The announced addition of 975 jobs with the ArcBest corporate expansion in Fort Smith could result in a total of 1,907 jobs created in Arkansas, according to an economic modeling analysis conducted by the Institute for Economic Advancement at the University of Arkansas at Little Rock.

Fort Smith-based ArcBest Corp. – formerly known as Arkansas Best Corp. – announced May 30 a $30 million plan that will see the construction of a new office building and data center at Chaffee Crossing and the addition of an estimated 975 corporate jobs by 2021.

The company will retain its high-profile, 195,000-square-feet corporate headquarter building on Old Greenwood Road in Fort Smith. That facility, which opened in early 1995, is expected to provide space for the consolidation of ABF Freight and ArcBest Technologies offices. Moving corporate and logistics jobs out of the existing corporate headquarters will allow room for expansion at ABF Freight and ArcBest.

“That anticipated growth, combined with space enabled by the new facility, supports the creation of 975 new jobs in Fort Smith through 2021,” noted the ArcBest statement.

There are now between 1,300 and 1,400 ArcBest corporate jobs in the Fort Smith area. 

An economic impact model prepared by Gregory Hamilton, senior research economist at UALR, indicates that the fully realized 975 jobs would result in 484 new “indirect” jobs in the region and 404 “induced” new jobs – or a total of 1,863 jobs in the region by 2021. The ArcBest jobs would also create more than 44 jobs outside the Fort Smith region.

“The 975 new jobs causes other business to increase employment by approximately 484 (indirect) in Fort Smith and 27.5 jobs in the rest of the state because of interindustry purchases,” Hamilton noted in the report prepared for The City Wire. “The gains in payrolls to the community and local expenditures derived from those payrolls causes an additional 404 jobs (induced) in Fort Smith. Another 16.6 jobs (induced effects ROS) are gained in the rest of the state. The total job creation is in the state is 1,907 jobs.”

Hamilton’s report is not an indepth analysis, but is a commonly used tool by businesses and governments to broadly assess the impact of job gains and job losses. The analysis looked at the impact of increasing employment in the management, scientific, and technical consulting services sector as a result of the announced 975 new jobs. Jobs and economic activity related to construction of new ArcBest facilities are not included in the analysis.

Also, the report uses 2014 values, and assumes that the 975 jobs created do not displace other jobs in the region or state. And for purposes of the report, Hamilton qualifies the region as being Crawford, Sebastian and Franklin counties. The other obvious assumption is that ArcBest follows through on adding the jobs.

The direct income produced by the new jobs – employee compensation and the boost to area business income – by $103.8 million a year by 2021, with a $2.3 million gain for the rest of Arkansas. The direct income also has a value added component that generates more economic activity for the region and state.

“These (value added benefits) are income type payments including labor income plus rents, dividends, interest, and indirect business taxes (addition to gross state product). They increase by $125.5 million in Fort Smith, $3.4 million in the ROS, and total $128.9 million,” according to the report.

Finally, the trickle down has one more stop. According to Hamilton’s report, business sales in the Fort Smith area increase by $249 million when the ArcBest jobs are in place by 2021. Business sales in the rest of the state increase by $6.4 million.

When it comes to ordering products online more consumers of all ages are becoming active shoppers, but the vast majority of them are not willing to pay shipping costs and do not require same-day service, according to studies completed by PwC and The Boston Consulting Group.

So why have so many retailers from Amazon to Wal-Mart invested in testing same-day delivery options? Research indicates same-day delivery for a fee appeals to roughly 5% of the U.S. population. Meanwhile retailers invest heavily in making same-day delivery available at a staggering cost.

Amazon has spent $13.9 billion to open new fulfillment centers since 2010. Wal-Mart has added two, and announced a third online fulfillment center to get them in delivery proximity to 160 million U.S. consumers by 2016. Wal-Mart’s fulfillment infrastructure, which includes its 4,200 U.S. stores, puts the retailer within 5 miles of two-thirds of the U.S. population.

As retailers expand these fulfillment centers PwC research estimates that same-day delivery costs could come down for consumers as low as $15, but that’s still more than most consumers are willing to pay. At just $10, the PwC researchers found only 10% of the respondents would pay for the expedited delivery.

Carol Spieckerman, CEO of NewMarketBuilders, said retailers pursue same-day delivery efficiencies in an effort to provide more delivery options.

“The fact that a low percentage of shoppers choose same-day delivery is great news for retailers since it is more expensive to execute. The current low demand in no way should discourage retailers from pursuing it, however. Retailers have come to the realization that offering a portfolio of shipping and delivery options is critical for customer retention. Attempting to force shoppers into one or two options that are easier and cheaper for retailers to execute only encourages comparison and cart abandonment. It’s high-risk behavior these days,” Spieckerman said.

She said retailers have no choice but to focus on same-day delivery because their competitors and third-party platforms like Google Shopping Express are raising expectations among consumers. 

“Resistance is futile,” Spieckerman said.

Matt Nemer, retail analyst with Wells Fargo, said same-day delivery introduces a a service that will one day prove more popular.

“I think this is something that consumers don’t know they want yet, but will — much like a tablet,” he said.

Retail giant Wal-Mart has been very vocal on the importance of giving consumers options. With its recent grocery delivery test in Denver, Wal-Mart also began offering a curb-side pick-up option for the online orders for no added charge. The home delivery charge is $30. 

Bill Simon, CEO of Walmart U.S., has said consumers in Denver have rated the Walmart To Go delivery and store pick-up services at 90% approval in four out of five surveys. He said the curbside pick-up option at the store, which is free, has become more popular and more widely used than the home delivery service. Wal-Mart believes that in markets where driving is the common mode of travel, pick-up depots and curbside pick-up options at the store nearby will become mainstream long before home delivery, according to Simon.

Wal-Mart also launched a same-day delivery service for general merchandise called “To Go” in five markets, including Minneapolis late last year. Wal-Mart has since temporarily suspended the same-day service in Minneapolis because of a technical issue. Wal-Mart says these are tests to determine feasibility and access demand and it has the scale and infrastructure in place to roll them out more widely anytime demand dictates.

“Walmart is a great example of how to steer customers into more easily executed options simply by making them convenient, free and fast,” Spieckerman said, adding that she applauds retailers who are testing multiple delivery and pick-up options.

“It goes back to the portfolio approach. Retailers can’t afford to force options on consumers since every customer has a different idea of ‘convenience’ and ‘affordability’ that can also vary by category, need state, usage occasion, time of day and other factors. The old wisdom was that certain shoppers preferred a single option across the board. These days, retailers have to be able to cover on all possibilities or risk losing customers,” Spieckerman said.

Analysts with the Boston Consulting Group note that same-day delivery will be niche service in the near future and retailers may choose to offer it to build customer loyalty, enhance brand awareness or keep up with competition.

“That said, same-day delivery is unlikely to generate significant revenues for retailers or carriers,” according to Rob Souza, partner at BCG. (Souza is no relation to the reporter of this story.)

Although no one is baking a cake or holding a big celebration, it has now been a full decade since Fayetteville Shale leader Southwestern Energy Corp. announced in 2004 that it was taking a big chance on an undeveloped natural gas play on the Arkansas side of the Arkoma Basin.

That unheralded announcement 10 years ago largely changed the state’s economic fortunes during the Great Recession and hailed the emergence of the natural gas industry in Arkansas – both as one of the largest marketed producers in the U.S. of the methane-rich hydrocarbon and as a major rival to coal and nuclear energy for retail electric generation.

What remains to be seen is whether the Environmental Protection Agency’s new proposal to drastically cut so-called “dirty air” emissions from existing U.S. power plants will benefit the natural gas sector in Arkansas. The gas industry seems to be a favorite of the Obama administration, getting a big boost in the president’s most recent State of the Union address.

“The all-of-the-above energy strategy I announced a few years ago is working, and today, America is closer to energy independence than we’ve been in decades. One of the reasons why is natural gas – if extracted safely, it’s the bridge fuel that can power our economy with less of the carbon pollution that causes climate change,” President Obama said in his Jan. 29 speech to the nation. “Businesses plan to invest almost $100 billion in new factories that use natural gas. I’ll cut red tape to help states get those factories built, and this Congress can help by putting people to work building fueling stations that shift more cars and trucks from foreign oil to American natural gas.”

FROM CHANCE TO WALL STREET STAPLE
In Arkansas, the state is still experiencing huge economic benefits from the 5,853-square-mile geologic formation that was estimated to hold 375 billion cubic meters of unproved, recoverable gas when early exploration began.

Danny Ferguson, a former state lawmaker who is now vice president of government and community relations at Southwestern Energy, remembered during this time that economic development discussion during the Huckabee administration largely centered on landing an automobile plant, often considered the crown jewel of jobs-producing, capital-intensive superprojects.

“I was a part of those discussions about bringing the Toyota auto plant to Arkansas,” Ferguson, who is also a former Forrest City mayor, said. In his role at the state Capitol, Ferguson was a central figure in authoring enabling legislation that defined a superproject as an economic development venture with at least $500 million in initial investment and at least 500 jobs.

Unbeknownst to most, Southwestern Energy was a relatively minor player in the oil and gas industry in the early 2000s that had quietly invested a few million dollars to purchase prime leasehold positions in the untested Arkansas shale play. Harold Korell, Southwestern’s former CEO and current chairman of the board, was cautiously optimistic about the shale formation after the former Fayetteville-based oil and gas company spent about $8.5 million to drill about 20 test wells in the basin in August 2004.

“Although there is a significant amount of data yet to be collected in order to confirm the economic merit of the play, we are encouraged by what we have seen to this point,” Korell said. “If our testing yields positive results, we expect that our activity in the play would increase significantly over the next several years.”

Ferguson said after his legislative term ended, he found himself looking for work and was interviewed for his current position by Korell.

“I remember him saying that if I took this job, I would be involved in the biggest economic development project the state has ever seen,” Ferguson recalled in his office across from the state Capitol. “At the time, it was a secret and I was thinking ‘what could this project be?’”

Korell’s clandestine forecast was vastly understated. A few months later, Southwestern made a decision that would change the company’s destiny. Just before Christmas of 2004, Southwestern announced a planned company-wide capital investment program for 2005 of up to $352.7 million, an increase of 24% over the previous year.

The surprise, however, was that the company’s investment in the Arkansas shale would nearly quadruple to more than $100 million. A year later, after reporting financial and operation records across the board, Southwestern would blow the top off Wall Street expectations by announcing a planned capital investment program for 2006 of $830.1 million, an increase of 66% over the previous year’s spending program that had to be revised several times.

Not long after, the Sam M. Walton College of Business at the University of Arkansas released an industry-sponsored “economic impact” study that forecasted the development of the Fayetteville Shale Play. The report said the infant shale play would have an estimated $5.5 billion total economic impact on the state through 2008 and “the potential to be one of the most significant tax revenue generators in Arkansas history over the next 10 to 15 years.”

By this time, news of the Fayetteville Shale play had spread across the industry. Billionaire Audrey McClendon, then CEO of Oklahoma City-based Chesapeake Energy, led a mad dash to the Arkansas shale play, hoping to reap the same rewards as Southwestern, at the time a much smaller rival. Other big names players followed, including integrated oil giant Shell Oil and oilfield service conglomerates such as Baker Hughes and Schlumberger.

But because of its early leasehold positions, Southwestern held most of the prime drilling areas in the shale and invested well over $800 million and $1 billion annually between 2007 and 2013. Today, even though the number of rigs in the Fayetteville Shale is almost down to single digits, natural gas production levels have actually increased because of improved drilling technology and better knowledge on how to maximize well production, said J. Kelly Robbins, executive vice president of the Arkansas Independent Producers and Royalty Owners (AIPRO).

“Despite the rig count, producers have more knowledge and wisdom on how to get the most out of these geological formations in Arkansas,” Robbins said.

That wisdom has led to nearly 10 years of economic prosperity that has seen Southwestern invest more than $10 billion in the Arkansas shale play, Ferguson said, adding that the company also employs more than 1,500 workers across the state.

IMPACT FELT LOCALLY AND STATEWIDE
Kathy Deck, director and economist at the Center for Business and Economic Research at the University of Arkansas, said the impact of the shale has been much better than previously projected. According to a May 2012 report by the university that revisited early economic projections for the shale development from 2008, the average annual pay in the “oil and gas extraction industry” was $74,555 in 2010, twice that of any other industry.

Also, the report said, Arkansas has benefitted economically from additional income from mineral leases and royalty payments, the highest growth rate in payroll employment and other employment activity generated by shale development. Those other economic offshoots include construction of the $1 billion Fayetteville Express Pipeline to ship natural gas from Arkansas to other markets, and the landing of the India-based Welspun Corp. pipe manufacturing factory, which has invested nearly $300 million at its location at the Port of Little Rock.

Deck’s report said that between 2008 and 2012, oil and gas companies invested more than $12.7 billion, or 29 percent more, than was previously forecasted. Overall, according to the center’s 2012 report, exploration and production activities related to the Fayetteville Shale from 2008 to 2011 generated more than $18.5 billion in total economic activity, exceeding the 2008 projections of $14.2 billion. Total annual state employment from Fayetteville Shale activity increased from 14,500 to more than 22,000 from 2008 to 2011, higher than the 2008 projection of between 11,000 and 12,000.

Also, nearly $2 billion in state and local taxes from permit fees and severance, property, income, sales and other taxes were collected as a result of Fayetteville Shale activities from 2008 to 2011. This is higher than the $1.2 billion projected in the 2008 study, following higher-than-projected expenditures by companies in the area and higher total employment.

“To put this in perspective, from 2001 to 2010, the state of Arkansas experienced only tepid growth in employment. Without the employment associated with the exploration and development of the Fayetteville Shale, Arkansas would have suffered a ‘lost decade’ where employment at the end of the period was lower than employment at the beginning,” Deck said after the report was released.

Although two years has passed since that report, not much has changed since the university released its highly watched economic report. In late May, Fayetteville Shale production boosted severance tax collections to quarterly and monthly highs, according to the state Department of Finance and Administration.

For the first three months of 2014, gross natural gas severance tax revenue came in at $19.9 million, up 29% from $15.4 million in the same period of 2013. At the same time, monthly collections of $7.3 million and $9.1 million in March and April, respectively, were the highest severance tax revenue totals posted since the state began keeping such records. Severance tax collections for January, February, March and April all came in well above $6 million, also a first for the state.

ARKANSAS IS A MAJOR PLAYER
Perhaps the biggest surprise in the past 10 years is the fact that Arkansas is now a major player in the natural gas industry. Today, Arkansas is the nation’s eighth-largest marketed producer of natural gas and is poised to top a trillion cubic feet (Tcf) of marketed natural gas production for the third straight year, according to preliminary data from the U.S. Energy Information Administration (EIA).

Between 2004 and 2008, as Fayetteville Shale drilling and development matured, Arkansas’ annual production of marketed natural gas jumped nearly 140% from 187 billion cubic feet (Bcf) to 446.5 Bcf. Then in 2009, Arkansas first joined the list of the nation’s top 10 marketed natural gas producers when sales of Arkansas natural gas spiked 53% to 683 Bcf of production. In 2010, Arkansas natural gas sales continued on an upward trend, jumping 35.7% to 927 Bcf of annual production, according to EIA figures.

Then in 2011 and 2012, despite fewer drilling rigs, Arkansas marketed production moved over a trillion cubic feet for the first time, jumping to 1.07 Tcf and 1.14 Tcf, respectively. The EIA, which is housed in the U.S. Department of Energy, is expected to release 2013 natural gas production statistics at the end of June.

For the record, Arkansas’ marketed natural production accounts for 4.5% of the nation’s output, the EIA says. And although Arkansas’ share of natural-gas fired electric generation has grown steadily over the last decade, most of the Fayetteville Shale and Arkoma Basin production is shipped out of state by pipeline to Midwest and Northeast U.S. markets.

Still, the industry’s largest trade association, America’s Natural Gas Alliance (ANGA), is lobbying hard to make sure that natural gas is part of the discussion as Arkansas and other states look to cut their greenhouse gas emissions. Nearly 30,000 jobs are supported by the industry and more than 20% of the state’s electricity is generated from the natural-gas fired power.

“As we consider EPA’s proposal with our members and with our power generation customers, we agree the rules should be flexible and fair and we believe they should recognize the ability of natural gas to play an increasing role in the delivery of reliable, safe and clean power,” ANGA President and CEO Marty Durbin said.

Ferguson said Southwestern is “exploring” possible ventures for the future that will allow the company, which has market capitalization of $16.1 billion, to get a seat at the table with regulators to discuss how natural gas producers can market their product directly to consumers. He mentioned current regulatory rules that allow utilities to negotiate deals for distribution and transport of electricity directly with large industrial customers, such as an automobile or steel plant.

“We think it would be great if we could engage directly in the future with the end users,” he said.

Middle school students going into the fifth, sixth or seventh grades will have the opportunity to learn more about science, technology, engineering and mathematics (STEM) at a July 21-24 camp hosted by NorthWest Arkansas Community College.

Students attending the sessions will have the opportunity to program a LEGO Mindstorms Robotics system. Topics will include mechanical design, gear ratios and programming. Participants will not take the computer or LEGO Robot home.

Cost for the four-day camp is $250. Participants are asked to bring a sack lunch, and water will be provided. Sessions will be from 8 a.m. to 4 p.m. July 21-24 at the Shewmaker Center for Workforce Technologies on the college's Bentonville campus.

Those seeking additional information or wanting to register may call 479-936-5175.

The tide is shifting in auto loan finance with large banks taking market share away from captive finance companies linked to auto makers, according to a recent report from Experian.

Auto sales in the U.S. are one of the fastest growing consumer borrowing segments since 2012, growing 10.2% between 2012 and 2013. Experian reports banks held $290 billion in outstanding auto loans for the first quarter of 2014 while captive financing companies had $221 billion. The study shows that year-over-year bank loan balances have increased 13.8% while captive loan balances rose just 4%.

Large banks are being drawn into the auto lending space for several reasons. Demand is hot and yields – more money from higher interest rates – are improving as credit quality stays marred.

BANKS TAKING SHARE
Arvest Bank, the largest in the state, reports its auto loans increased more than 13% since 2011. The bank said the rise in business reflects its frequent and aggressive loan sales promotions. Other area banks actively marketing auto loans include Simmons Bank and First Security.

"As a community bank, we try to meet the needs of our customer base. With auto loans, Centennial Bank continues to have demand, but that demand shifted several years ago to existing customers that want to work with their relationship banker. When large finance companies (many times related to the auto manufacturer) entered with 0% rate and numerous incentives to facilitate the purchase, auto loan demand for community banks declined,“ said Blake Holzhauer, regional chief lending officer for Centennial Bank.

These Arkansas-based banks must now compete with giants like Wells Fargo, Capital One, Chase and Ally who also are aggressively adding to their auto loan portfolios.

In the first quarter, Wells Fargo said it originated $7.8 billion in auto loans, a 15% increase from the same period a year earlier. The gains cemented Wells Fargo as one of the nation’s largest auto lenders. Wells Fargo tops the list for used car loans and recently expanded its offering into the subprime arena. Wells Fargo executives said in their recent earnings call that despite their growth, the credit quality of its loans hasn’t slipped.

Chase and Ally Bank also each increased their market share from a year ago. Chase ranks No. 2 with 4.77% of the market, while Ally has 4.65%. These shares rank ahead of Toyota Finance (4.09%), Ford Motor Credit (3.38%) and Honda Finance (3.16%) of the retail auto loans made in the last year.

CREDIT QUALITY WATCH
Experian reports that all credit classes from deep subprime to super prime grew loans year over year. The biggest increases were found at top and bottom of the credit spectrum, with non-prime or average credit borrowers in the middle and growing the least at 0.3% from a year ago.

Analysts believe big banks are chasing the higher yields in the auto loan market, particularly subprime.

“I don’t have any question that this rising growth in auto loans is tied to declining credit quality,” said Joshua Rosner, a managing director at research firm Graham Fisher & Company. “That is where the borrowers are.”

That said, borrower delinquency rates are improving. The Experian report shows that 30-day auto loan delinquencies were down 7.1% at the banks, 3.9% lower at captive finance companies and down 2.3% at credit unions.

Repossession also declined in the first quarter for banks, captive finance companies and credit unions. But independent finance companies saw a spike in repossessions, up 69% from a year ago.

Buy here, pay here, car dealer America’s Car-Mart felt that sting, saying that its customers were being lured away from big banks and other investors who have entered the subprime auto space in the past year looking for higher yields. Car-Mart CEO Hank Henderson said they had customers turning their cars back into the lot where they bought them because they financed other vehicles with big bank offers for terms much longer than Car-Mart’s average 24 months.

Shares of Bentonville-based Car-Mart (NASDAQ: CRMT) are off recent highs as a result of market concern about losing financing revenue. The shares were trading almost 2% lower in Thursday afternoon trading after a Wednesday close of $40.17. During the past 52 weeks the share price has ranged from a $47.93 high to a $39.34 low.

SMALLER BANKS ON THE SIDELINE
Smaller community banks like Signature Bank and Legacy National said they have not seen an increase in consumer auto loans over the past year.

Don Gibson, CEO of Legacy National, said his bank does not aggressively market auto loans to consumers and tends to focus more on business and commercial lending. That doesn’t mean the bank won’t make auto loans for its customers, it’s just not the core business.

Gary Head, CEO of Signature Bank, said farm loans in south central Arkansas and business loans in Northwest Arkansas are its bread and butter. But it does do some home equity lines of credit where customers take that money purchase a car, which allows them to deduct the interest. Head said the smaller banks are mostly on the sidelines of the auto lending boom.

“We have not written more car loans in the past year, but when our customers want to purchase a vehicle we make them a loan. They can take a check to the dealership and negotiate their price with less pressure,” Head said.

If there is one area of Arkansas' economy that is doing well, it is in jobs that require strong skills in math and science, according to Dr. Suzanne Mitchell. She says STEM is the one of the few areas in academics that can make a direct economic impact.

"If you want to improve the economy in Arkansas and get students interested in math and science and produce jobs with a better way of life and wealth, you have to have good STEM education and have choices."

Mitchell, executive director of the Arkansas STEM Coalition, said it was one of the reasons why public schools and universities across Arkansas are placing an increased focus on science, technology, engineering and mathematics (STEM) education.

"STEM education … is the foundation students need to (have) to make a good choice of careers and majors going into college," she said.

She acknowledges that little focus was placed on STEM as a whole during much of the 20th century, but said Arkansas saw the need starting during the last decade of the century. She said momentum has picked up in the last five years with the topic not only becoming a talking point for politicians and manufacturing executives in Arkansas, but Mitchell said STEM is starting to gain traction nationally.

The reason for that, she said, is because even if a job is not necessarily working directly in STEM, she said many times jobs require some level of science or math expertise, if not both.

"Actually, Arkansas has been trying to improve STEM education since 1990. But it takes nearly 12 years, or a whole generation, to make changes."

STEM JOBS REPORT
A report released Thursday (July 10) by the U.S. Census Bureau reported that the majority of college graduates with a STEM-focused degree were not working in STEM occupations.

"STEM graduates have relatively low unemployment, however these graduates are not necessarily employed in STEM occupations," said Liana Christin Landivar, a sociologist at the Census Bureau's Industry and Occupation Statistics branch.

The unemployment rate for STEM graduates was not disclosed, by the study said as of 2012, only 3.6% of all college graduates between the ages of 25 and 64 were unemployed.

But Mitchell said in Arkansas, the state was still underserved by STEM graduates.

"But most businesses tell us they do not have enough (qualified applicants). They'd rather hire inside Arkansas, but we just don't produce enough (STEM) graduates," Mitchell said.

As a way of changing the tide and promoting more interest in STEM within the state, Mitchell said her organization has worked with 12 colleges and universities across Arkansas to develop STEM Centers tasked with enriching "the knowledge and teaching practices of teachers in Science, Technology, Engineering, and Mathematics" by:
• Linking institutions of higher education to K-12 public schools, educational service cooperatives and businesses; and
• Providing services and resources for teachers, administrators, and students.

SUMMER CAMPS AND GENDER GAPS
One of those centers is housed at the University of Arkansas at Fort Smith, where Associate Professor Dr. Michael Reynolds, the head of the UAFS Department of Engineering, said the school is attempting to further promote student interest in STEM by hosting a series of summer camps throughout June and July.

Reynolds said using something like a summer camp was another way to peak interest for students in an environment outside of the classroom.

"What studies show, particularly with girls, is they don't see themselves as even considering engineering and my goal in (these camps) is to move their attitudes from, 'I'm not going to consider engineering or other STEM fields,' to 'OK, now I will consider it. It is a viable option for me.'"

Thursday's Census Bureau report highlighted the gender gap in STEM majors and employment nationally, noting that only 14% of engineers are women, the most underrepresented of all STEM fields. A higher percentage of women worked in mathematics (45%) and sciences (47%).

Reynolds said one of the camps held at UAFS in June focused specifically on getting girls interested in STEM fields and he hoped to expand camps that appeal to female students with future offerings at the university.

Within Arkansas, Mitchell said it was difficult to tell what kind of an impact any camps would have when making a dent in STEM majors and employment in Arkansas, especially among females.

"I don't think that we keep good records on following the girls longitudinally, especially if they go to a camp. And I don't know the number of camps across the state. … We really are at the beginning point here in Arkansas of offering camps in engineering or any type of sciences for boys or girls. They are probably going on all over the state, but we're not tracking it."

DIVERSE SKILLS NEEDED
Between UAFS' electrical and mechanical engineering programs, Reynolds said there were about 300 students enrolled at last count and he hopes the camps can begin to grow the enrollment. But he said many manufacturers and other companies across the state are needing a "diverse" group of skill sets, not just those being gained by his department's 300 students, which is why the diverse set of engineering programs across Arkansas' universities are so vital to today's economy.

"I would say the needs are diverse. Definitely the key thing I hear is that students have strong math and science skills with specific technical training. So they need to have a good math and science background and then they need to know how to do stuff. They need to know how to actually go into a plant or a company and actually use modern tools. So that's the thing that we try to do (at UAFS) is give them that broad-based math/science, then also teach them some tools, some real things because that's what industry tells me they need. It's both. It's not just, 'We need you to have a broad math/science background and then come to us and we'll teach you everything else.' Employers are increasingly telling us, 'We want you to have that math/science background, but now we also want you to be able to come to our company and be able to start day one doing something.'"

Mitchell said that was the other aspect of STEM education her group is working to expand, bringing more diverse training into the educational curriculum as early as secondary school.

"I do know there is talk about classes in computer science, programming, coding, things we can build upon over the years to get students ready for college. But we just need more students to have hands-on experience in math and science," she said.

TRAINING TEACHERS
Using the STEM Centers to train teachers on how to bring STEM to the secondary classroom will help with that, she said, as will non-classroom training students can receive at places like the soon-to-launch Arkansas Innovation Hub in North Little Rock.

"We have a new innovation hub in Little Rock that uses a maker model," Mitchell said. "That's the type of learning we need in school."

As for when the manufacturing world and other businesses could have enough graduates with STEM background, she said it would take a whole generation of 12 years or more before real substantive change could be seen. And she said it would take the cooperation of groups like the Arkansas STEM coalition, other non-profits, universities and the Arkansas Innovation Hub, which hosted its own summer camps.

"We must work totally together," Mitchell said. "I'm with the Arkansas STEM Coalition as their executive director and I try to pull together (all types of organizations, schools and agencies). We're all trying to work together on this."

Wal-Mart is the first of what could be seven or eight other retailers to partner with the Women's Business Enterprise National Council (WBENC), committing to sell merchandise featuring a new logo identifying the goods as produced by women-owned businesses.

“At Walmart we are committed to empowering women and impacting women-owned businesses from around the world—and so are our customers. In fact, we recently conducted a survey that found 90% of female customers in the U.S.  would go out of their way to purchase products from women, believing they would offer higher quality,” said MiKaela Wardlaw Lemmon, senior director of Women’s Economic Empowerment at Wal-Mart.

This label collaboration is part of Walmart's Global Women's Economic Empowerment initiative, launched in September 2011. At the time, Walmart committed to source $20 billion from women for its U.S. business and to double sourcing from women internationally by the end of 2016.

“We hope our collaboration with WBENC and WEConnect International will make customers around the world more aware of great products from women-owned businesses, and help these women continue to grow their businesses,” Lemmon said.

WBENC reports that women owned businesses contribute more than $1.3 trillion dollars to the U.S. economy and women are responsible for more than 80% of the consumer decisions globally. Creating awareness of these products can result in sales growth, increased consumer knowledge and loyalty. Both WBENC and WEConnect International focus on women’s business growth, which will be a natural outcome of the visibility and promotion of the new logo, according to the organization’s release.
 
Wal-Mart’s role in the process was to collaborate on the logo design and conduct the supporting research. The retailer said consumers will begin seeing the new logo on its shelves in September. 

Helen Lampkin, CEO of Rogers-based My Brothers Salsa, is a certified WBENC member and said her small business is excited about using the new logo on its products sold at Wal-Mart and Sam’s Club and in other retailers as well.

“The suppliers have to bear the cost of printing the new labels that will show the new logo, so for our business we are gradually working the label into circulation. We have a new non-GMO, certified organic, gluten free tortilla chip coming out soon and we held up the label production for a week so we could include the WBENC logo image on that product label. We also have seasonal items that are sold in Sam’s Clubs and those will be also bear the new WBENC image,” Lampkin said. 

Lampkin’s salsa got into Wal-Mart Stores through the Empowering Women’s Initiative. She said her buyer told her a year before Wal-Mart made the announcement in 2011 that there were opportunities for women-owned businesses within Wal-Mart.

“I heeded that advice and got WBENC certified in 2010. I believe Wal-Mart signing on to this label initiative will provide just the spark needed. I am eager to see if the stores will use any special signage or displays to highlight the products bearing the new label,” Lampkin said.

Wal-Mart’s role could also be to help educate women and consumers at large to look for the new logo, just like they might for “certified organic” or “Made in USA”.

Michelle Gloeckler, executive vice president of consumables and U.S. manufacturing lead at Wal-Mart, said during Tuesday’s (July 8) Open Call session, the retailer likes to see “Made in USA” on the front of the packaging labels, which alleviates the need for additional signage in stores aisles. But she also said some stores chose to highlight certain items in special displays like “Arkansas’ Own” to let consumers know that those products are made in a particular state. 

“Our store managers have a great deal of autonomy in how they chose to display special items, because they know how much labor they have to accomplish those tasks,” Gloeckler said.

Lampkin’s salsa and chip products are made in the U.S. by a woman-owned business, and they are formulated as “All Natural,” some are gluten-free and non-GMO and certified organic, which could make for some interesting labeling dilemmas, she said.

The Pleasant Crossings area of southwest Rogers is in the midst of development and will soon be home the state’s first Whataburger, a franchise from the Corpus Christi, Texas-based quick-serve restaurant.

The city’s planning commission approved the development earlier this month and the state health department’s permit was filed on Tuesday (July 8). This is typically an indication that the project is within a month or so of city permits being issued.

The Roger’s location is slated for 4335 S. Pleasant Crossing Blvd. In March, The City Wire reported the restaurant chain was scouting locations in Northwest Arkansas, shortly after the Pleasant Crossing Shops commercial development was announced.

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.

Golden Living announced Thursday (July 10) the launch of a new business, Fianna Partners, to offer the post-acute healthcare industry a new revenue cycle management solution.

Fianna Partners will offer its customers decades of expertise in revenue cycle solutions for post-acute providers.

Golden Living President and CEO Dr. Neil Kurtz announced that Fianna Partners will begin operations on Jan. 1, 2015, and will maintain offices at the Golden Living Administrative Center in Fort Smith.

In making the announcement, he said, “Golden Living is proud to provide an innovative solution for our industry through Fianna Partners and its knowledgeable, dedicated and caring employees.”

He also announced that Golden Living’s Senior Vice President of Facility Finance John Williams has been chosen to lead Fianna Partners.

“We are excited about the opportunity to provide our expertise to non-affiliated organizations and help them be successful,” Williams said.

Lawyers for Wal-Mart Stores argued before the Delaware Chancery Supreme Court on Thursday (July 10) for the retailer’s right to retain internal documents and records involved in the ongoing Federal Corruption Practices Act investigation.

Institutional investors — Indiana Electrical Workers Pension Trust Fund IBEW —sued Wal-Mart in Delaware Chancery Court for access to the internal records in 2013. The original suit CA No. 7779-CS, is a shareholder derivative suit that alleges that Wal-Mart’s board of directors breached its fiduciary duty by covering up and failing to adequately investigate allegations that employees of the company had bribed Mexican officials to win construction permits. 

The Chancery Court ruled in May 2013 that Wal-Mart should turn over the internal records to the court. The retailer’s objection is being heard this week by the Delaware Chancery Supreme Court in Wilmington. Wal-Mart’s lawyer Mark Perry, argued before the court that the ruling requiring the retailer hand over the files about its internal probe of the bribery claims when the documents weren’t reviewed by board members is flawed, according to a Bloomberg report.

The documents “are indisputably protected by attorney-client privilege,” Perry said.

Several large institutional investors have pursued lawsuits against Wal-Mart executives and board members implicated in the alleged bribery scandal. Information that has become part of the public domain include files released by U.S. Reps. Henry Waxman of California and Elijah Cummings of Maryland. The Congressional tandem found Wal-Mart’s Mexican unit used a state governor in Mexico to facilitate $156,000 in bribes.

The New York Times first reported that Wal-Mart executives were alerted to the alleged bribery in Mexico as early as 2005. The alleged bribes were used to hasten the retailer’s building of new stores and avoid permit hurdles that were holding up some of its competitors.

Wal-Mart self-reported alleged FCPA violations in December 2011, which was nearly six years after dated internal executive emails. 

Wal-Mart does not comment on pending litigation, but the retailer did release a compliance report earlier this year that stated the company has spent $439 million in legal fees over the past two years to investigate potential violation of the Foreign Corrupt Practice Act. Last year Wal-Mart spent $282 million on FCPA legal dealings on top of the $157 million costs in 2012, the year the probe in Mexico began and was expanded to India, China and Brazil.

“Compliance with FCPA and other anti-corruption laws remained a key priority for the company. Wal-Mart hired a number of anti-corruption directors and other anti-corruption staff in both its global headquarters and in its International retail markets during the year,” Wal-Mart noted its compliance report.

Stuart Grant, a lawyer for the investors, told the court that the pension funds he represents are demanding the files to support lawsuits against Wal-Mart directors over the scandal. He claims that Delaware law doesn’t allow companies to “hide responsive documents its counsel already knows to exist simply because the search protocols do not independently locate the responsive documents.”

Wal-Mart executives implicated in the corruption allegations are slowly fading from the retailer’s daily operations.

• Eduardo Castro Wright was linked the bribery allegations in Mexico, a market that he grew to prominence. Castro Wright quietly retired in July 2012.

• Tom Mars, former chief administrative officer, exited Wal-Mart in March 2013 after 11 years. He served as general counsel during the period under scrutiny for violations of the Foreign Corrupt Practices Act. From 2002 to 2009, Mars was involved in an investigation into bribery allegations regarding a Wal-Mart store built near the Mexican pyramids, according to company emails released in earlier this year by Congressional members. Internal emails mentioned in a New York Times' April report connect Mars to the matter as the senior corporate lawyer who briefed top executives such as former CEO Mike Duke in 2005 on the Mexican bribery allegations.

• Former CEO Mike Duke, headed up Walmart International during the time under investigation. He retired Jan. 31.

• Former CEO Lee Scott was CEO of Wal-Mart Stores Inc. during the time under investigation. Scott is exited his service on the board of directors in June.

• Board chairman Rob Walton also implicated in alleged bribery coverup knowledge according to investor suits, recently named a vice chairman who will take over board leadership at some point in the future. Greg Penner, his son-in-law, was chosen by the 69-year-old Walton as the vice chairman. Penner has been a board member since 2008.

Waco Title will open on July 28 its 17th office location at 1514 Fayetteville Road in Van Buren.

Waco Title has worked with Crawford County residents through its Waco Title office in Fort Smith for several years. The new office will allow Waco Title to offer the Van Buren/Alma area with a local and convenient closing office.  

The Waco family of companies has provided title insurance and closing needs in the area since 1885 and employs more than 140 people including three in-house attorneys.

Waco Title and its employees are covered by a fidelity bond as well as errors and omissions insurance and maintains in-house title plants in each of the markets they serve.

Known as the “Oscars of Innovation,” the list of the world’s top 100 technological product innovations compiled by R&D Magazine is prestigious, and the new list includes a Fayetteville-based firm.

For the second time in the company’s short history, Arkansas Power Electronics International, Inc. has been included on the list, which in the past has included such cutting-edge technologies as the flashcube, the automated teller machine, the fax machine and high-definition television.

Founded in 1999, APEI – the largest company affiliated with the University of Arkansas at the Arkansas Research and Technology Park – specializes in advanced, high-performance electronics for a variety of customers and applications, including the defense, aerospace and hybrid/electric vehicle markets. The magazine based its latest R&D 100 award on APEI’s high-performance, silicon carbide-based plug-in hybrid electric vehicle battery charger.

At the core of the on-board charger unit is one of APEI’s power modules, which will be released as a standard product later this year. The module’s high-speed switching capability and high-temperature packaging enabled the company to create a battery charger that is more efficient and more powerful than the current commercial technology.

The battery charger represents a major advance in power electronics and meets the increasing demands of the plug-in hybrid electric vehicle and electric vehicle markets and plays a vital role in allowing these markets to experience continual growth.

The new technology developed at APEI can also be utilized across a wide variety of different applications outside of the electric vehicle markets. These include: renewable energy battery charging, distributed grid storage, material handling equipment, boats, handicap mobility vehicles, commercial hybrid vehicles and future military tactical vehicles and systems.

APEI led the development of the battery charger in a collaborative research partnership that includes four other entities – Toyota Motor Engineering & Manufacturing North America, Inc.; the National Center for Reliable Electric Power Transmission, an academic research center based at the University of Arkansas; Oak Ridge National Laboratory; and Cree, Inc. The collaboration is funded by the Advanced Research Projects Agency in the U.S. Department of Energy.

In 2009, APEI received its first R&D 100 award for a high-temperature silicon carbide power module that was the result of a collaboration with the University of Arkansas and Rohm Co. Ltd. The module can greatly reduce the size and volume of power electronic systems.

Actor and comedian Tracy Morgan, his friend and personal assistant continue healing from the fatality accident on June 7 when the limo bus they were in collided with a Wal-Mart semi truck on a New Jersey turnpike. Morgan, released from a rehab facility last week has filed suit against Wal-Mart Stores.

He and comedian Ardley Fuqua Jr. and Jeffery MIllea, Morgan’s personal assistant, sued Wal-Mart Stores and its transportation subsidiary in federal court on Thursday (July 10). The plaintiffs want a jury trial and compensatory and punitive damages in addition to costs of their care and loss of income stemming from the injuries sustained in the accident. 

The complaint alleges three counts of negligence against Wal-Mart, with a fourth count of “loss of consortium” from Millea’s wife, who was eight months pregnant at the time of the accident. The suit claims that Wal-Mart was careless and negligent in the ownership and operation of its motor vehicle that injured the three men and killed their friend, James McNair, 62.

In response to the lawsuit Wal-Mart released the following statement: “This has been a terrible tragedy. We wish Mr. Morgan, Mr. Fuqua Jr., and Mr. Millea full recoveries. Our thoughts continue to go out to them, their families and friends, as well as to the families and friends of everyone involved, including Mr. McNair who lost his life. We are deeply sorry that one of our trucks was involved. As we’ve said, we’re cooperating fully in the ongoing investigation. We know it will take some time to resolve all of the remaining issues as a result of the accident, but we’re committed to doing the right thing for all involved.”

A federal transportation safety report found Wal-Mart driver Kevin Roper was traveling 20 miles over the speed limit at 65 miles per hour when his semi-tractor trailer collided with a luxury van on the New Jersey Turnpike on June 7.

A preliminary accident report filed by the National Transportation Safety Board found Roper traveling at 65 miles an hour for about a minute prior to crashing with the van which was flipped over upon impact.

The report also said Roper was within the allowable driving time of 14 hours on the road at 13.5 hours. Investigators claim that Roper swerved to avoid a crash on the turnpike and in so doing his rig slammed into the back of Morgan’s limo van. The report states that speed limit signs reducing the speed from 55 mph to 45 mph were posted about a half-mile before the crash. The speed limit had been reduced because of construction.

In addition, the NTSB report said investigators are compiling and analyzing information to determine the activities of Roper and the amount of rest he received in the hours and days preceding the crash. Roper resides in Jonesboro, Ga., but works out of a Walmart transportation hub in Delaware, a 700-mile commute. The lawsuit claims that Wal-Mart should have known, that Roper was awake for more than 24 hours before the accident occurred.  

“Wal-Mart knew or should have known that it was unreasonable for Mr. Roper to commute more than 700 miles from his home in Jonesboro, Georgia to work at a Wal-Mart facility in Smyrna, Delaware, especially immediately before he was to commence a long shift operating a truck that weighed approximately 30–40 tons. Additionally, there were many Wal- Mart distribution facilities closer to Mr. Roper’s home — including at least nine in Georgia alone—which would have significantly reduced Mr. Roper’s commute to work,” the suit states.

Roper pled not guilty to assault with a vehicle and was put on administrative leave by Wal-Mart pending the investigation.

The Arkansas Energy Office (AEO), a division of the Arkansas Economic Development Commission, has announced that $150,000 in rebates will be awarded through its Clean Fuel Vehicle Rebate Program, part of the Gaseous Fuels Rebate Program.

The Gaseous Fuels Rebate Program has four objectives:
• Provide an incentive for the purchase of clean alternative fuel vehicles;
• Provide an incentive for the conversion of vehicles to a clean alternative fuel using certified or approved conversion systems;
• To develop the refueling infrastructure for various alternative fuels; and
• Reduce emissions from motor vehicles and improve air quality in our communities.

“The popularity of clean fuel vehicles continues to rise, but more can be done to entice consumers to make the switch to clean fuels. By providing incentives to both fleet operators and fuel stations, there is a better opportunity for alternative motor fuels to take hold,” Mitchell Simpson, deputy director of the Arkansas Energy Office, said in a statement.

The Clean Fuel Vehicle Rebate Program applies to fleet operators for the conversion to compressed natural gas (CNG)/propane or the purchase of a CNG/propane fleet. The rebate amount is dependent upon the cost of conversion or incremental cost of a clean fuel vehicle and allows for a rebate equivalent to the lesser of 50% of the conversion/incremental cost or $4,500 per vehicle. Funds for the program were provided by General Improvement Funds and the Northwest Arkansas Development Council. There is no application deadline, but the rebates are available only on a first-come, first-served basis.

In addition, a total of $600,000 in funds will be issued to two fueling station operators through the Gaseous Fuels Rebate Program to install Compressed Natural Gas (CNG) equipment to provide public access to clean burning motor fuels. Kum & Go in Springdale received a $400,000 rebate and Arkansas Oklahoma Gas station in Fort Smith received $200,000. The Northwest Arkansas Development Council provided $400,000 of the total rebate amount and the AEO provided $200,000.

AEO administers the Arkansas Gaseous Fuels Rebate Program, as authorized by Arkansas Act 532 of 2013. The program supports the continued development of a publicly accessible, statewide network of alternative fuel filling stations and incentives for the purchase/conversion of fleet vehicles to clean-burning fuels such as compressed natural gas, liquefied natural gas (LNG) and liquefied petroleum gas (LPG). The rebates allowed under the program are for the lesser of $400,000 or 75% of refueling station construction/retrofit costs and the lesser of $4,500 or 50% of the conversion costs for vehicles.

Link to the AEO website for more information and an application.

With half of 2014 in the books, Benton and Washington county real estate agents report an active market and higher sales volume but a fewer homes sold.

MountData.com reports agents sold 3,395 homes in the first six months of this year. Unit sales slipped 2.3% from 3,478 homes sold in the same period of 2013. That said, sales volume topped $627.35 million, marking the second best half-year on record behind 2006, said Paul Bynum, market analyst with MountData.com.

Bynum said home prices are increasing faster that the rate of inventory growth, which is a good sign for sellers. Among existing homes sales this year, the median price rose to $139,900, up 2% from the same period a year ago. He said the inventory of existing homes stood at 3,737, up 431 units from last year. 

In the past six months existing homes sales in the two counties were 2,938 units, down slightly from a year ago, but total volume rose 1% in the same period. Home sales have lagged slightly behind last year for the past several months.

In June agents sold 436 homes in Benton County, valued at $88.327 million, down 0.9% in units and up 5.37% in total volume. Washington County reported 14.9% more homes sold in June than in the prior year period. The 292 sales totaled at $55.047 million in June, compared to 254 sales worth $45.323 million in the year-ago period. 

"Our unit sales for 2014 are still lagging behind 2013, year to date. However, our average price has increased 5% year to date and 13% for June 2013 versus June 2014, so our sales volume figures are just flat to slightly down. We are certainly seeing homes selling closer to the asking prices; and our agents are dealing with multiple offer situations much more frequently," said George Faucette, CEO of the local Coldwell Banker franchise. "I believe sales will strengthen only slightly, if any, for the second half of this year; but I do believe the pace of the first half is sustainable. Our agents are continuing to be very busy, and the general economy of NW Arkansas is doing very well."

HIGHER PRICES
Tami Fagan, an agent with Crye-Leike in Fayetteville, completed a closing last week where a home appraised for $45,000 over the sales price. She said it is not the first time it has happen this year as rising appraisals continue to bode well for sellers. 

“I am also seeing more multiple offers on properties which pushes the purchase price higher. A new agent in our office showed a brand new listing on Saturday, but the offer they made the next day was too late. Many homes are selling very quickly and some at full price offers, it’s been a few years since we have seen that,” Fagan said.

Median home prices have moved up nationally, particularly in coastal areas which is impacting home affordability, according to Jed Kolko, chief economist with Trulia. He said in much of the Midwest, including Northern Arkansas, prices are starting to rise but homes are still affordable for most middle class buyers. 

Kolko said home affordability according to Trulia standards allows for consumers to spend no more than 31% of their gross, pre-tax income on housing — mortgage, taxes and insurance.

With median home prices in Benton County at roughly $150,000 as of June, the price per-square-foot has risen 2.9% in the past 12-month period, according to MountData.com. In Washington County the median price is also $150,000, but the average price per-square-foot rose to $86.9, up 2% since June of last year.

New home sales for the first six months of this year totaled 457 units, up 1% from a year ago. The median sales price for new home construction totaled $223,500, down 3% from a year ago. This dip in new construction prices relates to more lower priced, smaller homes being built than a year ago, according to city permit records.

While local home prices are moving up, another report by CoreLogic indicates statewide home prices are still 2.3% below their July 2007 peak market price, which includes distressed home sales. Excluding the distressed home sales, statewide Arkansas home valuations are flat against their peak price in mid 2007.

BETTER COMPARABLES
Existing homes listed for sale in prior years had to compete with more distressed properties such as foreclosures or short sales but Fagan said those numbers have “fallen off the charts”

With fewer foreclosures there is not the downward pull on overall pricing that many neighborhoods faced between 2007 and 2012 lifting overall comparables higher.

Fagan said the local market is like a puzzle with lots of pieces that are coming together such as higher pricing, attainable financing, fewer homes to chose from and overall stable local economy. She said there is some pent-up demand in this market that is starting to move toward purchases now that prices are headed up again. 

AGGRESSIVE INVESTORS
The City Wire has previously reported that investors are active in the local markets, which has driven up the cash offers and the number of institutional investors buying properties. These buyers have been acquiring property in fairly large numbers, which has kept the inventory low for traditional buyers.

“I work with a number of investors in this market who have been buying distressed properties to flip, but that inventory is all but dried up. They no longer wait for the listing, they check the courthouse records and are even knocking on doors offering to buy homes in the midst of foreclosure,” Fagan said.

RealtyTrac reported late last year that in some months as many as 30% of the local home purchases were cash deals and roughly 12% of local home sales had been to institutional investors, who hold the asset as rental properties.

Daren Blomquist, vice president of RealtyTrac, recently told The City Wire that much of the housing recovery has been attributed to active investors. Roughly 33% of sales in the U.S. this year have been to investors. He said institutional investors and hedge funds came into the market in mid-2012 gobbling up single family homes by the thousands, which they are now renting. He said homeownership rates overall are declining and he expects investors to stay active because the demand for rental property will only increase as Boomers age and Millennials delay home purchases for a few more years. 

THE NUMBERS
Home Sales Data (January through June)
Benton County
Sales Volume
2014: $406.428 million
2013: $401.733 million

Unit Sales
2014: 2,166
2013: 2.176

Median Price
2014: $150,000
2013: $150,000

Washington County
Sales Volume
2014: $220.928 million
2013: $224.201 million

Unit Sales
2014: 1,229
2013: 1,302

Median Price
2014: $150,000
2013: $146,700

The restaurant segment continues to see sluggish activity throughout the second quarter and first half of 2014. The industry’s snapshot for June showed same-store sales were flat at 0.3% during the second quarter. While not great by any means, it was a 0.5% improvement over negative comps reported in the first quarter.

“Even without the weather-related constraints, same-store sales growth for the quarter was pretty lackluster;” said Victor Fernandez, executive director of insights and knowledge for Black Box Intelligence.

Expectations are for a stronger second half of the year from a same-store sales growth perspective, considering that same-store sales were negative during the back half of 2013 creating lower hurdles in 2014.

Black Box reports that on a two-year basis, sales in comparable stores grew by about 1.2% during the second quarter, while guest checks have grown at an average of 2.1% for all months during this same two year period.

“The sales growth we are observing is not reflecting the full price increase amounts that brands have likely taken during the last two years given the growth in average check”, Fernandez said. “The barrier continues to be the declining guest counts experienced by the industry.”

Comparable traffic one again was negative during the second quarter at -1.4%, but it was still the strongest result for the industry since the second quarter of 2013.

The industry has yet to post a quarter of positive same-store sales traffic since the recession. On a two-year basis, same-store traffic dropped by about 2.7% when compared with second quarter of 2012, further illustrating the chain restaurant industry’s main problem.

Fernandez cites several reasons for weaker traffic, as consumer incomes are not growing as fast as inflationary food prices, a shift in consumer preferences and slow improvement in the labor market.

Paul Harvel’s more than 46 years of work with chambers of commerce in three states –  from Northwest Arkansas and Fort Smith to Amarillo – has garnered him the most prestigious award in U.S. chamber circles.

The American Chamber of Commerce Executives (ACCE) has announced that Harvel will receive the Life Member Award, the chamber of commerce profession’s highest individual honor. It is bestowed in recognition of a lifetime of business community leadership and service to the association and chamber of commerce profession. The award will be presented to Harvel during ACCE’s national convention, to be held this year in Cincinnati, Aug. 12-15.

Only 42 individuals in the ACCE’s 100-year history have received the award.

“This is pretty neat. It’s the 100 year celebration, and they’ve only given out 42 before this year. ... And I have to tell you I was also pleased that it happened on the first ballot,” Harvel told The City Wire.

Harvel also was quick to deflect praise for the award – an action typical for those who know him.

“I really don’t know why they reached down to me for this. I guess I hung in there longer than they thought I would,” Harvel joked.

Recipients of the Life Member Award are nominated by their peers and selected by the association’s board of directors. Harvel is one of only three Life Member Award honorees in 2014. The Life Member award is earned by those who retire after notable careers in chamber leadership, and are awarded to those who exhibit a “tireless commitment to the profession and their peers, while driving positive change in their organizations and communities,” according to ACCE.

“It is especially poignant to be honoring Paul‘s work and his enduring influence across the nation during this, our centennial year, considering how instrumental he was in the success of ACCE for much of its history,” Mick Fleming, ACCE president, said in a statement.

The other 2014 Life Member honorees are James Anderson who is retiring as the Springfield, Mo., chamber president after 26 years; and Richard Hadley, who served 21 years as head of Spokane, Wash., chamber and economic development group.

HARVELCHAMBER HISTORY
Harvel began his chamber career in 1967 with the Little Rock Regional Chamber of Commerce. One of his highlights there included being part of a group that created Pulaski County Technical College, which now has an enrollment of 12,000, four regional locations and a new culinary school.

He left Little Rock after six years to be CEO of the El Dorado Chamber of Commerce. Other chamber jobs included head of the chambers in Enid, Okla., and Midland and Amarillo, Texas.

In 1985 he returned to Little Rock as the chamber CEO.

“The Little Rock Chamber’s total assets rose from $70,000 to over $10 million during his 21-year tenure. He conceptualized and built the Little Rock Regional Chamber’s new home and economic development center. The $8.5 million building was completed in 2001 and paid for in 3-1/2 years. It stands today as one of the nation’s premier chamber and marketing facilities,” noted the ACCE statement.

Following the Little Rock Chamber, Harvel became president and CEO of the Arkansas State Chamber where he started Leadership Arkansas and in two years saw total income rise from $800,000 to $1.8 million and membership grow from 650 to 1,400.

Harvel was also appointed by Gov. Mike Beebe as a member of the Arkansas Economic Development Commission.

Harvel closed his chamber career in 2013 at the Fort Smith Regional Chamber of Commerce. In Fort Smith, he was instrumental in securing more than $2 million for a new economic development fund drive.

‘CONTAGIOUS OPTIMISM’
Sam Sicard, president of First National Bank of Fort Smith, was part of the group that brought Harvel to Fort Smith.

“I am extremely pleased Paul Harvel is being appropriately recognized for the tremendous contribution he has made to our state and country for decades. Paul is a true visionary and his contagious optimism gave communities around this state the opportunity to accomplish far more than what many believed possible,” Sicard said.

Craig Rivaldo, former head of Arvest Bank in the Fort Smith area and now head of Arvest Bank in Benton County, worked close with Harvel on the economic development fund drive.

"I have never seen someone who could get in doors and raise money to the extent that Paul could. I believe that is a product of the respect many people have for Paul based on his many years in the chamber business,” Rivaldo said.

Perry Webb, president and CEO of the Springdale Chamber of Commerce, said Harvel has been a mentor to him and many other chamber officers around the country. Webb entered chamber work in 1987, and said Harvel has always been there to help or provide guidance. Webb also praised Harvel for his many years of support of the Arkansas Chamber of Commerce Executives Association.

“For many years, he supported that out of his (Little Rock chamber) office at no charge to the rest of us,” Webb explained.

Harvel has recently worked with Webb to raise money for the chamber’s strategic initiative fund. Webb said Harvel has called on more than 200 companies to help gather commitments for more than $1.4 million.

“He absolutely deserves it. It is a great honor for him,” Webb said of the ACCE award.

LEADERSHIP PUSH
Leadership programs were a large part of his chamber career, starting Leadership Enid, Leadership Little Rock in 1985, one of the first programs in the state, and Leadership Arkansas in 2006.

Mike Callan, president of Fort Smith-based Arkansas Oklahoma Gas Corp., was in the first Leadership Arkansas class formed by Harvel and was asked by Harvel to chair the second year of the class. Callan, who is in his final year as board chairman of the Arkansas State Chamber of Commerce, said Harvel’s award is not a surprise.

“Paul Harvel has dedicated his whole life to chamber work and community work. I can’t think of anyone else who is more deserving than Paul Harvel. ... I was really excited when I learned this morning that it came through for him,” Callan said.

Harvel how works part-time for Arkansas gubernatorial candidate Mike Ross, a Democrat.

Bank of the Ozarks posted second quarter net income of $26.5 million, up 30% over one year ago.

The big earnings boost comes as the Little Rock-based bank has completed three acquisitions in the last year. Most recently, Bank of the Ozarks announced it would acquire Arkadelphia-based Summit Bancorp in a $216 million blockbuster deal.

For the six months ended June 30, 2014, net income totaled $51.8 million, a 28.2% increase from net income of $40.4 million for the first six months of 2013.

“We are pleased to report our excellent results for the second quarter and first six months of 2014. While acquisitions have contributed significantly to our growth and profitability in recent years, our ability to organically grow our portfolio of high quality, good yielding loans and leases has been even more important,” said George Gleason, chairman and CEO.

Pertinent financial information for the quarter included:
• Total loans and leases were $4.58 billion at June 30, 2014, a 54.8% increase from $2.96 billion at June 30, 2013.

• Deposits were $4.98 billion at June 30, 2014, a 67.0% increase compared to $2.98 billion at June 30, 2013.

• Total assets were $6.30 billion at June 30, 2014, a 55.8% increase compared to $4.04 billion at June 30, 2013.

• Common stockholders’ equity was $850 million at June 30, 2014, a 60.1% increase from $531 million at June 30, 2013.

• Tangible common stockholders’ equity was $742 million at June 30, 2014, a 42.5% increase from $520 million at June 30, 2013.

Bank of the Ozarks recorded net interest income of $64.8 million in the second quarter. Non-interest income for the second quarter of 2014 decreased 8.4% to $17.4 million compared to $19.0 million for the second quarter of 2013.

On June 23, 2014, Bank of the Ozarks completed a 2-for-1 stock split, in the form of a stock dividend, effected by issuing one share of common stock for each share of such stock outstanding on June 13, 2014.

Shares of Bank of the Ozarks (NASDAQ: OZRK) closed trading at $32.94 on Monday. The company’s stock has traded between $22.46 and $35.24 per share in the last year.

As Arkansas regulators contemplate how to cut carbon emissions from the state’s fleet of coal-fired power plants, reducing the state’s dependence on its cheapest and most plentiful source of power could turn out to be a monumental and very expensive task.

In the days following President Barack Obama’s executive order mandating a 30 percent reduction in carbon dioxide emissions from electric generating plants by 2030, many supporters and critics have weighed in on the task ahead and, of course, the costs.

Arkansas Electric Cooperative Corp. (AECC), which oversees Arkansas’ 17 electric distribution cooperatives, said it was concerned how the Environmental Protection Agency’s proposal will impact future rates and the reliability of Arkansas’ electric generating capacity.

“We are disappointed that this EPA rule will reduce our use of coal, which is our most economical and reliable fuel to generate electricity,” AECC President & CEO Duane Highley said. “Although the proposed rule leaves the precise implementation details to the states to develop, the inevitable result will be the use of more expensive fuels, such as natural gas.”

Others critics from the business community and the state’s congressional delegation also echoed Highley’s concerns. Many have cited a study by the U.S. Chamber of Commerce’s Institute for 21st Century Energy, which issued a 71-page report saying the EPA’s plans to regulate carbon dioxide emissions from power plants will cost America’s economy more than $50 billion a year between now and 2030.

“Americans deserve to have an accurate picture of the costs and benefits associated with the administration’s plans to reduce carbon dioxide emissions through unprecedented and aggressive EPA regulations,” Energy Institute President & CEO Karen Harbert said. “Our analysis shows that Americans will pay significantly more for electricity, see slower economic growth and fewer jobs, and have less disposable income, while a slight reduction in carbon emissions will be overwhelmed by global increases.”

EPA SUPPORTERS
On the opposite end of the spectrum, dollars signs were also on the mind of the Sierra Club of Arkansas. But instead of additional costs to Arkansas consumers, Glen Hooks, director of the Arkansas chapter of the environmental group, said carbon pollution causes climate disruption and is already costing American communities billions of dollars from flooding, wildfires and extreme heat.

“By cleaning up and modernizing our aging, dirty power plants, we will begin to clean up our air, cut pollution-related illness and curb the worst effects of climate disruption,” Hooks said of Arkansas’ coal-fired power generation. “Curbing dangerous carbon pollution from power plants will not only save billions of dollars, it will also save lives.”

Notwithstanding the difference in opinions about the costs associated with the EPA’s proposal, all of the stakeholders say the process of developing a new power generation plan for Arkansas will be difficult and complex. Like the federal Affordable Care Act, known widely as Obamacare, President Obama’s new EPA standard allows regulators and stakeholders to design and implement a plan for its retail power marketplace that fits the need of Arkansas’ residential, commercial and industrial electric consumers.

According to the latest EIA statistics, as of Feb. 14, Arkansas ranked 29th among the 50 states in the amount of total carbon dioxide or “dirty air” emissions with 67 million metric tons. By comparison, Texas is ranked first with 656 metric tons of carbon emissions, while Vermont and the District of Columbia have the lowest emissions at 3 and 6 million metric tons.

The Arkansas Department of Environmental Quality (ADEQ) and the state Public Service Commission (PSC) have already begun stakeholder discussions intended to create an Arkansas plan pursuant to the new standard.

In an interview with Talk Business & Politics, ADEQ Director Teresa Marks said her department and the PSC have their work cut out for them. Although she was pleased that state regulators will have the flexibility to adapt a plan that is going to fit the needs of Arkansans, the state environmental chief said her department has the unenviable task of briefing stakeholders about the controversial guidelines.

“I think we have a lot of work ahead of us to determine what options or combinations of options will work best here in Arkansas,” Marks said of the 645-page proposal. “We will be pouring through it over the next several weeks.”

STATE’S LAST EFFORTS POWERED OUT
The state’s last attempt to restructure Arkansas’ electric power marketplace ended spectacularly in February 2003, when House Bill 1413 was signed by then-Gov. Mike Huckabee in order to repeal earlier enacted deregulation legislation. The Arkansas General Assembly passed Act 204 and determined that it was in the public’s best interest to continue regulating electric utility rates for the foreseeable future.

Those actions by Huckabee and state lawmakers in the winter of 2003 essentially killed the much-lauded Electric Consumers Act of 1999, which mandated in the retail sale of electricity beginning as early as Jan. 1, 2002.

The original act was intended to restructure the electric power industry and allow retail access by January 2002. Stranded costs were to be recovered via a competitive transition charge and the sale of bonds. Rates were to be frozen for three years for utilities seeking stranded cost recovery and one year for those that did not.

In addition, the PSC was empowered to force divestiture of generation assets to alleviate market power, and it was allowed to decide if stockholders should share stranded cost recovery with ratepayers. Utilities were required to functionally unbundle generation, transmission, distribution and customer service and file unbundled rates with the PSC by Jan. 1, 2000.

But most of those initiatives never got off the ground. In October 2000, the PSC opened a docket to study the electric power market. It wanted to ensure that the power supply problems and price spikes that occurred in California in the summer of 2000 did not occur in Arkansas when restructuring was scheduled to begin in 2002.

But Entergy and other state utilities suggested delaying the start for competition until Oct. 1, 2003, or Oct. 1, 2005, at the latest. Prevailing legislation required the retail market to open by June 30, 2003, at the latest. The PSC, utilities and the state attorney general’s office all agreed that the original timetable was unlikely to be carried out, but disagreed on when competition would begin. The PSC was directed to present its recommendation to the legislature in mid-November 2000.

On Nov. 29, 2000, the PSC issued the much-awaited “Report on Electric Restructuring” to the Arkansas General Assembly. State regulators recommended the date for deregulation be extended from the original timeframe in the restructuring legislation of Jan. 1, 2002, through June 30, 2003, to Oct. 1, 2003, through Oct. 1, 2005.

In the next legislative session in 2001, the Arkansas General Assembly approved Senate Bill 236, which was signed into law as Act 324. The new act delayed the start of deregulation from January 2002 to October 2003. The PSC was also authorized to initiate further delays based on the adequacy of the state’s transmission system and generating capacity to support a competitive market.

In December 2001, the PSC submitted another report to the General Assembly pursuant to Act 324, assessing the progress of restructuring in the Arkansas electric industry. The PSC recommended that the General Assembly either completely suspend the current statute to some future date or repeal the laws related to retail open access.

The recommendations were based on the prevailing absence of an operating regional transmission organization and the lack of evidence that customers, especially residential and small commercial customers, would realize a net price benefit from retail open access.

In comments from the PSC staff, it was also stated that in order for competition to exist, improvements to the transmission system were needed to assure that the major load centers in Arkansas have equal and reasonably unconstrained access to generation supplies.

By the time the 2003 General Assembly rolled around, Arkansas lawmakers had spent nearly two years reading headlines about the California energy crisis and how Enron Corp. had gamed consumers for billions of dollars in that state’s deregulated marketplace. Once the session began, the death of deregulation was inevitable.

One of the interesting bullet points that came out of the PSC’s staff recommendations to postpone the state restructuring efforts was that there was no “federal push” for competition in the nation’s electric retail market, especially after the California energy crisis caused massive blackouts, electric supply shortages and historic spikes in wholesale power prices.

At the time, the Federal Energy Regulatory Commission was charged with overseeing the final rules regarding the restructuring of the nation’s electric industry. Now, more than 11 years later, the Obama administration has essentially picked up the ball and restarted those efforts at the statewide level through the president’s favorite and most active government agency – the EPA.

But not much has changed over the last decade since the state’s deregulation efforts were stalled. Arkansas’ electricity profile is essentially the same.

For instance, four of the five largest power plants in Arkansas are still operated by Entergy Arkansas. The natural gas-powered Union Power Station in El Dorado, owned by the Tampa, Fla.-based Entegra Power Group, is the state’s largest power plant with a net generating capacity of 2,200 megawatts, according to the U.S. Energy Information Administration (EIA).

But next on the list is Entergy’s Arkansas Nuclear One plant in Russellville, the coal-fired White Bluff and Independence facilities in Redfield and Newark, respectively, and the recently retired Robert E. Ritchie gas-powered plant in Helena.

In addition, the top providers of electricity in Arkansas are still the same as a decade ago. Entergy Arkansas is by far the largest electric retailer in the state with more than 700,000 customers in 63 counties across the state. Southwestern Electric Power Co. is second with just over 114,000 electricity users in Arkansas, with Mississippi County Electric Cooperative, Oklahoma Gas and Electric and First Electric Coop Corp. rounding out the top five.

CHEAP, PLENTIFUL COAL STILL KING
Once regulators and stakeholders come to the table to implement Arkansas’ new EPA-mandated electricity standards, the obvious “elephant in the room” will be any discussion on the topic of coal. If the EPA regulations drastically reduce the usage of coal, the reliability of Arkansas’ energy grid system will be at risk, said Sandy Hochstetter Byrd, vice president of member and public relations for the AECC.

Byrd should know. She is the former chairman of the PSC who played a central role in recommending that the state delay deregulation of the electric industry more than a decade ago.

“Coal is the lowest cost source for energy for our members and that is obviously a concern to us,” Byrd said. “For many years, coal has been our workhorse.”
In fact, Arkansas’ history with coal goes back more than a century. Coal was Arkansas’ first mineral used for fuel output, primarily for powering steam engines and heating homes and businesses between 1880 and 1920. Over the last century, however, oil and oil byproducts have pushed aside the popularity of coal as a fuel, and the mining of coal is minimal in Arkansas.”

However, coal is still king when it comes to generating electric power in Arkansas. And it is cheap. Between 1990 and 2012, the price of coal has ranged between $1.42 and $2.22 per million BTU (British Thermal Units), according to the EIA. By comparison, natural gas peaked in 2008 at $8.90 per million BTU. However, prices in 2012 fell to their lowest at $3.12 per million BTU, and closed on June 6 at $4.54 per million BTU on the New York Mercantile Exchange.

But even with the EPA’s pressure on coal-fired generation and cheaply produced natural gas from the nation’s numerous shale plays, coal is still the largest single fuel for electricity generation in Arkansas.

In fact, coal’s monthly share of total generation in Arkansas has fallen below 40% only three times over the past 35 years, EIA statistics show. In November and December of 2012, coal’s percentage of monthly electricity dropped below 40% for the first time in 35 years. Before that, the last time coal’s share of total generation fell below 40% for a monthly total was March 1978, the EIA’s Electric Power Monthly report shows.

Today, coal-fired power represents 44.5% of Arkansas’ annual net electric generation. Natural gas-fired generation is second at 23.2% and nuclear energy is next at 19.4%. Renewable energy generates about 6.4% of the state’s power needs and hydroelectric fills 5.4% of the state’s electric capacity. Petroleum-fired fuel, once a staple for heating oil, now generates less than 1% of the state’s power (0.6%).

Nationwide, coal has been the largest source of electricity generation in the United States for more than 60 years. However, its annual share of total net generation declined from nearly 50% in 2007 to 39% in 2013 as some power producers switched to more competitively priced natural gas.

GUIDELINES OPEN OTHER DOORS
Once Arkansas begins developing a new strategy to meet the EPA’s four-pronged guidelines, Entergy officials hope that the state’s largest utility will get credit for its nuclear plant operation in Russellville. Nationwide, New Orleans-based Entergy Corp. has voluntarily cut its carbon emissions across the utility giant’s system by shifting from older coal-fired plants to newer natural gas plants, and by expanding its national fleet of nuclear reactors to 12 power plants in eight states that produce nearly 90 million megawatt hours of generation.

If Entergy gets recognition for its nuclear powered generation, the utility giant will be well ahead of the EPA’s carbon cutting goals in Arkansas and across its operating footprint, said Chuck Barlow, vice president of environmental policy and strategy for Entergy.

“(The EPA) has got to give us credit for our nuclear megawatts,” Barlow said of the Nuclear I and II power plants in Russellville. “We use coal, but we also [produce] a lot of nuclear and it has zero carbon emissions.”

Meanwhile, environmental advocates and energy efficiency supporters also say the new EPA standards also should open the door for ramping up the use of renewable energy in Arkansas, including wind, solar, biomass and other low-carbon sources of power.

The Sierra Club’s Hooks said Arkansas power plants released nearly 41 million metric tons of carbon pollution in 2013 – with nearly 85% of that coming from just five coal-fired power plants. Three of these older plants (Entergy’s White Bluff and Independence plants, and SWEPCO’s Flint Creek plant) were constructed in the late 1970s and early 1980s, he said.

“Reducing carbon pollution is good for both our environmental and public health, plus it will create thousands of clean energy and energy efficiency-related jobs right here in Arkansas,” the Sierra Club spokesman said. “We look forward to working closely with utilities and regulators to help clean up Arkansas’ carbon emissions.”

Arkansas has adopted several policies to encourage energy efficiency and renewable energy. For example, the Sustainable Energy-Efficient Buildings Program was enacted in 2009, directing the Arkansas Energy Office to develop a plan for reducing energy use in all existing state-owned major facilities by 20 percent from 2008 levels by 2014 and 30 percent by 2017.

Also in 2009, the Arkansas Alternative Energy Commission was created to study the needs and impacts of various forms of alternative energy on the economic future of Arkansas. More recently, the PSC announced a Sustainable Energy Resource Action Plan requiring implementation of energy-efficiency measures by the state’s investor-owned utilities.

J.B. Hunt Transport Services picked up steam in the second quarter after a sluggish start to fiscal 2014. The Lowell-based logistics firms reported solid net profits of $93.4 million, up 6.3% from the $87.7 million pocketed in the year-ago period. 

The results were inline with Wall Street’s consensus 79-cent earnings per share estimate, improving from the 73-cents per diluted share earned in the second quarter of 2013.

Top-line revenue grew in the quarter to $1.55 billion, up 12.3% from the $1.38 billion reported a year ago and surpassing Wall Street’s estimate of $1.54 billion.

All four of the company’s divisional pistons were firing in the quarter, despite some challenging metrics in the intermodal and truckload operating segments.

“The slowdown in train velocity and the difficult driver recruiting environment has challenged our (intermodal) growth in JBI. We are pleased we were able to maintain profitability levels despite these obstacles. The worsening driver supply conditions will continue to be a headwind for (dedicated contract services) DCS and (truckload) JBT as well. The planned improvement in truckload is ahead of schedule and though there is more to do, we are extremely pleased with the progress thus far,” CEO John Roberts III, said in the release. “While we continue to work to improve customer service and equipment utilization levels to achieve our expected market growth, the second quarter results demonstrate the combined earnings value of our four diversified, yet integrated, business units.”

HIGHER PRICING, MORE LOADS
The robust gains in top revenue were attributed to an 8% load growth in the intermodal division and 15% more loads covered in the firm’s brokerage division – Integrated Capacity Solutions. More loads helped to drive 9% and 31% increases in the segments, respectively.

The Dedicated Contract Services segment’s revenue rose 15% behind the better productivity from several large private fleet conversions implemented a year ago. Tyson Foods’ live haul operation is one of those private fleet conversions.

The laggard truckload segment, under the new management of Shelley Simpson, returned better than expected results. The truckload segment reported flat revenue, despite running an 8% smaller fleet.

“The company is increasingly becoming a provider of logistics solutions for its customers. Shelley Simpson is driving the effort and is providing strong leadership in sales and marketing plus the integrated capacity solutions unit,” said John Larkin, an analyst with Stifel Nicolaus. (Stifel conducts investment banking services with J.B.Hunt and is compensated accordingly for those services.)

Larkin recently said it makes sense for Simpson to lead Hunt’s “long suffering truck unit as some ICS customers prefer JB Hunt to provide its own truckload services as a component of integrated solutions.”

“While the truck unit, at its reduced size, will never be all things to all people, it can be a valuable arrow in Simpson’s quiver as she and her teams work to continuously optimize the supply chains of the company's customers,” Larkin, who is neutral on these shares shares, noted last quarter.

Hunt reported operating income of $159 million in the second quarter, versus $147 million a year ago. The increase in operating income derived from load growth, customer rate increases and freight mix changes was partially offset by lower box turns from slower train velocities, higher driver recruiting and retention costs, higher purchased transportation costs, higher safety and insurance costs and increases in equipment and tire costs compared to second quarter 2013.

BULLISH OUTLOOK
Wall Street approved of Hunt’s second quarter performance as shares (NASDAQ: JBHT) rallied on the news trading up nearly 2% at $76.02 in afternoon trading. Volume was heavy with more than 887,000 shares changing hands before noon. Average daily volume for the company is 767,000.

Economists view logistics companies such as Hunt as a barometer on economic growth given they are hauling goods on everything from big screen televisions delivered to consumer’s front door to live chickens supplying restaurants and grocers to millions of items and fixtures for Wal-Mart Stores and dozens of other retailers.

Analysts with Stephens Inc. rate J.B. Hunt shares as a buy with a target price of $87, despite a shaking first quarter.

“We remain encouraged by recent trends in the business now that abnormally harsh 1Q weather is behind us. We continue to view JBHT as a core transport holding and a bellwether in the domestic transportation space, and view recent anecdotes of tight truckload capacity as a leading indicator for an improving intermodal rate environment,” said Brad Delco, analyst with Stephens. (Stephens conducts investment banking services for J.B. Hunt is compensated accordingly.)

While analyst and Hunt management expect a strong back half of 2014, it won’t be without a few challenges. Costs related to driver recruitment and higher driver pay, rising insurance expenses and increased equipment expenditures will have to be factored into the bottomline this year. Stephens estimates Hunt will earn $3.15 per share this fiscal year, gaining some momentum in the next two quarters behind strength in all four of its operating segments.

SEGMENT RESULTS
Intermodal
Segment revenue of $931 million, up 9%
Operating income totaled $113.4 million, up 2%
Loads increased 8%, revenue per load rose 1.5%, excluding fuel surcharge.
68,700 units of trailing capacity and 4.500 power units available to the dray fleet.

Dedicated Contract Services 
Segment Revenue of $348 million, up 15%
Operating Income totaled $30.3 million, up 2%
Loads increased 23%, revenue per load rose 1.2%
625 new revenue producing trucks were added in the quarter to 6,538 units.

Integrated Capacity Solutions 
Segment Revenue of $173 million, up 31%
Operating Income totaled $ 6.2 million, up 50%
Loads increased 15%, revenue per load rose 14%.
Two new branches opened in the quarter bringing the total branch count to 26. The carrier base increased 9% and the employee count increased 23% to 36,300 in the quarter

Truckload
Segment Revenue of $101 million, flat
Operating Income totaled $ 9.4 million, up 217%, helped by $2.8 million gain from equipment sales.
Hunt operated 1,860 tractors compared to 2,018 a year ago at the end of the quarter.