Some of the most influential business and public policy leaders in the country took the stage today in Orlando, at Wal-Mart's U.S. Manufacturing Summit to discuss what it will take to bring more manufacturing jobs back to the U.S.

“We need to make things again in America, manufacturing represents middle class jobs that this country needs. We can’t just be a service economy,” Bill Simon, CEO of Walmart U.S., said in his opening remarks.

He said there was a time when a job at a local manufacturer meant a ticket to the middle class, but many of those labor intensive jobs went off-shore chasing lower wages, and the end-result has been a canyon, a hollowed-out middle in the U.S. workforce.

The two-day summit sponsored by Wal-Mart and the National Retail Federation was an attempt to get the right people in the same room to discuss how to rebuild America’s manufacturing sector. More than 600 suppliers and economic development teams from 36 states attended.

During the conference, suppliers announced more than 1,000 new U.S. jobs with investments in excess of $70 million from the likes of GE, Element Electronics and sock makers Kayser-Roth and Renfro.

“This is just a start as this economic transformation is taking place and the need to make things closer to the areas of consumption,” Simon said.

ONSHORE REALITY
Hal Sirkin, Boston Consulting Group Senior Partner, made a strong case for U.S. manufacturing, citing that American companies have had to get more productive or go out of business.

“The U.S. produces 2.5 times as much manufacturing value added as we did 40 years ago, and we do so with 30% less labor. We are one of the most productive countries in the world,” Sirkin said.

He said wages have risen in China over the past 13 years which have dramatically altered the economic case for manufacturing there. Sirkin said in 2000 labor costs in China were 25% of those in the U.S., and today they are 50% and expected to rise to 63% in the next two years. When adding component and raw material sourcing, shipping and overhead costs, Sirkin said the U.S. trumps China for lower overall manufacturing costs of many products.

Vlad Kazhdan, vice president of Element Electronics, said his family-owned firm met with Wal-Mart earlier this year at the company’s ‘Year Beginning Meeting” as they were planning to build a U.S. plant that makes televisions for Wal-Mart. He said the company had a three-year roll-out plan but Wal-Mart challenged them to be done in nine months. At that time he met with South Carolina Gov. Nikki Haley and together the three interested parties are getting it done. He said before the end of the year the new plant in Winnsboro, S.C., will be up and running, providing 500 new jobs in that community.

“The long term commitment for demand was answered by Wal-Mart, and South Carolina came through with the shorter-term incentives to get the plant operational," Kazhdan said.

Jeff Immelt, chairman and CEO of General Electric, said now is the time to onshore manufacturing where 25% of the cost is labor. He said refrigerators are another example of a product that could easily be made in the U.S. at a competitive rate today. Some 65% of GE profits come from outside the U.S., so Immelt said he regularly travels the globe. He’s found other nation’s are taking notice of the U.S. and this renewed interest in re-building its manufacturing base.

He said GE is expanding plants in Ohio and Illinois that will provide energy-efficient light bulbs for Wal-Mart. This $30 million investment is creating an additional 120 jobs.

EXPANSION HEADWINDS
Richard Fisher, president of the Federal Reserve Bank of Dallas, told the group that business owners and manufacturers he’s talked with in the past two years are confounded by the uncertainty in fiscal and regulatory policy. He said America should rebuild its manufacturing centers, but in spite of the compelling evidence to expand and take advantage of the cheapest money supply in the country’s 237-year history, manufacturers remain cautious because of taxes and unwanted regulation.

Several state governors took the stage on Thursday, including Arkansas Gov. Mike Beebe. Each state pitted their benefits against the other and the governors candidly discussed some of the perceived challenges manufacturers face when on-shoring jobs. Beebe said having the right workforce is essential to recruiting and retaining companies to a region.

“Sometimes that means you have to work with universities and community colleges to make sure they are offering the kind of programs local manufactures require,” Beebe said.

New Mexico Gov. Susana Martinez said in her state many high school students train simultaneously for vocational trades during their last two years of high school. 

“We found our manufacturers needed engineering techs and other skilled support staff which are being educated while still in high school. They graduate with a diploma, an associate’s degree and a job rating certificate,” Martinez said.

Beebe said it’s not just the education level, but also the work ethic that manufacturers consider.

Several governors agreed that businesses need less state and federal regulation in addition to incentive programs to attract domestic and foreign manufactures.

WAL-MART’S STAKE
Critics might ask what is Wal-Mart’s stake in this initiative. As a retailer offering the lowest prices Wal-Mart buys its fair share of products made outside the U.S. The retailer has committed to source an additional $50 billion in products made in the U.S. over the next 10 years. This is less than 20% of the company’s U.S. sales totaling $274 billion last year.

Wal-Mart may be a global company, but its U.S. division accounts for 65% of the company’s total sales revenue.

Wal-Mart said the $50 billion is just a start, and the bigger piece of the story is found in small communities like Griffin, Ga., where people have gone back to work at 1888 Mills making towels sold at Wal-Mart. Earlier this year Wal-Mart said it worked with 1888 Mills on a long-term commitment that gave them the incentive needed to reopen a plant in rural Georgia years after virtually all textile manufacturing moved off-shore. Towels made in the USA were unheard of until 1888 Mills made that first step back on U.S. soil last year. However, the 1888 Mills plant employs less than 50 in the town of more than 23,000 people, and a majority of the company's operations are located overseas.

Duncan Mac Naugton, chief merchandising officer with Walmart U.S., said Wal-Mart sells a lot of towels, but the 1888 Mills “Made in the USA” product outsold the others by more than 35%.

“Consumers take pride in buying things made in America,” he said.

Wal-Mart is also positioned to win anytime jobs are created in this country, particularly in rural America, where the majority of its 4,000-plus stores are located, company officials have said.

Simon was quick to point out it’s not just Wal-Mart making a difference, but it is getting the right people together – suppliers, retail buyers and government agencies – who can work together to move investment in the right direction.

“We don’t need anyone’s permission," Simon said, adding that businesses have the capital to invest and the time is right for action.

Mike Harvey, chief operating council for the Northwest Arkansas Council, attended the summit and agreed that Wal-Mart’s push could be a game changer.

“If Wal-Mart says it is going to do something, they can move the needle faster than any government initiative,” Harvey said.
 

Arkansas is widely known as a poultry producing state but one of the nation’s largest chicken company’s continues to move its business elsewhere.

Pilgrim’s Pride, based in Greeley, Colo., announced plans to close a processing plant in Batesville in the next 60 days as employees received their WARN letters this week as required by the federal Worker Adjustment and Restraining Act.

The plant closure will impact 470 workers.

The poultry company has been streamlining operations for several years to rein in excess capacity in older, commodity-oriented facilities, as the chicken industry pursues higher margin products.

Last week Pilgrims said it was also closing a rendering facility in El Dorado, and shifting those operations to a plant in east Texas. That closure eliminate 29 jobs.

Ozark Mountain Poultry-based in Rogers is reportedly pursing the Pilgrim’s facility in Batesville. This firm is a further processor and does not own its own grow out operations. OMP performs deboning operations and employs 600 workers in Springdale and Rogers.

On the opening day of a Wal-Mart-sponsored manufacturing summit, Gov. Mike Beebe met with officials from two Asian-based electronics manufacturing companies who are likely to locate a plant in the U.S.

Beebe and other officials attending the summit said the effort by Bentonville-based Wal-Mart Stores to bring manufacturing back – often referred to as “onshoring” – to the U.S. would be assisted if the federal government would either act or get out of the way.

Beebe was one of eight state governors to attend the “U.S. Manufacturing Summit” in Orlando, Fla., that began Thursday (Aug. 22) and will conclude Friday with a trade show connecting economic development officials from 36 states with about 600 Wal-Mart suppliers and retail vendors.

The summit is the first high-profile public event held by Wal-Mart following the Jan. 15, 2013, company pledge to purchase in the next 10 years an additional $50 billion in U.S.-made goods. Company officials have said they hope to boost U.S. manufacturing by purchasing more sporting goods, apparel basics, storage products, paper products, textiles, furniture and higher-end appliances. (Link here for The City Wire report on the summit’s opening events.)

Some cynics have said the Wal-Mart effort is pure publicity, with company officials seeking to ride the coattails of a resurgence in U.S. manufacturing. There is also concern that the global companies who place facilities in the U.S. will – possibly to appease large retailers – only place a small portion of their overall manufacturing volume in the U.S.

WAL-MART COMMITMENT
But Beebe and Mike Harvey, chief operating officer for the Northwest Arkansas Council, are confident Wal-Mart is serious about being a leader in the onshoring effort. Harvey, along with Council President Mike Malone, and Tim Allen, president of the Fort Smith Regional Chamber of Commerce, are attending the summit.

“I think they are going to follow through. First of all, they don’t have any choice. ... Once they announce this bold initiative ... and put someone as high up as Bill Simon (president and CEO of Walmart U.S.) in charge of it, it has a lot of legs,” Beebe said.

What’s more, Beebe said that prior to the summit, his office had already worked to arrange meetings between Wal-Mart and officials with foreign-based manufacturers. One of the meetings was from a lead generated during Beebe’s April 2012 trip to China.

Harvey said he is “100% certain” that Wal-Mart will remain committed to the 10-year effort. He also said the effort could cause the trend of U.S. manufacturing job losses to reverse course.

“I’m not saying all those jobs will return, but this may be a tipping point going to the other direction,” Harvey said.

U.S., ARKANSAS MANUFACTURING LOSSES
Historically, U.S. manufacturing sector employment has ranged between 17 million and 19 million. It reached a high of 19.553 million jobs in June 1979. Sector employment has been stuck below 12 million since May 2009. Prior to May 2009, the last time sector employment was below 12 million was May 1941.

The U.S. Bureau of Labor Statistics estimated there were 154,300 manufacturing jobs in Arkansas during June 2013. Employment in the sector is down 24.6% compared to June 2003, and is down almost 38% compared to the sector high of 247,300 set in February 1995.

Harvey said Arkansas has a competitive advantage with other states because it is the home state of Wal-Mart.

“Certainly with the foreign manufacturers, being in the home state, being in Arkansas is appealing to them,” Harvey said.

Harvey also said interest in Arkansas resulted in the state having two exhibit booths – one from the Arkansas Economic Development Commission and another staffed by the Northwest Arkansas Council – in the Friday (Aug. 23) trade show and 20 appointments set with companies interested in learning more about Arkansas.

“The fact that we’ve had 20 companies express an interest in being in Arkansas, I’m just thrilled with that. ... Arkansas is one of just a handful of states to have two booths because there was so much demand,” he said.

Beebe said geography also is an advantage.

“Our geographic proximity to the center (of the U.S.) is a huge advantage,” Beebe said.

FORT SMITH ADVANTAGE?
Of Arkansas’ three largest metro areas, the Fort Smith region has been the hardest hit in the past decade in terms of losing manufacturing jobs. Between June 2003 and June 2013, jobs in the sector are down 23% in central Arkansas, down 34.16% in the Fort Smith region, and down 20.8% in Northwest Arkansas.

Beebe said his office and the AEDC does not pick and choose where projects go, but instead focus on what is the best fit for the company being recruited. However, Beebe noted that the Fort Smith area does have an advantage with potential manufacturing prospects.

“Mainly because of Fort Smith’s history, I tout Fort Smith’s manufacturing culture,” Beebe said, adding that the region’s “trained and trainable manufacturing workforce” is an attractive asset.

Harvey said the unfortunate fact that Fort Smith has lost so many manufacturing jobs could be an advantage if the onshoring resurgence gains momentum.

“Fort Smith has a lot of available buildings on market for manufacturing ... and this could be very good for them,” he said.

‘STAYING PATRIOTIC’
Beebe is optimistic that manufacturing jobs will return to the U.S. and Arkansas, with part of the optimism driven by what he sees as a change in consumer habits. According to Beebe, U.S. consumers are willing to buy a U.S. made item if the value is good and the price is reasonable.

“I think Americans are staying patriotic about this (willingness to buy American),” he said.

Possibly holding back a resurgence in manufacturing jobs are outdated federal laws, Beebe said. For example, the U.S. has a tariff on certain electronic components that is no longer needed. The tariff was established decades ago when global trade realities were different. But with the components no longer made in the U.S., the tariff does not make sense, and in some cases makes it financially impossible for foreign companies to build electronic component assembly operations in the U.S.

“It’s an impediment to bringing jobs back to America from overseas,” Beebe said of outdated federal laws.

U.S. Commerce Secretary Penny Pritzker also attended the Wal-Mart summit, and Beebe said he “emphasized with her” the need to quickly convince Congress to address the specific rules that no longer make sense and are potential deal-killers with some of the Asian companies that have expressed an interest in locating in Arkansas.

“I will follow up on this (with Pritzker) and our people will follow up on this specific issue,” Beebe said.

Mike Harvey, chief operating council for the Northwest Arkansas Council, attended the summit and agreed that Wal-Mart’s push could be a game changer.

“If Wal-Mart says it is going to do something, they can move the needle faster than any government initiative,” Harvey said.

Fort Smith sales tax revenue was down almost 3.5% in the July report, marking four consecutive months of year-over-year declines in city collections and the city’s portion of the countywide sales tax.

Each of the city’s 1% sales taxes (1% for streets and 1% for water and sewer projects) collected $1.614 million in the July report, down 3.49% from the same period in 2012, and 6.34% below budget estimates. (Because the state of Arkansas has a two-month delay in reporting collections back to the cities, the city of Fort Smith — for budgeting purposes — has historically reflected the collections on a one-month delay. Which is to say, the tax collections remitted to cities in August are from taxes collected in June and transferred by merchants to the state in July.)

For the first seven reporting months of 2013, each of the 1% sales taxes generated $11.494 million, down 1.63% compared to the same period of 2012, and 4.49% below the budget estimate.

Collections in 2012 of the two 1% taxes totaled $39.21 million, slightly ahead of the $38.683 million during 2011. The 2011 collections were 3.9% above 2010 collections.

Fort Smith’s share of the county 1% sales tax in the July report is $1.279 million, down just 0.18% compared to July 2012. The collection was down 2.64% compared to the revenue estimate.

For the first seven reporting months of 2013, the countywide tax has generated $8.958 million for Fort Smith, down 1.75% compared to 2012 and down 4.15% compared to budget forecasts.

The countywide tax collection is critical because the revenue is a little more than 40% of the city’s general budget of roughly $42 million. A majority of the general fund budget general supports fire, police and other critical city functions. The dip in collections has resulted in city officials seeking 4% budget cuts from all departments.

Fort Smith’s July report is counter to the overall Arkansas report for July. July sales and use tax collections totaled $186 million, an increase of $8.1 million or 4.5% from last year. Collections were also above monthly forecast levels by $1 million or 0.5%.

PREVIOUS ANNUAL COLLECTION INFO
2% sales tax collection (1% for streets; 1% for water/sewer bonds)
2012: $39.210 million
2011: $38.683 million
2010: $37.229 million
2009: $37.554 million
2008: $41.226 million
2007: $37.858 million
2006: $36.840 million

Fort Smith portion of 1% countywide sales tax
2012: $15.279 million
2011: $15.15 million
2010: $14.89 million
2009: $15.04 million
2008: $16.61 million
2007: $15.15 million
2006: $14.71 million

Sales tax revenue in Northwest Arkansas’s largest cities continues to rise with solid collections reported in August. Spending across the region is up from last year despite fickle consumer behavior that has created a yo-yo effect in the macroeconomy.


Tax collections from June that were reported by area cities in August totaled $4.598 million, up 11.78% from a year ago. Fayetteville, Springdale, Rogers and Bentonville each collect a 2% local sax tax that is split evenly between bond repayment and each city’s general fund. This report tracks the 1% tax going to fund city budgets.


Bentonville reported a 47% jump in revenue this month, an increase city leaders link to a weak comparison from tax rebates subtracted from last year’s results.
 Revenue collections climbed to $968,097 in Bentonville for the month, helping to push the city further out front of its 2013 budget. A year ago collections totaled $656,619 after the rebate was deducted.


For the 16th consecutive month Rogers has reported tax revenue in excess of $1 million as its growing retail centers continue to attract shoppers from inside and outside the immediate region.
 Businesses in Rogers collected $1.22 million in taxes for the month, up 8.32% from last year’s period.


Fayetteville reported tax collections of $1.5 million for the month, this compared to $1.44 million in the year-ago period, recorded gains of 3.96%.


Springdale’s collections rose 2.6% to $904,653, versus $881,546 reported in the same month last year.


Collections in Siloam Springs, Bella Vista and Lowell also rose from a year ago. Each of the these cities reported double-digit growth in revenue compared to August 2012. 

Cumulatively these smaller cities received $650,656 in revenue during August, versus $581,932 in the year-ago period.


Sales tax collections are sign of consumer spending and confidence but given the two-month lag in data they provide a look back, not forward.


Year-to-date collections remain solid for the cities, which is another healthy sign for the local economy, adding to improving home sales and prices, a growing population and expanding labor force.


Mike Malone, CEO of the Northwest Arkansas Council, said recently that 30 new people a day are moving to Northwest because of the job opportunities and quality of life this region affords. 


Economists agree that has a lot to do with the fiscal health of local cities that continue to invest in needed infrastructure, parks, trails and entertainment venues.
 The population growth is also driving the need for more housing which also supports commercial development across the two-county area.

Collections across the Benton and Washington counties are also up 7.44% through the first seven months of this year. The two counties reported combined revenue of $40.523 million. Benton County collections rose 10.22% year-to-date and Washington County collections are up 4.39%.

Sales Tax Revenue (year-to-date)
Bentonville
2013: $6.386 million
2012: $6.147 million

Rogers
2013: $9.788 million
2012: $8.694 million

Fayetteville
2013: $11.935 million
2012: $11.464

Springdale
2013: $6.939
2012: $6.650

Siloam Springs
2013: $1.904 million
2012: $1.703 million

Lowell
2013: $1.717 million
2012: $1.571 million

Bella Vista
2013: $894,787
2012: $845,904

John Brown University recently opened its new CARE Clinic, a counseling facility located on the Siloam Springs campus.

The clinic features facilities designed to utilize play therapy, a form of psychotherapy which helps children process complex emotions through playing.

JBU is the first university in Arkansas to provide a certificate in play therapy through the graduate counseling program.

“The new facilities will focus on state of the art training in play therapy techniques for any licensed clinician interested in becoming a registered play therapist,” said Dr. John Carmack, program director for graduate counseling and professor of marriage and family therapy. “Currently, the closest like facilities are in Denton, Texas and in Kansas City.”

The building’s five play therapy suites are located in The Tucker Hill Play Therapy Wing, named in honor of the late grandson of Dr. John Carmack.

“The new play therapy CARE Clinic demonstrates John Brown University’s strong commitment to providing high quality training and to better serving the mental health needs of our communities through the use of play therapy,” said Dr. Charles Romig, professor of counselor education, licensed marriage and family therapist and registered play therapist.


The CARE Clinic is a counseling center with locations in Northwest Arkansas and Fort Smith that offers affordable counseling to anyone in the community. The clinic allows JBU's graduate counseling students to gain experience through training and supervision.

More information can be found at www.jbu.edu/careclinic/
 

Mercy recently named Clark Ellison as regional vice president of philanthropy for its south central communities. In his new role, Ellison will continue to lead Mercy Health Foundation Northwest Arkansas, while also overseeing Mercy Health Foundation Fort Smith.

Having begun his career with Mercy in 1998, Ellison has many notable accomplishments as vice president and chief development officer for Mercy NWA, including Mercy Hospital in Rogers, that was funded by a $42 million capital campaign.


During his 16 years at Mercy, Ellison has championed multiple fundraising initiatives in order to advance the work and spirit of Mercy in the community.

“As a nonprofit organization, donor support and true partnership is how we successfully bring health care excellence to the community,” said Patricia Arnold, Mercy’s philanthropy vice president. “Clark is gifted at this. His personable approach in building meaningful relationships, along with his strong leadership and management skills, will be added benefits to strengthening our south central communities’ philanthropic efforts.”

As regional vice president, Ellison will be responsible for developing and enhancing philanthropy programs, increasing support, strengthening donor, member and volunteer relations, and building visibility with stakeholders, corporations, foundations and the public. 

He will collaborate with fellow regional vice presidents and Mercy’s philanthropy team, as well as hospital presidents, physicians and volunteer leaders throughout the region to enhance awareness of the foundations.

In addition to Ellison’s fundraising capabilities, he assisted Mercy Health Foundation Joplin with co-worker and community relief and special projects after the May 2011 tornado.  
 

Banks across Benton and Washington counties posted wider profits through the first half of 2013, compared to last year, but it could be 2015 before profit levels normalize, experts said.

A dozen banks in the region — large and small community banks — posted cumulative net income profits of $141.122 million during the first and second quarters of 2013. Profits rose 47.8% from the same period in 2012, as some banks reversed losses and most have shored up balance sheet and loss reserves.

The banks surveyed for this report include: Arvest, Legacy National, Bank of Fayetteville, First Security, Decatur Bank, Liberty Bank, Pinnacle Bank, Parkway Bank, Bank of Gravett, Signature Bank, Chambers Bank and Metropolitan Bank. These institutions represent a cross sampling of the local banking sector and their improving results help to support a healthier Northwest Arkansas economy.

Even though the local banks are making money again, their profits remain muted from compressed operating margins related to interest rate spreads and higher overhead costs to comply with ongoing regulations. Gary Head, president of Signature Bank, said historically banks have operated on a 4% net interest spread, which has been squeezed down to 2% or 3%.

Talk of the Federal Reserve tapering back their open market purchases later this year is a sign the overall economy is gaining strength. But, if rates continue to rise, bankers said their own net interest spreads could further contract as long as rates are moving upward.

“Local banks are seeing higher profits this year largely because they have already dealt with making the necessary provisions for the delinquent loans on their books. When banks don’t have to set aside large loan loss provisions, that money can go straight to the bottomline,” said John Dominick, banking professor at the University of Arkansas.

The banks in this report set aside a total of $21.324 million in loan loss provisions this year. Last year the same banks put back $47.51 million toward loan loss provisions in the first six months of the year. The banks charged off charged-off $40 million in bad debt in the first two quarter of 2013. The losses compared to $129.66 million charged-off through June of 2012.

“We are going to see bank profits continue to rise this year in what looks like a sharp manner, but most of that is directly related to them making lower provisions. Growth should taper down next year and if the economy continues to slowly improve, profits could normalize by 2015,” Dominick said.

TEPID DEMAND
Community banks make their money from loans made and repaid in a timely manner. But bankers in this region agree the climate for making loans is quite competitive.

“We are out there beating the bushes and making loans, but the overall demand for money is still quite timid, despite the very low rates,” said Don Gibson, president of Legacy National Bank.

Legacy was one of five banks out the 12 that made more loans this year, than last.

Loan Growth
Legacy, $202.5 million, up 18.2%
Chambers, $647.49 million, 15.8%
Parkway, $79.224 million, up 13%
Arvest, $8.162 billion, up 5%
Liberty, $1.872 billion, up 3.8%

First Security bank reported stable loans with those a year ago. The five other banks shrunk their loan portfolios from a year ago.


Although the bankers admit there is active competition for the loans, that is nothing new in the Northwest Arkansas market. Bankers said consumers and business owners just don’t have the confidence they need to borrow money today.

“We have seen our customers work diligently to strengthen their balance sheets over the past few years and they are very cautious about taking on more debt to expand at this time,” Gibson said.

His comment echoed those from Richard Fisher, president of the Federal Reserve Bank of Dallas, who spoke last week at Wal-Mart’s U.S. Manufacturing Summit in Orlando. Fisher said business owners and manufacturers he’s talked with in the past two years are confounded by the uncertainty in fiscal and regulatory policy. He said businesses are not taking advantage of the cheapest money supply in the country’s 237-year history, largely because they remain cautious because of taxes and unwanted regulation.

Rosalind Brewer, CEO of Sam’s Club, said recently that small business owners across this region and the nation report serious concerns about the U.S. economy, health care costs and other regulatory burdens upon their businesses.

REAL ESTATE OWNED (REO) HOLDINGS
Real estate makes up a large percentage of the loans made by local banks and rising residential home values is also helping to boost bank profitability.

The banks in this report shed $111.59 million in real estate owned (REO) from June of 2012 to June of this year. Nearly all of the banks were able to move some of their property in the past year. That said, these banks were still carrying real estate valued at $245.179 million on their balance sheets, according to the filings with Federal Deposit Insurance Corp.

Legacy slashed its REO by 46% from a year ago. Gibson said the bank had written down real estate values over the past few years to the point where the prices were attractive for some properties.

Signature Bank also whittled down its REO holding some 16% in the year-over-year period. Head said the bank has three properties under contract now and hopes to get that moved by the end of the year.

“Banks have been able to sell the homes, and most of what is left is raw land and some commercial property at this point.  We are seeing more interest in bank-owned property in recent months, but no one that I know, is accepting low ball offers,” Head added.

Dominick said the banks would like to sell their REO holdings, but they are not likely to now take huge discounts given they have already marked the values down to appease their regulators amid lower appraisals.

Now that residential property values have begun to stabilize and even appreciate in some areas, the steep write-down in those values have subsided. The commercial market continues to lag behind.

PROFITABILITY PERFORMANCE
While the banking sector as a whole is showing marked signs of strength, the banks in this report posted mixed individual statistics in year-over-year period. This is another sign of the wobbly economy as not all business sectors, including banking, are seeing uniform recovery rates.

Eight of the 12 banks in this report made more money than last year, roughly one-third of which reversed steep losses to do so. Three of the 12 banks reported lighter earnings this year and one bank posted a net loss.

One of the key metrics used to measure a bank’s profitability is its return on assets. The ROA metric indicates how well the bank manages its assets, regardless of its size. The industry benchmark ROA is 1.0% and over the past few years that metric has been hard for many banks to achieve with larger losses and lighter loan demand. One-quarter of the banks this report achieved or exceeded the 1.0% benchmark through the first half of this year.

First Security Bank had the highest ROA in the group at 2.36%. The Bank of Fayetteville also climbed back into this elite group posting a ROA of 1.08%, up from 0.03% just one year ago. Arvest Bank improved its ROA to 1.02% in the period, up from 0.40% last year.

Four other banks in the group achieved ROA levels of 0.70% or better. Those banks include Liberty at 0.87%, Parkway at 0.80%, Chambers at 0.74% and Legacy National at 0.70%.

Dominick said each quarter that these banks continue to post positive earnings, their ROA levels will increase. When losses are incurred, ROA levels fall and it takes time for them recover.

It’s been nearly six years since the local real estate bubble erupted ahead of the national recession and banking crisis of 2008. Profits are returning for most of the local banks, but insiders agree profits are still no where near historical levels.

2013 NET PROFIT / LOSSES (January through June)
Bank of Fayetteville: $1.814 million, up 5,930%

Arvest Bank: $69.646 million, up 54.6%

Parkway Bank: $474,000 up 45.3%


Liberty Bank: $12.403 million, up 7.07%


First Security Bank: $50.314 million, up 3.2%

Signature Bank: $536,000, reversing $15.82 million loss


Legacy National: $933,000, reversing $1.792 million loss


Metropolitan National: $1.944 million, reversing $1.464 million loss

Bank of Gravett: $139,000, down 56.5%

Chambers Bank: $3.383 million, down 34.6%

Pinnacle Bank: $77,000, down 68.3%

Decatur Bank: $-464,000, down 131%

Source: www.fdic.gov
 

Downtown Fort Smith, an area once described as rundown with gutted buildings and others in disrepair, has recently been experiencing a re-birth, of sorts, but the revitalization is not only limited to commercial space.

According to developer Rick Griffin of Griffin Properties, residential real estate in downtown Fort Smith is not only stable, but a growing sector in an area once struggling to recover from the devastating affects of suburban sprawl to the east following the development of Central Mall and a 1996 tornado that caused millions of dollars in damage to western gateway of the city.

"Malls around the country changed downtowns. In the 1950s, when (Fort) Chaffee was alive and well, people would go downtown and walk the sidewalks. That was typical entertainment," he said. "The malls gutted local businesses. Downtown fell into disrepair. But our family and others started to buy those properties and figuring out what do with them. We've been working down there for about 35 years."

Griffin said part of his family's approach to downtown development has been to accomplish three things – offer commercial buildings that are modernized, get people living downtown and offer services to support residential and commercial development.

APARTMENT ACCEPTANCE
While the modernization of commercial buildings has been underway for many years, luxury apartment development has lagged for some time, with the Griffins not introducing their first units to the market until about 10 years ago.

"People in the late 80s and 90s put apartments in, they were just ok. But over the last 10 years, we've started to put (luxury) apartments in the top floors of buildings – 23 feet wide and 90 feet deep, about 2,000 square feet per floor."

Developments to call downtown home in the last decade include not only Griffin's 307 Garrison Avenue and 14 North 3rd Street, but also the West End Lofts, apartments at 706 1/2 Garrison Avenue, 501 1/2 Garrison Avenue, West End Lofts and the Ivory House Lofts, located above the Sake Sushi and Martini Bar at 823 Garrison Avenue.

Property Manager Amanda Mondier said the 14 lofts above Sake, purchased in 2008 by the Meadows family and first rented in 2010 through management company Southwest Resources, are nearly always at capacity. Much of the residents have chosen to be close to work.

"I think that just the downtown lifestyle, and just feeling like they live in the city, is a draw," she said. "And quite a few of the people that live down here work downtown, also."

DOWNTOWN JOBS
There may be more people working downtown by next summer.

The historic and white tiled Friedman-Mincer building – also known as the OTASCO building – at the intersection of Garrison Avenue and Towson Avenue in the eastern end of downtown Fort Smith was built in 1911, and Steve Clark plans to give it a serious makeover more than 102 years later.

Clark, founder and president of Propak, plans to convert the three-story, 24,000-square-foot building into offices for the about 40 employees of Propak. The company provides logistics, transportation and supply-chain management services.

Griffin said while the apartments he builds in mixed-use developments are typically  always full, as well, but it has not been without cost.

"Renovating the buildings is expensive. Cash flow isn't great. But there are tax credits available, but it handcuffs you to what you can do to the outside of the building. I wanted to do it all as apartments, but tax credit people want businesses that face Garrison. We had to do commercial space on the Garrison frontage."

And while some of the commercial space may not be leased regularly, Griffin said what he does know is "when we build decent apartments, we rent them. With commercial, we may have vacancies, but the apartments stay full."

POSSIBLE MARSHALS STIMULUS
As for what the future holds for downtown residential development, with conservative estimates of about 100 units in the market, Griffin said he thinks it looks bright.

"Remember that when the U.S. Marshal's Museum is constructed, it will be a game changer for this area and for downtown Fort Smith. It will bring a lot of people to downtown."

Griffin is already planning for that period, developing a $3 million mixed use residential development along the 400 block of Garrison Avenue to add to his downtown residential portfolio.

But to continue the growth Griffin expects in the downtown neighborhood, Mondier said residents will start to demand more amenities.

"If you look at people that move in from out of town from bigger cities, they're always surprised that there's not stuff downtown. ... A grocery store (would be a good addition), because there's not one down there. There needs to be more things that could be easily accessed or more convenient to down there."

Griffin said with his commercial properties, he is working to make sure unique retailers come to downtown in order to meet the needs of residents and visitors alike.

"We're trying to not rent to just anyone. I'd like to have a meat market downtown. if there was a small specialty grocery store, a small market down there would probably thrive. I was concerned about having a liquor store downtown, but we have that solved. People need to focus on not duplicating, but you need it to be diverse. But does (the downtown residential market) have a good future? I think it has a great future."

Investors of Tyson Foods got cold feet on Monday (Aug. 26) amid concerns of steep production increases that will most certainly pressure poultry margins in the coming quarters.

Shares of Tyson Foods tumbled more than 7% following a downgrade by Bank of America/Merrill Lynch analysts who took the stock from a “buy” to a “hold” recommendation on a one-year target price of $32.

The stock was trading Monday afternoon (Aug. 26) at $29.17, down $2.31 per share following the downgrade.

Tyson Foods had been flying high of late hoisted by better operating margins linked to lower commodity grain costs and higher chicken prices. But analysts heeded caution on Monday, following steep increases in poultry production reported across the industry.

The Merrill Lynch team of Ryan Oksenhendler and Bryan Spillane said recent industry data indicates a steep increase in production that will likely squeeze operating margins sooner than expected – by the spring of 2014.

U.S. Department of Agriculture recently reported broiler egg sets rose 3% from a year ago, but pullet placements among breeders jumped 8% in July. At the same time cold storage levels rose 4% from June, and processors had 5% more chicken in the freezer at the end of July than they did a year ago. These stats forecast excess poultry supplies in the coming two quarters or so, and also threaten to cut short the rally in wholesale prices enjoyed by processors for most of this year.

Georgia Dock chicken prices for boneless, skinless breast were $2.08 cents per pound last week, up from $1.77 a year ago. Leg quarters, typically an export item, were bringing 53 cents per pound last week, up one cent from a year ago.

While Tyson is a diversified meat company, chicken has been one of the brighter spots in its portfolio this year. Beef and pork margins have been constrained from demand issues relevant to supplies of live cattle and hogs. Tyson Foods continues to invest its chicken and prepared foods segments in part because it will help drive the company’s value-added sales, a mission CEO Donnie Smith announced late last year.

Smith said in the company’s recent earnings call that Tyson’s move toward growing value-added sales 6% to 8% this year is on track with 5% gains made through three quarters of 2013. Last year roughly 45% of Tyson Foods’ sales came from value-added products. That was $15 billion of the $33.3 billion the meat giant posted in total revenue, according to analysts with Fitch Rating Service.


Using that data, half of Tyson’s total sales are now perceived as valued-added. These products command a larger profit margin than commodity whole or chicken parts. They also provide some insulation against this perceived threat of declining industry margins.


Earlier this month, Tyson executives said they expected U.S. chicken production to increase 2% to 3% in fiscal 2014. Smith said Tyson’s chicken segment should be operating at or above its normalized range through next year.


Tyson was not the only company impacted from the Bank of America downgrade. Its chief competitor, Pilgrim’s Pride, also lost 7.75% of its share value on Monday. Shares of Pilgrim’s closed at $15.47, down $1.30 on the day.

Both companies recently reported strong results in chicken. Tyson’s chicken sales rose 10.6% over the past year to $3.16 billion, largely on the heels of higher demand. S&P Capital IQ analyst Tom Graves expects chicken to provide the largest amount of profit for Tyson this year and next, helped by a likely reduction in grain costs thanks to lower corn and soybean prices.

Pilgrim’s reported chicken sales of $2.18 billion in the recent quarter. Sales rose 10.5% from a year ago. Pilgrim’s CEO Bill Lovette, told investors on July 31 that he believed the “industry remains disciplined to the supply and demand fundamentals necessary for profitability.” He said the higher egg sets also met with lower hatchery rates compared to a year ago. Lovette said when looking at cumulative chick placements, the industry is still at one of its lowest levels since around 2007.

The one thing analysts and poultry executives do agree on is that cost-conscious consumers continue to purchase more chicken than beef, given the lower prices per pound.

Arvest Bank and the Northwest Arkansas Naturals are working together to kick off  a "1 Million Meals" campaign to help feed those who are hungry.


In September, Arvest Bank will launch its annual campaign, a two-month effort to collect donations to provide more than 1 million meals to partnering food banks in the 90 communities Arvest operates in across Arkansas, Missouri, Oklahoma and Kansas.


To help Arvest Bank reach that goal and get the campaign started, the Northwest Arkansas Naturals are offering free Naturals’ game tickets to anyone who donates either $5 or 10 individual food items at the main gate of Arvest Ballpark before the 2013 Naturals’ home games between Aug. 26 - 29.



Residents wanting to take part should bring $5 or 10 non-perishable food items to the ballpark gates between 6 p.m. and 7 p.m. and exchange them for a ticket for than evening’s game.
 

In the past six weeks 8 permits have been filed with the state health department for new restaurants looking to locate in Northwest Arkansas.

Cracker Barrel, Chipotle Mexican Grill, Azul Tequila Grill and Dunkin Donuts have plans to open in Bentonville.

Chuy’s, Longhorn Steakhouse and Freddy’s Steakburgers filed permits for new venues in Rogers.

In Washington County, K.J. Sushi and Korean BBQ  filed a permit for a new restaurant in Fayetteville. The locations of all 8 new eateries can be found on this map.

The local restaurant sector expansion is being fueled in part by the population growth of roughly 1,000 new residents per month coming to this region.

The region’s expanding labor force is also a key metric that grabs the attention of potential restaurant owners.

Bruce Grindy, chief economist with the National Restaurant Association said the key driver in the second half of the year will be job growth, as steady income gains are needed to help consumers release some of their pent-up demand for restaurants. 

“If monthly U.S. employment gains are in the 180,000 - 200,000 range through the remainder of the year as expected, restaurant sales will likely post consistent gains,” he said.

He expects overall, U.S. restaurant sales growth in the 4% annualized range when the books are closed on 2013.

Grindy said total food and beverage sales totaled $45.8 billion in July on a seasonally-adjusted basis, up 0.6% from June.


He said restaurant sales in July remained 3.9% above their July 2012 levels, after adjusting for seasonal and holiday factors. Grocery store sales rose 2.7% during the same 12-month period.



That said, restaurant sales across the country have been softer in some sectors such as casual dining in recent months.

 Casual dining establishments reported a 3.5% drop in sales last month, on the heels of a 2% decline in June, according to the Knapp-Track Index which looks at 56 casual restaurant chains from coast to coast.



Malcolm Knapp, the report author, noted that nervous consumers are carefully allocating their resources and are spending in some segments – such as automobiles – and restaurants are suffering as a result.


Locally, prepared food taxes are up in Fayetteville and Bentonville through June from a year ago. These are the only two local towns that collect this tax.



Fayetteville food venues collected $1.34 million in taxes during the first two quarters of 2013. Collections are up from roughly $1.27 million in the year-ago period.



In Bentonville, prepared food taxes totaled $556,139 during the first half of this year, rising 6.4% from the same period in 2012.
 

Members of the Fort Smith Board of Directors discussed city finances at today's noon study session, where they learned that the city's 2014 budget would likely stay at levels similar to the current budget.

The budget is unlikely to rise noticeably in the next fiscal year, according to City Administrator Ray Gosack, due to the drop in sales tax revenues this year.

In response, Director Pam Weber questioned whether any cuts need to be made to this year's city budget following the across the board 4% cuts that went into affect earlier this year.

"The sales tax revenue is still meeting those revised revenue estimates, so at this time there's not any spending adjustments to the general fund. But if those revenue trends continue into 2014, then that level of spending we made for the rest of 2013 would need to continue into the rest of 2014," Gosack said.

He said even with the decline, repayment of bonds are in good shape since the bonds were drawn out over multiple years and included "cushion" should a drop in revenues, such as what happened this year, were to occur again or continue.

Gosack added that the city has budgeted 7.5% for contingencies, a number he said cannot go any lower without affecting cash flows.

"Given what's gone on the last eight to ten months revenue, that's the most prudent route to take at this time."

Each of the city’s 1% sales taxes (1% for streets and 1% for water and sewer projects) collected $1.614 million in the July report, down 3.49% from the same period in 2012, and 6.34% below budget estimates.

For the first seven reporting months of 2013, each of the 1% sales taxes generated $11.494 million, down 1.63% compared to the same period of 2012, and 4.49% below the budget estimate.

For the first seven reporting months of 2013, the city’s portion of the countywide tax has generated $8.958 million, down 1.75% compared to 2012 and down 4.15% compared to budget forecasts.

The countywide tax collection is critical because the revenue is a little more than 40% of the city’s general budget of roughly $42 million. A majority of the general fund budget general supports fire, police and other critical city functions.

Despite the decline in sales tax revenues, Gosack said there were reasons to be optimistic about the future of Fort Smith.

"There are other positive signs in our economy. It will probably take sales tax or retail sales some time to catch up with those other positive trends," he said.

Among the positives, Gosack highlighted the recent announcements of new jobs coming to the Fort Smith area and the positive signs in the commercial construction market.

"So although people focus on the employment rate, one of the things I look at is the actual number of people with jobs working in our MSA and that number continues to go up. So that tells me there are more people with jobs, working and that provides more income to be spent on retail sales in the economy."

Gosack also highlighted positive signs in the residential real estate market as an indicator that the sales tax revenue decline will eventually turn around, though likely not until fiscal year 2015.

One of the few areas the city administrator said would need additional funds in the 2014 budget would be in healthcare, where premiums have continued to rise.

"Even though the revenue will be flat, the one significant expense that I know will rise in 2014 is healthcare," he said, with Board members speculating it could rise as much as 7% or 8%.

The nation’s largest private employer — Wal-Mart Stores Inc. — expanded the parameters of its company benefit package to include spouses of full-time employees and domestic partners.

A postcard was sent out to employees this week detailing several changes to the company’s health plan for 2014, according to Wal-Mart spokesman Randy Hargrove.

He said Wal-Mart did expand coverage eligibility for any spouse or domestic partner of a full-time employee which includes, medical, dental, a new vision option, critical illness and accident plans. Hargrove told The City Wire that domestic partners would be eligible beginning in 2014, during the enrollment period starting Oct. 12.

Wal-Mart joins a long list of Fortune 500 companies including Costco, Ford, Home Depot and Best Buy to offer health care benefits to same-sex partners. The civil rights group, Human Rights Campaign, estimates 62% of Fortune 500 companies have already done so. HRC said inclusion efforts have increased from 34% in 2002.

Often a target of criticism by labor groups, the retail giant was praised today by HCR for “adding gender identity and expression to its employment non-discrimination policy.” 

“What matters in the workplace is how you do your job, not your gender identity or sexual orientation,” said HRC President Joe Solmonese. “As the nation’s largest private employer, Walmart shows that doing the right thing is also good for business. We urge them to continue to move forward by ensuring all of their LGBT employees receive equal benefits.”

The Supreme Court’s ruling in June to recognize same-sex marriage will undoubtedly mean more employers tweak their benefit packages to comply with federal law, especially since 13 states and the District of Columbia have legalized same-sex marriages.

Hargrove said benefits for domestic partners is one part of the company’s ongoing effort to provide affordable, comprehensive medical coverage for its employees. He said this is also the first year Wal-Mart has offered a vision plan in its benefit package. In addition, a program known as Expanded Centers of Excellence will provide participants 100% coverage for hip and knee joint replacements as well as certain heart and spine surgeries.

Wal-Mart also is providing participants the opportunity to comparison shop for certain health care procedures with a new online tool – Castlight – that searches for doctors and medical services based on cost and quality reviews.

Hargrove said health insurance premium increases would be 3% and 10% depending on the coverage plan chosen, and are the lowest increases in several years.

Wal-Mart employs roughly 1.3 million in the U.S. and more than half of its workers participate in the company’s health care plans

News that Wal-Mart has applied the brakes to its India expansion is no indication the retailer has gotten cold feet, despite a management shake-up and an ongoing investigation tied to the Foreign Corruption Practices Act.

Wal-Mart said Tuesday (Aug. 27) the retailer is optimistic about growing its Best Price Wholesale cash and carry business in India as well as future retail investment opportunities that may be possible through the Foreign Direct Investment policy.

Retailers like Wal-Mart, Tesco and Carrefour have been licking their chops for several years about the possibilities to be had in a $396 billion retail market that is likely to grow by 12% to $574 billion by 2015, according to Deloitte.


Recent news reported out of India indicates Bharti Retail, Wal-Mart’s 50% partner since 2007, has returned more than two dozen properties back to landlords, which were leased throughout the country to open Easyday stores.


Wal-Mart, which operates a cash and carry venture with Bharti, lobbied hard for the entry of foreign supermarkets into India, and was expected to be the first foreign retailer to set up shop in the country. 


The last two stores opened by Bharti Walmart was in October 2012 and the retailer appeared to be expanding its reach albeit at a cautious pace.

In July, sources out of Bentonville said it would likely be 2015 before Wal-Mart ramped up its expansion in India.


Wal-Mart reportedly cooled its heels as news of an investigation into the legality of the $100 million Bharti Walmart transaction years ago came to surface earlier this summer. 


“We appreciate the continued efforts by the Indian Government to clarify investment conditions. Reform of this policy will improve shopping options for customers, provide new markets to local suppliers and farmers, and improve supply chain infrastructure in the country. We continue to review the guidelines and work with the government to understand the rules that exist for foreign direct investment. In every market where we operate, Wal-Mart is a strong supporter of small and medium enterprises with a focus on those that provide our customers with competitive and quality products,” a spokeswoman from Walmart India noted in an email Tuesday (Aug. 27).

An internal investigation is also underway into whether company executives in India committed any violations of the FCPA, a broader audit of bribery allegations in the retailer’s Mexican business unit.

Analysts with Deloitte said there is also the Parliamentary elections in 2014, which could further hinder retail expansion should opposition parties win and then reverse the recent decision to allow foreign ownership. Any or all of these developments are enough to sideline global retailers in India for the time being, analysts said.

This pause in expansion does give Bharti Walmart time to re-assemble its leadership team following a suspension of Bharti executives and the resignation of CEO Raj Jain in June. Jain had overseen the Indian market since 2007. Earlier this month, Wal-Mart transferred its chief operating officer for Bharti back to the U.S., after one year running that local business.

Wal-Mart said it will continue to invest in India with its cash and carry business, supply chain infrastructure as well as its direct farm and supplier development programs that not only will serve customers but also make important social and environmental contributions to the country.

“We think India’s best days are ahead, and we are excited to be a part of this opportunity. Modern retailers worldwide bring about large-scale, high volume sourcing, coupled with a strong technological edge and supply chain efficiencies. These have a direct positive impact on consumers who benefit by getting a wide assortment of quality goods at low prices,” the Walmart India spokeswoman added.
 

Joe Calhoon, an author and business growth expert, will present his 1Hour2Plan speech to local business leaders and entrepreneurs next month. The luncheon is set for 11 a.m., on Wednesday, Sept. 18, at the Shewmaker Center on the NorthWest Arkansas Community College campus in Bentonville.

Calhoon has worked with leaders in more than 600 different organizations including Apple, 3M, GE, Chick-fil-A, as well as a wide range of small and midsized companies.

He is the author of three books - Prioritize!, On the Same Page, and The 1 Hour Plan for Growth.

In his 1Hour2Plan presentation, Calhoon will cover the following topics:

•Applying the 3-step system to grow an extraordinary business
•Aligning a team with shared vision, mission and values
•Setting three objectives that drive superior results
•Identifying high leverage strategies to take business to the next level
•Consistently engaging teams and focusing on what matters most.

The event is open to the public and co-sponosored by Donna Feyen, owner of More Than A Review and Jamie Smith, owner of Jamie’s Notebook.

The luncheon event, which is catered by Honeybaked Ham, will also include door prizes and networking opportunities. Tickets for the event are $35 until Sept. 4 increasing to $40 afterward. To register, visit Evenbrite

The Fort Smith metro area was one of two in the state to see a jobless rate decline in July compared to June and to July 2013. Unfortunately, the rate improvements do not reflect sizeable employment gains in the region.

The jobless rate in the metro area during July was 7.6%, down from 7.7% in June and well below the 8.4% in July 2012, according to figures released Wednesday (Aug. 28) by the U.S. Bureau of Labor Statistics.

Metro employment of 123,147 was 0.24% more than July 2012, but was 1.72 below employment in June.

Five of the eight metro areas in or connected to Arkansas had jobless rate increases in July compared to June, and six areas had jobless rate decreases compared to July 2012. Only the Fort Smith and Texarkana metro areas saw jobless rate declines compared to June and July 2012.

During July, the lowest metro jobless rate in the state was in Northwest Arkansas with 5.9% and the highest rate was 10.3% in the Pine Bluff area.

UNEMPLOYMENT FALLOUT
July was the 55th consecutive month the Fort Smith metro jobless rate has been at or above 7%. July food distribution by the River Valley Regional Food Bank is a side-effect of the persistent higher unemployment rate in the region.

The food bank set an all-time record of distribution in July 2013 by placing 975,091 pounds with its 217 member agencies during the month.

“The jump in tonnage represents a 55% increase over July 2012 and a 26% increase over the previous record set in July of last year. With a daily average of 31,450 pounds, the food bank easily distributed a truckload of food a day, which amounted to 795,000 meal equivalents in July,” noted a food bank statement.

There were 144 hunger-relief agencies receiving food for the Arkansas service area counties of Crawford, Franklin, Johnson, Logan, Polk, Scott, Sebastian and Yell.

"All I know is that this is the biggest amount we have ever distributed and I've been here for 11 years,” said Ted Clemons, executive director of the food bank.

Wal-Mart Stores is the largest provider of food. The Walmart stores in the Fort Smith region and the Walmart Clarksville Distribution Center are responsible for one-third of the food bank's donations, according to the food bank. Other top contributors in the month of July included Sam's Club, Kellogg's, Pepsico, Little Debbie, Harp's Food Stores and Tyson Foods. As part of the food bank's retail recovery program, Red Lobster, Longhorn Steakhouse, Pizza Hut, Olive Garden and Bob Evans Restaurant donated 4,300 pounds. 

FORT SMITH METRO NUMBERS
The size of the Fort Smith regional workforce during July was 133,224, down from the 135,812 during June, and below the 134,039 during July 2012. The labor force reached a revised high of 140,253 in June 2007.

Unemployed persons in the region totaled an estimated 10,077 during July, down from the 10,502 during June, and below the 11,195 during July 2012.

The Fort Smith area manufacturing sector employed an estimated 18,600 in July, up from the 18,500 in June, and below the 19,400 during July 2012. Employment in the sector is down more than 34% from a decade ago when July 2003 manufacturing employment in the metro area stood at 28,100. Also, the annual average monthly employment in manufacturing has fallen from 28,900 in 2005 to 19,200 in 2012 – the first year the average has dropped below 20,000 since surpassing that level.

Jobs in the Trade, Transportation and Utilities sector — the region’s largest job sector —  totaled 25,600 in July, down from a revised 25,800 in June, and above the 24,100 during July 2012. The revised June employment marks a new employment high in the sector. The previous high was 25,700 posted in December 2007.

Employment in the region’s tourism industry was 9,500 during July, down from 9,600 in June and above the 9,100 in July 2012. The sector reached an employment high of 9,800 in August 2008.

In Education & Health Services, employment was 17,800 during July, down from 17,900 in June and above the 16,900 during July 2012. The June employment level was a record for sector employment in the Fort Smith area. The annual average monthly employment in the sector has steadily grown since 2005 when it reached 14,000. In 2012 the average was 17,100.

In the Government sector, employment was 16,700 during July, down from 18,900 in June and above the 16,600 in July 2012.

NATIONAL NUMBERS
Unemployment rates were lower in July than a year earlier in 320 of the 372 metropolitan areas, higher in 38 areas, and unchanged in 14 areas, noted the broad BLS report.

The U.S. unemployment rate in July was 7.4%, down from 8.2% from a year earlier. Arkansas’ jobless rate was 7.4% in July, up from 7.3% in June and unchanged compared to in July 2012.

Oklahoma’s jobless rate during July was 5.3%, up from 5.2% in June, and unchanged compared to July 2012. The Missouri jobless rate during July was 7.1%, compared to 6.9% in June and unchanged compared to July 2012.

ARKANSAS METRO AREAS
Fayetteville-Springdale-Rogers
July 2013: 5.9%
June 2013: 5.7%
July 2012: 6.2%

Fort Smith
July 2013: 7.6%
June 2013: 7.7%
July 2012: 8.4%

Hot Springs
July 2013: 7.8%
June 2013: 7.7%
July 2012: 8%

Jonesboro
July 2013: 7.3%
June 2013: 7.1%
July 2012: 7.6%

Little Rock-North Little Rock-Conway
July 2013: 6.8%
June 2013: 6.7%
July 2012: 7%

Memphis-West Memphis
July 2013: 9.5%
June 2013: 10%
July 2012: 9.5%

Pine Bluff
July 2013: 10.3%
June 2013: 10.1%
July 2012: 10%

Texarkana
July 2013: 7.1%
June 2013: 7.4%
July 2012: 7.3%

FORT SMITH METRO AREA HISTORY
Past annual average unemployment rates
2012: 7.7%
2011: 8.6%
2010: 8.2%
2009: 7.9%
2008: 4.8%
2007: 5.3%
2006: 4.9%
2005: 4.5%
2004: 5.2%
2003: 5.5%
2002: 5%
2001: 4.2%
2000: 3.7%

The Northwest Arkansas jobless rate rose to 5.9% in July, the third consecutive monthly rate increase and proof that not even one of the healthiest regions in the country is immune from the whims of a on-again, off-again national economic recovery.

However, employment in the region’s largest sector – trade, transportation and utilities – reached a new high in July.

A slight decline (0.17%) in the number of employed and a 2.4% gain in the number of unemployed pushed the July rate above the 5.7% in June. However, the July rate was well below the 6.2% in July 2012.

Five of the eight metro areas in or connected to Arkansas had jobless rate increases in July compared to June, and six areas had jobless rate decreases compared to July 2012.

During July, the lowest metro jobless rate in the state was in Northwest Arkansas with 5.9% and the highest rate was 10.3% in the Pine Bluff area.

NWA METRO NUMBERS
According to figures released Wednesday (Aug. 28) by the U.S. Bureau of Labor Statistics, the size of the Northwest Arkansas regional workforce during July was estimated at 241,041 a scant decrease from the 241,104 during June, and ahead of the 237,105 during July 2012.

June was the first month the region’s workforce has topped 240,000. The average annual monthly labor size was 231,461 during 2012, 227,938 during 2010 and 225,177 during 2009.

The number of employed during July fell to 226,896 from 227,297 in June. The July employment was 2.06% higher than the 222,298 in July 2012.

Following are other key figures from the BLS metro report.
• Unemployed persons in the region totaled 14,145 during July, above the 13,807 during June and below the 14,807 during July 2012.

• The Northwest Arkansas manufacturing sector employed an estimated 26,700 in July, down compared to 26,900 in June, and below the 26,900 during July 2012. Sector employment is down more than 20% from more than a decade ago when July 2002 manufacturing employment in the metro area stood at 34,000.

• Jobs in the Trade, Transportation and Utilities sector — the region’s largest job sector —  totaled 50,700 in July, up from 50,200 during June, and up from the 47,700 during July 2012.

• Employment in the region’s tourism industry was 22,000 during July, unchanged from 22,000 in June and up from 20,600 during July 2012. The June and July employment is a new record for the sector, although the figure could be revised in subsequent reports.

• In Education & Health Services, employment was 24,900 during July, down from 28,900 during June and up from 26,200 during July 2012.

• In the Government sector, employment was 26,600 during July, down from 30,700 in June and up compared to 28,500 during July 2012.

NATIONAL NUMBERS
Unemployment rates were lower in July than a year earlier in 320 of the 372 metropolitan areas, higher in 38 areas, and unchanged in 14 areas, noted the broad BLS report.

The U.S. unemployment rate in July was 7.4%, down from 8.2% from a year earlier. Arkansas’ jobless rate was 7.4% in July, up from 7.3% in June and unchanged compared to in July 2012.

Oklahoma’s jobless rate during July was 5.3%, up from 5.2% in June, and unchanged compared to July 2012. The Missouri jobless rate during July was 7.1%, compared to 6.9% in June and unchanged compared to July 2012.

ARKANSAS METRO AREAS
Fayetteville-Springdale-Rogers
July 2013: 5.9%
June 2013: 5.7%
July 2012: 6.2%

Fort Smith
July 2013: 7.6%
June 2013: 7.7%
July 2012: 8.4%

Hot Springs
July 2013: 7.8%
June 2013: 7.7%
July 2012: 8%

Jonesboro
July 2013: 7.3%
June 2013: 7.1%
July 2012: 7.6%

Little Rock-North Little Rock-Conway
July 2013: 6.8%
June 2013: 6.7%
July 2012: 7%

Memphis-West Memphis
July 2013: 9.5%
June 2013: 10%
July 2012: 9.5%

Pine Bluff
July 2013: 10.3%
June 2013: 10.1%
July 2012: 10%

Texarkana
July 2013: 7.1%
June 2013: 7.4%
July 2012: 7.3%

NORTHWEST ARKANSAS METRO AREA HISTORY
Past annual average unemployment rates
2012: 5.6%
2012: 6.2%
2010: 6.5%
2009: 6.1%
2008: 4.1%
2007: 3.8%
2006: 3.6%
2005: 3.3%
2004: 3.8%
2003: 3.7%
2002: 3.3%
2001: 3%
2000: 2.9%

Not only is the management of product and people related to supply and demand part of the curriculum at the University of Arkansas’ Walton College, it’s also a real issue with which Walton College leaders are struggling.

However, it’s a struggle they welcome.

The Executive MBA program at Walton College has grown from about 20 students in 1999 to 68 accepted students for the 2013-2014 class and around 40 students on a waiting list.

“It has been growing steadily over the past few years,” Dr. Vikas Anand, associate professor and director of the MBA program at Walton College, said in what could be labeled an understatement.

Students in the newest class work in a wide variety of backgrounds. Sectors represented are retail, technology, consumer packaged goods vendors, engineering, marketing, manufacturing, computer hardware and software, higher education, logistics/transportation, law, banking, military and medical.

Anand also said the class diversity has changed, with 38 women in the 2013-2014 class – a record class number for the program.

The two-year, 38-hour program consists of online and at-home study, with students attending class one Saturday per month for two years. Classes in the program include “Managing Ideas, Products and Services,” “Economics of Management and Strategy,” “Retail Strategy and Processes,” and “Supply Chain Management.”

It’s the growing supply of individuals seeking matriculation through the program that Anand and others at Walton College are now tasked to manage.

Anand says the program is “not an overnight success.” He emphasizes that interest is the result of many factors, including the university’s willingness to think beyond traditional academia and merge the needs of the private sector with the advantages of technology.

GROWTH FACTORS
A factor leading to increased interest has been a move to make the course more accessible to those with jobs and who do not live in Northwest Arkansas. Part of that was a willingness to waive the GMAT (graduate management admission test) requirement by “giving weight to work experience,” Anand said.

“When you think about it, why should someone who is 40 or 45 years old and have run a business for several years” not be given credit for the experience, Anand asked.

The 2013-2014 class has 38 students with between 10 and 25 years of work experience, and only 28 with less than five years of work experience.

“I found that they are probably the most motivated students that we have,” Anand, who has been with the program since inception, said of those with extensive work experience. “When you think about it, someone who is coming in, who is coming back, at that age is motivated.”

Anand said the older graduates also are “some of our strongest supporters after they have graduated. ... Their word of mouth about us is fantastic.”

Yet another factor, according to Anand, is that the university has actively pitched the program in large regional cities only a few hours drive from Northwest Arkansas. Dallas, Kansas City and Little Rock are home to some of the students in the newest class. Anand also said the class has become a “recruiting tool” for some of the retail-sector vendor companies in Northwest Arkansas.

“A large number of people who come to Northwest Arkansas are here just a few years to work for a vendor. ... What we find is that they use that time to complete (the executive MBA). I know at least two or three companies who use that as a recruiting tool to get them to come here,” Anand said.

Somewhat of a surprise in recent years to Anand is the number of physicians and pharmacists who enter the program. Several doctors from the Little Rock area have completed or are in the program because they see how changes from the federal healthcare law may require them to “learn more about the finances of their business,” Anand said.

TUITION COMPARISON
Possibly the most important factor is tuition. Tuition for the Executive MBA program is about $35,000, although it could rise closer to $40,000 for the 2014-2015 class. Even with the higher tuition, the program is less expensive than other large university programs. Following are tuition levels for similar programs around the country:
• University of Texas: $89,250
• University of Texas-Dallas: $82,000
• University of Pennsylvania (Wharton College): $171,360
• University of Oklahoma: $77,400
• Arizona State University: $79,600
• Auburn University: $55,480
• Texas Christian University: $89,500

Anand admitted that it “is tempting to push it (tuition) higher when there is so much demand,” but said Walton College officials are mindful of what the cost means to companies and individuals. He said about 40% of students receive tuition reimbursement from their employer, with the reimbursement ranging from 25% to 100% of all costs.

TECHNOLOGY, CLASS EXPANSION
With expectations for continued demand, Anand said, Walton College officials are planning to expand the program to two sections in 2014-2015. Technology, which has helped foster program growth, will help Walton College administer a second section without stressing the system and jeopardizing quality, Anand said.

“Technology to me is a huge enabler,” he said.

The technology is “centered around the delivery of education,” Anand said, with Walton College faculty developing over the years several options for that delivery. One option allows outside experts to interact with the class from a remote location. All class lectures are recorded, which allows students to merely listen to a lecture and then watch it again to take notes – or vice versa.

Another option is access to a video lecture in which students watch the lecture before attending class.

“This allows students to interact more when they come together,” Anand said. “We’ve already gone to that format, so it’s really about, ‘How do we go beyond that? How do we enhance that impact?’”

Going beyond to enhance an impact may be a journey without books.

“In a few years, we won’t be looking at textbooks,” Anand said of moving to a more digital classroom. “I see this as a huge opportunity.”

But technology, Anand stressed at the end of his praise for its benefits, is not a substitute for human interaction.

He said a key value of the MBA program is that “it builds networks through an interactive format for learning” in which faculty and students gather in or out of the classroom and “engage in these accidental conversations” that foster a level of learning outside even the best-planned curriculum.

The struggle continues to be the balance between quality education, convenience and the ever-changing needs of the private sector.

“We have to continue to increase the flexibility for our students without compromising the quality of the education,” Anand said.

The State Chamber/Associated Industries of Arkansas is planning to launch two new websites to address workforce development needs in Arkansas.

“Intern in Arkansas” will match a student’s area of study with a business area of expertise through an online hub. According to the chamber, students will learn real-world functioning of a business. The site, interninarkansas.com, will be activated in mid-September.

“Internships play a pivotal role in a student’s success,” said Susie Marks, senior vice president of the Arkansas State Chamber of Commerce. “The Intern in Arkansas site is being developed as an effort to retain Arkansas’s young talent in the state through internships that develop into permanent jobs. This is an effort aimed at connecting undergraduate and graduate students with existing opportunities in their chosen career field.”

Supporters to date of the “Intern in Arkansas” site include the Arkansas Department of Education, AEDC, UCA, Lyon College, Ouachita Baptist University, Clinton School of Public Service and Hendrix College.

The second site is “Dream It. Do It. Arkansas” which will launch in early October at DreamItDoItAR.com.

The State Chamber/AIA has partnered with the National Association of Manufacturing’s (NAM) Manufacturing Institute and will become one of 21 others states to launch a local site. The web site has a goal of educating young people, teachers and parents about jobs in manufacturing, according to the chamber. The site will also develop an advisory council to develop a plan to address skills gaps in Arkansas’ workforce.

“Dream It. Do It. Arkansas” is sponsored by Nucor and Rockline Industries in partnership with Bad Boy, Evraz Stratcor, Little Rock Tools and Prestolite Wire.

“Our plan with ‘Dream It. Do It. Arkansas’ is to develop collaboration between employers, our education system, our workforce development agencies and economic development organizations to address the critical shortage of qualified workers. ‘Dream It. Do It. Arkansas’ will also educate students, parents and educators on the importance of career and technical training needed to fill manufacturing jobs in order to build a competitive workforce for our state,” Marks said.

Part of the effort for the web site will tie into an upcoming focus on manufacturing in Arkansas. As part of a national effort, state business groups and Arkansas Manufacturing Solutions will host “Manufacturing Day” on Oct. 4.

Through grassroots initiatives, partnerships between schools and employers, and a web site – www.MFGDAY.com– an effort is being made to influence the perception of manufacturing careers.
www.mfgday.com/