the total income and change in total income in an area as well as how consumers are responding to new information about the health of the national and local economy. Obviously, this measure is tied to retail activity.

Building Permit (housing) valuation — B+
The total value of permits issued in the fourth quarter (measured in a three-month rolling average) were improved more than 40% compared to the fourth quarter of 2011.

Residential building is an indicator of current and expected population growth. As new households are created they induce growth in retail, education services, health care services and other types of businesses that provide goods and services to households. Also, new construction provides employment and tax revenues.

Hospitality employment — B-
Hospitality employment, which began trending downward in the second quarter of 2012, leveled off during the fourth quarter. December 2012 saw 8,100 jobs in the regional hospitality sector, up 100 jobs from December 2011.

Growth in the hospitality and leisure sector as measured by growth in employment is included because of the emphasis on creating quality of place in local economic development initiatives. Unlike enplanements/deplanements, which may not be tied to activity in restaurants, hotels, and cultural venues, hospitality and leisure employment most certainly are influenced by growth of these activities. Another possible measure is hospitality-related tax collections.

Manufacturing employment — B
Manufacturing employment in the Fort Smith region continues to be a concern, but numbers did improve during the quarter. Sector employment in December 2012 was 19,000, up 300 jobs from December 2011 employment. Employment in the sector is down more than 33% from more than a decade ago.

For better or worse, Fort Smith remains a manufacturing town. That implies the near-term economy rises and falls on the performance of the sector. Growth in employment or even stable employment in the sector bodes well for the near-term outlook for the local economy.

Construction employment — C-
This sector, which includes mining/natural resources employment, saw employment decline slightly during the quarter (6,700 in December 2012, compared to 6,800 in September 2011).

The rationale for including construction employment is similar to that for building permits. The employment measure is influenced by changes in both the residential and commercial real estate markets.

Obviously, new space implies new residents and new businesses.

Economic conditions in Northwest Arkansas remain robust, with regional growth similar to that of the fourth quarter of 2011, but slightly less than in the third quarter of 2012, according to The Compass Report.

The fourth quarter 2012 grade of C was down slightly from the B+ recorded in the third quarter of 2012. The quarterly Compass Report is managed by The City Wire, and is the only independent analysis of economic conditions in Northwest Arkansas.

Ongoing job growth and consistent gains in area sales tax collections suggest strength in the metro economy.

The unemployment rate in Northwest Arkansas was the lowest in the state amongst all MSAs in December (5.1%). It is a full percentage point lower than that for the Little Rock/North Little Rock/Conway MSA (5.9%). The highest rate in the state was the Pine Bluff MSA at 9%.

Based on current growth rates, the region is significantly outperforming its peers. The primary growth drivers were not destroyed by the recession, and if anything, the region is likely to become more attractive as other parts of the state and country struggle to create jobs.

Economist Jeff Collins, who conducts the data collection and analysis for The Compass Report, said the Northwest Arkansas economy is outpacing even the state’s largest metro area in some areas.

“Despite an economy that is roughly two-thirds of the Central Arkansas economy, real estate data indicate that activity in Northwest Arkansas exceeded that of the state’s largest metro,” Collins said. “Specifically, building permits in the fourth quarter for Northest Arkansas were 111 percent of the total for Central Arkansas. The value of the permits during the period was roughly 123 percent of that for Central Arkansas.”

However, Collins said there remains a concern that growth in housing construction could again prove problematic for the region.

“Concern in the banking community that supply may be racing ahead of demand has not abated. If anything, it has increased,” Collins said.

NORTHWEST ARKANSAS
OVERALL GRADES — Northwest Arkansas regional economy (per quarter)
4Q 2012: C
3Q 2012: B+
2Q 2012: B-
1Q 2012: B-

DATA AND REPORT DOCUMENTS
Link here for the raw data used to prepare The Compass Report for the Fort Smith area, Northwest Arkansas and central Arkansas.

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

SECTOR DATA
Non-farm employment — A
Non-farm employment is well ahead of 2011 figures, with employment in the metro area at 213,900 in December compared to 205,000 in December 2011.

Non-farm employment is an often quoted measure of employment growth. Moreover, it is disaggregated into various employment sectors such as manufacturing, education and health services, etc. Change in employment drives population growth. The type of employment being created also determines in large part the change in income that drives growth in retail.

Goods-producing employment — B-
The decrease in manufacturing jobs as a percentage of the overall workforce helps diversify almost any metro economy. The percentage of manufacturing jobs in the overall workforce was 16.8% in December 2012, down from the 17.1% in December 2011.

This measure speaks to the risk in a local economy from being heavily weighted toward sectors that have been under economic pressure. One of the fundamental principles of reducing risk is diversification.

Metro area Unemployment rate — B-
The area unemployment rate, an important gauge in the health of the metro labor market, posted declines in the first quarter. Unemployment in December was estimated at 5.1%, compared to 5.7% in December 2011.

Like non-farm employment, the local unemployment rate is also often quoted. Increases in the unemployment rate are correlated with declines in consumer confidence.
The unemployment rate is an important gauge of the health of the local labor market.

Sales and Use tax collections — B+
Sales tax collections in the region have shown steady gains since 2010. The tax collections, which are good indicators of regional consumer confidence, were up in Benton, Madison and Washington counties to $6.254 million during November 2012 — compared to $6.858 million in November 2011. Overall, collections were up for the quarter.

Sales and use tax collections provide an insight into both the total income and change in total income in an area as well as how consumers are responding to new information about the health of the national and local economy. Obviously, this measure is tied to retail activity.

Building Permit (housing) valuation — A
The total value of permits issued in the fourth quarter (measured in a three-month rolling average) were higher than those in the fourth quarter of 2011. The rolling average in December was $38.238 million, ahead of the $17.053 million in December 2011.

Residential building is an indicator of current and expected population growth. As new households are created they induce growth in retail, education services, health care services and other types of businesses that provide goods and services to households. Also, new construction provides employment and tax revenues.

Hospitality employment — B-
Hospitality employment in Northwest Arkansas has trended positive for several quarters. December 2012 saw 19,800 jobs in the regional hospitality sector, up from the 18,500 jobs in December 2011.

Growth in the hospitality and leisure sector as measured by growth in employment is included because of the emphasis on creating quality of place in local economic development initiatives.

Unlike enplanements/deplanements, which may not be tied to activity in restaurants, hotels, and cultural venues, hospitality and leisure employment most certainly are influenced by growth of these activities. Another possible measure is hospitality-related tax collections.

Manufacturing employment — B-
Manufacturing employment in the region showed signs of stability during the quarter. Sector employment in December 2012 was 28,100, up from the 27,400 during December 2011. Employment in the sector is down more than 20% from more than a decade ago.

Construction employment — C-
This sector, which includes mining/natural resources employment, saw gains in employment compared to the fourth quarter of 2011, ending December with 7,800 jobs, up over the 7,600 jobs in December 2011.

The rationale for including construction employment is similar to that for building permits. The employment measure is influenced by changes in both the residential and commercial real estate markets.

Obviously, new space implies new residents and new businesses.

Dr. Ricky Tompkins, who now serves as associate vice president of research and planning, will assume many of the responsibilities associated with the vice president for learning come Monday (April 15).
 
Tompkins will report to Dr. Steven M. Gates, senior vice president for learning and provost.

In the new role, Tompkins will continue to have oversight of several key areas, such as grants, research, planning, effectiveness, public safety, risk management and diversity.
 
Two other administrators at NorthWest Arkansas Community College also will assume additional responsibilities.
 
Dr. Anita Jones, dean of communication and arts, will now also have responsibility for the schools “Distance Learning and High School Relations” program
 
Tim Cornelius, vice president for learning will now have responsibility for adult education, service learning and honors programs.
 
Those organizational changes also will become effective Monday, April 15.
 
The changes are being made in conjunction with the departure of Dr. Ted Phillips, who had served as vice president for learning, since June. Phillips resigned from his role to accept a position in Texas.
 

Cameron Smith, a director at America’s Car-Mart Inc., recently added to his company holdings with three open market transactions totaling 2,450 shares, an investment of nearly $107,000.

The average price paid for these three trades on April 8 and April 10 was $43.65. Indications are the move was a good deal for Smith, a local business executive and founder of corporate recruiting firm Cameron Smith & Associates in Rogers.

Car-Mart shares (NASDAQ: CRMT) closed this week at $46.22, giving Smith a $6,200 gain on his recent investment.

Smith’s Car-Mart holdings total 6,150 shares, which include 1,875 shares registered to his wife. He joined the board of directors in December 2009.

Car-Mart shares have ranged in price from $35.81 to $50.59 during the past 52 weeks. Over the past three months shares have mainly traded between $45 and $48.

The buy here, pay here auto dealer / finance company will report earnings on May 20. Analysts expect Car-Mart to report 93 cents per share in net income, down from 97 cents per share a year ago. But top line revenue is expected to grow 5% to $119.2 million.

The 4th annual Compass Conference, presented earlier today (April 12) at the Fort Smith Convention Center, focused on the impact of natural gas on the local and regional economy.

Paul Harvel, president and CEO of the Fort Smith Regional Chamber of Commerce, told attendees that while the natural gas industry was not publicly discussed as much as manufacturing and other large employers in the Fort Smith region, it had made its presence known.

"The largest industry we have in this community is an industry that sometimes we don't pay that much attention to because it's always here and it's always faithful and it's always stable and that's the oil and gas industry," he said.

A panel of three experts in the oil and gas industry, as well as an economist, told the crowd how the industry had not only changed, but how it will continue to evolve if the right actions are taken within the industry and within government.

Mike Callan, president of Arkansas Oklahoma Gas Corp., said the biggest challenge facing the industry and the nation today is the lack of a comprehensive energy plan.

"We've got the folks on the environmental side that want us to move entirely to renewables and we've got people on the other side who want us to continue to rely entirely on traditional fuels," he said. "This lack of a comprehensive energy policy or plan in the United States has put us where we are today where we still import a significant amount of our petroleum energy we use here to run the country."

Callan said the future growth of the industry, especially in the state of Arkansas, could be stifled should the government place too many regulations on the natural gas industry.

STATE INVESTMENT
Luckily for Arkansas, the industry has been allowed to flourish due to the discovery of the Fayetteville Shale, according to Kelly Robbins, executive vice president of the Arkansas Independent Producers & Royalty Owners.

Robbins said in the last four years, more than $18 billion had been invested in the state of Arkansas due to natural gas exploration.

The exploration, he said, resulted in more than 3 billion cubic feet of natural gas produced in Arkansas on a daily basis.

"A billion cubic feet of natural gas - it will provide power for 3,600 TV sets to run non-stop for a century, it'll power 24,000 homes for a year, it'll give you enough fuel to go across our country on a road trip 84,000 times, or you could go to the moon and back 559 times," Robbins explained.

The oil and natural gas industry, Robbins said, was the basis of the Fort Smith economy and would continue to impact the local region, as well as the state, in a positive way.

"In Arkansas, the value of oil and natural gas that is produced is greater than that of cotton, rice and soy beans combined," he said. "We think of Arkansas as being an agriculture state, and we are and proudly so, but we produce some other great resources that are even more valuable and we don't hear a lot about them."

Due to the the growth in natural gas, Arkansans realized $1.1 billion in energy savings between 2010 and 2011, he said, adding that it has also proven to be environmentally friendly, dropping carbon levels to their lowest points since 1992.

‘NATURAL GAS BANDWAGON’
Bill Hanna, president of Hanna Oil & Natural Gas, said a move to natural gas was logical given the need to keep costs low in industries such as transportation and manufacturing.

Hanna said with it being such a clean fuel, it actually would make sense for environmental groups to jump on the natural gas bandwagon.

"I always thought if the environmental groups decided that natural gas was the solution, and they claimed it as theirs, that would be great. I would love for that to happen and we could say, 'Good idea,'" he said.

Dr. Jeff Collins, a partner at Streetsmart Data Services and an economist who conducts the data collection and analysis for The Compass Report, said that in just the last four years, the Fayetteville Shale was responsible for creating between 11,000 and 12,000 jobs.

"It's hard to imagine a more transformative, almost serendipitous, event (for) the Arkansas economy," he said.

Due to the growth of the oil and natural gas industry, Collins said Arkansas has shielded from some of the more disastrous effects of the great recession.

But he cautioned that explosive growth in the industry would not last forever.

"There's certainly a lot of natural gas around and we seem to be finding new natural gas in places and there may be a lot more in Arkansas and we just haven't found it yet," Collins said. "But there is a shelf life to these sorts of bonanzas and the question is what you do with that revenue."

The revenue brought should be reinvested in all sorts of different projects, ranging from improved science and mathematics education to infrastructure, he said.

CNGCONVERSION
Callan echoed Collins' statement, saying that natural gas wells are "living and breathing and have a life."

He also said part of AOG's reinvestment was through conversion of many of the company's trucks to compressed natural gas (CNG).

Currently, Callan said the company had 60 of its 115 vehicles running on CNG.

He said the cost of converting a vehicle to run on CNG was about $8,500. To outfit a fueling station for CNG, he said the cost was nearly $600,000.

While the state of Oklahoma has nearly 70 CNG fueling stations, including enough along Interstate 40 for someone to travel entirely on CNG from Fort Smith to Oklahoma City, the state of Arkansas only has three stations, Callan said.

In order for CNG to gain traction, he said, the state will need to expand beyond the three CNG fueling stations in Damascus, Fort Smith and North Little Rock.

He pointed to private industry as being a leader in offering CNG to the masses.

Love's Travel Stores, Callan said, has installed many CNG fueling stations at its truck stops in Oklahoma in partnership with Oklahoma City-based Chesapeake Energy and he said Love's may expand the offerings to its truck stops in Arkansas and Texas in the near future.

The panelists concluded that the industry will not continue to see continued growth should the amount of government regulation increase.

Hanna said regulations should be within reason and not encroach on a private business's ability to operate and maintain a profit.

"We do need government help, we need everyone's support," he said. "But we don't need the government involved to the point where you really can't function and I don't know that we're there. I don't know, but it sometimes feels like we're there."

Farm living is the place to be for John Robert and Carolyn Hart of Prairie Grove. The farming duo milks 113 cows twice a day, and house 50,000 or so pullets for laying hens on their third-generation family farm.

Down the road from the Hart’s are lush green acres dotted with grazing cattle – just the life ordered by Anita and Jared Munyon, also third generation family farmers in Washington County.

These two farm families hosted a dozen local women – and one man – who took part in the University of Arkansas promotion “Moms on the Farm.” The event, held Saturday (April 13) is an annual outing designed to educate the public on the connection of the family farm and the local food supply.

For most of the moms on the tour, it was an eye-opening experience as they, like much of today’s population, are two to three generations removed from family farming.

That isn’t the case for 66-year-old John Robert Hart who traces his family back 108 years on this same 250 acres he calls home. He lives in a home built prior to 1861.

Carolyn Hart, his wife of 44 years, says their home has been updated, remodeled and expanded at least three times over the years. It was the place where John grew up. But there are remnants of the original structure in the home’s floor boards that are stamped 1861, and visible from the basement.

DAIRY LOVE
The Hart’s dairy herd totals about 300. The couple is milking 112 of them now, 20 are dry, the rest are retained heifers and this year’s calf crop.

“It takes us about four hours to milk each morning and we get started around 4 a.m. Then we repeat the same process in the evening,” he said.

Each cow gives about five gallons a day, which totals roughly 18,750 gallons a month for the 112 milking now. The 1,250 gallon tank in the milking barn is emptied every other day by Hiland’s Dairy.

Each day this couple collects 625 gallons of milk, which is enough to serve 40,000 school children at lunch.

It’s a big job, but Hart says he’s never wanted to do anything else.

“We haven’t taken a vacation in 10 years, but that’s alright cause I’m doing what I love,” he added.

The couple also has 12 calves which have to be bottle fed twice a day, and that adds another half hour of so to the morning and evening rituals.

“A few months back we had 55 calves to bottle feed, which greatly added time to the milking schedules,” Carolyn Hart said. “You just roll up your sleeves and do it,”

The couple admits it hasn’t always been easy, with volatile milk prices and continually escalating grain costs. He said the operating margin continues to shrink. Each milking cow consumes about 60 pounds of forage a day, roughly 28 pounds of grain with supplemented hay, alfalfa and pasture grazing.

Hart said milk prices now are roughly $19 per hundredweight, but they got as low as $9 in 2009, which drove dozens of local dairies out of the business. He expects his price will rise to about $22 per hundredweight by early fall.
 
The couple said it is not unusual to have to get a loan to cover the feed costs on the interim. But in recent years it’s taking longer to pay the money back as the operating margins continue to shrink.

The Munyons, also third generation family farmers with more than 1,000 acres between Prairie Grove and Lincoln, closed their dairy in late 2009. Both loved the dairy business but couldn’t make the economics work.

DIVERSIFIED INCOME
The Munyons found other ways to sustain their livelihood by expanding their commercial beef farm to more than 560 head, which includes heifers with an abundant calf crop.

Anita bashfully shared she kept 11 of the dairy cows, because she couldn’t stand the thought of letting them all go.
 
“They will die on this farm,” she said, pointing to the cows grazing in small pasture next to her home.
 
Looking for a way to diversify their income, the Munyons signed on as contract growers for Simmons Foods to operate four poultry houses and raising roughly 400,000 broilers a year. This is enough meat to feed every man, woman and child in Northwest Arkansas for nearly a week.

The chickens raised on the Munyon farm are slaughtered and processed in Decatur. The chicken is then sold to food service companies who then sell to companies like Olive Garden, Red Lobster, Kentucky Fried Chicken, Taco Bell, Longhorn Steakhouse, Pizza Hut, Wal-Mart, Sam’s Club, Chili’s, Red Robin, Heinz, Aldi, Schwan’s and Applebee’s.

The broiler chicks get to the farm the same day they are hatched and spend six weeks under the watchful eyes of Anita Munyon. Neither Jared or Anita had any prior experience in poultry farming, as they both had dairy backgrounds and formal training in livestock.

“We are still learning the poultry business and there is a lot to learn,” Anita Munyon told the group.” She has a bachelor’s degree in agricultural business and Jared attended a prestigious dairy school in the Midwest following his high school graduation.

“It gets harder and harder for young folks like us to keep farms going. With land running $3,000 an acre, tractors costing $100,000 or more and tighter profit margins with rising input costs,” Jared Munyon told the group.

The Munyons own 750 acres and lease another 300 acres to provide forage for their cattle. They do not supplement with grain and firmly believe a farm should be sustainable – the land provides the needed nourishment for the livestock.

They routinely sell their calf crop at seven-months old, retaining enough heifers to replenish the numbers the next year. Those calves will make their way to a feed yard operation and eventually be sold to a meat packer such as Tyson Foods, Cargill or other smaller independents, who then slaughter and process the meat for retail and wholesale distribution.

With live cattle prices higher on shorter supplies, the Munyons say it’s tempting to sell, but they intend to stay in the business for many years.

COOKING DEMO
The last leg on the farm tour featured a cooking demonstration by Wendy Petz, former president of the National Cattlewomen’s Association, who lives in Huntsville. Petz prepared for the group three easy recipes which were chosen to show the diversity of beef and chicken.

The demonstration was loaded with relevant facts about the differences in beef cuts and how they should be prepared accordingly.
 
“USDA select is a lower quality of beef than USDA choice,” Petz told the group.

She said the “choice” grade will have more marbling – fat content laced within the muscle – which gives it more flavor and more tenderness than a leaner “select” cut.

When preparing “select,” Petz told the group to guard against overcooking, because there is less fat and this cut will be drier than a “choice” cut cooked for the same amount of time. Petz also warned against cross contamination of raw meat and raw vegetables.

“Keep your raw meat separate from uncooked vegetables. That goes from the time you put them in your grocery cart, to the storage in the fridge and the counter preparation,” Petz said.

Janeal Yancey, coordinator of the tour, told the group to not put raw meat in the popular recycle grocery sacks.

“If you put meat in the sack and it leaks, it could contaminate whatever else goes in that bag. Also, when storing meat in a refrigerator keep it at the bottom, put the fresh vegetables on the top shelves and keep dairy in between the two,” Yancey said. “This is best practice and required in food service.”

During the 15-mile bus ride back to the University of Arkansas the moms on the tour were impressed with the operations and said they had a new appreciation for family farmers and their contribution to the food supply.

Legacy National Bank CEO Don Gibson and the bank’s management team have received word from federal regulators that the enforcement action against the bank since 2008 was terminated.

The Office of the Comptroller of the Currency found the bank in “satisfactory and sound financial conditions” during its recent audit and terminated the “Formal Agreement” it placed the bank under five years ago this month.

The order was terminated as of March 21, but was only recently made public on the OCC website.

“We are excited to move past this enforcement. Our team and board has worked very hard to help restore the bank to a satisfactory status,” Gibson said. “I got the news recently when I was visiting my grandchildren in Utah. That was one phone call I didn’t mind taking on vacation.”

Legacy is the second local bank to shake a regulatory enforcement action, following Parkway Bank who had its order lifted in 2011. During the economic downturn roughly a dozen local banks come under enforcement actions that they are continuing to work through today.

“It’s good to see the local banking sector doing better. I know Legacy’s board, management and staff diligently worked for many months to restore their ‘satisfactory’ status. They have to be happy about that,” said banking analyst John Dominick, professor of finance at the University of Arkansas.

Gibson said Legacy posted net income of $444,700 in the first quarter, and is off to a good start in 2013 with plans to open a new branch on Joyce Avenue in Fayetteville later this year.

Enforcement actions require more executive time and add costs to overall bank operations.

Gibson said now that the order is lifted, more focus can be forward-looking and overall expenses will go down.

“We are in great shape to focus on some growth this year which is in keeping with our original charter goal of providing local banking services across Northwest Arkansas. We started with three branches in Springdale and added a Rogers branch, but the Fayetteville branch was put on hold after we came under the regulatory order,” Gibson said.

Legacy was placed under the enforcement order in early 2008, as regulators began to crack down on banks heavily invested in real estate loans and carrying losses over several quarters.

The bank returned to profitability in 2011, earning $366,000 after posting losses in excess of $10 million in the combined three years prior. In 2012, Legacy netted profits of $1.133 million, and grew assets to $262.56 million, up $10 million from the prior year.

Unlike other banks under similar enforcement actions, Legacy did not have to raise additional capital to regain compliance. The bank reported $35.325 million in capital at the end of 2012.

Capital is seen as the lifeblood of a bank. The key ratio used by regulators to measure capital strength is its “Tier One” percentage.
 
Legacy had a “Tier One” ratio of 11.34% at the end of 2012, which was higher than 79% of the banks in its peer group across the nation.

Listing five homes a week makes Coldwell Bankers’ Nicky Dou a busy, but happy real estate broker.

“I currently have 16 homes under contract and writing more every day. Listing five homes this week. Last year was my best year ever in real estate sales and I am over triple the amount I was at the same time last year,” Dou said on Monday (April 15.)

She isn’t alone. The number of home sales across Northwest Arkansas rose 12% during the first three months of 2013 compared to the 2012 period.

George Faucette, CEO of the local Coldwell Banker franchise, said the firm’s first quarter sales rose 22% from 2012, with an impressive gain of 64% from 2011.

MountData.com reports agents across the two-counties sold 1,413 homes valued at $241.24 million in the first quarter of this year. Not only did agents sell more homes, but the prices of those properties were also higher and boosted total sales volume by 19% from a year ago.

Median prices of the homes that have sold this year totaled $140,000, up 4.47% from a year ago, and 18.8% higher than in 2011, according to Paul Bynum, statistician with MountData.com.

Faucette says there are more higher-end home selling across his firm. He reports the average price of homes closed in March was $192,000, up $30,000 from the same month last year

He says part of the reason prices are moving up is that more upscale buyers are in the market, and they are closing deals.

“Some of that certainly has to do with the relocation, of which there is more and our company does a lot of that,” Faucette added.

Bynum agrees that a combination of more higher-end homes selling and less foreclosure or distressed sales factored into the averages. Bynum says there were 3,226 homes listed for sale at the end of March, inventory was up by about 50 homes from last month, but is still 10% below the inventory levels of last year.

He said four homes have sold for more than a million dollars so far this year.

“The higher end market is coming back but at a slower pace. I am getting ready to list two million-dollar homes, one is on Beaver Lake and one is in ‘The Blessings.’ I feel confident they will both sell pretty quickly,” Dou said. “The homes at Pinnacle Country Club that are in the Bentonville school district are going quick. I have a buyer from out of town that can’t even seem to find a home in the higher-end market that fits their family’s needs and will most likely end up building.”

Dou and other agents say they see a sense of urgency from more buyers today and a higher confidence level than they have witnessed in seven years or so. With prices moving higher and inventories shrinking in some price ranges and geographic areas, the market has become more favorable for sellers.

Bynum says there is a four-to-five-month supply of homes under $150,000. He considers a neutral market to be a five-to-six-month supply.

“The market is becoming more of a sellers market again and buyers are finding that they can’t ‘wait’ if they want to get the home they want,” Dou said.

She recently worked with buyers who looked at homes once a week for about a month. But every time they liked a home, it sold before their next house hunting outing. Dou said they missed out on a home they loved after three weeks of looking before they were convinced to make a move.

“The home they purchased was only listed one day. I have sold many listings within a week of listing this year. The market is amazing and I am happy to be part of it,” Dou said.

Bynum reports there were 621 pending sales at the end of March, up 11% from the same period in 2012. He says pending sales are a leading indicator of future market activity.

In March, agents sold 409 homes in Benton County, up 23% from the same month in 2012. Total volume was $74.795 million, up more than $20 million from a year ago.

In Washington County there were 191 sales, down from 213 a year ago. Total value was $32.557 million, down by roughly $1.5 million from March 2012.

Harold Crye, CEO of Crye-Leike Realty, the fifth largest real estate firm in the nation, told The City Wire  that sales were good in March, even with a year ago, which was a record $33 million.

"Our Northwest Arkansas market is up about 13% so far this year, over last.  We are expecting another good year, but supplies are down and the market is leaning more toward sellers. Realtors prefer a more balanced market because buyers want ample choices.  We expect overall inventories to stay pretty low throughout this year," Crye said.

Wal-Mart Stores President and CEO Mike Duke announced Monday (April 15) that the company will boost the purchase of renewable energy and reduce the amount of energy required to power company stores.

The two moves are part of the company’s goal of being supplied 100% by renewable energy. Specifically, the two plans to be implemented are:
• Drive the production or procurement of 7 billion kWh of renewable energy globally every year, a 600 percent increase over 2010 levels; and
• Reduce the kWh/square foot energy intensity required to power Walmart’s buildings globally by 20 percent compared to 2010 levels.

The initiatives were unveiled at Walmart’s Global Sustainability Milestone Meeting.

“More than ever, we know that our goal to be supplied 100 percent by renewable energy is the right goal and that marrying up renewables with energy efficiency is especially powerful,” Duke said in the statement. “The math adds up pretty quickly – when we use less energy that’s less energy we have to buy, and that means less waste and more savings. These new commitments will make us a stronger business, and they’re great for our communities and the environment.”
 
The planned six-fold increase in renewable energy projects is expected to be equal to eliminating the need for roughly two U.S. fossil fuel power plants. Based on external estimates of projected energy costs and other factors, the two new commitments are anticipated to generate more than $1 billion annually in energy savings once fully implemented.
 
“When I look at the future, energy costs may grow as much as twice as fast as our anticipated store and club growth,” Duke said. “Finding cleaner and more affordable energy is important to our every day low cost business model and that makes it important to our customers’ pocketbooks. Our leadership in this area is something our customers can feel good about because the result is a cleaner environment. And savings we can pass on to them.”

Other points from Monday’s statement include:
• In 2012, Walmart added nearly 100 renewable energy projects, bringing the total number of projects in operation worldwide to nearly 300 today.

• According to the Solar Energy Industry Association, it has more solar power capacity and number of systems than any other company in America.

• In the U.S., Walmart hopes to install solar power on at least 1,000 rooftops and facilities by 2020, a significant increase from just over 200 solar projects in operation or under development currently.

• In order to meet its energy efficiency goal between now and 2020, Walmart projects to increase LED usage in sales floor lighting, parking lots and other applications. Walmart will also focus on market-relevant scalable technologies, including high efficiency HVAC and refrigeration systems and sophisticated energy/building control systems.

• Added to the renewable energy the company receives from the grid, today, 21% of its buildings’ total electricity and 17% of buildings’ total energy use is currently supplied by renewable energy.

Former high-flying Northwest Arkansas developer Brandon Barber has been confined to home detention to await a scheduled June 17 federal trial on numerous fraud charges related to real estate deals and his bankruptcy case.

Barber appeared Monday (April 15) before United States Magistrate Judge Erin L. Setser in Fayetteville, Ark., for arraignment “on various charges of bank fraud, bankruptcy fraud, wire fraud, and money laundering stemming from schemes to defraud involving several Northwest Arkansas real estate transactions and Barber’s bankruptcy case,” according to a press release from Conner Eldridge, United States Attorney for the Western District of Arkansas.

Also appearing with Barber were co-defendants K. Vaughn Knight, age 46 of Fayetteville; James Van Doren, age 37 of New York; Jeff Whorton, age 45 of Johnson, Ark.; and Brandon Rains, age 32 of Springdale, Ark.

All the defendants pleaded not-guilty to all charges.

The defendants are scheduled for trial on June 17, 2013, before Chief U. S. District Judge P. K. Holmes III.

The defendants were released on bond but were subject to a special condition prohibiting them from incurring new financial debt, and Barber was confined to home detention and subject to GPS monitoring.

The four indictments, handed down from a Grand Jury seated in Fort Smith, are:
• Providing false and fraudulent financial information and statements to Legacy National Bank of Springdale in connection with loans to finance the Legacy Condominium building and project in Fayetteville;

• Providing false and fraudulent financial information and statements to Metropolitan National Bank of Little Rock and Enterprise Bank of St. Louis, in connection with loans to finance the Bellafont project in Fayetteville;

• Concealing assets and income from creditors and the bankruptcy court by transferring funds to Van Doren and Knight or accounts controlled by them and using those funds for Barber’s personal benefit and expenses; and,

• Falsely and fraudulently representing purchase prices for real estate to First Federal Bank of Harrison, Ark., to obtain loan amounts exceeding the actual purchase prices and thereby generating excess cash without the Bank’s knowledge or approval.
The charged conduct generally occurred from 2005 through 2009.

The maximum penalties for each crime are:
• Bank fraud—30 years in prison and a $1 million fine;
• Money laundering—10 years in prison and $250,000 fine;
• Conspiracy to commit bankruptcy fraud—five years in prison and a $250,000 fine;
• Bankruptcy fraud by concealment of assets or false statements—five years in prison and a $250,000 fine;
• Conspiracy to commit wire fraud—20 years in prison and a $250,000 fine;
• Conspiracy to commit money laundering—20 years in prison and a $500,000 fine; and,
• Conspiracy to commit bank fraud—30 years in prison and $1 million fine.

This case is being investigated by the Internal Revenue Service Criminal Investigation Division and the Federal Bureau of Investigation. United States Attorney Conner Eldridge, First Assistant United States Attorney Wendy Johnson, and Assistant United States Attorneys Glen Hines and Benjamin Wulff are prosecuting the case for the United States.

After finishing strong in 2012, the pace of hospitality tax collection growth has slowed in Fort Smith and Van Buren for the first two months of 2013.

Collections in Van Buren for the reporting months of January and February total $63,866, up 1.99% compared to the same period in 2012. February collections were $31,940, up 3.2% compared to February 2012. The city collects a 1% tax on lodging and a 1% prepared food tax.

Maryl Koeth, executive director of the Van Buren Advertising & Promotion Commission, said part of the slower growth could be from smaller paychecks resulting from the

“The loss of 2 percent per paycheck has left consumers with less disposable income to spend on what they consider non-essential items, such as dining out,” said Koeth, referring to the Social Security portion of the payroll tax returning to 6.2% after being lowered to 4.2% for two years.

Koeth said the restaurant numbers are up 1.56% for the year, and hotel collections are up 2%.

“That means business travel is still doing well,” Koeth said.

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

FORT SMITH
Collections in Fort Smith for the first two months totals $105,146, down 8.2% compared to the same period in 2012.

February collections were $55,570, down 10.7% compared to the $62,252 in February 2012. The city collects a 3% tax on lodging.

Claude Legris, executive director of the Fort Smith Convention & Visitors Bureau, said an event schedule change is a big reason for the decline in collections.

“One of the primary contributors to this decrease in the Fort Smith market was the hosting of a religious conference in 2012 that did not reoccur in 2013,” Legris explained.

During 2012, Fort Smith hospitality tax collections totaled $746,182, up 5.37% compared to the 2011 period. The city collects a 3% tax on lodging.

Nationwide, the lodging industry is doing well.

STR (Smith Travel Research), the leading firm for data on the global hospitality industry, recently reported that the “U.S. hotel development pipeline” comprises 2,717 projects totaling 320,750 rooms. This development tally is up 9.2% in the number of rooms compared with March 2012, and a 19.3% increase in rooms under construction.

TOURISM EMPLOYMENT, ARKANSAS COLLECTIONS

Employment in the region’s tourism industry was 8,600 during January, down from 8,700 in December and unchanged compared to January 2012. The sector reached an employment high of 9,800 in August 2008.

Average monthly employment in the Fort Smith metro tourism sector ended a two year decline in 2012. During 2007, 2008 and 2009, the average monthly employment was 9,300. That fell to 8,700 during 2010, 8,500 during 2011, but rose to 9,000 during 2012. The sector reached an employment high of 9,800 in November 2008.

Arkansas’ 2% tourism tax receipts totaled $751,792 in January, the most recent month reported by the Arkansas Department of Finance and Administration. The tally was the largest posted for January in the past eight years.

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

Arkansas’ tourism sector (leisure & hospitality) employed 103,700 during February, unchanged from January and ahead of the 102,700 during February 2012. The February and January jobs tally marks a new employment high in the sector. The previous high was 103,400 jobs during October 2012.

Dr. Dino Patti Djalal, the Ambassador of the Republic of Indonesia, wowed a room of business men and women in Rogers on Monday, (April 15) with the opportunities of trade. He was selling the benefits that come as trading partners with one of the most rapidly growing economies in the world.

Djalal’s trip to Northwest Arkansas lasted less than 24 hours, but was packed full of meetings starting with U.S. Sen. John Boozman, R-Ark., on Sunday evening. He then addressed business students at the University of Arkansas on Monday morning before speaking to a group of invited guests at Arkansas World Trade Center at noon.

Djalal told The City Wire he was looking forward to a brief meeting at the Wal-Mart Corporate office in Bentonville early Monday afternoon on his way back to the airport. This trip was cut short as he was asked to address the U.S. Congress on Tuesday about potential trade opportunities.

“It took the University of Arkansas two years to get the Dalai Lama to visit, and I got Ambassador Djalal to commit in just one year, 50% of the time. Even though this trip is brief he promises to return,” said Boon Tan, director of Asian Trade Development for the Arkansas World Trade Center.

Djalal said he didn’t have time to see the Crystal Bridges Museum of American Art in Bentonville, but it does give him a great excuse to return. Djalal joked that Arkansas seems like a very nice place to live, “unless you are chicken or a duck.”

TENSE TRADE HISTORY
Djalal said for too long the trade and sporadic conversations between the U.S. and Indonesia have been “crisis driven” to the point where it almost took a catastrophe or some human rights issue to glean American interest.

“We think there are new opportunities for a more balanced and ongoing dialog going forward. We do hope to double trade with the United States in the next few years, but China has been very aggressively pursuing Indonesia as well,” he said.

Indonesia’s economy is growing at a 6% clip, just slightly behind China’s 7.5%. The nation has one of the fastest growing middle class demographics in the world at 20% of the population, some 50 million consumers,with a disposable monthly income of $3,000. Djalal says the number is growing at 7 million per year is on track to reach 135 million by 2025.

There is tension between the the nations regarding a compliant recently filed with the WTO involving horticulture and beef imports from the U.S. In several news reports Indonesia has been criticized for a lack of transparency and “protectionist” tendencies as result of recent trade and investment regulations, such as import licensing requirements, trading rights limitations, foreign equity restrictions and domestic manufacturing requirements.

Djalal assured The City Wire, that Indonesia is listening to the concerns brought by the U.S. and says work is ongoing to resolve the complaint. On Friday, Indonesia vowed to scrap import quantity limits on horticultural products in response to the U.S. complaint.

“We have pledged to double trade with the U.S. and we don’t take these complaints personally, but more see them as a part of normal trade discussions,” Djalal told The City Wire.

POLITICAL STABILITY
He said the country has come a long way in terms of political stability in the past decade after years of unrest immediately following the countries move to democracy.

“Our president is just finishing his second five -year term and today we are a model for an Islamic democracy for the rest of the world,” he said.

Indonesia’s goal to attain self sufficiency in food agriculture is not necessarily a roadblock for Arkansas companies, according to former Arkansas Gov. Jim Guy Tucker, who attended Monday’s meeting.

“There is no reason you can’t set up an importing company here in Arkansas and then sell those Indonesian goods around the country and world for that matter. On the flip side, Indonesia needs a lot of our skills to develop their own products. That leads to lots of consulting opportunities and those relationships build sales and investment over time,” Tucker said.

He first began investing in Indonesia in 1991 and says those investments have been profitable and the experience in the country has been very good. Tucker is founder of Pacific GeneTech Limited. a firm that develops and commercializes vaccine technologies to address threats of emerging infectious diseases and other pathogens.

Ni Made Marthini, commercial liaison for the Embassy, addressed the group about the possibilities to attend an Indonesian Trade Expo this October. Tan said he will likely take a delegation to the expo in October in hopes of facilitating some working relationships for a few local companies and partners abroad.

“When we returned from the Thailand delegations, three local companies had found trade partners abroad. We hope to do the same in Indonesia,” Tan said.

Chris Pixley, vice president of operations for Fayettville-based Pacific Vet Group, said he is interested in Southeast Asia because he sees plenty of opportunity to sell his probiotic technology, which is used to promote better health in live poultry without the use of antibiotics. He plans to use the contacts he made today at the noon luncheon to assist with licensing issues and other protocol.

Marthini urged the business group to seek her out for help

TRADE BALANCE
U.S. exports to Indonesia in 2012 totaled $8 billion, up 8.1% from the previous year. Corresponding U.S. imports from Indonesia were $18 billion, down 5.8%.

Djalal agreed the countries need to work toward balancing the $10 billion trade deficit. He would like to see Ford and Cadillac on Indonesian streets and told the group his country does import lots of television entertainment.

“I personally would like to see more Oprah and less Kim Kardashian,” he said with laugh.

Tan said the Ambassador’s viewpoint is “refreshing” and the possibilities are huge going forward.

“You know U.S. companies shied away from Indonesia for nearly three decades because of environmental concerns. But today they are meeting with Greenpeace and struck an agreement to right those wrongs. We have to give them a chance to amend,” Tan said.

The business leaders agreed Indonesia’s rapid growth and willingness to trade and bring new products to market is too big for U.S. to ignore. A representative from Wal-Mart assured Djalal at the meeting that the retailer is committed to sourcing from sustainable companies and countries who enforce high standards.

Tan said the rapid rise of the Chinese Renmimbi is causing foreign manufacturing investment in China to flee to areas like Vietnam and Indonesia with cheaper labor and more favorable exchange rates.

He expects Indonesia’s growth to continue and says Arkansas the United States need to be onboard. But it all begins with conversations like those heard here today.

Bo Bittle was recently named the new president of Signature Bank Fayetteville. He joined the bank in 2004 where he most recently worked as a loan officer.

“As an experienced banker, Bo helped us define Signature service for Northwest Arkansas and we are confident he will continue to raise the customer service bar in his new role, according to the bank’s news release.

He is a graduate of Ole Miss University and the ABA National Commercial Lending School. Bittle also serves on numerous boards including Life Styles and the Fayetteville Chamber of Commerce, where he is guiding the Chamber’s Leadership Fayettevillle committee.

In 2013 Bittle is the president of Big Brothers/ Big Sisters and vice president of the Northside Rotary Club.

Bittle and wife Claire and son Will live in Fayetteville.

The only thing traded more often than predictions and analysis about who might take the reins at the world’s largest retailer when 63-year-old Mike Duke steps down as president and CEO are Wal-Mart shares.

The focus on executive succession at Wal-Mart is understandable given the job is one of the most high profile positions in corporate America – if not on the global corporate stage. Some insiders tell The City Wire they would not be surprised if a CEO shift is announced prior to the June 7 Wal-Mart shareholder’s meeting.

Duke assumed the role of CEO in February 2009, at the age of 60, replacing Lee Scott who stepped down at age 60 after nine years in the role. If Duke does opt to retire this year, as a growing number of Wal-Mart watchers predict, his tenure as CEO will be shortest in company history. However, his time at the helm will be one of the most fruitful for shareholders since the company’s growth explosion in the 1980s.

During Duke’s watch, Wal-Mart shares broke out of a 10-year lull to set historic highs. Wal-Mart’s market cap has risen more than $73 billion since he assumed the CEO role in February 2009.

Duke’s pocketbook has also benefitted. His total pay was $18.13 million in fiscal 2012, but the vast majority of that came in the form of company stock. The CEO salary was $1.26 million, with more than $2 million in performance-based cash bonuses, according to the most recent Proxy filing with federal regulators. (Fiscal 2013 salary information will be found in the upcoming annual Proxy filing which is expected to be released in the next week to 10 days.)

WHO’S NEXT?
Leon Nicholas, senior vice president of retail insights for Kantar Retail, said Wal-Mart is like much of corporate America today – Baby Boomer heavy in the top two tiers of management with an emerging junior class challenging them.

“There are a couple of candidates that come to mind if and when Mike Duke announces his retirement. Speculation is that will happen sometime this year, perhaps hastened by the ongoing investigations in the company’s international division,” Nicholas said.

Analysts agree Wal-Mart will not likely recruit outside its own ranks for the next CEO given its corporate history of promoting from within. (In addition to Nicholas, The City Wire spoke with two other sources with deep knowledge of Wal-Mart. Those sources spoke on condition of anonymity.)

The most likely choices for the next CEO are Bill Simon, 52, CEO of Walmart U.S., and Doug McMillon, 44, CEO of Walmart International. Other possibilities include Rollin Ford, 48, chief information officer, and Charles Holley, 54, chief financial officer.

All four of the executives report directly to Duke and have international management experience, which is key given Wal-Mart’s global presence and ongoing probes into possible corrupt practices regarding expansion in India, Mexico, China and Brazil.

Wal-Mart is cooperating with the investigations and has spent in excess of $157 million related to the probes. Nicholas said those costs could hit as much as $500 million when the dust clears, not including fines that may be assessed.

He and other analysts say it is important that whoever is chosen as the next CEO have clean hands with regards to the Foreign Corrupt Practices allegations, which date back to 2001.

POSSIBLE SUCCESSOR PROFILES
In 2001, Bill Simon was an executive with Diageo serving as president, North American Ready-To-Drink, where he led the successful launch of Smirnoff Ice. He joined Wal-Mart in 2006 at age 46, after a stint as senior vice president of global business development for Brinker International.

Doug McMillon, a Gen X candidate, was still working his way up the management chain in Walmart U.S., around 2001. He assumed the role of Sam’s Club CEO in February 2006. Since 2009, McMillon has overseen the company’s international division.

Charles Holley worked in the company’s international division between 1994 and 2002 and is credited with helping to pioneer Wal-Mart’s international expansion efforts, which included leading Walmart International’s merger and acquisition activities, according to his profile on the corporate website.

Rollin Ford, also from Generation X, was working his way up through Wal-Mart’s logistics division between 1993 to 2006. Ford’s international experience includes leading Wal-Mart’s global sourcing, global business processes, global shared services, corporate transformation, information systems division and global customer insights since February 2012.

THE CEO LINEAGE
Duke is only the fourth CEO to lead Wal-Mart in the company’s more than 50 years. He is an industrial engineer who spent 23 years with Federated and Mays Department Stores before joining Wal-Mart logistics in 1995.

He later joined the company's international business division leading Wal-Mart's expansion into mature and emerging markets.

“Mike built an international management team that delivered strong operational results in a complex global environment,” noted Duke’s profile on the company website.

He also ran the U.S. stores division. Duke also serves on the Wal-Mart Board of Directors.

Duke’s predecessor Lee Scott, also came up through the company’s logistics division and, like Duke, led the U.S. store divisions before his nine-year tenure as CEO. Scott has a bachelor’s degree in business and spent nearly 30 years at Wal-Mart. Scott also serves on the Wal-Mart Board of Directors.

David Glass, assumed the CEO role from founder Sam Walton in 1988, after working side-by-side with the retail legend for 12 years during the greatest transformation period in the company’s history. He is credited with establishing the company's first distribution center outside of Bentonville. He was also instrumental in the creation of Sam's Club, and pioneered development of the first supercenter. It was under Glass’ tenure that Wal-Mart became the nation's largest retail company and made its first foray into international markets with an acquisition in Mexico.

Walton held the role of CEO for his retail company for roughly 40 years before passing the torch to Glass.

The Walton family remains deeply connected to the company, and holds a substantial number of Wal-Mart shares (NYSE: WMT). The percentage of shares held by insiders and individuals holding at least 5% floats around 50%. Rob and Jim Walton, sons of Helen and Sam Walton, serve on the Wal-Mart Board of Directors, with Rob considered an active player in company affairs through his role as board chairman.

CORPORATE EXPERIENCE
The four possible CEO candidates each have accomplishments and backgrounds that would make them a reasonable choice for the top slot.
 
Simon, like Glass, Duke and Walton, brought prior experience in retail and other business operations to the table when he joined Wal-Mart.

He is also credited with the $4 generic prescription which was deemed a game changer in the drug industry. During his role as CEO of Walmart U.S., the division returned to positive same-store sales comparison, reversing a negative trend spanning nearly two years.

Simon also earned a master’s degree in business administration and has prior work experience in government relations as well as consumer product companies. This could give him a slight advantage over the other candidates. However, Simon is the only possible successor who has not worked in Wal-Mart’s international division, although he has some global management experience with Brinker.


McMillon, like Scott, has been a student of Wal-Mart and worked his way up the management chain. He holds a master’s degree in business administration and has senior management merchandising experience in Wal-Mart and Sam’s. McMillon, who assumed the International CEO post in 2009, would be the second youngest CEO in company history – after Sam Walton.

Unlike the rise of Duke, Scott and Glass, McMillon has not yet served as CEO of Wal-Mart U.S., the largest division within the company in terms of sales and people. Like Glass and Walton, McMillon is a popular choice among insiders and Wal-Mart watchers because of his charismatic persona and willingness to speak candidly in public forums.

Holley, like Glass, was hired with an expertise in finance. He has yet to serve as CEO of Wal-Mart International or CEO of Wal-Mart U.S., which has traditionally been the route to the top executive position.

He has held the chief financial officer role since December 2010. And like Glass, Duke and Walton, Holley brought other business experience to Wal-Mart when he joined the company.

Glass is the only prior chief executive to serve as chief financial officer, but before he assumed the role of CEO. Glass also spent several years as chief operating officer, overseeing the day-to-day management of U.S. stores. Holley’s experience has included strategic planning for the international division, but not day-to-day operational managemen.

Ford, like Scott, cut his teeth in the logistics division. Like Glass, he also oversees the company’s major information systems in addition to global sourcing. Ford has a bachelor’s degree in business administration and systems analysis. He has been in the chief administrative officer role for one year, taking that position at the same time Rosalind Brewer assumed the CEO role for Sam’s Club.

While Brewer is seen as a future leader by analysts, her brief tenure at Sam’s and lack of international day-to-day operational experience put her a seat or two back at this time, according to analyst consensus. But she is definitely one to watch in the next couple of years, Nicholas said.

None of the mentioned candidates served as the CEO of Walmart U.S., and the CEO of international, something Duke did prior to his appointment in 2009.

THE EXECUTIVE DOMINO
If Simon should assume the CEO role, analysts say Duncan Mac Naughton, executive vice president and chief merchandising and marketing officer for Walmart U.S., would be favored to move up as well.
 
If McMillon gets the call to move up, analysts say David Cheesewright, president and CEO of Wal-Mart EMEA (Europe, Middle East, and Africa), may take a larger role in the international division.

Analysts say if Ford is the chosen, his vacated position could be split between two of the executive vice presidents who now report to Ford – Karenann Terrell and Cindy Davis.

Jeff Davis, executive vice president-treasurer, or Catherine Smith, executive vice president-strategy and chief financial officer for Wal-Mart International, would be the most likely replacements for Holley if he were to be the next CEO for Wal-Mart Stores Inc.

Several ongoing and upcoming activities at the Northwest Arkansas Regional Airport are designed to position XNA for growth as airport officials work with consultants and legislators to negate the potential negative impact of federal budget cuts.

None of the efforts underway is more talked about than the airport’s need for a low-cost carrier to serve the local business community. Talks have escalated over the past few months now that the airport concourse and added gates are available.

LOW COST DEMAND

In March, a consultant group who works with smaller airports to attract low cost carriers held two meetings in Northwest Arkansas.

Cameron Smith & Associates brought together roughly 25 large Wal-Mart suppliers to who fly in and out of the area routinely in their business operations to meet with the consultant. Over the past month suppliers say they have continued dialog with the consultant to better assess their overall needs. The parties desperately want to see a low-cost carrier option for business travel.

Mike Malone, director of the Northwest Arkansas Council, said during previous business surveys conducted by the region’s five largest chamber of commerce offices, a recurring theme voiced among executives was the need for more competitive airfare out of XNA.

The surveys found the number of flights available by the present carriers at XNA are sufficient, but the higher cost has businesses and individuals driving north and south to catch cheaper flights.

“We know 39% of our customers go elsewhere because our costs our higher," said airport director Kelly Johnson.

Smith says what is not known is how many business professionals get into their car and drive to Dallas for regular meetings, which is business lost to the airport and a time drain for companies.

“We worked four years to get Allegiant to come here, and this spring is their fourth anniversary at XNA. We will get another low cost carrier. We are working feverishly toward that endeavor,” Johnson said.

She said the two hurdles that stand between a low cost carrier flying in and out of XNA are overall industry consolidations and some of the six discounters left fly big jets out of densely populated areas.

Southwest would be an exception, and a good fit at XNA but since its merger with AirTran, airports like Lubbock, Texas, comparable in size to XNA, are losing routes. Johnson said Southwest has been pulling out of some of their smaller markets. An exception would be Southwest’s recent entry to Branson, which is believed to a subsidized venture.

Similar conversations about the potential for local subsidies have been entertained, outside of the $950,000 grant the airport received last year to help recruit a new carrier. Johnson said attracting a new carrier doesn’t necessarily mean the new entrant will be successful.

People have to be convinced to try the new carrier and it’s not uncommon for existing carriers in an airport to lower their costs to be more comparable to a discount carrier to prevent customers from converting. The grant is designed to help defray potential lost costs on behalf of the new carrier while it is building a clientele.

A big part of attracting a new carrier is being able to establish that the community has a commitment to serving the carrier and its customers’ needs. That includes marketing to potential carriers and the local business community about what unique attributes Northwest Arkansas offers.

“We’re one of hundreds of communities that are trying to get new service, including the discount carriers that everyone wants,” Johnson said.

CONSTRUCTION UPDATE

The runway reconstruction project is on schedule with a targeted completion in the spring of 2014, said Barbara Busiek, director of construction and grant administration. The project includes replacing the original runway and making other drainage and lighting improvements. The project is funded through three, $10 million federal grants.

“The contractor has completed the majority of the demolition work outlined in Phase 1. The airport, working with the paving contractor The Harper Co. and Rogers Iron and Metal Corp., has made great efforts to recycle all the copper wire, dowel bars and pavement that is removed as part of the demolition process,” Busiek said.

“The contractor is working on the removal of existing (navigational aids), installation of under drains, airfield electrical, subgrade preparation and has started paving on one of the connector taxiways.”

An even larger project, constructing a four-mile stretch of road from the planned Springdale Bypass and the airport, will cost an estimated $93 million and will come from various funding sources including local airport and earmarked funds. Johnson said they are still waiting on environmental approval before the project can move forward.

“We’re hoping to have the approval this year but we’re having to wait for that whole process to work itself through,” she said.

MERGERS & CUTS 

Airport officials also have their eye on the federal budget cuts, which could affect XNA in several ways. With all but two of the state’s control towers being scheduled to shut down, XNA officials are “troubled” by the fact that Fort Smith’s airport control tower is on the list.

“They have our approach control so we need to know who will handle our traffic if they close that,” Johnson said.

Cuts in the Homeland Security budget includes furloughing screeners and no screeners are allowed to get overtime. There is also a potential staffing issue for the exit lanes, which means the airport will have to fund those positions, Johnson said.

Aside from ongoing budget restraints, regional airports like XNA are also vulnerable to the ongoing consolidation across the airline industry. The pending merger of American Airlines and U.S. Airways will affect some route consolidation over the next year or so.

Johnson said there is a possibility of new flights but it’s too early to know for sure. She said U.S. Air has some routes that are not available at XNA and those might be introduced in the future.

Last week American Airlines did announce American Eagle flights from Los Angeles to XNA, which begin August 27.

Widely known for its long haul and massive intermodal businesses, J.B. Hunt Transport is also making a name for itself in home delivery with its Final Mile service.

Through the company’s Dedicated Contract Services (DCS) division, J.B. Hunt collects bulky packages from online retail orders and delivers them the final mile from one of its 90-plus warehouse locations scattered across the country. The warehouse locations account for a total of more than 1 million square feet of space.

Nick Hobbs, president of DCS, said last week he saw a niche opportunity several years ago to take singular bulk items like treadmills, dishwashers and furniture and other large items that don’t fit on a pallet, the last mile in what could be a long logistics haul across country.  

As e-commerce orders grow, this segment of Hunt has continued to expand to fill a growing niche market. Less-than-truckload carriers do a great job helping retailers with smaller pallet orders, but they stop in the backroom or the distribution center, Hobbs said.

“FedEx does a great job delivering small packages to the front door but I didn’t see any major carrier taking large bulky items into the home and assembling or installing them for the manufacturer or retailer. So we started doing it,” Hobbs said during a retail supply chain conference at the University of Arkansas last week (April 11.)

This final mile segment is averaging 2 million deliveries a year, according to data on J.B. Hunt’s corporate website.

Hobbs said the warehouse network is positioned within 150 miles of the 98% of the U.S.population. Northwest Arkansas is serviced out of the Tulsa warehouse, he said.

The Final Mile service is helping to boost DCS segment revenue. In the first quarter of 2013, DCS revenue rose 9% from the year-ago period.

A net additional 633 revenue producing trucks were added over the same period 2012, primarily from new accounts. The company also expensed $1.7 million in contract implementation costs for new long-term customers. These costs include driver and management hiring costs, equipment repositioning costs, technology design and integration.

One niche J.B. Hunt has cornered is in-home delivery for one retailer with a very high-net-worth customer – average $600,000 annually, according to Hobbs. He said in-home delivery is more expensive for the company but customers are willing to pay a premium for services.

Hobbs said taking the J.B. Hunt brand to the consumer level comes with added costs and some challenges.

“We have two men in the truck, which is necessary for safety and physical lifting. These drivers go through stringent background checks and must have closely shaven beards and no visible tattoos. In some cases they wear the uniform of the customer we are delivering for as well. We have plumbers, and other skilled trade professionals helping with the installation and set-up when necessary,” Hobbs said.

Some of the largest brands on the planet using J.B. Hunt with their final mile delivery needs include Best Buy, Home Depot, Cargill, Whirlpool and Blue Seal.

“We haven’t done a lot of direct marketing of this service to the consumer, but we target high-end retailers who rely on help getting the product safely delivered and set up,” Hobbs said.

Jim Crowell, director of the UA Supply Chain Management Research Center, said J.B. Hunt is out in front with this Final Mile service, which is positioned to grow in the coming years as consumers do more online shopping direct from manufacturers.

Aside from retail/ manufacturers product delivery, Hobbs said they also haul doors, windows and other building supplies for Toll Brothers and other players in the residential construction arena.

DIRECT TO CONSUMER
Dr. Jim Tompkins, CEO of Tompkins International, said the lines between retailers and suppliers will become more blurred in the future as manufacturers begin to market their some of the product online.

Hobbs and other logistics professionals at the conference predict a time when a consumer might order their groceries online from multiple retailers/ suppliers and have them delivered in one consolidated package and put away in the pantry by a service like Final Mile.

Hobbs also told the group delivering quality customer service is a must when you are entering someone’s home. He said consumers want and expect quality service and will let people know when they don’t get it.

“We were recently reminded of that by The Southern Wife in her blog. Thankfully we made it right and she posted that too,” Hobbs said.

Consumers can order Final Mile delivery and installation from Amazon.com as an add-on service provided by J.B.Hunt.

Hobbs says during the first few months of the year they deliver lots of treadmills, and as spring blooms they deliver more grills and outdoor furniture making the business somewhat cyclical.

There are no new jobs planned, but officials with SGL Carbon announced Wednesday (April 17) a $26 million upgrade to their facility in Ozark.

The German-based company employs more than 90 people in the Ozark plant, which produces high-power graphic electrodes that create heat in electric arc furnaces used in steel mills.

Work on the expansion is expected to be complete by June 2015.

“SGL Group’s significant investment in Ozark underlines our long-term commitment to this facility as well as our employees,” Scott Carlton, president of SGL Group North America, said in a statement released by the Arkansas Economic Development Commission. “This investment covers new, state-of-the-art technology for the manufacture of graphite electrodes and will substantially reduce energy consumption. The Ozark facility is an integral component of SGL Group’s global network of graphite electrode production, and we look forward to future growth in the state of Arkansas.”
 
According to SGL, steel production in electric arc furnaces offers advantages in terms of lower investment costs, higher production flexibility and less pollution.

ADVANCED MANUFACTURING SUPPORT
Grant Tennille, executive director of the Arkansas Economic Development Commission, said the investment is a signal that global companies are willing to invest in advanced manufacturing operations in Arkansas.

“Arkansas’s reputation as a manufacturing hub will continue to grow as companies like SGL Carbon invest in new, advanced manufacturing technology,” Tennille said in the AEDC statement. “We appreciate the hard work of the company’s existing workforce that made today possible and thank SGL for choosing to make this significant investment in its Arkansas facility.”

SGL Carbon has 47 production sites and around 6,700 employees in Europe, North America and Asia, and a service network covering more than 100 countries, SGL Group is a company with a global presence. The company is based in Wiesbaden, Germany.
 
“It is great to have one of our leading local companies make such a significant investment in Franklin County,” Franklin County Judge Janet Powell said in the statement. “We look forward to continuing to help and support the company as it grows.”

SGL Carbon also operates the HITCO Carbon Composites operation in Arkadelphia, Ark. The HITCO group produces rocket nozzles, advanced composites components and other materials for the military and civil aviation industry.

FORT SMITH AREA ANNOUNCEMENTS
The SGL Carbon announcement marks the third significant economic development investment in the Fort Smith region within the past 30 days.

Officials with Atlanta-based Phoenix Metals announced March 21 plans to invest $12 million in a new 65,000-square-foot metal processing operation at Chaffee Crossing that could employ up to 40 with an average wage of $15 per hour.

On April 4, officials with Health Management Associates (HMA) announced plans to operate a regional service center in Fort Smith that will employ more than 500 with average annual salaries potentially exceeding $40,000. Those jobs are expected to be in place within 12 months.

Tim Allen, president of the Fort Smith Regional Chamber of Commerce, said the three announcements indicate that businesses are more comfortable investing in U.S. expansion projects. He said the “pipeline” of economic development projects that may locate in the Fort Smith region is now seeing those investment decisions push the projects to completion.

“I think the pipeline was starting to be filled in the past two years, and I think now we are starting to see the fruition of some of that,” Allen told The City Wire. “What I think we are seeing is that the capital is being turned loose on some of these projects and they are beginning to move forward.”

Allen said there are other jobs and investment projects nearing completion.

“We do see the potential for that, for some additional good news for the region in the next couple of months,” Allen said.

The simple, warehouse style building located in Springdale does not give any outer indication of the learning — and cooking that goes on inside.

The new McDonald’s training facilities that brothers Bill and Walter Mathews built in the back of their new offices has received accolades from those high up in the McDonald’s corporate chain.

The Mathews brothers own 34 McDonald’s including all of those in Northwest Arkansas, and adjacent areas in Missouri and Oklahoma. They are in the process of rebuilding the McDonald’s in Cassville, Mo., which burned recently from an electrical fire. They are also planning a new restaurant in Springdale, eventually Elkins and will be moving the Siloam Springs location to a better location.

“We never planned for this,” Bill Mathews said with a chuckle.

They also have 1,700 employees, all who are trained in the new facility in Springdale. Crew members come each week for hands-on training when they are hired or when new products are rolled out. It pays off: the Mathews’ crews are already showing high returns within the corporation on results with the new chicken McWraps that came out recently.

TRAINING CENTER
Many McDonald’s around the country train their crews in the kitchen where they are employed, which can interfere with the store’s daily operations and creates a less-than-ideal training environment.

“There’s just too many distractions,” Mathews said.

Word is getting out about the training facility and franchisees are sending their crews to Northwest Arkansas for the training and the hospitality, including many of the Dallas, Texas restaurants.

Why invest – construction alone on the center was permitted at $175,000 – in such an elaborate training program when most franchisees consider on-site training sufficient?

“The quality of training for our crew and managers has improved dramatically,” Mathews said. “We’re executing new products better. Our sales are better than anyone else in our region because our crews are better trained.”

Whenever they open a new restaurant they have the newly hired crew go work in an existing restaurant for a weekend for on-the-job training so that when the new location opens the employees won’t be inexperienced, he explained.

Mathews said well-trained crews attract and retain good customers. If the crews are not well-trained, people won’t come back to that restaurant, he said.

HUMBLE BEGINNINGS
Although the McDonald’s of Northwest Arkansas is one of the most successful in the market, it comes from humble beginnings. Bill Mathews worked at the first McDonald’s in Northwest Arkansas in 1973 (on College Avenue in Fayetteville). He was working his way through college, considering it “just a job.”

In 1976, he was promoted to a restaurant manager but still never gave thought to the idea of owning a McDonald’s, he said.

The owners of the restaurant asked him if he wanted to buy the store and he talked it over with his brother, Walter, who agreed to the venture. This was in 1979. The brothers managed their store and the company grew to four restaurants by the early 1990s. After that, things started to change.

“It pretty much exploded after that,” he said. “It wasn’t rocket science. The whole market just grew.”

Even with the economic downturn, the brothers have been able to maintain and even grow their success.

“Customers are more conscientious of what they spend,” Mathews said. “Our percentage of sales from the Dollar Menu is some of the highest of the country. That’s been surprising even to me.”

MORE CHICKEN THAN BEEF
The brothers are focusing on remodeling their existing restaurants, a task they usually do about every seven years to keep each location looking new and fresh.

“We’re giving them a new look and expanding the dining and also putting in more of the dual-lane drive thrus,” he said.

He’s also looking forward to some of the new products that have come out and several more that are to come. There will be many more healthy options including the chicken McWraps.

“We now sell more chicken than beef,” he said.

The addition of the training facility and new offices several years ago was another big development for the company. Now all of their accounting, restaurant maintenance and repair, and other administrative roles are “in house,” providing more continuity between the restaurants and providing jobs for people within the organization but not in the restaurants.

“It’s really been all about the people,” Mathews said.