The upcoming nasty politics of the private option, moving an entrepreneurial iceberg, and a greener Wal-Mart and are part of the Northwest Arkansas Friday Wire for Feb. 7.

NOTES & ANALYSIS
• Get ready to rumble
Consider yourself warned all you who have found some measure of relief that Arkansas politics have not yet devolved to the putrid depths of chaos stirred feverishly by the shallow and sophomoric fecal flingers who have slimed their way into leadership positions in Washington D.C.

Your warning comes with two words: “Private option.”

It seems that in 2013 the Arkansas Legislature passed a plan – the private option – that all but completely altered how Obamacare would be administered in Arkansas with respect to Medicaid funding. There is no need to detail the particulars, because all one needs to know is that this plan had, at some point, a connection to Obamacare.

Arkansas’ upcoming political filing period, 2014 fiscal session and May 2014 primary will be dominated by who is and who is not for funding of the private option plan. There will be a side who suggests that anyone supporting private option probably helped Obama pick out the pens he used to sign Obamacare into law. There will be a side who suggests that any questions related to funding of private option or tweaking the private option plan will be akin to pulling the plug on grandma and personally torching to the ground the rural hospital near you.

The greasy spot in the middle of the nuclear political battlefield will be what remains of the shrinking number of Arkansas elected officials who seek reasoned alternatives outside limitations of line-in-the-sand politics.

“Cry ‘Havoc,’ and let slip the dogs ... “

ICYMI
Following are a few stories posted this week on The City Wire that we hope you didn’t miss. But in case you missed it ...
• The Supply Side: Salsify support
Drive Medical, a New York-based durable medical equipment manufacturer, said it continues to see robust demand for its growing catalog of products from retailers like Walmart.com, CVS, Target and Walgreen.

• Moving the Iceberg
The Iceberg, co-working center in downtown Fayetteville, the brainchild of a few local entrepreneurs opened its door two years ago, occupying the basement space of the Metro District, just off of Dickson Street.

• A greener Wal-Mart?
Wal-Mart has plenty of fans and critics when it comes to the retailer’s sustainability initiatives. When former CEO Lee Scott boldly announced the retailer’s sustainability platform eight years ago, there were doubters that Wal-Mart would stay the course.

NUMBERS ON THE WIRE
• $17.2 billion: Estimated amount of subprime car loans in 2013, just off the $20 billion mark reached in 2007.

• $3.482 billion: Year-to-date (July 2013-Jan. 2013) gross tax revenue collected by the state of Arkansas, 2.1% above the same period in the previous fiscal year.

• $1.7 billion: Estimated hit to the U.S. air travel industry in January as a result of winter storms, with an economic impact that could reach $5 billion.

OUTSIDE THE WIRE
• The long-term joblessness problem
In 28 states, a third or more of the unemployed have been without a job for six months or longer, leaving them with no unemployment insurance safety net following the expiration of extended benefits in December.

• Pryor breaks with Obama on minimum wage
President Barack Obama held two meetings this week plotting strategy to maintain the Senate Democratic majority, while also pitching an issue that could put a vulnerable incumbent at risk: a minimum wage increase. Senator Mark Pryor, whose home state of Arkansas is headquarters of Wal-Mart Stores Inc. (WMT), says he will oppose raising the minimum wage.

• Signing with The Tide
Signing day came and went without Alabama ever being threatened to fall from its place atop the college football recruiting pecking order. Coach Nick Saban and his staff in Tuscaloosa received national letters of intent from 19 players on Wednesday, not including eight early enrollees who arrived on campus in January. The Crimson Tide's 27-man signing class marks the third consecutive year in which it finished No. 1 in the ESPN Class Rankings.

WORD ON THE WIRE
“You know, when Whirlpool takes their marbles and goes to Mexico, I mean, we need policies that punish the heck out of companies that take their business, their manufacturing and take it for cheap labor outside this country. That’s another problem on the national level that I detest.”
– Arkansas Gov. Mike Beebe when asked about the state’s economy and prospects for jobs recovery

"Let's look at it as a math equation. We know (President) Barack Obama is immensely unpopular in Arkansas. We know Obamacare is unpopular at this point. If the Republicans and outside groups can equate that program and Obama with Pryor, I don't see how he has much luck."
– Will Watson, a Democratic consultant with Natural State Strategies in Fayetteville, about the U.S. Senate race between U.S. Sen. Mark Pryor, D-Ark., and U.S. Rep. Tom Cotton, R-Dardanelle

“Middle class and lower income consumers are having a tough time, paying higher taxes this year and Mother Nature isn’t doing anyone any favors. Budgets are tighter and there is less fuel in the tank to move this economy forward.”
– Rich Yamarone, chief economist with Bloomberg Brief, about the financial impact of U.S. winter storms on the American consumer

The upcoming nasty politics of the private option, the Fianna Hills Country Club project, and a governor’s disdain for Whirlpool’s marbles movement are part of the Feb. 7 Friday Wire for the Fort Smith region.

NOTES & ANALYSIS
• Get ready to rumble
Consider yourself warned all you who have found some measure of relief that Arkansas politics have not yet devolved to the putrid depths of chaos stirred feverishly by the shallow and sophomoric fecal flingers who have slimed their way into leadership positions in Washington D.C.

Your warning comes with two words: “Private option.”

It seems that in 2013 the Arkansas Legislature passed a plan – the private option – that all but completely altered how Obamacare would be administered in Arkansas with respect to Medicaid funding. There is no need to detail the particulars, because all one needs to know is that this plan had, at some point, a connection to Obamacare.

Arkansas’ upcoming political filing period, 2014 fiscal session and May 2014 primary will be dominated by who is and who is not for funding of the private option plan. There will be a side who suggests that anyone supporting private option probably helped Obama pick out the pens he used to sign Obamacare into law. There will be a side who suggests that any questions related to funding of private option or tweaking the private option plan will be akin to pulling the plug on grandma and personally torching to the ground the rural hospital near you.

The greasy spot in the middle of the nuclear political battlefield will be what remains of the shrinking number of Arkansas elected officials who seek reasoned alternatives outside limitations of line-in-the-sand politics.

“Cry ‘Havoc,’ and let slip the dogs ... “

ICYMI
Following are a few stories posted this week on The City Wire that we hope you didn’t miss. But in case you missed it ...
• Moving forward on the Fianna Hills Country Club project
Plans to drastically alter the appearance and business model of the Fianna Hills Country Club are continuing to move forward, with plans for a $20 million investment in the property.

• Local tax revenue trend
Sales tax collection for the city of Fort Smith were down 0.69% for the 2013 reporting year, ending two years of collection gains and coming in 1.16% below budget estimates. However, the year ended on a positive note with the December report showing gains in city collections and the city’s portion of the countywide 1% sales tax.

• Hostile takeover ‘standstill’
The hostile takeover effort against Van Buren-based USA Truck by Knight Transportation is over. At least for now. The two trucking companies announced Tuesday (Feb. 4) the settlement of litigation filed Oct. 10, 2013, by USA Truck against Knight.

NUMBERS ON THE WIRE
• $3.482 billion: Year-to-date (July 2013-Jan. 2013) gross tax revenue collected by the state of Arkansas, 2.1% above the same period in the previous fiscal year.

• $574.5 million: Estimated reduction in state revenue that would happen under a proposal by Mike Ross to change Arkansas’ income tax code. Ross, a Democrat, is running for election as Arkansas Governor, and will likely face GOP candidate Asa Hutchinson in the November general election.

• $1.7 billion: Estimated hit to the U.S. air travel industry in January as a result of winter storms, with an economic impact that could reach $5 billion.

OUTSIDE THE WIRE
• The long-term joblessness problem
In 28 states, a third or more of the unemployed have been without a job for six months or longer, leaving them with no unemployment insurance safety net following the expiration of extended benefits in December.

• Pryor breaks with Obama on minimum wage
President Barack Obama held two meetings this week plotting strategy to maintain the Senate Democratic majority, while also pitching an issue that could put a vulnerable incumbent at risk: a minimum wage increase. Senator Mark Pryor, whose home state of Arkansas is headquarters of Wal-Mart Stores Inc. (WMT), says he will oppose raising the minimum wage.

• Signing with The Tide
Signing day came and went without Alabama ever being threatened to fall from its place atop the college football recruiting pecking order. Coach Nick Saban and his staff in Tuscaloosa received national letters of intent from 19 players on Wednesday, not including eight early enrollees who arrived on campus in January. The Crimson Tide's 27-man signing class marks the third consecutive year in which it finished No. 1 in the ESPN Class Rankings.

WORD ON THE WIRE
“You know, when Whirlpool takes their marbles and goes to Mexico, I mean, we need policies that punish the heck out of companies that take their business, their manufacturing and take it for cheap labor outside this country. That’s another problem on the national level that I detest.”
– Arkansas Gov. Mike Beebe when asked about the state’s economy and prospects for jobs recovery

"Let's look at it as a math equation. We know (President) Barack Obama is immensely unpopular in Arkansas. We know Obamacare is unpopular at this point. If the Republicans and outside groups can equate that program and Obama with Pryor, I don't see how he has much luck."
– Will Watson, a Democratic consultant with Natural State Strategies in Fayetteville, about the U.S. Senate race between U.S. Sen. Mark Pryor, D-Ark., and U.S. Rep. Tom Cotton, R-Dardanelle

“Middle class and lower income consumers are having a tough time, paying higher taxes this year and Mother Nature isn’t doing anyone any favors. Budgets are tighter and there is less fuel in the tank to move this economy forward.”
– Rich Yamarone, chief economist with Bloomberg Brief, about the financial impact of U.S. winter storms on the American consumer

Retailers, despite a slew of layoffs and store closure announcements in recent weeks are expected to see modest sales growth of 4.1% in 2014, up from 3.7% growth last year, according to the National Retail Federation. Online sales are expected to rise between 9% and 12% this year, when compared to 2013.

“Measured improvements in economic growth combined with positive expectations for continued consumer spending will put the retail industry in a relatively good place in 2014,” said NRF President and CEO Matthew Shay. 

He said the looming debt ceiling debates, increased health care costs, and regulatory concerns remain as risks for consumers and retailers. But, he said, the NRF believes economic tides will change in 2014.

“As the industry tackles important issues in 2014, such as immigration and tax reform, we will continue to push our nation’s leaders to support policies that promote growth and create jobs for hardworking Americans,” said Shay.

A number of factors contributed to NRF’s rosy outlook. They factor in early estimates of GDP growth of 2.6%, a faster pace than the 1.9% rate for 2013. They also expect to labor market to add 185,000 jobs per month and continued improvement in the housing sector.

Rich Yamarone, chief economist with Bloomberg Brief, told The City Wire this week that he expects a tough year for retailers. He said the middle class continues to be hit with higher taxes, more expensive insurance costs and this winter they are shelling out a lot more just to keep warm.

“I see optimistic projections for GDP growth being made, but I have to ask myself where  this growth is going to come from. I don’t see it,” he said.

Wal-Mart Stores Inc., the nation’s largest retailer posting around $465 billion in annual sales last year, has already lowered its earnings expectations for fiscal 2014. The downward guidance was based on weaker-than expected first quarter numbers, which include the holiday shopping season that can be as much as 30% of total annual sales industrywide.

The retail behemoth shaved 26 cents off its fourth quarter earnings related to store closings in Brazil and China and Sam’s Club layoffs and management restructuring. This 26-cent reduction is on top of an 11-cent charge to the $1.50 to $1.60 per share earnings expected by the retailer in the fourth quarter.

Wal-Mart sales were impacted more than company officials expected from reductions in federal food stamp payments. Bill Simon, CEO of Walmart U.S., told reporters on multiple occasions that the retailer did not expect any material impact from the cuts. But the company issued an earnings warning on Jan. 31.

“Despite a holiday season that delivered positive comps, two factors contributed to lower comp sales performance for the 14-week period for Walmart U.S.,” Charles Holley, chief financial officer noted in the release last week (Jan. 31). “First, the sales impact from the reduction in SNAP (the U.S. government Supplemental Nutrition Assistance Program) benefits that went into effect Nov. 1 is greater than we expected. And, second, eight named winter storms resulted in store closures that impacted traffic throughout the quarter. Sam’s Club was also impacted by the weather throughout the quarter.”

Even with the lower earnings warning given by Wal-Mart, Wall Street analysts said the news was something it could live with.

“Despite the lower guidance, we view Wal-Mart’s January quarter performance as better than other retailers, and remain constructive on shares due to their “safe haven” status (dividend yield and excellent operations), as well as its attractive valuation, helped by the January stock sale (especially retail) this year,” notes Budd Bugatch, analyst with Raymond James & Associates.

He lowered his fourth quarter estimate to $1.59 from $1.64 per share, also shaving a nickel off the annual earnings prediction as well, to $5.10 from $5.15 following the company’s release.

Bugatch expects Wal-Mart will post $474.93 billion in fiscal 2014 sales for the year ended Jan. 31. His fiscal 2015 sales revenue estimate for Wal-Mart is $492.13 billion, an increase of 4.25% from the prior year. This is a little more optimistic than the NRF sales growth estimate for the same time period.

Clark Partners Realty Group announces that it is no longer just a team of real estate agents, but a full-service real estate firm.

Owner/Broker, Anthony Clark, officially launched the full-service real estate firm on Jan. 6. The team is also made up of brokers Karon Reese and Shelley Evans and associates Scott Cook and Alex McGowen, as well as Billy Law, the firm’s marketing coordinator. Clark Partners Realty Group is located on the Fayetteville square at 5 W. Mountain St., Suite 201.

The public is invited to the firm’s drop-in open house to celebrate its grand opening on Thursday, Feb. 20,  from 2:30 to 6 p.m. The Fayetteville Chamber of Commerce ribbon cutting is scheduled for 2:30 p.m. the same day.

Allens Canning business went on the auction block earlier this week with Sager Creek Acquisition Corp. winning the bid and agreeing to pay $124.781 million for the bankrupt business. Little is known about Sager Creek, a recently formed Delaware-based corporation, according to the court filing.

The president of Sager Creek, James Athanasoulas, is the managing director of Sankaty Advisors, a unit of Boston-based Bain Capital. Sankaty Advisors is a secondary lienholder listed among Allen’s creditors. The amount owed was not disclosed.

The $124.781 million price tag is subject to increase or decrease for the actual amount of “First Priority Obligations,” other pending claims and fee along with the $3 million break-up fee required by the court. The sale be must authorized and approved by the bankruptcy court in a hearing set for Tuesday, Feb. 11, in Fayetteville. A secondary bid was recorded by Atlanta-based McCall Farms in the amount of $124.606 million, according to the filing.

There were a number of assets excluded from this proposed deal such as the stadium suite at Arvest Ballpark in Springdale, an airplane hanger at the Siloam Springs Municipal Airport, frozen re-pack facility and processing plant in Montezuma, Ga., and five residential properties each located in Siloam Springs.

Other personal items also excluded from the deal included a desk in the CEO’s office once belonging to Earl Allen, various sports and personal memorabilia located in the corporate offices of Nick, Josh and Rick Allen, and various historic photographs of the family business displayed in the corporate headquarters.

The stalking horse bidder, New York-based Seneca Foods Corporation, walked away from the deal to acquire Allens a second time this past week as the fruit and vegetable company was outbid for the Siloam Springs-based canned food business.

Seneca entered a bid at $148 million after combing through Allen’s records. Early reports indicated the winning bidder, Sager Creek, offered the court $159.98 million for the assets up for grabs. Subsequents details in the court filing late Friday, (Feb. 7) indicated the purchase price to be $124.781 million by Sager Creek, with McCall Farms backup bid of $124.606 million.

This is the second failed attempt by Seneca to close a deal with Allens in three years. Seneca said in December that Allens canned food business would fit into the company’s long-term growth plans.

Allens and Seneca tried to merge their operations in June 2011, but walked away from the deal in September 2011 when the businesses could not agree on terms.

Given that Sager Creek principals are venture capitalists/private equity investors and not manufacturers like Seneca or Allens, it’s possible the business could be dismantled and sold off or infused with cash and sold for a higher price.

Country and bluegrass fans in Northwest Arkansas will have the opportunity to see Willie Nelson and Alilson Krauss who announced they will perform at the AMP in Rogers on July 7.

These award-winning musicians will perform together for the first time in a 35-city tour across the U.S. The tour kicks off May 8 in Murray Ky., and wraps up July 18 in Toledo.

Also appearing will be Union Station, featuring Jerry Douglas. They'll be joined on various dates by recent Grammy Awards winner Kacey Musgraves, Jason Isbell, The Wild Feathers and The Devil Makes Three.

Punctuated by the high-energy rock riffs of Rush and massaged by the distinct baritone voice of advertising pitch man Mike Rowe, Wal-Mart Stores Inc. has in recent days placed a high-profile advertising commitment on the company’s pledge to return manufacturing jobs to the U.S. 

Jim Karrh, a marketing and public relations advisor with more than 20 years experience and owner of Little Rock-based Karrh & Associates, said Wal-Mart has certainly “reached a huge mass audience” with their manufacturing initiative through the new ads. (The three ads can be viewed at the end of this story.)

“They have pushed the chips to the center of the table,” Karrh said, using a gambling reference to suggest the company is now “all in” publicly with the effort.

On Monday (Feb. 10), Wal-Mart spokeswoman Katie Cody said there have been “more than 2,000 job commitments” as a result of the effort to buy products from U.S. manufacturing operations. More are expected. Cody said more than 40 different Wal-Mart departments are “actively working” with existing or potential suppliers to find opportunities to source products from U.S. manufacturing operations.

Some of those 2,000 commitments include 500 jobs related to the planned production of televisions in Winnsboro, S.C., and 250 jobs planned to begin in March 2014 at a shoe production plant in Hazelhurst, Ga.

INITIATIVE HISTORY
The 30-second television ads – which have found air time during broadcasts of the 2014 Winter Olympics – attempt to show the early results of the 2013 pledge by Wal-Mart to buy an additional $50 billion in American products over the next decade. Bentonville-based Wal-Mart estimates cumulatively over the next decade the investment will total $250 billion. The Boston Consulting Group predicts that this $250 billion investment will create one million jobs, including the jobs in manufacturing and related services.

Wal-Mart conducted a manufacturing summit in Orlando, Fla., in August 2013, with an estimated 500 suppliers attending and representatives from 38 state governments, including eight governors. Arkansas Gov. Mike Beebe was one of the eight attending. A 2014 summit is set for Aug. 14-15 in Denver, Colo.

The initiative has already proven beneficial to Wal-Mart’s home region. Redman & Associates in October announced a $6.5 million investment to relocate its ride-on toy manufacturing business from Shanghai to Northwest Arkansas over the next three years. Redman operates a sales office in Bentonville that employs 16 people. Moving the manufacturing to Northwest Arkansas is estimated to create 17 jobs the first year, and ramping up to 74 by the time the entire operation comes online in Rogers.

Walmart U.S. CEO Bill Simon announced Jan. 23, 2014, a $10 million innovation fund from the retailer and its foundation to spur new U.S. manufacturing commitments that lead to job creation. The fund will provide grants to innovators in the manufacturing sector and seeks to create new processes, ideas, and jobs that support America’s growing manufacturing footprint.

‘AT ONE TIME, I MADE THINGS’
The three television ads made public by Wal-Mart are busy with alternating scenes of factory work with hard hats, eye protection, sparks flying, empty bottles moving along an assembly line, forklifts moving pallets and impact wrenches buzzing. 

The “I Am a Factory” ad featuring the voice of Mike Rowe begins with the image of a closed manufacturing site, complete with a padlocked gate.

“At one time, I made things,” emerges the voice of Rowe. “I was mighty and then one day, the gears stopped turning.”

As as factory work begins, Rowe continues: “But I am still here, and I believe I will rise again. We will build things, and build families, and build dreams. It’s time to get back to what America does best.”

The ad then closes out with the Wal-Mart message: “Over the next ten years, we’re putting $250 billion to work to help create new manufacturing jobs in America.” And that’s followed by Rowe saying, “Because work is a beautiful thing.”

The “Lights On” ad carries the viewer 10 seconds into a dark space. The action begins when a worker turns on the lights. Doors open, coffee makers are prepped and pallets are stacked and prepped for loading.

“Actions are louder than words,” the ad notes.

‘WORKING MAN’
Although the Rush song “Working Man” makes the point for Wal-Mart in the title, the lyrics of the song have historically been considered an anthem for the working man who can’t seem to rise above their economic class no matter how hard they work.

The song lyrics, included in the Wal-Mart ad, note: “I got no time for living, yes, I’m working all the time. Seems to me I could live my life a lot better than I think I am. I guess that’s why they call me, they call me the working man.”

Some comments on Wal-Mart’s YouTube page note the issue between the song title and the lyrics.

“I think you missed the point of the song,” noted one comment.

That was followed by, “Agreed. It's almost as bad as when Reagan used Born in the USA for his 84 campaign before Springsteen told him to knock it off.”

Another comment mentioned Rush’s home.

“The irony of Rush being Canadian is killing me but otherwise this is a fantastic spot and a great tribute the all the Working Men and Women. Well done.”

‘GETTING BACK TO BASICS’
Cody, with Wal-Mart, said the imagery of the ad is the point of the message.

“The important thing is the energy of the music and highlighting the people working in the factory,” Cody explained.

No matter the irony or lyrical message, Karrh said it’s a smart move by Wal-Mart. He said his initial impression is that Wal-Mart is using the ads to also return to the company’s “foundational Americana” message. He said the ads could be seen as not only the promotion of returning jobs to America, but of Wal-Mart “getting back to basics and back to what is authentic to them as well.”

“I immediately thought, ‘OK good,’” Karrh said after his first viewing of the ad with Mike Rowe. “They’re bringing back a piece of the Wal-mart story that has always been true to them, but I think it got lost and minimized a bit over the years. ... I hope they stick with it.”

Cody declined to provide detail on the ad cost and air time purchased, but did say that broadcast time has been bought for all three ads.

The financial picture at Van Buren-based USA Truck appears to be improving, but the company still posted a net loss of $9.11 million in 2013. While an improvement compared to the net loss of $17.671 million in 2012, it marks the fifth consecutive year of losses for the trucking company.

According to the earnings report released early Tuesday (Feb. 11), the company would have posted a fourth quarter gain if not for a $5.97 million charge to boost the long-term claims liability reserve and a $1.5 million charge for expenses related to fighting the hostile takeover attempt by Phoenix-based Knight Transportation. That attempt came to an effective end on Feb 4. with a "standstill" agreement approved by both trucking companies.

Instead, the fourth quarter saw a loss of $4.636 million, more than the $3.24 million in the fourth quarter of 2012. The 45 cent per share loss missed the consensus estimate of a 1 cent per share loss. Revenue for the quarter was $141.416 million, up 4.93% compared to the same period in 2012.

For the full year, the company posted a loss of $9.11 million, better than the $17.671 in 2012. The company posted a 2011 loss of $10.77 million, a 2010 loss of $3.308 million, and a $7.177 million loss in 2009.

Revenue for the year was $555.005 million, up 8.3% compared to revenue in 2012.

'TURNING POINT'
"The fourth quarter capped a turning point year for USA Truck, with improvements in virtually every area of our business," President and CEO John Simone said in the earnings report. "Our results reflect the growing positive momentum of our strategic plan, which focuses on three critical areas – operational execution, profitable revenue growth and cost effectiveness.”

The one-time charge is a function of the company being self-insured. The decision to take the charge came “right at the wire” at the end of the quarter and was a tough call.

“it was disappointing that we had to take the charge, but it was the right thing to do,” Simone said in an interview with The City Wire, adding that it will help level costs going forward.

The report noted several areas in which company officials reported improvements. Those include:
• Reduction of debt by $12 million;
• The first quarter of positive operating income since the second quarter of 2011;
• Operating income growth of 74.4% for the year in the Strategic Capacity Solutions segment; and
• Increased length of haul and increase in rates during the quarter.

"We are very pleased with our fourth-quarter performance, especially since we are still in the early stages of implementing our turnaround plan and see many opportunities for continued improvement,” Simone noted in the report. “Given the substantial headway we have made over the past year and the momentum we carry into 2014, we believe our goal of returning USA Truck to profitability is achievable for the full year 2014." 

BACK IN THE BLACK
Returning to profitability in 2014 will require continued improvement in the company’s operating ratio, which remained relatively high at the end of the year. The year end operating ratio was 105.4, meaning that the company lost $1.054 for each dollar in revenue. However, that operating ratio was an improvement over the 110 operating ratio at the end of 2012. The operating ratio for the fourth quarter was 109.1.

During an interview with The City Wire, Simone said he is confident the OR will keep moving in the right direction and the company will be “fully profitable” in 2014.

“We have 17 areas that will provide significant cost savings to our business, and some of the largest areas are improving our safety and claims ... and we’re going to be doing that by” changing the hiring process and placing “more rigor around our training programs,” Simone explained.

Another key in improving OR is in controlling costs related to driver retention, Simone said. He said the trucking environment now favors good drivers who have the ability to work for the company that treats them the best. USA Truck operates with a little more than 2,000 company drivers and around 100 owner-operators.

“Good drivers are like free agents today. Good drivers can go anywhere and get a job,” he said.

Retaining good drivers will require the company to ensure driver time is “better utilized” so that drivers are spending as much time on the road and not waiting for new loads, maintenance and other down-time factors, Simone said. Driver utilization was improved, with the company recording a 3.6% gain in miles per seated truck during the quarter.

“We’re here to serve the driver so we can take care of our customers,” Simone said, adding that the company is not perfect in how it works with drivers but is pushing for continued improvement.

The other part of the USA Truck plan to reach profitability is in gaining marketshare and doing more business with existing customers. Simone said USA Truck secured $36 million in net new revenue during the quarter, with the full year seeing $152 million in net new revenue posted. On top of that, the company added three Fortune 500 companies to its top 10 customer list in terms of revenue. Also, 96% of the top 100 customers by revenue purchased more than just one service from USA Truck, up from 67% compared to a year ago.

Link here for a PDF report from USA Truck of its fourth quarter and full-year earnings.

USA Truck shares (NASDAQ: USAK) closed Monday at $14.82. The market responded Tuesday to the report by dropping the price on the thinly-traded stock to $14.07 in mid-day trading. During the past 52 weeks the share price has ranged from a $16.38 high to a $4.37 low.

The economy, particularly in Northwest Arkansas, has seen steady growth in the past two years. But on a national level the number of Americans who consider themselves middle class wage earners continues to shrink, according to a recent report from Pew Research Center.

Economists warn that without middle-class engagement, a full economic recovery is unlikely.

Since 2011, the number of Americans who identify themselves as the middle class has dropped from 52% to 44%. Pew researchers said this is a fundamental shift in how American’s view their income levels.

According to the Census Bureau, the median household income in the U.S. decreased by 8% since the recession began in 2007. Median incomes fell from $55,627 in 2007 to $51,017 in 2012. The median income in 2012 was at the same level it was in 1995, a setback of 17 years, the report notes.

Income losses have been greater for households in the middle of the income distribution than for households at the top. For households in the third quintile of the income distribution, average income fell by 8% from 2007 to 2012. Meanwhile, for households in the highest quintile, average income fell by only 2%. The net result is growing inequality in the income distribution, the research notes.

A separate study Pew conducted in 2012 also found a reduction in the middle of the income distribution. The study used Census Bureau data to classify adults into lower, middle or upper income tiers depending on the income of their household relative to the overall median. The researchers found that the share of adults in the middle income tiers has fallen in each of the last five decades, from 61% in 1971 to 51% in 2011.

Economists have been reporting for years that the lack of job growth in the middle-skill, mid-income levels jobs is creating a gap in earning potential for the middle class. The New York Federal Reserve found that middle class jobs increased 46% between 1980 and 2009. At the same time, low-skill jobs rose 110%, while high-skill jobs increased 100%. The shift has been referred to “jobs polarization” and it continues today with the majority of new jobs announced being low-skill, lower income positions.

Wall Street analysts continue to advise investors to aim high or low but avoid the middle income demographic as it steadily erodes. John Maxwell, head of the global retail and consumer practice at PricewaterhouseCoopers, recently told The New York Times that retailers and restaurants are either chasing richer customers, or focusing on rock-bottom prices to attract budget-conscience shoppers.

“As a retailer or restaurant chain, if you’re not at the really high level or the low level, that’s a tough place to be,” Maxwell said. “You don’t want to be stuck in the middle.”

Restaurants such as Olive Garden and Red Lobster that cater to the middle income consumers have had their woes, while fine-dining chains like Capital Grille and Ruth’s Chris Steak House continue to expand. The local Ruth’s Chris Steak House in Rogers confirmed with The City Wire that it’s in the midst of expanding its patio section to add additional tables and seating to the restaurant.

“We know much of the economic recovery of the past few years is largely attributed to upper-income demographics. But this wealthy class can only consume so much,” said Kathy Deck, director for the Center for Economic Research at the University of Arkansas.

She said this shift away from the middle class is a challenge to continued economic growth and the longer term consequences could result in diminished innovation. Locally, Deck said roughly 26.3% of households earn less than $25,000 and just 26.8% of households earn more than $75,000. That leaves the vast majority in the middle, where incomes have largely stagnated.

“A shrinking middle class is not what people think of when picturing a vibrant economy. Without the middle engaged future recovery will be hindered in the national economy,” Deck said

She also said that while Northwest Arkansas is seeing much broader-based job growth than the nation as a whole, there are still more applicants than there are jobs, particularly in the lower-skill service industry.

“As long as there is a surplus of applicants, there is little chance wages will increase among these service/hospitality jobs. From December 2012 to December 2013, Northwest Arkansas jobs grew at 4.1% clip. This compared to 1.6% nationally,” Deck noted.

While the Northwest Arkansas economy is growing at faster pace than the nation, Deck said it is not immune to effects of the shift income distribution and growth.

A recent report from economists Steven Fazzari of Washington University and Barry Cynamon, of the Federal Reserve Bank of St. Louis, indicated that the top 5% of earners were responsible for 38% of domestic consumption in 2012. The researchers found this was a 10% jump from 1995.

Fazzari reports since the recession ended in 2009, inflation-adjusted spending by this top echelon has risen 17%, compared with just 1% among the bottom 95% of wage earners.

The effects of this phenomenon are now rippling through one sector after another in the American economy. While spending among the most affluent consumers has managed to propel the economy forward, the sharpening divide is worrying, Fazzari notes.

“It’s going to be hard to maintain strong economic growth with such a large proportion of the population falling behind,” he said. “We might be able to muddle along — but can we really recover?”

Arvest Bank announces the promotion of Jacob Barnes to branch manager of the bank location at the corner of East Robinson Avenue and Butterfield Coach Road in Springdale. He will report to Jenny England, branch administrator. Barnes began his career with Arvest at Siloam Springs in April of 2006. Over his career, he has worked as teller, financial services representative and assistant branch manager. 


“Jacob has proven himself as a superb customer service provider and a great team member here at Arvest Bank,” England said. “He knows how Arvest Bank operates and how best to work within that structure for the benefit of our customers."

A native of Gentry, Barnes graduated from Gentry High School and completed his bachelor’s degree in political science from John Brown University in Siloam Springs. He and his wife, Kathleen Barnes, have a son, Grisham, age 2. They are involved with Children of Arkansas Loved a Lifetime (CALL) and are in the process of becoming foster parents. The family lives in Springdale.

It took federal Bankruptcy Judge Ben Barry more than an hour Tuesday morning (Feb. 11) to weed through a long list of objections regarding the sale of Allens Canning to private equity firm Sager Creek.

Part of the process required Judge Barry to transfer more than a dozen claims related to the Perishable Agricultural Commodities Act (PACA) to U.S. District Judge Richard Taylor in Arkansas’ Easter District. The claims involve licensing and lease contracts related to commodities managed by Allens. The federal PACA oversees certain contracts related to agriculture commodities.

Once the commodity contracts were moved, Barry quickly approved Sager Creek’s $124.781 million purchase price for Siloam’s Springs-based Allens Canning.

“It’s a good deal, it’s good for the debtors and the creditors,” Barry said as he ordered the approval.

There was one holdout, which was set aside for a future hearing date on Feb. 24, as lawyers for Allens and Sager Creek were told by Barry to work out the terms with Infor Global Solutions, the accounting software company that licensed their product to Allens. The software company is claiming the license is non-transferrable. Council for Allens said its software the company uses daily to run its business and the new owners will need it as well. 

Infor told the court it didn’t object to the sale, but something would have to be done to support the transfer to Sager Creek – likely a fee paid. Barry asked the parties to work out a deal ahead of the Feb. 24 hearing. Barry also commended Allen’s counsel for resolving more than 40 objections filed to the sale ahead of Tuesday’s hearing.

An adversarial case still has to be heard the court, but it does not impact the closing of the sale to Sager Creek. SSS of Crawford County claims that 80 acres included in the sale, does not belong to the debtors. Barry said, “Rather than throw a monkey wrench into the deal, hindering closing, the case can be heard on Mar. 21., understanding the deal is going to close with the SSS claim still hanging.”

Both parties agreed to argue the case of Mar. 21.

Stanley Bond, an attorney for several creditors with PACA claims, asked the lawyers with Sager Creek to guarantee and specify for the court how it planned to pay the outstanding claims. Barry indulged that request.

Mark Weinstein, senior managing Director for FTI Consulting, told the court that an evergreen fund would be established by Sager Creek for the sole purpose of satisfying 100% of the PACA claims filed with court which are subject to the resolution process.

The transcript from the Feb. 7 auction was filed with the court. The document indicated that the opening bid by Seneca Food was $148 million. The bidding was a complicated issued as the three parties taking part in the auction each tailored their offers according to perceived value, subject to breakup fees, working capital or other debt obligations.

Sager Creek had the highest bid at roughly $160 million, but the purchase price was substantially lower at $124.781 million, which included money it was owed by Allens, breakup fees and working capital.

McCall Farms was deemed the backup bid with a purchase price of $119.2 million. Seneca Foods came in third offering a purchase price $117 million. There were just three bidders taking part in the auction, according to the transcript.

Little is known at this point about Sager Creek, a recently formed Delaware-based corporation, according to the court filing.

The president of Sager Creek, James Athanasoulas, is the managing director of Sankaty Advisors, a unit of Boston-based Bain Capital. Sankaty Advisors is a secondary lienholder listed among Allen’s creditors. The amount owed was not disclosed and is now a moot point given its purchase of Allens was approved.

The deal is expected to close by Feb. 28.

Matt Hicks has been named market president in Rogers and Bentonville, according to Scott Hancock, Centennial Bank Division President. Hicks has worked in a variety of roles for Centennial Bank, having been active in the Jonesboro, Siloam Springs, and Springdale/Fayetteville and Bentonville/Rogers markets. 

Hicks will office in Centennial Bank’s Rogers branch at 4000 West Walnut. He relocated to Northwest Arkansas in 2006, most recently serving as a vice president of lending in the Bentonville and Rogers markets. Hicks has experience in retail banking, insurance, loan operations as well as administration and loan production.

“Matt is very involved in the community and his leadership skills will help further build upon our reputation for strength and service,” Hancock said. 
 
He began his banking career in 2004 with Liberty Bank of Arkansas in Jonesboro. He holds a master’s degree in business from Harding University in Searcy and a bachelor’s degree from Arkansas State University.
 
His community involvement includes numerous organizations where Hicks has, or is now serving:
• Chair of the Community Enrichment Workgroup of Northwest Arkansas Emerging Leaders,
• Advisory board member of Northwest Arkansas Emerging Leaders,
• Past chair of United Way Generation: GIVE,
• Board member and treasurer of Single Parent Scholarship Fund of Northwest Arkansas,
• Business Advisory Board member for Northwest Arkansas Community College Enactus Program,
• Board Member for the Children’s Safety Center in Springdale and,
• Graduate of Leadership Fayetteville class XXII.

The Fort Smith Board of Directors for the first time Tuesday (Feb. 11) heard from an attorney who believes the city may have the authority to level fines against Whirlpool Corp. for its admitted pollution of groundwater in and around the area of the company's former manufacturing facility in south Fort Smith.

The attorney, Melissa Sims of Sims Law Office in Princeton, Ill., reached out to City Administrator Ray Gosack after reading about the contamination issue on the Internet. In a letter to Gosack, Sims explained what her firm could provide the city should she be retained for legal representation.

"As we discussed, I partner with several top tier law firms in the country and together we represent municipalities in utilizing the city's ordinance violations to fine polluters for contamination on a contingency fee basis," she wrote, adding that she began her practice following her work as village attorney in DePue, Ill., where she used the village's nuisance ordinance to level fines against both Exxon Mobil and CBS Viacom for environmental contamination.

"The Seventh Circuit Court of Appeals ruled that no federal preemption applied and we grappled with state law preemption on the issue of abatement (injunction) action. Ultimately, the Village of DePue settled with the defendants for $975,000."

She said her firm, which only charges clients one-third of any judgment against defendants, have the resources to go after large corporations like Whirlpool, while other small local firms may not have the manpower or finances to wage a tough battle.

"I have other cases filed – and yet to be filed – in Illinois and other states working with large firms on a contingency fees basis to assist cities such as Fort Smith seek restitution for contamination from old factories which have reaped enormous benefit from spreading hazardous materials."

Sims, who participated in a conference call with the Board during Tuesday's study session, said in the case of Fort Smith, it could be possible to fine Whirlpool for not only polluting the land where the company sits, but also other properties where a toxic plume of trichloroethylene (TCE) has migrated in groundwater during the 30 years since the company's admitted spill of the cancer-causing chemical.

The local ordinance that could be used is the city's ban on littering, which imposes an initial $500 fine and subsequent $250 fines for everyday the litter is not cleaned up.

Sims said her initial research on Arkansas' statute of limitations laws indicates that municipalities, such as Fort Smith, may not have a stated timeline of how far back in time a city could go when it comes to imposing a fine, though a lot of it depends upon how far back it can be proven that the violator, in this case Whirlpool, committed the violation. By the company's own admission, TCE contamination occurred in the early 1980s, a time when the company stopped using the degreasing agent at its Fort Smith manufacturing facility.

In discussing the possibility that the city could retain counsel to pursue fines against Whirlpool, City Director Keith Lau raised the issue of whether pursuing legal action against the company would hurt the city's attempts to attract other businesses.

"We want to protect the citizens, I understand that. We want to protect and enforce our nuisance laws, I understand that. But we've also all talked about being business friendly in the city of Fort Smith and promoting industry. What kind of message does this send — and it's just something to think about — what message are we sending if there's an industry out there that inadvertently contaminates the groundwater, brings it to us, goes to the ADEQ, goes through their steps of remediation and then at the very end, we sue them — not sue them, fine them — for contamination? So there's a balancing act here and I'm not sure I'm comfortable with this."

City Director Philip Merry challenged Lau's statement, recalling how long it has taken Whirlpool to address the contamination that has spread from its facility to the neighborhood north of the factory.

"I can't imagine that there's a company out there that would think that 30 years is (a) fair timeframe to rectify a problem. And I can't imagine there's one out there that would find our litter laws so strong that they don't want to come (and) have to comply. I'm asking that we definitely allow this professional to dig in for free to see laws have been broken and recommend back to us what laws have been broken and what she thinks would be a fair thing to request and then we make the decision at that time. I think to not make an informed decision, as in to allow her to dig in and recommend for free, would be remiss on our part."

Merry made a motion to place the consideration of retaining Sims on the Feb. 18 Board agenda for a vote, with City Director Pam Weber seconding the motion.

Should Sims determine the city could impose fines on the city, she said it could up a month after being retained by the city before any court actions against the Benton Harbor, Mich.-based company are filed.

If fines are imposed and Whirlpool is found in violation or settles with the city, Gosack said Arkansas was clear that the money would have to be used for "governmental purposes," which he said could include infrastructure improvements or economic development initiatives, such as enlisting outside help to market the Whirlpool site to interested buyers. He said any money collected could not, by state law, be distributed to residents living above the plume, many of whom are engaged in a class action lawsuit against the company.

Following the meeting, resident Debbie Keith, who has been a vocal advocate for citizens in the contaminated area, voiced support for possible fines against the company and expressed disappointment at Lau's statement about the message imposing fines would send to businesses wanting to locate in Fort Smith.

"I think the city of Fort Smith should set a precedent and say this is not going to be acceptable. If you want to come here and do business (as) a blue collar industry, then you need to be responsible," she said. "It's absolutely ridiculous at this point in the game that we would even consider what Whirlpool thinks by any means. And yeah, they should be punished. If we have to slap their hands and tell them no, this is not acceptable…ADEQ should have done it. That's their job. ADEQ's not done their job, so we're being forced to do something."

The new Arkansas Music Pavilion under construction in Rogers will be named the Walmart AMP, following a $2.5 million gift from the retailer on Tuesday (Feb. 11). The Walton Arts Center announced the gift which includes additional capital support and services over the next decade to ensure the venture’s success.

“Northwest Arkansas is quickly becoming known for its arts, culture, and high quality of life,” Doug McMillon, president and CEO of Wal-Mart Stores Inc., said in a statement. “By creating a permanent home for the Walmart AMP in our community, we are making this region an even better place to live and work. Walmart is proud to support this state-of-the-art facility, which will be just down the road from the first Walmart store, and to help bring additional economic opportunity to the surrounding area.”

The venue will be the largest permanent outdoor amphitheater in the state and is slated for completion in June. The new amphitheater will have improved technical capabilities, improved access, an increased seating capacity of 7,000, (3,000 covered and 4,000 lawn seats), greater lines of sight, air-conditioned restrooms, and the largest stage house in the state.

The new facility is under construction in the Pinnacle Hills area of Rogers.

“With the generous support of Walmart, the new venue will position Northwest Arkansas as a key stop on concert tours in the mid-south. The outdoor amphitheater will provide a fun and comfortable concert-going experience, attract bigger artists, and serve a broader audience to create more economic activity around the region,” said Peter Lane, president and CEO of Walton Arts Center.

The Walton Arts Center purchased the AMP in February 2011 as part of an expansion strategy to meet the growing demand for more arts and entertainment in the region. Previous owners were Suzie Stephens and Brian Crowne. The AMP, now in its eighth year, has been located at the Northwest Arkansas Mall in Fayetteville and the Washington County Fairgrounds.

Walmart joins the Lifetime Founders, Johnelle Hunt who donated the land and $3 million interest-free loan as well as the Willard and Pat Walker Charitable Foundation who donated $2.5 million — these gifts include naming rights for the Hunt Pavilion and Walker Plaza, respectively.

The new facility is set to open in the Summer of 2014, and country music singer Jake Owen is scheduled for a Sept. 11 concert.

Consumers spend $725 billion annually on consumer packaged goods (CPG) and the battle for market share is a fierce one between national brands and private label marketers. The stakes are high for even the slightest pick up in marketshare as it can provide a significant boost to the bottom line.

A report by consumer marketing firm IRI examined growth opportunities for retailers and suppliers looking to capitalize on emerging retail segments like convenience stores, dollar stores, drug stores and warehouse clubs.

During the past year, private label share has increased across half of the largest CPG categories, with drug, convenience and dollar channels showing signs of increased private label momentum. Researchers see ample growth opportunities for suppliers and retailers in the private label arena.

National and private label manufacturers are broadening their product portfolios. These changes are having an impact on private label’s key strength — the price point — and reinforcing the need for retailer/supplier collaboration on private label strategies, the report notes.

PRIVATE LABEL GAINS
Private label efforts to drive growth have met with success across some important product categories since 2010:
• Cups and plates, 56% of share, up 4.8% 
• Food and trash bags, 54% of share, up 3.6% 
• Bottled water, 38% of share, up 6.6%
• Fresh bread and rolls, 36% of share, up 2.7%
• Toilet tissue, 23% of share, up 4.2%

These categories are generally viewed as “staples,” historically a private label strong suit, since consumers tend to see little differentiation between private label and national brand options in these categories. Combined, share victories across just these five categories brought more than $2.6 billion to private label marketers’ top line revenue during the past year, according to IRI.

Private label purchases comprised about 14.6% of consumers CGP spending last year. That’s been a fairly steady rate since 2010, according to the report. Researchers said at the macro-economic level private label sales look flat, but taking a closer look there is mounting evidence to support the belief that an evolutionary change is underway.

SUPPLIER ACTIONS
ConAgra, a manufacturer of national brands, recently completed the acquisition of private label manufacturer, Ralcorp. Together the company is working toward growing national brands and private label brand segments of its business through new product innovation and broader promotional programs that benefits from streamlined distribution.

Jason Long, CEO of Shift Marketing Group, said when it comes to attacking private label brands, he is watching Procter & Gamble.

“P&G have introduced lower tier brands Bounty Basic and Charmin Basic and have just launched a basic version of Tide called Tide Simply Clean & Fresh which is about 35% cheaper than regular Tide,” Long said.

In formulating a cheaper alternative that still carries the sacred brand name, Long said P&G runs the risk of diluting its brand equity and cannibalizing existing sales.

“But, they also will grab sales that had previously been ceded to private label. It's a risky move, but it's a strategy they need to explore in my opinion,” Long added.

P&G’s Tide is the Lexus in the laundry detergent category. It has been used as a loss leader at Target for years and was recently added to the shelf at Aldi, an almost an exclusive private label grocer.

As further proof of the laundry-detergent competition, Texas-based grocery giant H.E.B. recently introduced Bravo Plus laundry detergent, a private label option that was touted as a lower-priced solution that contains the same number of cleaning enzymes as Tide.

The two products were merchandised side-by-side, with signage that called on shoppers to “Take the Bravo Plus Challenge,” with a reassurance that dissatisfied customers would receive a full refund.

DRUG/CONVENIENCE MOMENTUM
The IRI study indicated private label performance within the drug store segment has been consistent year-over-year. Unit share grew 1% to 17.6%, while dollar share climbed to 16.9%.

The convenience store segment has the smallest percentage of private label share at just 2.4% of the market at the end of 2013, according to the IRI report. That said, researchers agree the convenience store segment is ready to be opened up by manufacturers and retailers to introduce new products that respond to consumer demand.

IRI said a prime example of what can happen in the convenience store segment can be seen at Ahold’s Stop and Shop stores. The retailer began offering a broad selection of  tiered private label products under the brands Stop & Shop (basic), Nature’s Promise (organic line), Simply Enjoy (snack foods) and Guaranteed Value, a less expensive tier. Private label now accounts for 40% of the products sold at Ahold’s Stop & Shop stores, IRI noted.

Within the convenience store sector, private label share growth is strongest across edible products. This is supported by numerous launches, including 7-Eleven’s national  launch of 7-Select snacks and CST’s (new owner of Valero) rapid expansion of its Fresh Choices brand.

CONSUMER DEMAND
Analysts said consumers remain locked in conservative purchase behaviors that were initially adopted earlier in the economic downturn. Private label plays a key role in helping consumers save money. 

IRI reports on average, private label solutions offer consumers savings of 22% versus national brand solutions. The price gap, however, has been on the decline for several years. Today, only 5% of private label categories provide savings of more than 50% to consumers.

The study also notes that one-third of consumers are actively seeking out private label solutions to save money, and 10% of grocery list makers are listing specific private label products to buy before even entering the retail environment — roughly the same prevalence that existed at the depths of the recent recession.

A strong target for suppliers and retailers are light private label buyers. These buyers, defined as the bottom one-third of private label spenders, currently spend an average of a little over $200 annually on private label products, IRI noted in the report.

RETAILER UPSIDE
Long said on the retailer side of private label, the best example that comes to mind is Costco’s revered Kirkland brand. 

“The brand has come to stand for consistent quality across multiple product categories and has established trust with the consumer,” he said.

The wholesale club sector is demonstrating the strongest private label share growth, according to the IRI study. The growth is occurring among heavy and light purchasers of private label products and boosted wholesale club private-label sales nearly $1.4 billion in 2013, as compared to 2010.

Long said many private label brands are still a “shot-in-the-dark” from a quality and consistency standpoint, but one other retailer that has hit pay dirt with private label is Home Depot.

“I like what Home Depot has done with its HDX private label brand. Home Depot maintains that it's a branded house, and that the HDX brand is only for ‘fill-in’ opportunities, but from a supplier vantage we're seeing more and more emphasis being placed on the HDX brand in certain categories. It will be interesting to see where Home Depot ultimately takes the HDX brand,” Long said.

In the competitive world of retail, selling convenience is key,. While Sears struggles to keep pace, the department store chain announced a bold move this week — free drive-through pickup service for online orders.

The retailer said cold winter weather has taken a toll on store traffic but it wants to reward consumers who order online and chose to pick the items up at a local store, without having to leave the warmth of their car.

“We are transitioning from a business that has historically focused on running a store network into a business that provides and delivers value by serving its members in the manner most convenient for them,” the retailer told investors last month.

The new drive-through feature is part of Sears’ attempt to capture online shoppers’ dollars.  It’s also aimed at getting more customers to use the retailer’s mobile app.

A consumer can order their items online, chose store pickup service and when it’s convenient drive to the store chosen as the pickup site. The app notifies the store the shopper is parked out front. The order is delivered by a store attendant within five minutes. If the store doesn’t meet the 5-minute guaranteed, a $5 dollar coupon is given to the customer waiting. 

Sears customers have to share identifying details about their vehicles, such as make, model and color (but no license plate information), the company said. The retailer provides a tutorial on the service in this You Tube link.

The retailer said the drive-though option is getting positive feedback from senior customers and moms with small children.

Sears sales were down more than 9% in the previous quarter and the retailers expects a loss of $360 million this quarter.

Consumer credit outperformed consensus expectations with a gain of $18.8 billion in December, the highest level in the past 10 months and more than $6 billion higher than consensus expectations, according to report from Wells Fargo Securities. This move to acquire more debt is slowly building, after several years of de-leveraging by consumers following the recession of 2008 and subsequent recovery.

Both non-revolving and revolving credit contributed to the net gain. Non-revolving credit (student and auto loans) saw growth of 8% year over year. Revolving credit, which is primarily made up of credit card loans, increased at 1.9% year over year, the highest level in over six years.

Wells Fargo also notes that consumer credit as a percent of disposable personal income increased to an all-time high of 24.6%, indicating consumers have become more comfortable accruing debt.

The Federal Reserve’s Senior Loan Officer survey (SLO) released earlier this week stated that many banks had eased lending standards and had experienced higher demand for consumer loans, excluding home mortgages. If these trends continue it could mean further growth for consumer credit going forward.

The SLO survey respondents were asked about their expectations for loan delinquency and charge-off rates in 2014, assuming economic activity progresses in line with consensus forecasts. 

The domestic and foreign respondents indicated that they anticipated improvements in the performance of business loans. Domestic banks also reported that they expected improved performance for most types of loans to households, except auto loans to subprime borrowers, for which they expected increasing delinquency and charge-off rates in 2014.

More than 107 vendor booths featuring the latest trends in window fashion, countertops, flooring or outdoor living are set to display their wares and services this weekend, Feb. 14, 15 and 16, at the Springdale Convention Center.

“The 2014 NWA Home Show is sold out this year as far as vendor space is concerned, and there will be about a dozen local builders on hand to talk with consumers about home building and remodel options,” said Brenda Jones, executive director for NWA Home Builders Association.

She said there is a entry small fee from $5 for one day to $10 for a three-day pass, but the ticket is good a 50% meal discount at the River Cane Buffet and $10 of free-play at Cherokee Casinos in Siloam Springs.

A special feature of this year’s event will be money saving ideas that visitors can utilize  in their homes and gardens. Research shows that February is the most popular time of year for planning home improvement projects slated for the spring.

Also this year, the event will include a “Find the Gnone” contest. Every hour the gnome will be hidden in one of the several booths at the show. An announcement will be made that the hunt has begun and the first person who spots the gnome and comes to the ticket counter with the gnome's location will get a special prize.

Habitat for Humanity in Benton and Washington counties will also present at this year’s event.

Lowe’s will also be on hand Saturday and Sunday between noon and 2 p.m. to entertain the kids with a “build and grow clinic”  this gives children the chance to learn how to build something out of wood, a project they can take home.

“We expect a good crowd given the warmer weather forecast and the cabin fever many have endured these past few weeks. There will be a grand opening at 10 a.m. Friday kicking off this year’s event. It will wind down at 5 p.m. on Sunday,” Jones said.

Hospitality tax collections in Fort Smith and Van Buren were down in 2013 compared to 2012, ending two consecutive years of gains for both cities. The tourism chiefs in both cities say 2014 will continue to be challenging for the regional tourism industry.

Collections in Van Buren during 2013 totaled $423,221.83, remarkably close to the $423,222.91 during 2012. December collections were $32,071, down 1.2% from the $32,451 in December 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 wintry weather in December likely resulted in the monthly decline. She said the January tally will also see a weather effect.

“January numbers are already reflecting (a) slow down caused by the bad weather. Lodging numbers for December were strong, but restaurants struggled with the icy, snowy weather and a weak economy. Preliminary numbers are showing this same trend for January 2014,” Koeth said.

Koeth said she expects 2014 tourism activity to be similar to 2013.

“Lodging ended the year above last year, but restaurants were down and are staying down. Due to the economy, specifically the smaller paychecks, we continue to see a change in the dining out patterns of consumers. I don't see that changing in the near future,” she 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 during 2013 totaled $731, 057, down 2% compared to the same period in 2012. The gap in collections improved through the year with first quarter collections were down more than 6% compared to the 2012 quarter. For the fourth quarter, collections were up 0.62% compared to the 2012 quarter.

The city collects a 3% tax on lodging.

The 2013 tally in Fort Smith was boosted by a healthy jump in December. December collections were $52,204, up 15.7% compared to December 2012. Claude Legris, executive director of the Fort Smith Convention & Visitors Bureau, said “a wide range of factors” caused area hotels to be more full than normal.

Candlewood Suites reported a 40% increase in collections thanks to several construction crews staying in the extended-stay hotel. Hampton Inn saw December revenue jump 29% thanks to utility crews using the hotel as a base while they worked winter weather related power outages.

The Holiday Inn in downtown Fort Smith hosted a robotic competition that helped boost the hotel’s revenue 26% in December. In 2012, the competition was split between days in November and December, Legris explained. Also, the La Quinta Inn was up 46% in December because all its rooms were open. In December 2012, areas of the hotel were closed for renovations.

During 2012, Fort Smith hospitality tax collections totaled $746,182, up 5.37% compared to the 2011 period. The 2011 collections were up 4.3% compared to 2010.

Legris said he is projecting a 4% increase in collections during 2014, but admitted that reaching the target “will be a little bit of a challenge.”

TOURISM EMPLOYMENT, ARKANSAS COLLECTIONS

Employment in the region’s tourism industry was 9,000 during December, down from 9,100 in November and above the 8,700 in December 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’ tourism sector (leisure & hospitality) employed 103,400 during December, down from a revised 103,700 during November, and above the 102,900 during December 2012. At a revised 103,700, the November employment tied a record for the sector that was first reached in January 2013.

Arkansas’ 2% tourism tax receipts totaled $11.967 million for the first 11 reporting months of 2013, up 2.95% compared to the $11.624 million during the same period of 2012.

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.

The Regional Intermodal Transportation Authority (RITA) voted Wednesday (Feb. 12) to contract with Washington, D.C.-based The Normandy Group to host a meeting during the summer in hopes of bringing together key players in government and industry in hopes of eventually securing funding for the construction of a $23 million inland port along the Arkansas River.

According to Mat Pitsch, intermodal project manager for the Western Arkansas Planning and Development District (WAPDD), said the organization approached RITA about hosting the meeting 

"We've been approached by an entity who saw (our ongoing plans for a new inland port) in the public eye, a former staffer for Sen. Boozman who works for a group that what they do is bring all parties to the table, whether it's elected officials, whether it's the shipping lines, whether it's the railroad companies, the big shippers, (agriculture) businesses, the retailers that use big shipping. They, for a fee, would host a major meeting, try to coordinate all those people to be there are the right time and our board is considering that at today's meeting."

Former Boozman Chief of Staff Matt Sagely is the individual who reached out, according to Pitsch, with himself and Fort Chaffee Redevelopment Authority Executive Director Ivy Owen meeting with Sagely during a visit to Washington in January.

RITA, which is funded jointly by various local governments including the cities of Fort Smith and Van Buren, will split the cost of the $20,100 contract with the FRCA.

Owen said bringing government and business leaders together using The Normandy Group was "an investment," which is why the FCRA board approved its half of the expenses shortly after Owen's trip concluded.

"We think it is so important that this happen, and I was so impressed with this meeting we had in D.C. and the wherewithal that these people have and the ... what they can do to bring these people to the table. It is worth our investment to get them here. It's vitally important that we get these people here to talk to us."

Pitsch told The City Wire that the proposed inland port, what he referred to as a harbor, would be located nearly Lock and Dam 13 in Barling, on land that used to be part of the U.S. Army installation at Fort Chaffee. The location, he said, provided easy access to the river as well as railroads and Interstate 49 when it is completed, though a timeline for completion of the interstate is still largely unknown at this time.

The U.S. Army Corps of Engineers is completing a study on the port and whether it would be a feasible venture. There is a possibility that RITA could obtain Corps funding of up to $7 million for the project, though the meeting planned for this summer by The Normandy Group would look to make the project a public-private partnership should the right opportunity between a private group and RITA present itself.

As for how the proposed port is different than the other ports along the Arkansas River today, Pitsch said this port would have capacity to handle large containers normally unloaded at ports along the West Coast.

"Probably the easiest way to analyze it, and of course those people are at our meeting today, is in the trucking industry you have short haul, less than truckload (LTL). Well, in the shipping industry, what we're heading towards is a containerized and not necessarily defined as containerized, but something so large in its bulk that you wouldn't just ship a partial load. And I think that's where we're headed. We've had customers in this region step forward and said, 'That's what we want.'"

Ports already in existence on the river, he said, are not structured to handle the capacity.

While some may question the need for the port, RITA Chairman Robert Null said the completion of the expansion of the Panama Canal next year will open this part of the country to a whole new customer with coastal cities, including Newport News, Va., already preparing for the onslaught of container traffic to reach their shores.

It's that region, Null said, that The Normandy Group has helped before, showing that the company can follow through on bringing the big players to Fort Smith for a meeting in June. Asked whether he had confidence in the company's ability to replicate the success in the Fort Smith region, Null expressed no doubts.

"You asked the question, 'Can this group pull it off?' We've looked at it. They've got a history of it. We think they can pull it off."