Unretired!

Arkansas Commerce Secretary Hugh Mcdonald Takes New Role

by Roby Brock

Seven years ago, Hugh McDonald retired after a longstanding career at Entergy. He was the CEO of Entergy Arkansas for 16 years and was actively involved in Arkansas’ business landscape.

He is past board chair of the Arkansas State Chamber of Commerce, the Little Rock Regional Chamber of Commerce, Fifty for the Future, the Arkansas Research Alliance, the Arkansas Career Education and Workforce Development Board, and the University of Arkansas Medical Sciences Board of Advisors.

McDonald joined Entergy in 1982 as an engineer at Waterford 3 nuclear generating plant in Louisiana. He held various management positions in the distribution, transmission, customer service, retail marketing, and regulatory business functions in Louisiana, Mississippi, Texas, and Arkansas. Prior to working for Entergy, McDonald was employed by Black and Veatch Consulting Engineers in Overland Park, Kansas. He holds a Bachelor of Science degree in Construction Management from North Dakota State University and earned an MBA from the University of New Orleans.

Lured out of retirement by Governor Sarah Sanders, McDonald now serves as the Secretary of Commerce for the state of Arkansas. The agency, which was reorganized in 2018, encompasses 10 different divisions and commissions. McDonald sat down for a conversation with The Arkansas Banker magazine to discuss his new role.

Q: You are the former Entergy Arkansas CEO, former chairman of the Arkansas State Chamber of Commerce. What lured you out of retirement?

Hugh McDonald: I got a call one night out of the blue and had an offer that I really couldn't refuse. The governor is a good negotiator and I think I still have a little bit to contribute and it's in sort of the wheelhouse that I worked a lot in in my previous life in economic development and workforce development and running a large organization. So I felt, let's do this. Let's have fun.

Q: You've had a few weeks to get settled into this new role as Secretary of Commerce. What are you learning?

McDonald: I'm learning a lot. I think the state as a whole does a good job at traditional economic development, recruiting new businesses, expanding existing businesses with the incentives we have in place. Clint O'Neill is the new executive director [of AEDC], solid guy, I really like Clint.

What we don't do enough focus on, in my opinion, is for example entrepreneurship, helping the organizations, these entrepreneur support organizations. They call them ESOs. There are various ESOs across the state. I want to find out how can the state and economic development support that network on a more holistic fashion than we have in the past, because you've got so many. I mean 99% of the companies are small business. How do we support that network?

You've got kind of two groups of small business. You've got the innovation type, the tech type, that venture capital go in at various stages and those companies scale up, but you also have the momand-pop retail small businesses. There are different types of small business, different types of entrepreneurs, but they're both important in terms of nurturing, supporting from a state economic development perspective. They grow in different ways and they should be supported more to be able to do that. And they both affect quality of life. They both affect talent recruitment in different ways, which is also very important for us to do as a state.

Q: Do you see directing more resources into those areas or do you see, just knowing that you've got the endorsement of the state of Arkansas behind you to do this? What do you think that you can additionally push to help those businesses?

McDonald: My plans aren't full yet. In fact, we're planning a summit with some of the best entrepreneur support groups in the state and venture capital because I think we have to do both. We've got to support it with the state backing. That is going to require some additional focus on resources within AEDC. We've got to relook at our incentives. Our incentives have worked well for the traditional economic development. I want to continue that, I want to get better at that. But how do we have to change our incentives going forward to support the new economy, entrepreneurship, as well?

Q: You have worn the hat as the Entergy Arkansas CEO. You were involved in a lot of economic development deals, mostly big ones because the big ones require electricity, a lot of work, a lot of power. There's a lot that you did at Entergy that probably prepped you for this role, would you say?

McDonald: Yes. Entergy did a lot of the big economic development, but it also does a lot of the community development as well supporting rural Arkansas. A Big River Steel project is not going to happen in every county. That's just unrealistic to assume. But how can we support the small towns in rural Arkansas from growing their leadership capacity, which then they can start their own economic development efforts, as well? And starting from a small business perspective, that's where we can really, I think, help in terms of rural Arkansas.

Q:

Assess where you see the Arkansas economy right now. Are we at some sort of tipping point that concerns you? I think you would be a guy that looks at strengths, weaknesses, opportunities and threats. I'm not asking for the full-blown analysis on that, but where do you see opportunity areas. Where do you see potential threats?

McDonald: I think our biggest challenge is workforce and workforce development. Our unemployment rate is low. I mean, we're almost at the full employment perspective. We've got more job openings than we have applicants at this time. So, the question - I'm not an economist - but the question about are we going to go into a recession? Who knows? Smarter people than I can advise you on that, but I think the economy is strong. It's a diversified economy in Arkansas. That's one advantage we do have. So, I'm bullish on the economy in Arkansas.

Q:

You mentioned Clint O'Neill earlier, head of the Arkansas Economic Development Commission. That was a position your predecessor, Mike Preston, held that post and Secretary of Commerce. You're dividing that out a little bit. Tell me why that particular strategy.

McDonald: Frankly, I think it's a better fit for me and I think it's a better structure. I don't think I could, if I'm wearing both hats, I don't think I can do as good a job as I need to be doing on the other eight or nine divisions within the Commerce Department.

Q:

Let’s talk about the other divisions under the Commerce umbrella. What’s your learning curve for agencies like Banking and Securities. How will you approach managing them?

McDonald: I don't think with those two individual divisions that you spoke of, Securities and Banking, I don't think there's going to be significant changes in there. It was just an opportunity to streamline two divisions that those industries are continuing to work closer and closer together. And it made sense. Frankly, it made sense to the securities CEOs that I talked to, and it made sense to the banking CEOs that I talked to. So it's an opportunity to do things more efficiently, streamlined. They all said, "Looks good to me. Makes sense. So let's do it." and the importance of working with the federal government, which is critical on these core of engineer projects and moving commerce more effectively and efficiently in our waterway system. Both Aeronautics and Waterways are small organizations. Aeronautics is five employees run by a very capable leader, Jerry Chism.

Q:

What's been your learning curve on the things outside of your bailiwick prior to taking this job? You knew a lot about economic development, which is a huge part of the job, but you get to wear some hats for aeronautics and waterways and all those things, too. What's been your learning curve on those new divisions?

McDonald: It's obviously steep. I was in a Waterways Commission Meeting today, my first one. So learning about the terminology and the funding mechanisms that our ports have on our navigable rivers

Cassandra Caldwell runs the Waterways Commission. Right now, it's a department of one. So not huge, but that does not mean it's not important, and it doesn't mean it doesn't take some of my time because I'm learning and getting up to speed. But principles that one uses in a large organization in a Fortune 500 company can and should apply to state government. And where they do, I want to apply those concepts to state government. You can't do that immediately, but we will look for opportunities for efficiencies. That's what the governor expects, and frankly, I think that's what three million Arkansas citizens expect.