The outlook for two trucking operations that employ more than 1,000 in the Fort Smith region – and many of those being good-paying jobs – is improving. Fort Smith-based Arkansas Best Corp. is arguably beyond “the challenges of the past few years,” and Van Buren-based USA Truck is “in the early innings of its turnaround story.”

It’s safe to assume that shareholders, employees and execs at both companies are looking forward to financial and operational stability.

Arkansas Best, a transportation holding company whose largest subsidiary is national less-than-truckload carrier ABF Freight, has lost more than $82.3 million in the past five years – not including an unusual $64 million accounting charge to reflect goodwill impairment. And for almost a year, the company and the International Brotherhood of Teamsters worked to hammer out a new five-year labor agreement that was eventually ratified on Oct. 30, 2013.

The new contract covers about 7,500 employees of ABF Freight System who are members of the union. Most of those workers are drivers. The company has said the agreement will result in savings of between $55 million and $65 million a year, with about 75% of the savings coming from wage and benefit reductions, and the remainder coming from flexible workplace rules and facilities consolidation.

BETTER BUSINESS ENVIRONMENT
Net income during 2013 for Arkansas Best was $15.8 million, much better than the $7.7 million loss in 2012 and the most earned by company in a year since 2008. Full year 2013 tonnage was up 3.4%, and tonnage for the first quarter of 2014 has continued on a strong path – up around 3% – despite winter weather that potentially shaved up to 3% from the tonnage increase. The company also said ABF billed revenue would have been up as much as 7% and tonnage would be up around 6% if not for winter storms that hit many parts of the country during January and February.

Arkansas Best President and CEO Judy McReynolds said during a March 4 Raymond James investor conference in Orlando that the “the business environment is better” with respect to conditions favorable for businesses under the Arkansas Best umbrella.

“I’ve been with the company for nearly 17 years, and  I can honestly say that I’ve never been so excited about the opportunities that lay in front of us today that are within our reach,” McReynolds said in opening her comments about “an evolving story” at Arkansas Best.

She noted later in her conference remarks: “We’ve weathered the challenges of the past few years, and our current financial position equips us to move forward with growth and investments that benefit our shareholders, our employees and our customers.”

Also on March 4, ABF officials announced a rate increase to be effective March 24. The increase is about 5.4%, but the rates vary depending on location and load.

BETTER FINANCIALS
The increased tonnage and move to push higher rates – rate hikes that may stick thanks to tightening capacity in the national trucking industry – is why Brad Delco believes Arkansas Best’s financials “will begin to shine” in future quarters. Delco, a transportation industry analyst with Little Rock-based Stephens Inc., has a $42 target price on Arkansas Best shares. Company shares (NASDAQ: ABFS) closed Wednesday (March 5) at $35.73, up 84 cents. During the past 52 weeks, the share price has ranged from a $36 high to a $9.62 low. (Stephens Inc., Delco’s employer, has a market position in Arkansas Best and USA Truck, and does investment and non-investment business with the companies.)

However, Delco estimates the company will post a 15 cent per share loss in the first quarter, down from his previous estimate of 5 cents per share loss. The loss of business from weather is the reason for the downward shift.

“We think the weather impact on transports this quarter is very well known, and we view the accelerating top-line trends very favorably. As bad weather abates, we think the earnings power of the Freight business will begin to shine through along with greater contributions from the non-asset businesses,” Delco said in his March 5 investor note.

Delco does estimate the company will report full year 2014 earnings of up to $2 per share, and 2015 earnings of $2.80 per share.

McReynolds spoke during the conference of the company’s goal to generate more revenue from operations other than ABF (non-asset based operations). Other subsidiaries include Panther Expedited Services (logistics), FleetNet (an emergency/preventative maintenance company) and a household goods moving company.

ABF Freight generated $1.761 billion in operating revenue in 2013, or 76.6% of total operating revenue. The percentage is down from 82.5% during 2012. The value of diversifying revenue is evident when comparing operating income of the segments. For example, ABF Freight generated 76.6% of the revenue during the year, and 52.5% of the operating income. Panther Logistics, the second largest subsidiary of Arkansas Best, generated 10.7% of operating revenue, but cranked out 36.4% of the total operating income among the five subsidiaries.

Revenue from the non-asset based subsidiaries was just short of $600 million in 2013. McReynolds said March 4 that the goal is for non-asset revenue to reach $1 billion by 2015.

With a little more than $194 million in cash and borrowing capacity, McReynolds also said the company is “very active in scoping and understanding acquisition opportunities.” She said “several teams” are now looking at such opportunities.

USA TRUCK
The outlook at USA Truck is better but considerably less rosy than that of Arkansas Best. USA Truck 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.

In fact, the company has lost more than $47.9 million in the past five years. The last time the company strung together meaningful numbers was in the middle of the previous decade when 2004, 2005 and 2006 delivered net income of $7.432 million, $15.568 million and $12.441 million, respectively.

The resulting low share price created from the financial losses resulted in USA Truck fighting off two hostile takeover attempts by trucking companies who sought to gain USA Truck assets and business lines at near fire-sale prices. The latest takeover attempted ended in early February when Knight agreed to pull back from its $9 per share offer.

Athough Delco believes USA Truck will finally report positive income in 2014 – 25 cents per share – he said the turnaround toward more stable finances is a “likely several year
process” considering internal and external factors the company faces.

“After a recent visit with Management we have had an opportunity to take a deeper dive into the operational changes that have been put in place at (USA Truck), as well as what challenges and opportunities remain for the company to proceed along with its turnaround plan. In short, both opportunities and challenges are plentiful but progress is being made and more importantly will take time to translate into results,” Delco noted in a Feb. 25 investor note on USA Truck.

Delco has set a $12 target on USA Truck shares. The shares (NASDAQ: USAK) closed Wednesday at $14.80, down 70 cents. During the past 52 weeks the share price has ranged from a $16.38 high to a $4.37 low.

“In our opinion, the Trucking business is both difficult and complex with typically thin margins and in addition to both processes and investments that need to be developed/made, a cultural mindset shift is also required that may take time to materialize,” Delco wrote.

USA Truck President and CEO John Simone declined to comment for this story.

Office supply retailer Staples will close 225 stores in North America by the middle of next year seeking to trim costs amid a weaker sales climate.

Staples said it is aiming to save $500 million annually through the closings and other cost cutting measures. The closings represent about 12% of Staples store fleet.

This announcement follows the purging trend moving across the retail channel since the the start of this year from Macy’s and Sam’s Club to the recent 20% store reduction from RadioShack.

"Our customers are using less office supplies, they're shopping less often in our stores and more online, and their focus on value has made the marketplace even more competitive," CEO Ronald Sargent said during an earnings call Thursday, March 6.

Office Depot said last week that it expected sales to continue falling in 2014, after reporting a surprise quarterly loss.

Staples' sales dropped 10.6% to $5.87 billion in the quarter ended Feb. 1. Analysts consensus was an expected $5.97 billion. Same-store sales in North America, excluding sales through Staples.com, fell 7% as Staples sold fewer business machines, technology accessories, office supplies and computers.

Net income from continuing operations rose to $212 million, or 33 cents per share, from $90 million, or 14 cents per share, a year earlier.

Staples said is putting more emphasis on e-commerce opportunities as nearly 50% of its sales now are online.

"A year ago, we announced a plan to fundamentally reinvent our company," Sargent said. "We're meeting the changing needs of business customers and taking aggressive action to reduce costs and improve efficiency."

Shares of Staples (NASDAQ: SPLS) tumbled more than 15% in early trading on Thursday at $11.31, down $2.08

NorthWest Arkansas Community College has joined forces with Crystal Bridges Museum of American Art to bring “Vivaldi’s Sounds of Spring” to life for local audiences on March 19 and 21.

The Vivaldi programs in Crystal Bridges’ Great Hall will begin at 7 p.m. each day. The programs are free, and tickets are available at online.
 
Miles Fish, music professor at NWACC, will be the guest lecturer. He has been researching and studying Antonio Vivaldi’s music since 2002, spending summers in Italy. Two of Fish’s books involving Vivaldi have been published by Apple’s iTunes, the college said.

Performing guest artists will include:
• Antonella Gozzoli, soprano visiting from Tuscany;
• Ben Harris, Fayetteville Jazz Collective;
• Tobiah Murphy, University of Missouri Conservatory of Music; and
• NWACC Chamber Singers.

The March 19 program will address “The Life and Times of Antonio Vivaldi.” The March 21 program will focus on the miraculous discovery and “re-premiere” performance of Vivaldi’s works at the outbreak of World War II.

The performing arts presentations coincide with the March 15 opening of “The William S. Paley Collection: A Taste for Modernism” at Crystal Bridges.

Fish has noted that because of Vivaldi’s pioneering innovative contributions to “program music” (evoking images — painting pictures with musical sounds), his works remain especially relevant to those who love visual art.
 
The Vivaldi “Spring” was revolutionary at its conception and remains, centuries later, a textbook example of memorable sound painting, according to Fish.

Consumer debt, and not just wicked winter weather, is having a chilling effect on retail sales. Consumer debt rose by $241 billion in the fourth quarter of 2013, the largest period increase seen since the fall of 2007, according to a recent study by the Federal Reserve Bank of New York. 

At the same time consumers were taking on more debt, retailers from Abercrombie and Fitch to Wal-Mart reported lackluster sales largely blamed on inclement weather and deflationary margins. Fourth quarter revenue for Wal-Mart Stores Inc. totaled $129.706 billion, up 1.5% compared to the fourth quarter of the prior year but was below the consensus estimate of $130.23 billion. Operating income during the quarter was $7,347 billion, down 14.4% compared to the previous fourth quarter. Net income during the quarter was $4.431 billion, down 21% compared to the previous year.

Consumer indebtedness rose to $11.52 trillion as of Dec. 31, up 2.1% from the third quarter. The report found that 2013 was first four quarters to register a net annual increase ($180 billion or 1.6%) in debt since 2008. 
                                                                    
While consumer debt remains 9.1% below its peak of $12.68 trillion in the late 2008, relatively stagnant income among the shrinking middle class is problematic for sectors like retail that rely on discretionary spending.        

Rich Yamarone, chief economist with Bloomberg Brief, recently told The City Wire that he expects a tough year for retailers if they are depending on the middle to lower middle class consumers.

“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,” Yamarone said. 

He said as household debt levels rise, consumers will have less money for movies, dinner out or new clothes. 

Analysts note that most middle class consumers did not personally benefit from the wealth created last year with record stock prices and still have most of their wealth wrapped up in their homes. With that, the Federal Reserve study notes mortgage debt stood at $8.05 trillion at the end of 2013. For the full year, mortgage balances saw a net increase of $16 billion, ending the four year streak of year over year declines, the study notes. The balances on home equity lines of credit dropped by $6 billion (1.1%) and now stand at $529 billion.

The biggest drain on consumer balance sheets at the end of 2013 were $18 billion in new auto loans originated in the fourth quarter, $53 billion in added student loan balances and $11 billion charged to credit cards.

Experts warn that as consumers ante up for big ticket items like new cars, those are debts that will stay on balance sheets for an average of 48 months and longer. Phil LeBeau, a CNBC analyst, this week reported that consumers are borrowing a record rate to pay for their new rides. He said the average amount borrowed by car buyers last quarter climbed above $27,000 for the first time ever. Experian Automotive data show that the average auto loan in fourth quarter 2013 was $27,430 — an increase of $739 compared with the same period of 2012. The average used car loan was $345 higher, coming in at $17,974.

The increases mean higher monthly payments for longer periods of time. Experian said monthly payments are rising and expected to top $500 on average this year. J.D. Power said last week that February was on track to have one-third of new car auto loans extended out to six years because of the higher purchase prices and desires for lower monthly payments.

The Federal Reserve report also looked at consumer delinquencies and found auto loan performance to be stable with 3.4% of the notes at least 90-days past due.The number of credit inquiries within six months – an indicator of consumer credit demand – remained unchanged from the previous quarter at 169 million.

Looming student loan debt is also a major concern. Student debt rose $53 billion in the recent quarter to $1.08 trillion. More than 11.5% of student loans are 90-days delinquent or in default.

"Young people with student loans are less likely to buy a house or a car or contribute to a 401(k), said Wilbert van der Klaauw, a senior vice president of the New York Fed's research and statistics group.

The report notes that young consumers with large debts will have less spending power until the debt is satisfied as student loans are not dischargeable by bankruptcy.

The CEO of Union Pacific Corp., the railroad transportation giant, told a Little Rock audience that he sees positive signs in the U.S. economy, particularly in the agricultural, chemical and auto business.

John J. “Jack” Koraleski, who has served as CEO since 2012, told the Arkansas Economic Development Foundation – the non-profit arm of the state’s economic agency – that early trends in his transportation portfolio are off to a good start in 2014.

“We think the agricultural markets are going to be pretty darn strong,” Koraleski said. “Overall, we think its going to be a pretty stable year for agricultural products.”

He also said a rebound in car sales are “almost back to what we would consider normal.”

But the energy business may be the biggest driver of new business for Union Pacific and the overall economy. Koraleski said shale production in the natural gas business has been steady across Union Pacific’s territory as fracking sand and chemicals as well as steel materials for pipelines have been a rising source of revenue.

He also said the coal business and a harsh winter have boosted the company’s bottom line. Koraleski said cold weather has been a big benefit to his firm, but he was no longer a fan of the freezing temperatures, despite its good economic news for Union Pacific.

“I’m ready to give up that strategy. I’m ready for it to not be cold anymore,” he joked.

Koraleski also noted that onshoring efforts – the move of foreign manufacturers back to U.S. soil – is expected to benefit Union Pacific and the overall economy in part due to competitive labor and low energy costs in the U.S.

“We’re starting to see more and more parent companies from the Eurozone look to the U.S. for manufacturing,” he told the audience.

KEYSTONE PIPELINE A ‘WIN-WIN’
The controversial Keystone XL Pipeline project has been a hot potato for business and political leaders nationally.

Koraleski said his company will win regardless of the project’s ultimate fate.

“If they build it fine, if they don’t, fine. We’re kind of in a very fortunate position,” he said.

Koraleski said if it is not built, his company will be a major transporter of the 700,000 barrels of oil coming from Canada to Mexico. If it is built, it will require 1,200 miles of pipe, rock, and concrete as well as provide jobs for 9,000 workers who will need trucks, tools, and housing.

“We haul all that stuff,” Koraleski said. “We’re lucky because we win either way.”

FACTS & FIGURES
Omaha-based Union Pacific reported its strongest ever quarterly and full year financial results last year. The company posted net income of $4.388 billion in 2013 on revenues of $21.96 billion. Those numbers were 11% and 5% higher respectively.

The company’s stock (NYSE: UNP) has been trading toward the high end of its 52-week high of $187.09.

Union Pacific has major and minor operations throughout Arkansas including in Hoxie, Jonesboro, Bald Knob, Pine Bluff, North Little Rock, Van Buren, Hope, Camden, and Texarkana. Union Pacific covers 23 states across two-thirds of the U.S. and has locations across North America.

Several years ago, it opened a 600-acre intermodal facility in Marion, Ark., that Koraleski said is the “standard” for the company’s new endeavors.

In Arkansas, Union Pacific employs 2,074 workers with an annual payroll of $230 million. It invested $173.3 million in capital expenditures in the last year.

Koraleski has served in a number of roles with Union Pacific, where he has worked since 1972. He has served as controller of Union Pacific Corp., executive vice president of marketing and sales, and executive vice president of finance and information technology for Union Pacific Railroad. Prior to that, he worked in the real estate and administrative departments.

Koraleski earned a bachelor’s and master’s degree in business administration from the University of Nebraska at Omaha.

Men today have dropped the book on traditional roles and picked up the household shopping list, according to a recent study by Defy Media. “The Acumen Report: Brand New Man,” found that 65% of respondents said they now hold the primary shopping responsibility for the household.

About 54% said they shop for groceries and household supplies more than their spouse. An interesting finding in the study was a growing number of men (50%) said their spouses do not tell them what brands to buy and about that many said they ask family and friends for recommendations about certain products

Jason Long, CEO of Shift Marketing Group, said suppliers can’t afford to miss this demographic opportunity, yet many of the shopper marketing data still target female consumers.

Carol Spieckerman, CEO of NewMarketBuilders, said multiple studies that revealed the degree to which women influence purchases, even those that are made by men, created a “better safe than sorry” mentality among brands and retailers. She said the logic assumed that men would not be put off by female-centric marketing in non-gender-specific categories so the rewards would outweigh any risks. As a result, many retailers and brands have gone too far.

“I’m surprised by how many retailers refer to their customers as ‘she’ and ‘her,’ for example, and when feminized language is institutionalized, you have to believe that it marginalizes male customers in the end,” Spieckerman said. “The answer isn’t for the pendulum to swing too far back, though, as Burger King, Go Daddy and others have learned the hard way. Female-focused marketing may not offend men, but a big push in the opposite direction can get brands into trouble.”

CULTURAL SHIFT
“About 35% of men don’t have a significant other, many are marrying later,” Long said. “They routinely shop for what they need and that continues even after they get married.”

The average age of a marrying male today is 29, versus 25 in the 1980s. About 43% of the men between the ages 18 to 49 live with a spouse, and 22% live with parents. That leaves 35% of men flying solo when it comes to making brand decisions and filling up the shopping cart.

Long said the explosion in cable programming geared toward men in recent years shows the tremendous market potential that has has more or less snuck up on suppliers and the retail sector.

INFORMAL SURVEY
An informal survey by The City Wire found 66% of respondents who said the male in the household does nearly all of the grocery shopping, and at least some of the cooking.

“(My husband) Lynn does mostly all of the grocery shopping, I couldn’t tell you the last time I actually bought more than a loaf of bread and milk,” Jana Isabel noted in her response to the The City Wire survey. The Isabel’s reside in east Texas.

The same was true for Kim Borrelli, a Texas banker who said her husband Joe does 100% of the grocery shopping and 75% of the cooking.

“I wouldn’t have it any other way, I love it,” Kim Borrelli said. 

Rod Coleman of Fort Smith also does most his family’s shopping for as long as daughter Elizabeth Coleman Voris can remember. 

“I do most of the shopping for us because I'm a stay at home mom and Justin just doesn't have the time with his job,” Voris said of her own household.

David Reese said he enjoys the grocery shopping and is always looking for an excuse to run to the store. Reese owns a real estate business and was raised in the grocery business.

Each of these respondents, except Voris are boomers but the two surveys found Gen X and Millennial men also prefer shopping more when time allows. Ashley Lemley, 28, of Fort Smith said her husband James does the grocery shopping and 99% of the cooking, Tim Sabo a Gen X executive from Dallas, said he also does most of the grocery shopping for his family of four.

INSIGHTS REVEALED
The Defy Media report outlined four key ideas about how men approach a new brand relationship. They refer to these as the 4 - E’s: Exposure, Education, Experimentation, and Eureka.

The first three E’s largely involve marketing. The research indicates men rely heavily on the information provided by brands to get them though the process. Researchers said suppliers can jump-start a man’s journey to a new brand relationship by giving him a reason to seek a new brand; educating him about the brands and product categories; catching his eye at the point-of-sale; and offering ways for him to evangelize the brands he loves.

Creating a need is key as researchers note that without a compelling new need, men have no motivation to change the brands they use. Many of the respondents said they consider seeking a new brand a drag, especially given the numbers of brands from which to choose.

Defy said men can and do ask for directions and they research products online. The biggest influencer of men in the Defy report was recommendations from friends and family, followed closely by advertising and coupons. Nearly 40% said they became aware of a brand after first trying it at friend’s house. About one-third said the brands they use are closely linked to those used by their parents, but just as many said they found new brands via social media.

THE EUREKA MOMENT
Once brand awareness occurs, researchers said men are quite comfortable “buying and trying.” The men interviewed said they love getting a deal, because they can experiment with little risk, the study noted.

Researchers said a guy won’t buy a product just because it’s on sale — there has to a need — and if the new product disappoints, he is unlikely to buy it again, even if it’s on sale. Men also can be enticed by advertising that speaks to them. More than half of the Defy study respondents said they had bought and tried a new beer because of the advertising.

The Eureka phase means that he has found a brand to love. Research shows that when a male shopper reaches the Eureka phase they are very likely to tell their friends and family. The survey found 79% had recommended beer, other beverages and snacks were recommended by 53% and 56%, respectively.

Spieckerman said most consumer brands are still erring on the side of female-centric marketing but she likes the way some retail concepts are taking a fresh and relevant approach to men.

“French apparel retailer, Loding, which just opened its first North American store in Toronto is a great example. Loding offers no promotions, sales or discounts and simplifies decision-making by pricing every item in a category (shirts, belts, shoes, etc.) at the same price regardless of style and even quality. Instead of using gimmicks or risky marketing strategies, Loding looked at how men like to shop and served up a solution,” Spieckerman said.

Tyson Foods Chairman John Tyson sold 336,895 shares of Tyson Foods stock for an estimated $12.9 million earlier this week, according to a filing with the Securities and Exchange Commission.

Following this sale, the Tyson family heir’s stock holdings amount to $1,868,160 shares with a market value in excess of $75 million.

John Tyson is the corporate insider with the most shares of Tyson Foods Class A stock at this time. However, the estate of Don Tyson still controls 2 million shares worth an estimated $80.34 million.

Shares of Tyson Foods (NYSE: TSN) closed Thursday March 6 at $40.17, down 25 cents. For the past 52 weeks, Tyson’s share price has ranged from a $22.47 low to a $40.80 high.

A dearth of political candidates for legislative seats, tough allegations against the poultry industry, growth in Hispanic buying power and comments about “intimidator” Putin are part of the Northwest Arkansas Friday Wire for March 7.

NOTES & ANALYSIS
• The (almost) non-election election cycle
The list of folks who filed to run for legislative seats in districts representing the Northwest Arkansas and Fort Smith areas turned out to be shorter than a grocery list on a $5 budget.

It must have been disappointing for those who thought the creation of a two-party system in Arkansas would result in more competition for legislative races. Of the 30 Fort Smith and Northwest Arkansas House and Senate districts up for election in 2014, only 12 are contested. And of those 12, six are contested in the GOP primary only. And of the six that will have a November general election contest, only four will see a Democratic-Republican matchup. The other two will see a Republican candidate square up against a Libertarian candidate.

In the Arkansas Senate, 17 of the 35 seats up for re-election. Of the 17, only four will have a November contest. In the 100-member Arkansas House, only 38 seats will see a November contest.

Overall, Republicans had 132 candidates file for 98 different federal and state offices, while Democrats had 88 candidates file for 81 different federal and state offices, according to a report from Talk Business writer Jason Tolbert. Libertarians had 19 candidates file, the Green Party has two candidates, and only one candidate filed as an Independent.

Kudos to those who were pining for Republicans to “win” the political filing season. However, if you were hoping for a healthy slate of candidates under the belief that competition improves the chances for better government, well, better luck next cycle.

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: Pursuing the Hispanic market
Hispanic and Latino shoppers across the United States wield more than $1.2 trillion of buying power annually with projections of $1.5 trillion by 2015, according to Nielsen. That economic power is why Wal-Mart, Home Depot and most major retailers invest in marketing efforts to woo this important demographic.

• Stable NWA apartment sector
A growing local economy and increased enrollment at the University of Arkansas kept multifamily occupancy levels stable at 96.5% last year, despite the opening of 823 new student housing units since the fall of 2012.

• Negative statewide tax revenue trend
The growth of year-to-date tax collections in Arkansas is on a downward trend, and the February gross revenue number was below the budget forecast. The February report also showed a continued decline in collections related to consumer spending.

NUMBERS ON THE WIRE
$140 billion: The combined net worth of the Walton family heirs, dubbed the world’s wealthiest family, according to Forbes Annual Billionaire List. The children of Sam and Helen Walton saw their wealth rise 20.9% during 2013 spurred on from the bull market and record stock prices last year.

$1.2 trillion: The buying power of the Hispanic demographic across the U.S. this year, according to Nielsen.

$444 million: A three-year contract value between Tyson Foods and the U.S. Department of Defense to provide meat for commissary sales to military personnel.

$241 billion: The amount consumer debt rose in the fourth quarter of 2013, the largest period increase seen since the fall of 2007, according to a recent study by the Federal Reserve Bank of New York. 

OUTSIDE THE WIRE
• A meat racket?
Christopher Leonard's new exposé on the chicken industry, The Meat Racket, doesn't devote much ink to the physical object on our plate, the chicken meat itself. Instead, Leonard focuses on the economic machinery that delivers the meat to us, or, as he puts it, "the hidden power structure that has quietly reshaped U.S. rural economies while gaining unprecedented control over the nation's meat supply."

• Southern issues
Look, there are lots of things to love about the South. It's clean and quiet. There's delicious food, good people and often amazing weather. But that's exactly why it makes us so sad to think about all the ways in which the region is struggling today.

• Selfies Bring Ashtags to Lent
Gaby Driessen stopped by St. Peter's Church here and a priest put a thick smudge of ash on her forehead — a traditional way Catholics and other Christians physically show their commitment to the faith on Ash Wednesday, the first day of the season of Lent. Then she did what many 24-year-olds would. She took a self-portrait, or selfie, with a friend and they posted it on Instagram.

WORD ON THE WIRE
"He's an intimidator. He's a ruthless man. He's former KGB. He has to be reminded that after the Cold War that most of Eastern Europe has chosen to move to the West.”
– former U.S. Secretary of State Condoleezza said during a Wednesday lecture at the University of Arkansas

“While I appreciate that the President finally heard my concerns about his proposed cuts to Social Security, I’m frustrated to see more of the same in his budget blueprint. Once again, we see lopsided tax increases, as well as cuts to the Corps of Engineers, the Small Business Administration, and drinking water improvement programs — to name a few.”
– U.S. Sen. Mark Pryor, D-Ark., in criticizing the 2015 federal budget proposed by President Barack Obama

“The drive-through (depot) options for (pick-up) play heavily on convenience and will be particularly effective in driving incremental business with shoppers who already trust Wal-Mart yet may shop elsewhere for fill-in trips. This is a powerful attack on drug retailers and dollar stores that continue to expand into consumables and fresh produce in particular. Until Wal-Mart’s small format stores proliferate, drive-through options are a great way to keep convenience-focused, price-sensitive customers from seeking other options.”
– Carol Spieckerman, CEO of NewMarketBuilders, about a plan by Wal-Mart to tether its retail network

A dearth of political candidates for legislative seats, tough allegations against the poultry industry, thoughts on “New Tech” schools and an excited trucking exec are part of the March 7 Friday Wire for the Fort Smith region.

NOTES & ANALYSIS
• The (almost) non-election election cycle
The list of folks who filed to run for legislative seats in districts representing the Northwest Arkansas and Fort Smith areas turned out to be shorter than a grocery list on a $5 budget.

It must have been disappointing for those who thought the creation of a two-party system in Arkansas would result in more competition for legislative races. Of the 30 Fort Smith and Northwest Arkansas House and Senate districts up for election in 2014, only 12 are contested. And of those 12, six are contested in the GOP primary only. And of the six that will have a November general election contest, only four will see a Democratic-Republican matchup. The other two will see a Republican candidate square up against a Libertarian candidate.

In the Arkansas Senate, 17 of the 35 seats up for re-election. Of the 17, only four will have a November contest. In the 100-member Arkansas House, only 38 seats will see a November contest.

Overall, Republicans had 132 candidates file for 98 different federal and state offices, while Democrats had 88 candidates file for 81 different federal and state offices, according to a report from Talk Business writer Jason Tolbert. Libertarians had 19 candidates file, the Green Party has two candidates, and only one candidate filed as an Independent.

Kudos to those who were pining for Republicans to “win” the political filing season. However, if you were hoping for a healthy slate of candidates under the belief that competition improves the chances for better government, well, better luck next cycle.

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 ...

• Positive permit tally
February building permits came in at a combined $7.405 million for the cities of Fort Smith, Greenwood and Van Buren. The total is an increase of 12.04% over the same period last year, which saw only $6.609 million in permits across the region's three largest cities. The total is also an increase of 8.96% from February 2011's total of $6.796 million.

• Negative statewide tax revenue trend
The growth of year-to-date tax collections in Arkansas is on a downward trend, and the February gross revenue number was below the budget forecast. The February report also showed a continued decline in collections related to consumer spending.

• Political education partnership
Three faculty members with the University of Arkansas at Fort Smith and The City Wire will collaborate to deliver a series of political-based essays and reports beginning in March.

NUMBERS ON THE WIRE
$4 million: The cost of constructing Rogers New Tech High School. The district retrofitted an existing building in two different phases in order to build the "New Tech" high school, which Rogers Public Schools Chief Financial Officer Kathy Hamlon said was an alternative to the construction of a traditional new high school, which would have cost the district tens of millions of dollars.

12%: The increase in building permit values from February 2013 to February 2014. The increase was largely seen in Fort Smith, where $5.962 million in permits were issued, while Van Buren saw permits totaling $978,376 and Greenwood saw permits totaling $464,485.

$1.6 million: Contract amount awarded by the city of Fort Smith to River Valley Sports Complex, a non-profit, to build a softball and baseball event complex at Chaffee Crossing.

OUTSIDE THE WIRE
• A meat racket?
Christopher Leonard's new exposé on the chicken industry, The Meat Racket, doesn't devote much ink to the physical object on our plate, the chicken meat itself. Instead, Leonard focuses on the economic machinery that delivers the meat to us, or, as he puts it, "the hidden power structure that has quietly reshaped U.S. rural economies while gaining unprecedented control over the nation's meat supply."

• Southern issues
Look, there are lots of things to love about the South. It's clean and quiet. There's delicious food, good people and often amazing weather. But that's exactly why it makes us so sad to think about all the ways in which the region is struggling today.

• Selfies Bring Ashtags to Lent
Gaby Driessen stopped by St. Peter's Church here and a priest put a thick smudge of ash on her forehead — a traditional way Catholics and other Christians physically show their commitment to the faith on Ash Wednesday, the first day of the season of Lent. Then she did what many 24-year-olds would. She took a self-portrait, or selfie, with a friend and they posted it on Instagram.

WORD ON THE WIRE
“I’ve been with the company for nearly 17 years, and I can honestly say that I’ve never been so excited about the opportunities that lay in front of us today that are within our reach.”
— Arkansas Best Corp. President and CEO Judy McReynolds said during a March 4 investor conference in Orlando, Fla.

"He's an intimidator. He's a ruthless man. He's former KGB. He has to be reminded that after the Cold War that most of Eastern Europe has chosen to move to the West.”
– former U.S. Secretary of State Condoleezza said during a Wednesday lecture at the University of Arkansas

“While I appreciate that the President finally heard my concerns about his proposed cuts to Social Security, I’m frustrated to see more of the same in his budget blueprint. Once again, we see lopsided tax increases, as well as cuts to the Corps of Engineers, the Small Business Administration, and drinking water improvement programs — to name a few.”
– U.S. Sen. Mark Pryor, D-Ark., in criticizing the 2015 federal budget proposed by President Barack Obama

Members of the Fort Smith Regional Chamber of Commerce received an update Friday morning (March 7) on the current state of the so-called Private Option, Arkansas' answer to the Affordable Care Act (aka Obamacare), where money that would be spent on Medicaid coverage for poor Arkansans is instead used to purchase private insurance for individuals generally earning less than $15,000 per year.

According to Craig Wilson of the Arkansas Center for Health Improvement, before implementation of the private option, more than 400,000 Arkansans were living without healthcare. And according to Wilson, the years and even decades before the implementation of the Obamacare at the federal level and passing the Private Option legislation in the state's General Assembly had left many people with high premiums, cuts in services and spending caps on their insurance policies, which were becoming more and more expensive with time.

He said overall, the goals of Obamacare were good but hard to implement all at once. Those goals included improving the quality of care and access to care while reducing costs.

Due to the way the federal legislation was crafted, Wilson said many Arkansans qualified for some level of subsidy to assist with costs under Obamacare, which allows individuals to obtain coverage assistance even if their income is up to 400% of poverty level. The Private Option maxes out at 138%, he said.

But he said while many individuals may have been opposed to Obamacare, he said it would be hard to show that Arkansas' Private Option was not a good alternative. He highlighted two specific reasons why it was necessary for Arkansas to have taken the lead nationally in the creation of the Private Option, which is now being looked at by several states as a model for providing health care to its citizens.

"The cost of care for others when they show up at the emergency room and don't get the preventative care that they need prior to that … that's what costs. It's not the uninsured are not accessing care, they were just accessing it in the most inefficient way possible by showing up at the emergency room," he said, before highlighting the numerous delays in the full implementation of the federal healthcare legislation. "So because of the issues that we had before and because of the changes and delays in the Affordable Care Act, we know that we must take the reigns as a state and do something for our citizens to meet their healthcare needs."

Wilson said making private insurance available to the hundreds of thousands of Arkansans who are likely eligible for coverage under the Private Option would save those individuals and taxpayers at large bundles of money as this program not only provides coverage, but also "teaches (people) how to use insurance effectively."

He also said the Private Option is fully funded by the federal government through the year 2016, which gives Arkansas time to implement the program at virtually no cost to the state's taxpayers.

As a whole, Wilson asserted that the Private Option is reforming the healthcare model in the state of Arkansas and will ultimately have a positive impact on individuals, businesses and the economy. He said the program was digitizing much of the medical records in the state through mandated requirements and was opening coverage to a variety of different insurance providers who previously had not been in the Arkansas marketplace.

In all, he said there was nothing Arkansas could have done to keep the Affordable Care Act from becoming law and by making significant changes to the program through state legislation, the state economy would recapture as much as $1.1 billion worth of money that had been going out of state.

Already, as of late February, Wilson said 26,000 people had enrolled in the Health Insurance Marketplace and "had been transmitted to the (health) insurance carriers."

Regarding the Private Option, Wilson said there had been more than 190,000 applications by late February, which he said "demonstrates the need that was out there." Of those that applied, he said 127,000 had been determined eligible for the Private Option. Of those, about 11,500 were determined to be better served by Medicare due to having serious medical conditions while another 94,000 of the eligible individuals have been enrolled in private insurance, well more than a third of what Wilson said was anticipated.

"We're very much nearing the halfway mark, and getting over the halfway mark, in terms in meeting the expectations for enrollment. And what that means when you look at both the Private Option and those individuals who are receiving subsidies through the Health Insurance Marketplace, that's about 130,000 individuals that received coverage in the private marketplace. That money is turning over in the private market and those people are getting coverage, they're getting care."

Van Nuys, Calif.-based Superior Industries, one of Northwest Arkansas' largest manufacturers, reports a challenging start to 2014, as its biggest customers Ford, General Motors, Chrysler and Toyota work through unsold inventories on the heels of back-to-back record years.

Superior makes aluminum wheels for the auto industry and operates plants in Fayetteville and Rogers, employing about 1,400. There also are three plants in Mexico, with a fourth slated for completion early next year.

Superior reported 2013 net profits of $22.8 million, or 83 cents per diluted share. Profits declined 26% from the prior year as the wheel maker faced a $10.4 million increased tax provision. Profits were $30.9 million, or $1.13 per diluted share in 2012.

Consolidated net sales slid 4% in 2013 to $789.6 million as the company faced production downtime for plant improvements in Rogers and Fayetteville. Unit shipments decreased 5% in 2013 from last year, the company noted in the release on Friday, March 7.

While total sales were down, the capital improvements and more select product mix did help to raise the manufacturer’s gross margin — meaning the company kept more of the money it made than in the prior year. Superior’s gross profit for 2013 increased to $64.1 million, or 8% of net sales for 2013, from $60.6 million, or 7% of net sales for 2012.

“I continue to be pleased with the year-over-year gross margin growth being achieved, demonstrating that the ongoing investments being made in our existing manufacturing facilities have contributed important efficiency gains,” said Steven Borick, chairman and CEO.

He said the company still has opportunities to further improve its manufacturing performance and flexibility, citing the actions being taken at existing manufacturing facilities, particularly in the U.S., that are resulting in lower operating costs and productivity improvements.

“We are making excellent progress with the construction of our new, state-of-the-art manufacturing plant in Chihuahua, Mexico, which will add needed capacity, further enhance efficiencies and complement our three existing Mexico-based facilities. The project is on plan and scheduled for completion and initial testing by the end of this year, with commercial production anticipated for the first half of 2015,” Borick said.

The company ran at 99% capacity during 2013, and turned away business to become more selective on program bidding because of its capacity constraints.

Superior’s shipments to Ford totaled 5.055 million wheels, a 9% gain from the prior year. Trucks comprised the majority of those sales for the F-Series, Explorer, Flex and Edge models. Roughly 1.140 million of the wheels sold to Ford were for passenger cars. Superior said the Fiesta and MKZ models sold better than Fusion and Mustang which suffered losses.

Shipments to General Motors declined 11% from the prior year, as Malibu orders plummeted 57%. Superior shipped a total 2.935 million wheels to General Motors last year, the vast majority were for light trucks. Superior said shipments to Chrysler fell 17% in 2013, led by a 19% decline in light trucks overall. The majority of losses were related to the Jeep Grand Cherokee, Dodge Caravan and Journey. Dodge Ram shipments rose.

Borick said Superior made up for some of the declines from General Motors and Chrysler with a 21% gain in sales to Toyota. He said sales to Toyota were for largely for passenger cars. However, the biggest seller for Toyota last year was the Corolla, which is not among the models in Superior’s wheel portfolio.

Shipments to Nissan plummeted 41% last year as Superior walked away from the Sentra model. Total shipments to Nissan last year were 663,000 wheels, down from 1.117 million shipped in 2012.

Borick said deflationary pressures in aluminum also contributed to lower overall sales in 2013. But prices have risen 7.5 cents a pound since the start of 2014. He said for every 1 cent move up in aluminum prices another $1 million is needing working capital.

He said there are some immediate negative issues being felt by the auto sector supply chain, as dealers work through higher than wanted inventory levels, in part from weaker sales at the tail end of 2013 and start of 2014. Borick attributes this to harsh winter weather and shorter downtime for the automakers themselves.

Shares of Superior Industries (NYSE: SUP) rose 3.16% to $19.49 on Friday, following the earnings release. For the past 52-weeks the share price has ranged from a $16.89 low to $20.75 high.

J.B. Hunt Transport Services Inc. recently entered into an underwriting agreement with J.P. Morgan Securities, Goldman, Sachs and Morgan Stanley on the issuance and sale of $500 million in new bonds, according to a filing with Securities and Exchange Commission on Friday (March 7).

The notes include $250 million in principal at 2.4% due in 2019 and $250 million at 3.85% due in 2024. Proceeds are expected to be used to repay certain outstanding indebtedness and for general corporate purposes. These senior notes are unsecured obligations of the company and will rank equally with all of the company’s existing unsecured obligations, according to the release.

On Feb. 28,  Moody’s Investor Service raised the transportation giant’s unsecured debt rating to Baa1, from Baa2. At the same time Moody’s affirmed the company’s short-term rating and with an overall stable outlook.

Moody's notes that the ratings upgrade is warranted by J.B. Hunt's strong track record of revenue growth, consistent margins and solid cash flow generation. Since 2010, the company has demonstrated annual revenue growth of at least 10%, operating income margins of around 10% and cash flow from operations of approximately $400 to $600 million annually.

J.B. Hunt has a $150 million variable rate loan due this month, and $100 million in senior notes at 6.08% due in July. Each of these are expected to be retired with the new capital raised.

Private investment is beginning to trickle back into the commercial real estate sectors in Benton and Washington counties. Several announcements and other pending deals have prompted real estate professionals David Erstine and Clinton Bennett of CBRE Northwest Arkansas to launch the I-540 Interchange Report.

The first edition (January 2014) reveals more than 24 new projects in the planning stage, some of those have since moved into the construction phase over the past month. At the same time, the region also has seen the opening of several other projects including Dunkin Donuts in Bentonville and Planet Fitness in Fayetteville.

“For a such a long time when we would drive from Fayetteville to Bella Vista we would see dirt flying and projects coming to life, but around 2009 it just stopped. There was nothing going on, no deals to speak of in the commercial sector,” Erstine said.

He said the market downturn over the last three to five years gave local municipalities time to catch up on infrastructure projects that were sorely needed from the rapid population growth of the previous decade. 

“Now that these infrastructure projects are well on their way — (Don Tyson Interchange in Springdale, flyover in Fayetteville, widening of Hwy. 265 between Fayetteville and Springdale, a western loop in Fayetteville and more connectivity in western Rogers around the AMP down to the Pleasant Grove exit) — I think you are going to see private investment made as the cities forge on ahead with their projects,” Erstine said.

WASHINGTON COUNTY
Bennett added that as better road access is given to certain areas, commercial investment will follow. He points to the Highway 265 widening project and the eastward extension of the Don Tyson Parkway and the impact that is already having near the Butterfield Coach Road area along U.S. 412 in east Springdale.

The Walmart Neighborhood Market has been there for a few years, but Bennett said now that the infrastructure is nearing completion he has property in the area that is drawing the attention of several prospective suitors for commercial development.

In West Springdale, the improvements made to Elm Springs Road and the new Walmart Supercenter under construction has drawn the attention of McDonald’s. Arvest and Verizon who have planned projects in that immediate area, according to the CBRE report. 

Erstine said the completed interchange work at Mount Comfort Road in west Fayetteville has prompted Kum & Go to build a convenience store in that area — the first commercial project since hundreds of homes were built in that area 10 years ago.

West on Wedington, CBRE reports Freddy’s Frozen Custard and Northwest Health have projects on the drawing board. Walgreen, Super Cuts, First Security Bank, Casey’s General Store, Dickies BBQ and Slim Chickens are already under construction in the area.

An interesting redevelopment project rumored in Fayetteville is Whole Foods scouting out property on North College Avenue near Millsap Road. Estine said the site most talked about is the former Mercedes dealership. His firm does not represent Whole Foods, but he said such a store could have a big impact on redevelopment along that portion of U.S. 71 (College Avenue).

“We see clients who want to locate retail to the region but in the Fayetteville area they all want to be near Joyce Avenue and the mall area. College Avenue does not fit their criteria. If a national player like Whole Foods does decide to invest on College Avenue, it could open the possibilities for others,” Erstine said.

Whole Foods did not return calls seeking comment for this story.

Further south on Martin Luther King Boulevard in Fayetteville, Bennett said Dunkin Donuts and San Antonio, Texas-based Whataburger are scouting locations, but no deals have yet been struck.

Bennett said Dunkin Donuts, which recently opened in Bentonville, has planned at least three locations in this market. He said CVS Caremark, already under construction in Bella Vista and Fayetteville, recently secured property at U.S. 412 East and Thompson Avenue in Springdale for a third pharmacy.

BENTON COUNTY
Bennett said the new Wal-Mart AMP (Arkansas Music Pavilion) will no doubt drive more commercial development in western Rogers and it will also be viewed by investors as a major step forward in the “quality of life”  metric that has become an important recruiting tool. He points to the Wal-Mart AMP and the Razorback Greenway in helping to deliver high marks for “quality of life” criteria.

Bennett said there are numerous large projects (retail and office space) in the Pleasant Grove Road and Promenade/New Hope Road areas that are in the planning stages. At Pleasant Grove Road, the Pleasant Crossing Shops, is a 20,000-square-foot retail shopping center, near the Wal-Mart Supercenter. SNAP FItness, two restaurants and a nail salon are reportedly going into that space once completed by late 2014 to early 2015.

A liquor store and Cavender’s Boots are also planned projects in the Pleasant Grove area of western Rogers, according to the CBRE report.

Erstine said Country Club Plaza is planned near the gates of Pinnacle Country Club, which will be office/retail space. Hunt Ventures has planned to construct a nine-story Class A office building totaling 220,000 square feet. Another private investment deal for 40,000 square feet of office space is slated near the Shoppes at Pinnacle Hills, as well as 60,000 square feet of additional space in Metro Park.

Collective Bias is planning to build along New Hope Road, which will free up a large space the firm now occupies just one block off the Bentonville Square.

Bennett said once this office space is completed in the Rogers area, there will be some softening in the market, which is now fairly tight with respect to Class A space.

“I really think this space will be absorbed. We continue to see Wal-Mart vendors and third party suppliers expanding their offices and personnel,” Bennett said. 

The CBRE group said Wal-Mart is also worth watching as they have already announced seven new stores in the the two counties from Farmington to Pea Ridge.

Tuscaloosa, Ala.-based Peco Foods will invest $165 million in the construction of a new fully integrated processing operation near Pocahontas in northeast Arkansas. The operation is expected to employ about 1,000 when completed.

A fully integrated facility means the company will have a processing plant, hatchery, feed mill and farm operations in the area. The processing plant and hatchery will be located just outside of Pocahontas’ city limits and the feed mill will be in Corning, according to a statement issued Monday (March 10) by the Arkansas Economic Development Commission.

The AEDC note also said groundbreaking on the feed mill site is set for April and the first stages of work on hatchery and processing facilities will begin in July.

The announcement was made Monday in the Governor’s Conference Room at the State Capitol, with Mark Hickman, president and CEO of Peco Foods, Gov. Mike Beebe, Delta Regional Authority Federal Co-Chairman Chris Masingill and leadership from Randolph and Clay Counties attending.

“We are extremely pleased to formally announce this new project today,” Hickman said in the statement. “Arkansas is an excellent place to do business, and we look forward to providing new jobs and an economic boost to Randolph and Clay Counties. As we have experienced firsthand with our complex in Batesville, this state is home to an outstanding workforce that shares the goals and values of our company. I want to thank Governor Beebe and his team for their assistance in making our Northeast Arkansas expansion a reality.  We look forward to a long and very successful partnership.”

Peco acquired in 2011 the poultry operations in Batesville from Townsends, which had filed bankruptcy. Peco reportedly paid $51.4 million for the operations. In addition to the Batesville facility, the company also operates a feed mill in Newark, Ark.

Peco Foods is the 8th largest poultry producer in the United States and privately held and family operated. The company has a processing capacity of 24 million pounds of poultry per week in its six other slaughter and processing plants located in Alabama and Mississippi.

“When Peco Foods acquired an existing Arkansas facility a few years ago, it made a significant investment in the workers of Northeast Arkansas,” Beebe said. “That investment has ultimately led to this major expansion. We are here today because Peco Foods knows the workforce in Randolph and Clay Counties has the necessary skills to take the company to the next level of success.”

A vote on unionization at O.K. Foods that was expected to take place in late 2013 is now likely to take place later this year, according to a union that has been organizing employees at the company's facility in Fort Smith, as well as facilities in Muldrow and Heavener, Okla.

Anthony Elmo, a spokesman for the United Food and Commercial Workers International Union (UFCW), said the delay was a result of the company providing the UFCW with a larger than expected manifest of employees in the run up to the planned vote.

"In the process of giving us the list, which they have to do by law, that list was 600 (more) people (than the union was aware of). We didn't feel we could have a fair election (on whether or not to unionize) until contacting those workers to see if they supported the union or not. So that's where we are."

He said the unionization efforts began long before the proposed vote was to take place, with the Fort Smith location seeing the beginnings of the unionization push in about January or February of last year, while the Oklahoma sites started to see the push in the Fall of 2013. The purpose for pushing the unionization effort, Elmo said, was about fairness.

"Across the three plants, we got people coming to us," he said. "Their main issues revolve around wages, being low for the jobs they're doing. There was also a general level of unease."

Elmo said the UFCW, an international union that represents 1.5 million grocery and food production workers in the United States and Canada, was responding to the requests of many workers in the three facilities with a goal to "get workers the best possible contract, wages and benefits from their employer. Our philosophy is they have more leverage as a group than individually."

"Right now, they have a one to one relationship. The employer holds all the chips. All the employee can do is quit. We don't feel that that is right. We feel they should reform. We want to help these workers to fix OK Foods and make it a more fair workplace — with better insurance, a better retirement package. We want a more fair future."

Christopher Roy, officer-in-charge of the Memphis office of the National Labor Relations Board, confirmed the unionization efforts in a telephone call Thursday (March 6), though the NLRB was unable to provide publicly disclosable documents on the OK Foods case by publication.

"A petition was filed (to hold an election on whether to unionize or not) and then after the petition was filed, we undertook efforts to arrange with the parties a mutually agreeable date, time and place to hold the election," Roy said.

Elmo said while the petition has been withdrawn, it was not due to any unnecessary pressures from OK Foods but instead was simply due to the large number of people who he said had a right to know about the vote and what it could mean for their future.

And he said it is a future that the majority of employees in Mexico of OK Foods' parent company, Industrias Bachoco, have already decided should include a union.

"OK Foods, the American side, is not unionized (at any locations). But Bachoco, that company is a majority union company. Sixty percent of their employees are unionized with very fair contracts," according to Elmo.

Industrias Bachoco, which was trading on the NYSE at $43.10 late Thursday, had estimated earnings per share of $2.92 and total net income of $146.03 million, reason enough for Elmo to suggest that workers at the Fort Smith and Oklahoma facilities vote in favor of unionization when the issue comes back up later this year.

"(OK Foods is) a very successful company," he said. "It's part of why Bachoco bought them. I don't think paying better wages is going to hurt this company. I think it helps. It will reduce turnover. Right now, this company blows through employees. They are constantly bringing in new help. My argument to this company would be if these people thought these jobs were better and more stable, the turnover would go down and you would see increased cost savings from that. From a corporate perspective, I would say they may want to give this a look."

OK Foods did not respond to a request for comment.

Springdale-based George's Inc. recalled approximately 29,200 pounds of seasoned raw chicken breast strips because of a labeling error involving a known allergen, according to the U.S. Department of Agriculture.

MSG and soy protein were not listed on the product label, but no illnesses have been reported in connection with this mistake, according the USDA release.

The complaint was raised by a consumer who noticed the product was seasoned, while the label merely said “boneless, skinless breast pieces.” The company then discovered the labeling mishap, the release notes.

Product was sold in 40-pound bulk cartons labeled “George’s Boneless Skinless Breast Pieces W/Rib Meat”. The case code is 4790. The products processed and packaged from Dec. 21 through 23 and sold to distributors in Tennessee and Iowa for further distribution. The recalled products bear the establishment number “P-13584”.

Jobs continue to be the catalyst that drives Northwest Arkansas’s regional economy and for the first time since 2009 the small business sector is more optimistic about future hiring, according to a new report from the Northwest Arkansas Council.

The report was unveiled Monday (March 10) by the Council in collaboration with five local chambers of commerce and focused heavily on small business retention. 

Economic development teams met with 529 local businesses in 2013 and found that 2,037 planned new hires over the next three years with $195 million in planned investment out to 2016. One in five of the businesses surveyed said they plan to expand within the next years.

Small businesses accounted for 367 of the companies surveyed last year in this combined effort. Another 167 large or “prime” companies also were interviewed.

“Our Chambers really got out there last year and stepped it up. They talked to a lot of companies. We went from 459 (interviews) to 529. Our annual target annual is 450,” said Mike Harvey, chief operating officer for the NWA Council.

He said the interviews uncovered more than 2,000 new jobs planned, with three employers responsible for about half that number. The rest were small employers planning to add 5 to 10 people. Harvey said this type of activity among the small business sector is significant because it has not been involved in the broader economic recovery for the most part.

“One of the things that really jumped out at me from the 2013 surveys was the number of small companies who reported rising revenue,” Harvey said.

The report shows 57% of the smaller companies surveyed said total revenue in their Northwest Arkansas location is increasing. Another 31% reported stable revenue. Harvey said it’s significant because it’s twice the number reported a year ago and also uses a larger cohort of small businesses, banks, retail and service segments. He said the larger companies reported nearly the same data as last year.

This research, according to the Council, indicates the local small business sector is finally recovering after years of stagnant and even shrinking revenues.

STRENGTHS, CHALLENGES
Harvey said the businesses also saw the local economy as a positive metric, and it was mentioned among the top three strengths. A year ago it wasn’t among the top 10 positive strengths reported by local businesses.

Employers identified more than three times as many “community strengths” as “community weaknesses” when asked about Northwest Arkansas. The “strengths-to-weaknesses” ratio was similar in 2012, Harvey said.

The Affordable Care Act and Dodd-Frank banking regulations were listed among the top concerns of the businesses surveyed. Harvey said lack of public transportation is an area of concern among some of the industrial manufacturers. Road infrastructure constraints were also seen as ongoing  challenge as was the need for competitive airfares out of Northwest Arkansas Regional Airport.

He said there is also a lack of skilled workforce needed for “big data” and information technology (IT) jobs in the Wal-Mart supplier community. Other businesses also reported skilled labor and unskilled labor shortages.

Mike Malone, CEO of the NWA Council, said the council was formed to work on the region’s challenges and promote the good news as well. He said job creation is a big part of that good news. He said the region still has growing pains as its infrastructure is always playing catch-up to ongoing population growth.

“Last year Northwest Arkansas ranked No. 4 out of 400 metro areas for job growth, creating 9,580 job, an increase of 4.56%,” Malone shared at Monday’s event.

BUSINESS EXPANSION
Cindy Christopher, human resource officer at Gates Corporation in Siloam Springs, said the company closed a facility in North Carolina last year and added lines of production to the plant in Siloam Springs. 

She said 30 families have relocated to Siloam Springs as a result. At least two families also brought along grandparents who came out to help with the move and decided to follow along. Christopher said 36 families were offered transfers to Siloam Springs and all but six accepted.

Lance Eads, director of economic development for the Springdale Chamber and Commerce and a GOP candidate in the Arkansas House District 88 race, said one local firm — ORC Products— was recently able to expand its business into a larger location because of contacts made during the routine business retention meetings. The firm does government contract work.

Matt Crafton, president of Crafton Tull in Rogers, said his firm brought on six new engineers last year because of work created from the tax program that is funding road construction in Northwest Arkansas and around the state.

Bill Locke, owner of Admiral Moving Services in Fayetteville, said his firm is a direct recipient of work the chambers are doing to recruit and expand businesses in the region. Admiral has purchased 10 acres in Fayetteville and plans to build a larger facility in the city’s Commerce District.

“We started 11 years ago with four people and two trucks, today we employ 85 and have 45 pieces of equipment. We do commercial and business relocations. Regionally we see a lot of inbound growth to Northwest Arkansas, even though Arkansas is a neutral state. Enough people are leaving Little Rock and the Delta area to make the state appear neutral, but I can tell you this MSA is a vey inbound area,” Locke said.

He also addressed talent shortage in the region. Locke said they do work for a Wal-Mart supplier who furnished IT services. 

“This supplier moves 65 people in here each month, they stay for 90 days and they are shipped out to another assignment. If there were enough local talent for these IT jobs I am almost sure the 185 positions would be filled locally,” Locke said.

Roger Thomas, a principal at Telecomp, said his firm provides computer and telecommunication services for the Wal-Mart supplier community. Swirl, an advertising and marketing firm out of San Francisco, plans to relocate five or six people to Bentonville, but Thomas said the company may bring more from San Francisco over time. He said Swirl is a new client of Telecomp.

EcoArk Inc., a Rogers-based company focused on sustainability and waste stream recovery, recently acquired Eco3d, a Phoeniz, Ariz.-based firm that provides the integration of 3d technology and 3d digital modeling.

Eco3d provides the EcoArk clients a bridge into the digital 3d world by offering customized solutions to their workflows that ultimately save them money, according to the release. Under the terms of the acquisition agreement, Eco3d will be a stand-alone company, wholly owned by EcoArk.

“The acquisition of Eco3d makes sense for EcoArk because of our mutual focus in specific areas”, said Randy May, CEO of EcoArk.

May said Ken Smerz has worked the past 26 years within the commercial/industrial construction industry as a contractor, and business executive throughout the western United States. Upon discovering laser scanning and 3d modeling, Smerz recognized a huge blue ocean opportunity, May notes in the release.

As president and CEO of ECO3d, Smerz and his team are taking 3d imaging technology as a whole (laser scanning; structured light; 3d printing; photogrammetry; etc.) to create customized 3d solutions for each client’s specific needs, May said.

“We live in a 3 dimensional world in which everything we do revolves around one constant—measurement. It’s at the most basic level of our existence. We believe 3d technology can assist in the sustainability and enrichment of our daily lives…at work…at home…and at play,” May notes in the release.

Shares of the thinly traded P.A.M. Transportation Services Inc. hit a 52-week high on Tuesday (March 11) rising 3% to $23 on heavier than usual trading in the morning session.

P.A.M. share price has risen more than 100% in past 15 months from $11.03 in March 2011, and a low of $8.85 hit in December 2012.

The Tontitown-based trucking firm recently reported fourth quarter net profits of $1.295 million, erasing a loss of $311,010 reported in the prior-year period. Company management was pleased with the fourth quarter results, even though they noted unfavorable weather curbed the results during December.

Analysts believe an improving economy is benefiting truckers like P.A.M. Transportation.

"We continue to see a favorable demand outlook amidst an expected uptick in U.S. imports, rising manufacturing volumes and an improved trucking supply/demand balance," Deutsche Bank analysts noted Friday (March 7).

Although it lowered the industry's first quarter estimates by 11% on average, Deutsche Bank expects manufacturing freight to rebound as the nation thaws out.

"With significant freight delayed during January/February, we believe March has the potential to be a particularly good month for transportation companies if the weather holds,” the analyst notes.

Memco and M&M Poultry Equipment broke ground Tuesday (March 11) for a new warehouse and distribution center at 3001 E. Huntsville Ave., in Springdale. Investment costs were not disclosed in the release.

It is the first facility outside of the companies' corporate offices in Holllister, Mo., that is owned by the Middleton Group. The company is now located at 1710 Powell St., and has operated in Springdale since 1995.

The new facility will provide more square footage, improve product storage space and streamline workflows. As the company grows in the Northwest Arkansas region, this new space is geared to make both companies more efficient and customer friendly, company officials note in the release.

"This new location demonstrates our 20 year commitment to the City of Springdale and to our customers served out of this location," said Rob Middleton, executive vice president for sales & marketing. "This new facility will be a better fit for our customers and team members. Owning our own building will give us the flexibility to increase our service levels and provide a better experience to our customers."