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July/August 2014

Gov. Mike Beebe Takes Flight Energy In-depth

The EPA Impacts Arkansas

Turning 10

The Fayetteville Shale

Gene’s BBQ Always Open

Hot Springs Re-imagined Motorcycle Tourism Get Your Motor Runnin’

Heavyweight Fight Sen. Mark Pryor vs. Cong. Tom Cotton


Contents July/August 2014 5

Publisher’s Letter

7

Commentary Darrin Williams Why Rural America Matters

9 36

10

Point Counterpoint Duane Highley Steve Patterson The EPA & Arkansas Profiles Chauncey Holloman An Entrepreneur Comes Full Circle

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Arkansas Institutions - Gene’s BBQ Always Open For Business

18

Andrea Allen & L.J. Bryant Political Animals

84

Paul Latture & Bryan Day Port Of Call

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Industry Construction Trends In Commercial Construction

58 64

Tourism Agritourism Blooms Arkansas Wants Easy Riders

66 68

Manufacturing Made In Arkansas Bad Boy Mowers

48 47 96

58 20

64 72

Information Technology Security Concerns Insights Central Arkansas’ Startup Community Tyson Foods’ Big Deal

72

Hometown, Arkansas Fayetteville Is Far More Than Funky

98

Executive Q&A Noteimals’ Glenna Cook

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68

David Boling Chasing Money

Leadership Coping With Stress Six Leaders Share High-Pressure Secrets

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Individuality New Design School’s Sonia Gutierrez

82

Vision Downtown Hot Springs Re-examined

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Story: A Bruising Battle 20 Cover

Incumbent Mark Pryor and challenger Tom Cotton go toe-to-toe in one of the nation’s most-watched Senate races.

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Features European Reunion Gov. Mike Beebe travels overseas for new and existing jobs.

26 Energy In-depth

The EPA rolls out new regs, Arkansas’ energy industry responds, and the Fayetteville Shale Play turns 10.

COVER ILLUSTRATION: SHAFALI ANAND

www.talkbusiness.net

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Arkansas Economic Development Commission

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TALK BUSINESS & POLITICS | JULY/AUGUST 2014

ArkansasFavorsTheBold.com


From the Publisher

Stand Your Ground Talk Business & Politics is owned by River Rock Communications and is published six times a year. For additional copies, to be included in our mailing list, or for information about advertising, contact Katherine Daniels at katherine@talkbusiness.net. July/August 2014 Publisher & Editor-in-Chief Roby Brock roby@talkbusiness.net Art Director Bryan Pistole DesignMatters LLC bryan@designmattersllc.com Editor Bill Paddack wbp17@comcast.net Contributing Writers Larry Brannan Steve Brawner Jeanni Brosius Wesley Brown Kerri Jackson Case Michael Cook Rex Nelson Ethan Nobles Casey Penn Ben Pollock Bob Qualls Ryan Saylor Kim Souza Michael Tilley Jason Tolbert Photographers Bob Ocken bob@ockenphotography.com Trey Ashcraft treyark@yahoo.com Tim Rand pix@trand.com Kat Wilson katographic@gmail.com Vice President Operations Stephanie Baker stephanie@talkbusiness.net Vice President Sales & Marketing Katherine Daniels katherine@talkbusiness.net Printer John Parke Democrat Printing & Litho jparke@democratprinting.com River Rock Communications 8308 Cantrell Road Little Rock, AR 72227 501.529.1737

We heard a lot about the “need” for a “Stand Your Ground” law in the Republican Attorney General primary, but I think the debate needs broader context and application. And I’m not referring to guns. Arkansans have been and will be subjected to a tidal wave of negative campaign advertising this year, particularly from outside special interest groups. GOP Attorney General nominee Leslie Rutledge and Supreme Court candidate Tim Cullen can attest to the power of having hundreds of thousands of dollars spent to attack your character and pummel your political positions with no knowledge of who the messenger truly is. Candidate spending is at least transparent. The move about a decade ago to force those running for office to state, “I’m Joe Candidate and I approved this message” was a step in the right direction of political ownership. But, the Citizens United ruling has allowed an onslaught of third party groups to free-wheel spend at will without any true understanding or full disclosure of who is behind their efforts. Remember the “Thank you, Bill Halter” ads with the Indian-accented man complimenting Halter for supposedly sending jobs overseas? All we ever learned about the group behind those ads was that they had a post office box in Virginia. This election cycle we’ve already seen independent expenditure groups spend millions in Arkansas in the Senate and Governor’s race – as well as AG and Supreme Court – and we know much more is headed this direction. The problem is we know nothing about several of these groups, their real motivations, and the money trail that could help a voter understand why they would promote or oppose a certain candidate. Freedom of speech will likely protect the ability to spend as much as you want through these phantom groups, often referred to as “dark money.” But the time has come for faster and greater transparency. If political candidates can disclose donations and have them reported on web sites by monthly or quarterly deadlines through financial reports at the state and national level, then these groups can too. There was an attempt at the national level a few years ago, but alleged backroom deals spun the discussion into partisan rancor. I’m not advocating any exceptions to the rule. Simply disclose who is financing the spending in a timely basis. It will result in a more honest political conversation. It will restore some degree of confidence in a political process that is already greatly tarnished with skepticism. And, I suspect, it will curtail a few dishonest players who are currently abusing the campaign finance system’s lack of transparency. It would be great to have this at the federal level, but I think the state legislature could make it a law for playing politics in Arkansas. Perhaps good government Republicans and Democrats would be willing to meet my challenge by signing a pledge to make it happen. We have some really fine candidates for office in this election cycle and I have high hopes that there will be thoughtful and constructive dialogue at times in their campaigns, particularly when they debate. We deserve to have those conversations free from intentional personal destruction or, at least, clearly identified as to who is casting aspersions. It’s time to “Stand Our Ground” on this issue. Sincerely,

Roby Brock Publisher & Editor-in-Chief www.talkbusiness.net

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TALK BUSINESS & POLITICS | JULY/AUGUST 2014


Commentary

Rural America Matters By Darrin Williams

S

outhern Bancorp has been heavily involved with a tremendous volunteer program for the past decade. The Volunteer Income Tax Assistance program, also known as VITA, is an IRS-sponsored, rural-focused, volunteer program that offers free tax preparation and filing assistance to income eligible individuals and families. Nearly 50 Southern Bancorp volunteers recently wrapped up the tax season, and the results were record-breaking. Our volunteers filed nearly 3,000 federal tax returns, bringing more than $6 million in refunds and credits back to the rural communities we serve. This accomplishment is not only exciting because of the impact that such an influx of money can have on a rural community, but it also affords us an opportunity to raise and refocus attention on this vital, yet increasingly threatened part of America. Each passing year, rural America faces increased challenges. From population decline and economic development obstacles to an overall lack of access to growth capital, each challenge digs the proverbial hole deeper. And in Arkansas, where according to the most recent census data over 80 percent of the counties are considered rural, we’re talking about an increasingly large hole. And while we cannot fix every problem in every rural community, we can begin to chip away at a few of the bigger problems. In Southern’s case, this starts with improving financial access so that capitalism can work for all people by creating jobs and economic opportunities.

Darrin Williams

Programs like VITA infuse a community with new resources, but they are once-ayear activities. In order to fully address the long-term growth capital needs of rural communities, we need more consistent and sustainable forms of investment. One of the core tenants of Southern’s community development work is the belief that capitalism can and should work for people in rural America. But capitalism does not operate in a vacuum. It relies on an infrastructure

Each passing year, rural America faces increased challenges. From population decline and economic development obstacles to an overall lack of access to growth capital, each challenge digs the proverbial hole deeper. that can deliver capital to entrepreneurs, businesses, and individuals in a responsive and responsible way, something community development banks like Southern know how to do. Access to responsive and responsible financial services is consistently cited as one of the leading factors in determining a community’s economic vitality. And with the number of banks and bank branches plummeting, that access is dwindling.

Without a strong financial institution with which to partner, those in need of capital will often turn to predatory lenders who charge exorbitant rates and lock customers into a never-ending cycle of debt that offers little chance of relief, much less the kind of financial access that leads to home purchases, educational financing, or business creation. As other banks migrate toward more urban areas, Southern is exploring ways to serve even more rural communities. We’re looking to expand our services to places that traditional banks will often overlook or pass by because they focus on higher growth markets. So why are we doing this? And why should you care? Because the vitality and prosperity of our state is not determined by one metro area or one geographic location – each part of the state needs to be able to contribute. In states like Arkansas and Mississippi, where Southern operates, the vitality of rural communities will drive the future of the whole state. This is why I encourage you to think about how your company can invest in rural America whether through participation in one-time programs such as VITA; considering one of Arkansas’ rural communities for your business’ next location; or joining in Southern’s effort to create new economic opportunities. By working together, we can strengthen these communities and prove that rural really does matter. Darrin Williams is CEO of Southern Bancorp Inc. and serves as a State Representative for House District 36 in Little Rock. www.talkbusiness.net

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Commentary

Chasing Money By David Boling David Boling

I

was sitting at my desk, ready to start my new job, when my boss walked into my office and put a monkey carved from wood on my desk. The monkey was holding a phone against its ear. “Congratulations, you are now a phone monkey – start making those telephone calls for money,” she barked cheerfully. What was my new job? Telemarketer? Cold-call salesman? No, I was a political candidate. Just a few days before, I had launched my political candidacy in the Democratic primary in Arkansas for U.S. Congress. And my boss? She was my campaign consultant. Four years ago, my campaign ended when I finished third of five candidates in the Democratic primary – but I had fun and learned a lot, especially about the role of money in politics. I still have that wooden monkey in my office to remind me that candidates for Congress must spend a huge proportion of their time calling folks to ask for money. During my run, I spent 70 to 80 percent of my time on the phone asking people for money. On one day, I made about 90 calls. But my campaign staff was constantly pushing me to make even more. In their view, my phone calls were too long – they wanted me to limit each one to just a couple of minutes. Usually I would talk for more than 10 minutes, trying to connect personally with the potential donor but eating up precious time that I could have used to call others. This kind of work is not glamorous and is often discouraging. Before becoming a candidate, I had been a Justice Department

attorney and chief of staff to a U.S. congressman: When I had those jobs, people returned my phone calls right away. Once I became a candidate, lots of people weren’t so eager to call me back, because they knew I’d be asking for money. One episode of HBO’s “The Wire” portrays this campaign reality in a way unforgettable to me. Tommy Carcetti is running for mayor of Baltimore. Carcetti’s campaign manager, Theresa D’Agostino, scolds him to get in a room and make phone calls to raise money. In response, Carcetti goes into an expletive-laden rant about how much he hates making calls for money and shouts, “I can’t do it anymore! I hate it! I hate it more than anything!” Ultimately, a staffer pushes Carcetti into an almost windowless office to make the calls and D’Agostino tells him he needs to raise $30,000 in the next three hours. “You hit your number or die in this room,” she says as she walks out and locks the door. I didn’t win my election – but if I had, my experience on Capitol Hill has taught me that my life as a phone monkey would have continued. Anyone who has worked there knows the ubiquitous term “call time.” When I first heard it, I thought of the moment during a church service back in Arkansas when the preacher would call members to the front of the church to rededicate their lives to God. But I quickly learned that in Washington the term had more to do with the worship of Mammon than the worship of God. “Call time” meant the hours that members of Congress set aside to make phone calls for money. There’s always another election.

A Gallup poll last year showed that nearly eight in 10 Americans support the idea of campaign fundraising limits, even though they don’t view the issue itself as a top priority for Congress. Recent Supreme Court rulings show, however, that the court views such limits as unconstitutional. Perhaps this is in part because the current court doesn’t have a justice like Sandra Day O’Connor, Earl Warren or Hugo Black, who has actually run for elected office and confronted the reality of asking people for money. Fundraising has many negatives, but I did discover one positive. It measures the amount of hustle in a candidate to build up a network of financial support. As a kid playing basketball, if I worked hard my coach would shout, “Good hustle!” And the ability to raise money certainly measures that kind of initiative in a candidate. To get elected to Congress (and then to get reelected) under our current laws, one’s skill at raising money has become more important than one’s skill at mastering policy issues, giving a good old stemwinder or having a firm handshake. Each time I look at the phone monkey, it reminds me of this reality. And it causes me to wonder: Is this the kind of democracy that we really want? David Boling, vice president of the Maureen and Mike Mansfield Foundation, is writing a book about how it feels to be a first-time candidate. This guest commentary originally appeared in the June 6, 2014, edition of the Washington Post and is republished with permission from Mr. Boling. www.talkbusiness.net

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Profiles Service

PHOTOS BY BOB OCKEN

Chauncey Holloman

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Full Circle Entrepreneur Chauncey Holloman is helping launch the next wave of new startups. By Casey L. Penn “I’m quite the seasoned entrepreneur,” Chauncey Holloman, 25, says with a smile. That may sound peculiar coming from a twenty-something, but it’s true. Holloman launched her first successful enterprise at the age of 15. Harlem Lyrics, LLC, an Afro-centric greeting card line, has taught her lessons that business leaders twice her age would be wise to learn. Talk Business & Politics first met Holloman when she was just a few years into her business. Today, she has a decade’s tenure as CEO/owner of Harlem Lyrics and is paying forward her knowledge to fellow entrepreneurs in all stages of their own business development as the newest spokesperson for the Little Rock Small Business Development Office (LRSBDO). HARLEM LYRICS/HER OWN STORY OF SUPPORT A third-generation entrepreneur, Holloman’s family members are restaurant owners, writers and the like. Growing up surrounded by the ins and outs of running a business, Holloman found that she, too, had a capacity for big ideas and the “eyes to see” a niche market that she knew she could fill. Her winning concept came to her one day when, as a 15-year-old, she searched in vain for the perfect 16th birthday card for her best friend – one that said what she wanted to say and in the way she wanted to say it. When an edgy and urban card wasn’t on the rack, Holloman – a poet from a young age – decided to put one there. Backed by the advice and support of her family, she started Harlem Lyrics. Her mother, Subrena McCoy, offered grant writing support and her father, Shawn McCoy, an independent truck driver, helped get out her initial product. “We had grant writing, distribution and

creative direction under one roof when I started out,” Holloman recalled, adding that her family is still a driving force in her business and her mother acts as chief operating officer. Holloman pitched her urban greeting cards to everyone she could. She entered and became the youngest winner of the U.S. Department of Commerce’s Emerging Business Leaders Business Plan Competition, a competition that resulted in hefty startup funds, and she also received funding from the Arkansas Minority Women Entrepreneurial Program. Other accolades were a direct result of her entrepreneurial strength as a young woman – the Youth Achievement Award, the Maybelline New York/Cosmogirl National Entrepreneurial Award, Arkansas Small Business Administration Arkansas Young Entrepreneur of the Year, International Women of Distinction (Youth Honoree) and the Indiana Black Expo Youth Entrepreneur. Holloman has since negotiated her product into large chains (Macy’s, Walgreens and Kroger) as well as several mom-and-pop venues. Harlem Lyrics’ product line has grown to include T-shirts, stationery, greeting cards and more – all designed around its original cast of characters – Lyric, Precious, Harlem, Beebe and Jamie – to speak the language of its customers in a tangible way. Recently, the company developed a new animated cartoon series featuring the Harlem Lyrics cast. “We had a fully developed product line using cartoon characters, so the logical next step was to make an animated series,” said Holloman, who has begun pitching the idea. The company is also focused on maintaining vendor relationships, watching

for new opportunities and working toward the company mission – the latter being Holloman’s ultimate measure of success for her business. “There are ‘serial’ entrepreneurs, those with a monetary goal they’re trying to reach,” she explained. “There’s nothing wrong with that. If that’s who you are, then that monetary goal is your measure of success.” Harlem Lyrics, on the other hand, is mission-based. “We’re trying to show a positive view of African-American youth that is trendy and fashionable, yet positive. If we were to stop today, I would count us successful, but not done. We’ll continue to push our agenda through our products until I no longer have the foresight or the wherewithal to continue doing that.” ADDING A NEW ROLE As she ran her business, Holloman also finished her education in 2011 at the University of Central Arkansas. She brought her company to the point where it is wellestablished and currently in what she calls a “wait-and-see” mode. With these things under control, Holloman has found time to devote to her passion of helping other entrepreneurs succeed. After graduating, she began this effort through an internship with the City of Little Rock under City Manager Bruce Moore. In 2013, Holloman and Moore both agreed that the city’s LRSBDO would be a natural next step for her. She joined the team and immediately began heading up programming, which includes an intense entrepreneurial training course offered each spring and fall. The 10-week crash course, presented in conjunction with UALR’s Arkansas Small Business & Technology Development Center, covers a variety of subjects such as business concepts, www.talkbusiness.net

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Profiles: Holloman feasibility, market analysis, pricing and cash flow. For those who need an alternative to a 10-week course, Holloman has added a monthly incubator speaker session that offers an in-depth look at just one area of running a small business at a time. “You can cherry pick areas you need development on,” she explained. “For instance, if you don’t know who your target audience is, you may benefit from our consumer behavior session. If you’re looking for funding to reach the next level, our lending session might benefit you.” A development in the area of lending is coming soon, Holloman indicated. “I won’t speak their name just yet, but I’m excited. One of our community banks has agreed to come in to do mock lending sessions with small business owners. One of the biggest fears for small business owners is the question of ‘how do I pay for that?’ no matter what that may be – a product, a facility, whatever. Through the mock lending session, the bank will tell business owners ‘this is what we like,’ ‘this is what we don’t like,’ ‘wear a different shirt,’ or whatever they need to know to increase their chances of getting a small business loan.” In addition to these helpful programs, the LRSBDO office has computer stations (with valuable software), meeting space, and – for regular clients – even phone message service. “We offer technical, research and clerical assistance, and a huge interoffice printer,” Holloman said. In addition to her roles at Harlem Lyrics and LRSBDO, Holloman is a member of the Arkansas Venture Center, a nonprofit agency aimed at fostering grassroots growth of startup and entrepreneurial activity in Central Arkansas. LESSONS LEARNED Her own experiences and those she’s encountered through LRSBDO have taught Holloman lessons she’s happy to share to help those just starting out. To those with an idea, she urges them to make sure it fits their skill set and their personality. “Someone will say, ‘I’m going to create a pizza stand mobile food truck,’” she said. “My first response is, ‘can you make pizza?’”

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“Harlem Lyrics wasn’t my first idea. It won’t be the last ... I want to help as many entrepreneurs as possible.” Chauncey Holloman CEO, Harlem Lyrics Spokesperson, City of Little Rock Small Business Development Office How do you stay in shape mentally and physically? Mentally: I begin my day with The List. In this age of smartphones and Outlook, I still write it all down. My list determines my pace for the day, and as I go, it feels good to mark things off. When I know everything’s done, I’ve earned my lazy time when I go home. Physically: Forget about a treadmill. Help run a theater production! My degree is in mass communications/theater and marketing, and my hobbies are theater and writing. I have as much love for the arts as I have for entrepreneurship. When life feels a little too routine (which I hate) or I’m feeling a little out of shape, I pick up a crew job in costuming. What’s your advice for the bare bones startup business? If you’re leery of your business idea, by all means you should vet the idea. Once you’re confident, make it legit. Instead of having this company for years and risking things being stolen out from under you, copyright your name and what you do, and get registered. If you’re a minority vendor in something as big as contracting, register. Doors open that way. Is Arkansas a good place to start a business? Arkansas is a great place. The cost of living is low enough that people can afford to follow a dream for a while without going under. I love this state for the growth I’ve been able to accomplish here. Once you’ve found a great idea, she advocates sticking to your area of expertise within the realm of that idea. “If you don’t have finance or accounting experience, don’t try to wear that hat. Instead, know how to get that knowledge,” Holloman said. “It may be through contract help from someone else.” Finally, she says be your biggest cheerleader. “Know everything about your company, so you’ll be able to ‘ra-raboom-ba’ about it at a minute’s notice. As my mother says, ‘feel the fear and do it

TALK BUSINESS & POLITICS | JULY/AUGUST 2014

anyway.’ Sometimes that’s faking it; sometimes it’s knowing your market and being as prepared as you can be.” As Holloman approaches the future, her focus is solid. “Harlem Lyrics wasn’t my first idea. It won’t be the last,” she said. “However, my main focus now is the Small Business Development Office. I want to help as many entrepreneurs as possible. Many small businesses haven’t taken that step toward legitimacy. They need that push toward professionalism to help brand this state as an incubator for small business.”


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Profiles Service PHOTOS BY BOB OCKEN

Gene’s Barbeque on U.S. Highway 49 in Brinkley

Arkansas Institutions: Gene’s Barbeque Serving up Southern favorites and authentic eats, Brinkley restaurant hasn’t missed a day in 20 years. By Rex Nelson

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A

man driving down U.S. Highway 49 in Brinkley noticed the fire on the evening of Sept. 16, 2011, at Gene’s Barbeque. He called the fire department. Then, he called Gene DePriest at home. “I beat the firemen down here,” DePriest says in the back room of his restaurant as his invited Sunday night guests dine on fried crappie and a soaked salad of lettuce and radishes out of his garden. “The fire started in a fan in the women’s restroom. They got it out before it affected the kitchen.” DePriest worked all night to clean up after the fire. He moved the main dining area from the front room to what’s usually the private back room. As soon as the state inspectors left the next morning, he was open for business. It was 10 a.m. “It took us eight weeks to get things rebuilt up front,” he says. “But we never missed a day of business.” In fact, DePriest hasn’t missed a day of business since he purchased the restaurant from his younger brother in 1994. July 1 marked 20 years that Gene’s has been open 365 days a year. Thanksgiving Day. Christmas Day. New Year’s Day. Gene’s is serving food on all of those holidays. “Thanksgiving and Christmas are two of my busiest days,” says DePriest, who shows no signs of slowing down at age 77. When DePriest purchased the restaurant from his brother Louis, who died in 1996, it was known as Sweet Pea’s. The business had been a part of the Brinkley scene since 1971. Though the formal name became Gene’s Barbeque, the restaurant serves much more than barbecue. There are Southern favorites on the menu that have become hard to find in other restaurants. For breakfast, one can get salty country ham, pork chops and even chicken fried steak. The lunch and dinner menu features such classics as a fried bologna sandwich and an open-faced hot roast beef sandwich. There are steaks, catfish, shrimp, oysters and even buffalo fish ribs, which long have been a Delta staple. There are fried quail, frog legs, fried chicken, homemade stew and homemade chili. That’s all in addition to the barbecue. Along with the barbecue plates, Gene’s sells barbecue pork, beef, chicken and ribs by the pound.

As a game fish, crappie can’t be on the menu. DePriest saves those for special Sunday night dinners for friends. For years, the restaurant’s gravel side parking lot would fill up with pickup trucks late on Sunday afternoons. In the back room – the place where former Congressman Tommy Robinson and his sons once accosted a banker in an incident that received statewide media attention – men wearing jeans and camouflage would gather for the weekly wild game dinner. There might be fried squirrel one week, fried rabbit the next week and crappie the week after that. Duck, goose, dove and venison were on the menu from time to time. DePriest even has been known to bake a coon. Baked sweet potatoes, fried Irish potatoes, turnip greens and sliced tomatoes and onions from DePriest’s garden were regular sides.

Gene DePriest (right) has a laugh with a lunch regular.

DePriest explains the genesis of the Sunday night dinners this way: “I was killing a lot of squirrels. My wife wouldn’t cook them at home, so I started to cook them here at the restaurant and invite my friends over to help me eat them. It just kind of mushroomed.” An acquaintance of DePriest once described the menu as consisting of “whatever Gene shot, caught or ran over the previous week.” One of the regulars would bring wire pliers and an ice pick from home. The pliers were used to crack the squirrel heads, and the ice pick was then used to scrape out the brains for the man to eat. Visitors referred to him as the Squirrel Head Man.

As the usual Sunday night suspects aged and died, the wild game dinners became more irregular. “About everybody I hunted and fished with is now dead,” DePriest laments. One who isn’t is Wiley Meacham, who is among the South’s most famous duck hunters. Meacham is now in his 80s, but a trip hunting with him at his Piney Creek Duck Club is considered the Holy Grail for mallard hunters in the know. “Gene has his faults, but he’s one of the best friends I have,” says Meacham, who lives down the street. “He will give you the shirt off his back.” The Arkansas Delta is known for its colorful characters, and DePriest is nothing if not colorful. He was born near the small farming community of Monroe and attended school at Moro in Lee County. For several years during the 1960s, he ran a Brinkley restaurant called the S&K Grill. But old-timers who lived near the lower White River and Cache River know him best as the man who operated the 17/79 Club at Clarendon from 1971-94. The club was named for the intersection of U.S. Highway 79 and Arkansas Highway 17. “We would have several hundred people in there on a Saturday night,” DePriest says. “There would be live music and lots of fights.” It’s rumored that the club also hosted its fair share of high-stakes card games through the years. Things have settled down now. DePriest has gone from running one of the most infamous nightclubs in East Arkansas to operating the restaurant where the relatively staid Brinkley Rotary Club meets each Monday. From a business standpoint, the highwater mark for the restaurant came in the years following the alleged sighting of an ivory-billed woodpecker in the Cache River bottoms near Brinkley. There’s still an item on Gene’s menu that reads: “More than 60 years after the last confirmed sighting of an ivory-billed woodpecker in the United States, researchers have evidence that the majestic bird still lives. On Feb. 11, 2004, a kayaker caught a glimpse of a huge and unusual woodpecker in the Cache River National Wildlife Refuge. The encounter spurred an extensive scientific search for a species that many feared had vanished www.talkbusiness.net

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Profiles: Gene’s Barbeque forever, driven to extinction by the destruction of Southern old-growth forests.” There has never been another sighting, and certain experts consider the original sighting a hoax. DePriest, though, still calls the two-patty cheeseburger on his menu the “ivory-bill burger” and has a large poster honoring the woodpecker in the main dining room. “I sold $20,000 worth of T-shirts from

10,254 to 8,149. That’s less than half the 21,133 people who lived in the county in 1940. Monroe County has lost population in every census since 1940. Gene’s still attracts diners who pull off busy Interstate 40 at the halfway point between Little Rock and Memphis. So does the nearby liquor store that Tommy Robinson owns. And, as was traditionally the case in much of rural Arkansas, the local

Gene’s is a non-stop scene of activity.

2004 to 2008,” he says. The late Ed Bradley and his crew from CBS News ate their meals at Gene’s while doing a story on the woodpecker for “60 Minutes.” A Nature Conservancy article in 2005 noted, “Gene’s was a major hangout of the search team, a place where members sometimes met to dine after a day of working transects or checking cameras. We sit down and start to open our menus, but before we can order our waitress directs our attention to a board at the back with a new special, the ivory-bill cheeseburger.” Things have slowed at Gene’s since those heady days. As a matter of fact, they’ve slowed all across Monroe County. Between the 2000 and the 2010 census, Monroe County lost 20.5 percent of its population, the largest decrease percentagewise of any county in the state. The population fell from

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café is an important gathering spot. Farmers and merchants begin coming in for coffee as early as 6 a.m. to talk politics, fishing, hunting and football. This is a part of the Arkansas Delta where people tend to get up early, eat supper early and go to bed early. We live in an era where the tradition of gathering at the café has been replaced in other small towns by stops at convenience stores. Coffee is grabbed on the way out the door, and the only hot food is found under heating lamps. In a sense, Gene’s is a throwback in this modern age. Michael Stern, who’s nationally known for his series of “Roadfood” books that profile restaurants across the nation, once wrote this about Gene’s: “Knotty-pine paneled walls seem right for a place where literally half the customers are wearing hunter’s camouflage gear. A handwritten sign


advertises purple-hull peas for sale: $11 per bushel, plus tax. Long communal tables are marshaled in neat formation, and there is plenty of elbow room between chairs. Every few feet on the tabletops are squeeze bottles of barbecue sauce, plus hot sauce and vinegar peppers, along with ketchup, non-dairy creamer, salt and pepper. “This is a place set up for eating barbecue. Other customers are enjoying catfish, which looked crisp and thick, but we were happy with our choice of a large rib plate and a jumbo pork sandwich.” Like other men his age who inhabit this part of East Arkansas, DePriest has spent

a lifetime fishing and hunting. He’s also a gardener who has been known to plant up to 125 tomato plants in the spring along with bell peppers, onions, lettuce, radishes and various kinds of peas and beans. He knows that there’s no greater expression of the Arkansas culture than through our food. His definition of Arkansas cuisine is traditional country cooking that’s done simply and done well, using the freshest ingredients possible. John T. Edge, who heads the Southern Foodways Alliance at the University of Mississippi, says men like DePriest are among those “for whom food is a caloric fuel, sure, but also a means of cultural expression, on par with music and literature.” So perhaps it wasn’t that far of a stretch for DePriest to go from the loud music and long nights at the 17/79 Club in Clarendon to the ribs and fried catfish at Gene’s. Having been open 20 years without closing a day, Gene’s Barbeque can certainly be described as an Arkansas classic. www.talkbusiness.net

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Profiles Service PHOTO BY TIM RAND

Andrea Allen and L.J. Bryant, founders of the NEA Political Animals

NEA Political Animals Two friends on opposite sides of the aisle lead an organization in Jonesboro centered on political candidates and issues. By Bob Qualls

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TALK BUSINESS & POLITICS | JULY/AUGUST 2014


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t’s difficult to get Republicans and Democrats to agree on anything nowadays. But that’s not so in Northeast Arkansas, where there is an effort to restore dialogue and bipartisanship to political discourse. This takes place at meetings of the Northeast Arkansas Political Animals, a club that is modeled after similar ones in Central Arkansas and Northwest Arkansas. The original Political Animals Club in Little Rock was founded 30 years ago. The NEA Political Animals held its inaugural meeting last September and has had successful turnouts for its meetings – most are sellouts. It meets at the Jonesboro Regional Chamber of Commerce 10 times a year. The Jonesboro Chamber’s Governmental Affairs Committee has partnered with the organization from the beginning. Andrea Allen, deputy chief of staff for Republican Congressman Rick Crawford, and L. J. Bryant, a local business owner and former Democratic political candidate, founded the NEA club. Allen said it all began when she and Bryant met at a political event in Weiner – home to an annual rice festival. They became friends and shared an interest in politics. “It’s my passion,” Allen said. Bryant’s wife, Rebekah, works with Allen in Crawford’s First District office in Jonesboro. And yes, Rebekah is a Republican, too, so bipartisanship is a must in the Bryant household. Allen explained the idea behind the formation of the NEA Political Animals. She said because of all the partisanship, especially in Washington, she and Bryant saw the need for a way to bring everyone together where they can talk about politics and bring candidates and officeholders to speak to both sides of the political spectrum. “As L. J. and I got to know each other,” she said, “we found that we agreed on a lot of things.” So the idea of the NEA Political Animals was born. They sought advice from members of the Political Animals Club in Little Rock before launching the NEA club last year. Former Congressman Asa Hutchinson, the first guest, spoke at the September meeting. Allen had worked for Hutchinson in 2005 when he ran for governor the first time.

Since then, they have had numerous political candidates speak to the group and answer questions from the audience. They have hosted candidates for governor, lieutenant governor, attorney general, and Congress. “Voter education is a key component,” Allen said. Bryant agreed, pointing out that political campaigns today use television ads and social media to reach voters. “Our meetings give voters a chance to meet candidates faceto-face again,” he said. When the club was launched last year, Allen said, “we wanted to provide a bipartisan opportunity for voters in Northeast Arkansas to network, discuss politics and issues, and question candidates.” “In today’s social media, we do not have enough face-to-face interactions with our elected officials,” Bryant added. “We seek to solve that.”

He said they have a core group of 40 to 50 who attend the meetings, and they often exceed that number when the guest speakers attract a full house. The meeting room at the Jonesboro Chamber holds about 70 people. They meet at noon, usually on Friday, and attract local business people and local candidates and officeholders. Attendees have included people from Batesville, Paragould, Walnut Ridge and other cities across the region. Allen said they have received good coverage from the news media. Reporters from the Jonesboro Sun, radio station KASU and television station KAIT frequently cover the meetings. She also praised the partnership with the Jonesboro Regional Chamber and Cari White, its chief operating officer, for helping launch the organization. While the club has hosted an impressive list of candidates, both from the region and

statewide, Allen said, “We’ve got a lot to do before the general election in November.” For one thing, the club wants to host a debate by the candidates for the U.S. Senate – Sen. Mark Pryor, the Democratic incumbent, and his Republican challenger, Congressman Tom Cotton. Cotton has agreed to a debate but Pryor has not committed. For this one, the group would require a larger venue, probably at Arkansas State University, and it would be held in the evening. Allen said KAIT-TV has agreed to televise the debate. They also hope to host the candidates for attorney general and lieutenant governor at one time. “It will give voters a chance to get familiar with the candidates,” Allen said. Bryant grew up in Grubbs and Weiner and attended Hendrix College. He worked for former state Sen. Jack Critcher. Bryant has made two unsuccessful runs for office himself. He ran for land commissioner in 2010 and for the state House of Representatives in 2012. He and Rebekah have been married about a year. He owns the Jackson Hewitt Tax Service in Jonesboro and he also works in real estate. Allen, a native of Lawrence County, graduated from Williams Baptist College in Walnut Ridge and ASU. In addition to working for Asa Hutchinson, she also worked for his brother, former Sen. Tim Hutchinson. What lies ahead for the club? Allen would like to see more debates. “It would be fun, and provide a public service,” she said. Bryant said they had considered several possibilities, including doing polling. “Andrea and I work well together,” he said. Both believe the next election may be swayed by Northeast Arkansas voters. That means it will be an exciting time for the club in the coming months. But don’t think that their camaraderie could change their perspectives on November’s election outcomes. “Republicans will be more successful in November because of the desire and enthusiasm to undo the harmful policies of President Obama,” Allen said. “Democrats will be more successful this November not just because they want it, but because they connect with voters’ traditional Arkansas roots and values,” said Bryant. www.talkbusiness.net

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/AUGUST TALK BUSINESS ARKANSAS & POLITICS | JULY MAY/JUNE 2014 2014


Cover Story

Challenger Tom Cotton hopes to score a knockout punch against Mark Pryor, but the two-term incumbent has different designs. By Roby Brock

Few heavyweight fights live up to the hype, but political observers across the country are eyeing the U.S. Senate contest in Arkansas between Democratic Sen. Mark Pryor and Republican challenger Cong. Tom Cotton in hopes that it will live up to its epic billing. Control of the U.S. Senate – and perhaps the nation’s political agenda – are at stake.

ARTWORK BY SHAFALI ANAND & BRYAN PISTOLE PHOTOS COURTESY OF FACEBOOK

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Cover Story: Marquee Match-up The Senate race between Blanche Lincoln and John Boozman was well-determined by this point in the summer of 2010. Lincoln was TKO’d after her 2009 vote on the federal health care overhaul, Obamacare. Boozman merely showed up and put his name on the card and coasted to a 23-point victory in November. This cycle’s Senate race started last August and eleven months into it, there is still not a clear favorite. With five months to go, it appears we’re headed for a late-round decision. “I think the fact that it’s still competitive in June — unlike, for example, the race four years ago between Blanche Lincoln and John Boozman — at least in the short term is good news for Democrats,” said Jonathan Martin, national political correspondent for the New York Times. A Talk Business-Hendrix College Poll in April showed Pryor with a three-point lead, 45.5% to 42.5%. Since then nearly a dozen polls have been released – some independent, some partisan. Pryor and Cotton have evenly split a half-dozen of them tracked by RealClearPolitics.com with each candidate leading in three of the six polls. According to RealClearPolitics.com, which aggregates and averages the polls in the race, Pryor has an inconsequential +1.0 percent lead – certainly within anyone’s margin for error. For Arkansas Democrats, Pryor is bucking a two-cycle trend by remaining competitive. The Republican tsunami that swept Lincoln out of office in 2010 carried through to Congressional races, state constitutional offices, the Arkansas General Assembly, and a number of county-level positions. It was a historic year. Republicans made further gains – though not as large as expected – in 2012 and the conventional wisdom has been that 2014 would continue the trend. After all, Barack Obama is still President and his 35% popularity in Arkansas has haunted nearly every Democratic contender. “Democrats are feeling good as of right now that Pryor is still very much in this thing,” Martin said. “But Democrats, privately, concede that it’s going to be awfully tough for Pryor to get the number of Romney voters that he needs in 2014. It’s

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tough for a Democrat to win statewide in a federal race in Arkansas because you have to get so many folks that vote nationally for Republicans for the White House. So I think Democrats are aware of that challenge.” Cotton is working hard to tie Pryor to the President. In a late June ad titled “Toe the Line,” Cotton asserts that Pryor “votes with Obama” 90% of the time.

Cong. Tom Cotton-R

Sen. Mark Pryor-D

That charge is based on a Congressional Quarterly (CQ) rating system, which tracks party line voting and voting with the President when he has taken a clear position on an issue. They are two different statistics. The Pryor team says Cotton is ignoring the fact that in 2013 Pryor broke with the President “more than any other Senate

TALK BUSINESS & POLITICS | JULY/AUGUST 2014

Democrat.” Pryor has an even lower percentage of voting with the Democratic Party -- only 80% of the time. Both are still a high percentage to the average voter. But Cotton has “loyalty” problems of his own. Those same CQ ratings note that Cotton votes with Republican House leadership 97% of the time. Congress is not exactly known for its popularity, but the Pryor campaign has not made as large a referendum on this Cotton allegiance as Cotton is making of Pryor. Cotton doesn’t have a perfect attendance record avoiding Obama either. The CQ numbers show Cotton siding with Obama 12% of the time. Other scoring systems are often touted including The National Journal, which doesn’t rank Pryor in its Top 15 most liberal or conservative senators. Cotton also doesn’t make The National Journal’s list on either side. And GovTrack.US, a non-partisan government transparency web site, gives Pryor conservative scores among Senate Democrats and his bill co-sponsorships. He’s ranked by that group as the most conservative Senate Democrat and 44th most conservative among all Senators. GovTrack ranks Cotton pretty low on the bipartisanship scale, noting that he’s 5th lowest out of 74 House freshmen, 30th lowest out of 229 House Republicans, and 30th lowest out of all 435 members of Congress. The Pryor camp hasn’t used these statistics, but they do underscore their narrative that Cotton is not willing to work across party lines. TIME TO DEFINE So what will define this race for the fall? Some say it already has been defined. Dr. Jay Barth, professor of political science at Hendrix College, contends Cotton missed an early opportunity to define himself when he entered the race last fall. By attacking Pryor on his Obama connections on Day One and not establishing to voters that he was a “principled” candidate who may make seemingly rigid decisions, Barth says Pryor was able to hang the “reckless” label on


privately about that.” But Republicans argue that Cotton’s latest string of ads that include his mother, father and new wife, Anna, have been effective in

“Democrats, privately, concede that it’s going to be awfully tough for Pryor … Among Republicans privately, there is concern about Cotton’s campaign and Cotton as a candidate.” - Jonathan Martin, New York Times

reversing the “impersonal” label that Democrats claim they’ve tagged Cotton with. Cotton himself was self-deprecating about his reputation in a recent Politico news article. “I’m warm, dammit,” Cotton joked during an interview over breakfast with the reporter. Republicans also suggest that the more

personal ads have been effective moving Cotton’s likeability numbers, especially among voters in areas of the state who don’t know Tom Cotton and are just now starting to engage in the race. “The bio ads utilizing his mother, his father, his wife are all designed to say he’s your next door neighbor,” says GOP strategist and radio commentator Bill Vickery. “Obviously Tom Cotton is defining Mark Pryor as a supporter of the president,” Vickery said. “I think the Pryor people are creating this ‘unknown’ about Tom Cotton. It becomes more of a question of the devil that you know versus the devil you don’t know.” The Cotton camp is pinning its campaign message on the continued unpopularity of Obama and Pryor’s relationship to the national Democratic Party and its titular leader. It worked in 2010. It worked in 2012. And Vickery says it will work again in 2014. “Most definitely, 100%, it will work in

CHIHULY May 17, 2014 January 5, 2015

Dale Chihuly, Mille Fiori (detail), 2008

Cotton effectively. “I think the dynamics were such that Cotton had a chance to put it away early,” said Barth, who ran for Democratic office in 2010 and has contributed to Pryor’s campaign. “He didn’t fully introduce himself to Arkansas voters when he announced last year. He and outside groups went straight to the attack,” Barth said. “Because they failed to introduce Cotton to voters, the attacks were less believable, but it also kept Cotton’s flank open to be hit pretty hard on his voting record.” Based on conversations with political sources, The New York Times’ Martin agrees. “Among Republicans privately, there is concern about Cotton’s campaign and Cotton as a candidate,” Martin said. “If you look at his ads — and he’s tried a few different times now to personalize himself, to humanize himself with various family members — I think it sort of speaks to the challenge he has in trying to relate to Arkansans. So you do hear Republicans talk

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Cover Story: Marquee Match-up 2014. There are only three things for certain in life: death, taxes and the unpopularity of Obamacare in the South,” Vickery said. “It may still be working 15 years from now. Obamacare is the symbol of a lack of credibility of leadership.” Barth said he views Pryor’s Obama and Obamacare ties as a hurdle, but not impossible for the incumbent to overcome. For starters, the Pryor name is political platinum in Arkansas owing to the endearment of Mark’s father, former Sen. David Pryor. Barth also contends that cooling hostility toward the federal health care law and its Arkansas interpretation, the Private Option, has deflated the issue among some voters, especially independents. “I think the early Obamacare attacks were quite good at coalescing the base of support for Cotton, but it didn’t churn any new ground in terms of reaching independent voters,” said Barth. And Barth thinks the Pryor political brand is distinctive from the national Democratic brand. “In particular, the Pryor brand works well with older voters, who have skewed very Republican in the last few cycles here. I think they have and will stay largely at home with Pryor,” he said. If Cotton wants the race to be about Obama, Pryor wants the race to be about Cotton. The first-term freshman has cast a number of controversial votes that the Pryor camp and its allies have used repeatedly to paint Cotton as “too reckless” for Arkansas. They point to his vote against the Farm Bill, his opposition to expanding disaster aid, and his budget bill votes that called for raising the age thresholds for Medicare and Social Security to age 70. Cotton willingly defends the votes, but they often require more than 30 second sound bites. They also don’t necessarily mollify critics. At a recent Delta Grassroots Caucus meeting in Little Rock, Cotton described the Farm Bill as the “Food Stamp Bill” because of its heavy fiscal influence on the Supplemental Nutrition Assistance Program (SNAP). Pryor told the group the Farm Bill should be labeled the “Rural America Bill” for the many policy and financial aspects the

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bill covers. There’s your stark contrast in political worldviews. WOMEN & INDEPENDENTS So the day after the 2014 U.S. Senate race – November 5, 2014 – political pundits,

Sen. Mark Pryor-D

partisan strategists, and a voting public that has been inundated with a 16-month campaign will ask a very simple question that will beg analysis: How did he win? The key may lie in two vast, but important,

Cong. Tom Cotton-R

voter demographics that each campaign contends they must “run up the score” with. For Pryor, he must do well with women. Females account for nearly 53% of voter turnout in Arkansas and Pryor needs to not just win this demo, he needs to wipe the floor with them. Pryor has touted his positions with Paycheck Fairness for women, his support to

TALK BUSINESS & POLITICS | JULY/AUGUST 2014

curb domestic violence against women, his support for raising a state minimum wage, the Arkansas Private Option, and his stances on Social Security and Medicare as evidence of his alignment with women. During Christmas, Pryor’s “Compass” ad featured him describing his Biblical faith in another effort to connect with women. What Pryor needs with female turnout, Cotton needs from Independent voters. In the last two election cycles, Republicans have run up totals with indie voters by two-to-one, three-to-one, even four-to-one margins. In previous polling, Cotton bests Pryor among independents, but he hasn’t started lapping the Senator yet. His campaign said those indie numbers are moving in the right direction and they credit the introductory ads that Cotton has unveiled with his family as well as a popular ad he recorded with his former Army drill sergeant. Independent voters in Arkansas cut across a wide swath of age, income and party lines. They can be young, middle-aged or old. They may be upwardly mobile in income or on fixed incomes, and the question of party loyalty skews towards Democrat. These Democratic indies despise Pres. Obama, but they’ve been voting Republican for President for many cycles. The intensity of their dislike for Obama and the direction they feel he has led the country have pushed them to pull the lever for Republican federal candidates that they hope can put the brakes on an unpopular President’s agenda. Cotton understands that anger and angst. His ads, and the ads of many outside spending groups, simply state that Pryor and Obama are aligned politically and philosophically. Pryor’s saving grace is his longevity in Arkansas politics and the familiarity many voters have with his father and him. Is the strength of the Pryor brand capable of overcoming the Obama albatross? Can Cotton convince enough voters that he’s not the callous robot he’s been portrayed to be? Could a debate moment somehow define the race in a yet-to-be-determined manner? On November 5th, we’ll have the answers to these questions. Between now and then: It. Should. Be. Epic.


Success.

After beating liver cancer, UAMS has Carroll Martindale back in the swing of things.

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n 2010, Carroll Martindale should have been waiting for a tee time at his favorite golf course. Instead, he was waiting for something entirely more important: a new liver. After being diagnosed with liver cancer, Carroll was told he was a candidate for a transplant. While waiting for a donor, he underwent life-prolonging chemotherapy and radiation treatment at the UAMS Winthrop P. Rockefeller Cancer Institute, Arkansas’ official cancer research and treatment facility. Three years later, the call came and Carroll returned to UAMS for a successful liver transplant. Today, he is healthy, back on the course and thankful that the best things in life are worth waiting for.

Visit cancer.uams.edu or call: 501-526-2272

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Industry PHOTO: DOLLARPHOTOCLUB

Coal shipment on railway

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TALK BUSINESS & POLITICS | JULY/AUGUST 2014


The Balance of Power Arkansas faces a monumental task in cutting carbon emissions, meeting new EPA guidelines. By Wesley Brown 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 impacts 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.” Other critics from the business community and the state’s congressional delegation also echoed Hughley’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.” 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’ coalfired 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 wide 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 U.S. Energy Information Administration (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. ADEQ Director Teresa Marks said her department and 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 www.talkbusiness.net

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Industry: Energy 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,

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2003, to Oct. 1, 2003, through Oct. 1, 2005. In the next legislation 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

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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 gaspowered 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 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 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. 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 Sandra 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


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Industry: Energy 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. According to the Encyclopedia of Arkansas History and Culture, 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 percent 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 percent for the first time in 35 years. Before that, the last time coal’s share of total generation fell below 40 percent for a monthly total was March 1978, the EIA’s Electric Power Monthly report shows. Today, coal-fired power represents 44.5 percent of Arkansas’ annual net electric generation. Natural gas-fired generation is second at 23.2 percent and nuclear energy is next at 19.4 percent. Renewable energy generates about 6.4 percent of the state’s power needs and hydroelectric fills 5.4 percent of the state’s electric capacity.

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Petroleum-fired fuel, once a staple for heating oil, now generates less than one percent of the state’s power (0.6 percent). 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 percent in 2007 to 39 percent 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 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. Hooks said Arkansas power plants released nearly 41 million metric tons of carbon pollution in 2013 – with nearly 85 percent of that coming from just five dirty 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.

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TALK BUSINESS & POLITICS | JULY/AUGUST 2014


The Fayetteville Shale Turns 10 The economic impact of Arkansas Shale Play still widespread after a decade. By Wesley Brown 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 5,853square-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 PHOTO: DOLLARPHOTOCLUB

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Industry: Energy 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 percent 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

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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 percent 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

TALK BUSINESS & POLITICS | JULY/AUGUST 2014

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


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Industry: Energy 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 percent 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 now 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 percent 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 percent to 683 Bcf of production. In 2010, Arkansas natural gas sales continued on an upward trend,

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TALK BUSINESS & POLITICS | JULY/AUGUST 2014

jumping 35.7 percent 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 percent 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. Currently, nearly 30,000 jobs are supported by the industry and more than 20 percent 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 currently 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.


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Point Counterpoint EPA Rule Will Hit Arkansas Harder Than Its Neighbors By Duane D. Highley

O

Duane D. Highley

n June 2, the U.S. Environmental Protection Agency announced its most sweeping rulemaking yet – one that will affect every American but disproportionately affect every Arkansan. By restricting the use of coal, this rule will change the power-supply infrastructure that your money has built and paid for over the last few decades. Despite its tremendous negative economic impact, the proposed rule will have little or no impact on the environment. However, it will have a major impact on the pocketbooks of Arkansans. The electric cooperatives of Arkansas are responsible for providing reliable, affordable electric power for 1 million Arkansans representing 500,000 homes, farms and businesses in communities covering almost two-thirds of the state. We are a non-profit business enterprise, owned by the members we serve. Since we aren’t in business to make a profit, we have no financial interest in any one power-supply option over another. We don’t prefer coalbased energy because it helps us make more money; we prefer coal-based energy because it saves our member-owners money on their electric bills, simple as that. Coal power currently provides the majority of your electric energy. Without coal, utilities will shift heavily to natural gas. This is a problem because, even with the shale-gas revolution, natural gas energy costs about twice as much as coal. Coal not only helps to keep your power affordable, it also helps keep it reliable. This past winter we faced restrictions in the delivery of natural gas to our power plants in Arkansas, and on the coldest days it was offered at a cost up to 1000% (that’s right, one-thousand percent) higher than normal!

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At times of extreme weather, a 45-day supply of coal on the ground at your local power plant provides great peace of mind and protection from price volatility. In its newest proposed rule, the EPA has chosen to set independent carbon dioxide emission standards for each state, based on their estimate of that state’s ability to comply. Quizzically, this has resulted in Arkansas – which emits only 1% of the nation’s carbon dioxide – being asked to make a reduction equal to 5% of the nation’s total reduction target. Said another way, to meet the nationwide “30% target” reduction, Arkansans will actually be required to reduce our carbon dioxide emissions by over 44%, while our neighboring states all reduce by less. Missouri will only be asked to reduce its emissions by 21%, and Kansas 23%. Why? Because they haven’t built a fleet of gas-based power plants. We did build them in Arkansas, so the federal government has decided that we should use them at a much higher level than is economical, in order to carry the burden of compliance for citizens in other states, all at our expense. Arkansas will NOT be compensated. The rate impact from this rule in Arkansas will be more than double that in Missouri or Kansas, and higher than any other bordering state. As we are forced to move away from coal for power generation, the energy will be replaced by natural gas. Reduced energy competition combined with increasing energy demand will inevitably increase the price for this volatile commodity, further increasing your electric bill. Exactly how much it will increase will depend on which EPA-approved method the Arkansas Department of Environmental Quality will

TALK BUSINESS & POLITICS | JULY/AUGUST 2014

choose to restrict the use of coal in the state. Arkansas communities and schools will bear additional pain in the form of job losses, loss of local economic activity and loss of tax revenues when the existing coal plants cease operation. Many of these power plant jobs are the best jobs in their local community, and their loss will have a devastating impact on the rural Arkansas economy. It is ironic that Arkansas utility customers are being punished for following federal policy. In the late 1970s, the federal government outlawed the use of natural gas for power generation. Arkansas utilities complied by building a fleet of coal-based units to replace those gas-based plants, paid for by their customers. Now the federal government is asking utility customers to pay again – but this time to shut down those coal-based units and replace them with new plants that burn natural gas. Whatever your view may be on the science of climate change, the proposed regulations will do little to affect the planet. When fully implemented, the regulations will reduce global emissions of carbon dioxide by less than 1%. This is hardly noticeable on a planetary basis, but it will definitely be noticed by rural Arkansas communities who will deal with job losses, loss of tax base and increasing electric bills. Citizens have only 120 days to comment on this rule and its impacts. You can help us send a message to the EPA by visiting our website at TellEPA.com. It takes only a minute and can help ensure that the EPA hears from Arkansas before it’s too late. Duane D. Highley is president and CEO of Arkansas Electric Cooperative Corp. and Arkansas Electric Cooperatives, Inc.


Point Counterpoint Use Guidelines to Update Our Electric Power System By Steve Patterson

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ew federal guidelines to reduce carbon emissions from existing power plants can be a vehicle for modernizing Arkansas’ electric power system for the benefit of residential and business customers that depend on it. EPA Administrator Gina McCarthy said the guidelines are not set in stone, and she now expects “a lot of give and take with the states.” The state Public Service Commission (PSC) and the Arkansas Department of Environmental Quality (ADEQ) have started the state implementation planning process with a group of 21 stakeholder organizations ranging from power companies, consumer and advocacy groups and the Arkansas Advanced Energy Association (AAEA). We believe that this new obligation to reduce emissions is an economic opportunity to be embraced in Arkansas. Advanced energy technologies already account for 11,000-plus jobs in the state and our businesses are prepared to help. Nearly every aspect of America’s technology infrastructure has been modernized other than the electric power system, which operates with infrastructure, technology and a basic business model that dates to the early 1900s. Although an engineering marvel of the 20th century, the U.S. electric power system needs upgrading to meet the need for secure, clean and more affordable energy in the 21st century. Technologies like energy efficient heating and cooling systems for buildings, smart home electric systems, distributed and utility-scale solar power and high voltage DC electric transmission are just some of the long list of available technologies that are represented by advanced energy businesses that can be utilized to reduce carbon emissions in Arkansas. Unfortunately, much of the hyperbole and dire warnings of economic catastrophe that greeted the EPA guidelines on the day of

Steve Patterson

their release were based on incorrect assumptions formed before actual details were known. These arguments for the status quo vastly undervalued the capacity of energy efficiency to reduce carbon emissions and at least one study commissioned by the U.S. Chamber of Commerce assumed that EPA would require a national reduction of carbon emissions of 42 percent by 2030 when the actual target came in at 30 percent. It is being proven in Arkansas and around the country that energy efficiency creates more jobs per dollars spent than any other resource and it is the least-cost energy resource because it can be deployed easier and faster than a new power plant. By including energy efficiency and other advanced energy technologies in its guidelines, the EPA has opened the door for states to both add net jobs to the economy and lower electric bills for millions of consumers. Arkansas is well prepared to choose energy efficiency as at least one tool to help achieve our carbon reduction target. The public utility energy efficiency programs authorized since 2007 by the PSC are popular among Arkansas customers and represent the single-most important public policy to drive energy efficiency job creation and technology innovation in the state. An ongoing study by the Arkansas Advanced Energy Foundation on the economic impact of these programs has identified more than 700 Arkansas companies that are engaged by the utilities to deliver their incentive programs. These businesses range from small, Main Street plumbing businesses to large energy service companies of 150 workers or more. The study’s comprehensive findings are due for release in July, but we’ve already learned that many small companies of less than 10 employees say that utility EE programs comprise 50 percent or more of their business volume.

Though significantly behind energy efficiency’s evolution in Arkansas, renewable energy technology once fully enabled and supported by the electric utilities and political leaders, can rapidly achieve employment numbers similar to EE and contribute mightily to carbon reductions. Arkansas has had a taste of renewable energy through our hydropower facilities on the Arkansas, White and Ouachita River systems, but these power plants can be improved to produce more energy. And Combined Heat and Power (CHP) technology has only scratched the surface of its potential both as a renewable energy resource and as a way to use energy more efficiently. Finally, the state and region’s natural gas supplies are considerable, and increasing the use of natural gas combined cycle plants for baseline generation beyond present levels is yet another underutilized advanced energy technology that could significantly reduce carbon emissions in Arkansas. We don’t doubt Arkansas’ and America’s exceptional ability to innovate new and better energy solutions. How many of us imagined five years ago that we could remotely manage our home’s electrical system with a smart phone? By utilizing existing advanced energy technologies and services that are available within our borders, Arkansas’ plan to meet carbon reduction targets, due as early as June 2016, can be the vehicle for modernizing our electricity sector by introducing competition, choice and innovation for new products and services both known today and not yet imagined. This is the future we all want and expect for Arkansas. Steve Patterson is executive director of the Arkansas Advanced Energy Association, a coalition of manufacturers, energy providers, entrepreneurs, small business owners, educators, researchers and public institutions. www.talkbusiness.net

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TALK BUSINESS & POLITICS | JULY/AUGUST 2014


Strengthening Manufacturing In Arkansas E3: ECONOMY ENERGY ENVIRONMENT

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A SUSTAINABLE GROWTH STRATEGY


What Is E3?

Economy, Energy, and Environment To compete in today’s global marketplace, manufacturers need to be smart, innovative, and sustainable. E3 is a technical assistance framework helping communities, manufacturers, and manufacturing supply chains adapt and thrive in today’s green economy. Manufacturers across the country are

strengthening their local communities and creating new jobs with the help of E3. It works by joining forces with small and medium-sized manufacturers to connect them with resources from federal agencies, states, and regions. As a framework, rather than a prescribed program, E3 can meet the unique needs of any manufacturer.

In each E3 project, expert teams conduct customized technical assessments and offer practical, sustainable approaches that manufacturers can incorporate into their operations. These assessments aim to increase productivity, drive innovation, expand growth, reduce energy consumption, minimize carbon footprints, and prevent pollution throughout each facility while providing positive impact to bottom line profitability.

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Any manufacturer that participates in E3 is given access to the following services:

Service

Value Estimation

1. Lean, Green, and Clean Assessment

Create both a lean and green value stream map which enable staff to identify cost saving and lean opportunities.

2. Energy Systems Assessment

Comprehensive assessment to identify and evaluate all high energy use equipment in the facility.

3. Green House Gas Emission Assessment

Emission sources that have the potential to emit any of the six greenhouse gases will have these emissions quantified and a carbon footprint will be calculated.

4. Data Analysis and Report

Detailed report including findings, recommendations, and implementation resources available to the client.

5. Client Debriefing

One of our professional E3 staff members will debrief the client on all the findings and recommendations.

6. Implementation Support

Training, networking, and technical support as agreed upon with client on implementation projects.

Total Program Value

$35,750 + Long-term savings

Selected participants in the E3 program may be expected to make financial contributions to receive above stated services. All participants are required to make commitments of time and to implement improvements.

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Ventura Foods, LLC, is located in Opelousas, LA and employs 260 people. The oil refining facility produces Lou Ana brand oils as well as private labels. Products are sold to national food service operations, other food product manufacturers, and retail groceries in the U.S. and abroad. Ventura Foods LLC was on a mission to reduce wastes by identifying the company’s root causes of wastes and inefficiencies, as well as to discover lean and environmental improvement opportunities. To do so, they contacted the Manufacturing Extension Partnership of Louisiana (MEPOL), a NIST MEP affiliate. MEPOL in partnership with NIST MEP’s Texas Manufacturing Assistance Center (TMAC) delivered an E3 project to help Ventura Foods eliminate waste and inefficiencies.

E3 Success Story Results: • Reduced electrical use of 45,600 kWh • Saved more than 40,000 gallons of water • Cost savings of over $109,000 • Developed an implementation plan and trained internal resources Testimonial: Trained experts from MEPOL and TMAC visited our facility and introduced and trained a cross functional employee group on the E3 process (Economy, Energy, and Environment). Our goals were to try and reduce waste and, if possible, completely eliminate that waste. By using this process, goals can be achieved with eliminating waste, reducing costs, improving quality, and lessening the burden on the environment. Mike Diehl, Engineering Manager

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How Do Communities Benefit?

When manufacturers, communities, and utilities collaborate, the benefits reach far beyond manufacturers’ production lines. America’s manufacturing sector significantly contributes to the economic viability and success of many communities. These communities will be able to: • Improve the profitability and competitiveness of existing manufacturers. • Enhance their ability to attract new business. • Stimulate the local economy by creating new, well-paying jobs and helping to retain existing ones. • Train and equip workers with the skills necessary to compete in a global economy. • Reduce the frequency of abandoned manufacturing facilities. • Enable utilities to expand manufacturing customer base without increasing capacity.

“We now view E3 as the next generation of resources available for companies who are trying to become or remain socially responsible. E3 provides small companies, such as ourselves, the opportunity to be on the cutting edge of environmental sustainability.” David C.Neisler, Dicey Fabrics, Inc. ADVERTISEMENT


About AMS

Arkansas Manufacturing Solutions (AMS) was established in 1995 as a program of the Arkansas Science & Technology Authority and an affiliate of the National Institute of Standards and Technology (NIST) Manufacturing Extension Partnership (MEP). AMS provides executive level leadership and management consultative services to Arkansas companies in the following areas: • Innovation • Growth Services (including Export) • Operational Excellence (Lean, Toyota Kata, Training With Industry) • Sustainability (Green & Energy)

AMS has business consultants and offices in Fayetteville, Jonesboro, and Little Rock. The vision of AMS is to be the preferred partner and trusted advisor serving Arkansas manufacturers pursuing growth and excellence.

Over the last twelve months, AMS has helped manufacturers create and retain more than 3,335 jobs, increase and retain more than $592 million in sales, and save more than $12 million in costs. About AEO The ARKANSAS ENERGY OFFICE (AEO), a division of the Arkansas Economic Development Commission, promotes energy efficiency and emerging technologies through energy education and information programs as well as managing federal energy funds in the State of Arkansas. AEO helps fund E3 and supports the participating companies. Utilizing Department of Energy State Energy Program (SEP-DEEE0003777) Grant funds the AEO helps fund E3 and supports the participating companies and program activities.

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E3 assessment teams are continuing to identify opportunities for manufacturers to improve environmental performance, energy efficiency, and economic conditions.

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Results


For More Information

Dan Mickelson

Arkansas Manufacturing Solutions Arkansas Science & Technology Authority 900 W. Capitol Avenue, Suite 320 Little Rock, AR 72201 Phone: 479-575-6886 Cell: 479-409-6262 Fax: 501-683-4420 dan.mickelson@mfgsolutions.org www.MFGSolutions.org

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Insights

By Talk Business Staff

How’s this for a voting record? On May 29, Congressmen Steve Womack of Arkansas and Justin Amash of Michigan, both Republicans, each cast their 2,500th vote in the House of Representatives, giving them – according to The National Journal – the longest continuous voting streak among current House members. “Third District Arkansans entrusted me with the responsibility to represent them in the U.S. House of Representatives—that means showing up to vote,” Womack, of Rogers, told The National Journal. “I am grateful that nothing has prevented me from doing so and for the honor of being my constituents’ voice and an example for my peers.” Exporting success is significant to Arkansas’ economy. That’s one of the reasons for the annual Governor’s Award for Excellence in Global Trade. At this year’s ceremonies on May 22 at the Governor’s Mansion in Little Rock, Gov. Mike Beebe honored five companies for their leadership in exporting goods and services throughout the world. The winners: POM Incorporated (Russellville), Arkansas Rising Star; Harris International (Springdale), Global Sustainability; Sweepscrub.com (North Little Rock), Small Manufacturer; Triangle Engineering (Jacksonville), Medium Manufacturer; and Arkansas Steel Associates (Newport), Large Manufacturer. “For Arkansas’s economic growth to continue, our homegrown businesses must embrace international trade,” Beebe said. “These companies prove that businesses large and small can succeed in the global marketplace with innovative products and a sound business plan. The companies honored today should serve as an inspiration to businesses throughout the state.” Speaking of exports, according to Census Bureau data, Arkansas’ export shipments of merchandise in 2013 totaled $7.2 billion. There were 2,242 Arkansas companies exporting goods from Arkansas in 2013. The state’s largest trade partners in 2013 were Canada ($1.5 billion), Mexico ($870 million), China ($683 million) and France ($605 million). The economic impact of the racing and gaming programs at Oaklawn Racing and Gaming in Hot Springs and Southland Park Gaming and Racing in West Memphis is $895.5 million annually. That’s according to a study by the Arkansas State Chamber of Commerce and Associated Industries of Arkansas. The report, prepared by BaxStarr Consulting Group, said the two gambling venues were responsible for 2,868 jobs, paying $74.3 million in wages annually in Arkansas. Other key findings include: • $43 million in tax revenue generated; • $620.6 million racing and gaming related total impact; • more than 2.5 million additional racing and gaming visits, with a tourism impact of $120 million; and • 347 temporary construction jobs, with a payroll of $12 million, adding $200 million in new investments in Arkansas that includes current expansions by Oaklawn and Southland of approximately $20 million and $38 million, respectively. “Oaklawn’s and Southland’s continued growth in racing and gaming generates substantial investment and job growth in Arkansas,” State Chamber/AIA President & CEO Randy Zook said. “This study shows we have an opportunity to not only stimulate job growth, but to draw economic activity from other states and increase collected taxes both directly and indirectly from the racing and gaming industry.” www.talkbusiness.net

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Industry PHOTO: DOLLARPHOTOCLUB

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Eye On IT: It’s A Mad, Mad World Out There By Talk Business Staff In the arms race for the latest in technology, threats to businesses and individuals are increasing and the future may make us all more productive yet vulnerable. Doomsday scenarios where criminal hackers seek to bring down web sites, company servers, or large international computer networks sound like story lines for comic book superheroes and the villains they relentlessly pursue. It’s like the Justice League versus the Legion of Doom for control of the world. Those comic book fictional battles between good and evil are played out in real life nearly every minute of every day on the cyber-battlefield in the Information Age. “If you’ve been reading science fiction for the last five or ten years, this has been an increasing theme where people envision how trends are going to play out,” said John Burgess, CEO of Little Rock-based Mainstream Technologies. With open source software, cloud network computing, and more and more emphasis on mobile devices, Burgess says his work is never-ending. “A lot of our customers have gotten into this technology world. They rely on it for their day-to-day operations, and then they’re confronted almost continuously with something else they need to be thinking about other than what it is that they do,” he said. “Our clients are telling us that they need protection. They’re finding themselves in this increasingly risky world.” UNDER ATTACK Attacks like the Heartbleed malware or the data breach at retail giant Target Corp. are examples of high-profile incidents where millions of consumers were impacted, or

potentially impacted, by cyber-criminal work. There are a number of ways your personal or company computers can be affected. DDoS (Distributed Denial of Service) attacks attempt to crash servers or web sites by sending massive amounts of traffic to overwhelm systems. The servers crash under the load, taking websites and services down with them.

“Our clients are telling us that they need protection. They’re finding themselves in this increasingly risky world.” - John Burgess, CEO, Mainstream Technologies. There are also hacking attacks where sophisticated coders with bad intentions manipulate software to gain access to data for illegal purposes, such as stealing identities or using personal financial information to abscond with bank accounts. In both instances, the motivations for these attacks are wide-ranging from political to revenge to blackmail to pure and simple malicious criminal intent. Just like Superman saving the planet from

a diabolical Lex Luther master scheme, Burgess said there’s a constant race against the clock to find problems before they can be exploited. “We’re at the mercy of: do the bad guys find it first or the people who wrote the software or does a user of the software find it first?” A number of government and private resources exist for IT professionals and the companies they work to protect. The U.S. Department of Homeland Security operates a clearinghouse for defects and attacks, and regularly dispatches CERT bulletins – CERT stands for Computer Emergency Readiness Team – to provide early alerts for problems either in existence or on the horizon. The CERT web site issues alerts on current activity such as malware attacks, security advisories and updates, and incident summaries. Often, these notices and summaries highlight events that may have happened in New Zealand or Europe underscoring the international nature of threats. While the acronyms and code words may be confusing – OS X Lion v10.17.5, OpenSSL 1.0.1, Seamonkey 2.26 – these notifications affect your everyday computer and smart device usage. You can sign up to receive notifications daily by email. If you use Microsoft Windows XP, you’ll likely find something once a week that could impact your programs. The same could be said for iTunes, Google Chrome, or Adobe Reader, Acrobat, or Flash Player. In short, if you listen to music, surf the Internet, download an app, watch videos on your smart phone, or type a Word document, you have some vulnerability. When the Heartbleed flaw garnered headlines earlier this year, it had actually www.talkbusiness.net

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Craighead County courthouse veterans memorial

Feature: Entrepreneurship been in existence since 2012. Heartbleed wasn’t discovered for deep exploitation immediately, but by the time it did, it rose to the level of “catastrophic” with its worldwide reach and financial impact on commerce. “Catastrophic is the right word. On the scale of 1 to 10, this is an 11,” noted Bruce Schneier, an independent security expert in a Bloomberg report earlier this year. The flaw allowed for the revelation of information being processed by web servers, such as usernames, passwords and cryptographic keys. Nearly 500,000 web sites around the world were deemed vulnerable and one e-commerce company estimated that the disruption caused by Heartbleed may have compromised or curtailed as much as a half-billion dollars in trade. While many of the updates and notices that are sent out may not reach Heartbleed magnitude, they can still be crippling. Truth be told, there’s no guarantee that a seemingly innocuous bug might not be the next Heartbleed. That’s how treacherous the

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new world can be. STAYING VIGILANT The threats mean big business for companies like Mainstream. One of the larger, more established programming providers in the state, Mainstream writes custom software or can help clients find the right software solution for their needs. Years ago, the company embarked on developing a best practices model, which included constant certifications to deal with the rapidly evolving world of information technology. Many of its competitors do the same. Through the Great Recession, Mainstream had grown to a large enough scale to survive the roller coaster of business downsizing and closures. It picked up business as smaller IT players fell by the wayside. In recent years, the company has also capitalized on managed services, which includes the ability to serve as a cloudhosting center. Burgess sees more cloud

TALK BUSINESS & POLITICS | JULY/AUGUST 2014

adoption on the horizon as the financial model for firms to turn a capital expense into an operating expense “just makes sense.” That paradigm shift plus the exploding world of mobile technology is going to increase business reliance on IT companies like Mainstream. Burgess says that he sees many companies – particularly smaller and mid-size firms – looking at their IT departments through two different lenses. Their IT staff can provide stability within the company or be innovators. Mainstream can do either. “It’s hard to staff for both innovation and stability. Our message is pick which way you want to go, and we’re happy to play whichever role you want,” Burgess said. “If you want your in-house staff being responsible for maintaining the stability of what you have, then do that and we can assist you as the agents of change. If you feel like you have the agent of change inhouse or you want to be in control of


• • •

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Feature: Entrepreneurship your innovation, then turn your day-to-day stability issues over to us.” WORKFORCE WOES Tracking Arkansas’ information technology workforce is tricky. If you look at pure-play IT employment in the state’s Monthly Survey of Employers, the labor force has been shrinking. Ten years ago, there were an estimated 19,800 Arkansas workers in the information field. As of May 2014, only 13,800 workers are classified as information-related jobs. That’s just 1.1% of the state’s overall non-farm employment. However, in the new digital age and with the democratization of technology, many tech employees might not show up in the survey report. An office manager may be a small company’s IT department. Many firms now outsource IT management to independent consultants and those solo operators are unlikely to show up in the statistics. Another factor limiting the true identification of IT workers is that they may be reflected in other sector numbers. For instance, “professional” and “scientific” jobs may be heavily IT-related but they’re recorded in their respective categories. Likewise, a bank or trucking company IT worker will generally be categorized in the “financial services” or “transportation” sector. The same could be said for Dillard’s or Wal-Mart, whose IT employees are more likely to be counted in the “trade” category. Ask around and employers will tell you there are a dearth of workers with formal IT skills and that’s limiting to recruiting tech companies with which economic developers hope to score big. The attitude is pervasive from large employers to startup entrepreneurs who single an IT skills shortage as problematic for growth. The conversation has caught the attention of the two major party candidates for Arkansas governor, Republican Asa Hutchinson and Democrat Mike Ross. Hutchinson has been talking for months about the need to teach computer coding

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Mike Ross

Mike Ross-D • Wants education tied to technical, skilled jobs • Says next generation may have 10-15 jobs in lifetime Asa Hutchinson-R • Wants computer programming taught in all high schools • Views computer skills as crucial to entrepreneurship Asa Hutchinson

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at the K-12 school level. He thinks Arkansas could become a national leader in education by adding “coding and programming” courses to its curricula. He says his plan is crucial to “creating the job skills used in an information-based economy.” He’s offered specifics, such as making computer science courses available in every high school in Arkansas, as well as making them count toward core graduation requirements. That’s a shift from current state law which does not give math or science credit for computer science. “Arkansas should lead the nation in producing students with the knowledge and technology skills demanded by our current economy. The high demand for these skills will translate to more jobs, more entrepreneurs and ultimately greater sustained economic growth for Arkansas,” Hutchinson said when discussing his proposal at greater length in January of this year. He also wants to improve technical training in high schools in a way that will enhance the curricula in both two-year and four-year colleges. While he hasn’t embraced Hutchinson’s call for computer science in every high school, Mike Ross has laid forth ideas for improving education with the technical and skilled jobs of tomorrow. Ross contends that nearly half of the jobs in today’s marketplace didn’t exist 25 years ago. “A worker today will need to learn a new set of skills several different times throughout his or her life and will have to match those skills to jobs. In previous generations, a typical worker would only have two to three jobs in a lifetime,” Ross said in rolling out his jobs plan in June. “Now studies tell us that today’s young people will have between 10 and 15 jobs throughout their lifetimes.” Both candidates seem focused on closing gaps in education to bridge technical skills to jobs in waiting or yet to be imagined. Their plans may not be the panacea to the problem, but they can’t hurt.


By The Numbers Little Rock’s startup and tech community is thriving with positive activity. By Talk Business Staff The second quarter of 2014 may be remembered as a bellwether period for Central Arkansas’ burgeoning startup and venture capital community, and a key incubator period for tech-focused entrepreneurs. In the space of less than two weeks, three key events may one day be looked on as the catalyst that boosted Little Rock’s version of a small-scale Silicon Valley or Austin, Texas. First, on May 19, Gov. Mike Beebe and the Little Rock Regional Chamber of Commerce celebrated the launch of the Arkansas Venture Center (AVC), a nonprofit agency aimed at fostering grassroots growth of startup and entrepreneurial activity in Central Arkansas. According to AVC, the nonprofit group will focus on the establishment of startup acceleration, corporation innovation and technical training. The center, now located at the chamber, has identified six major business sector opportunities in Central Arkansas, which include consumer intelligence, data efficiencies, financial services, embedded systems, health care and social enterprise. The goal, organizers say, is simply to accelerate entrepreneurial growth, birth new startup companies and create jobs through the region. “We want to be a place where excellent ideas and creative people collide,” AVC co-founder Mike Steely said. Two weeks after the AVC launch, the Little Rock Technology Park board announced the hiring of Brent Birch as director on June 4. Birch, the chief information officer for Arkansas Business Publishing Group, is expected to begin work in early July. After a long and rocky debate over location, the Little Rock tech park board finally voted in October to invest in a

corridor of buildings on Main Street. In 2011, Little Rock citizens voted to target more than $22 million in sales tax proceeds for the much-ballyhooed tech park. On the same day as the tech part announcement, Beebe quietly hosted an invitation-only event introducing a new program called the Arkansas Fellowship. Modeled after a successful program in Indiana called the Orr Fellowship, the Arkansas Fellowship offers a two-year fellowship program to a select group of graduating college seniors and focuses on developing the next generation of entrepreneurs and business leaders in Arkansas.

To some education and business watchers, this could be the most important announcement because it is designed to halt a problem that many business leaders say threatens the future of Arkansas – keeping top academic talent and stopping top college graduates from fleeing the state to find better-paying technology and corporate jobs. “This is a great way to launch a program that we expect to grow and ultimately make a difference in keeping our most talented young people in this state,” said Kristian Andersen, who chairs the newly created Arkansas Fellowship board of directors.

F. John Deuschle, III Matthew R. Jones, JD, CFP® Jason D. Prather, JD, LLM

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Feature: Entrepreneurship Warwick Sabin, leader of the Arkansas Regional Innovation Hub, has been a heavy promoter of the fellowship effort. His organization is set to open its doors later this summer after extensive renovations to a downtown North Little Rock building will

create maker space for entrepreneurs and open up networking, business incubation, and educational opportunities to the masses. Although there is no consensus on just how successful any of these developments will be, Arkansans may look back on this

period one day and hail it as the beginning of Arkansas’ own Main Corridor tech boom. For those who are keeping tabs, here’s a brief “by the numbers” rundown on recent activity in Little Rock’s growing tech startup and entrepreneurial community.

120 Million

AT&T

The number of calls that PrivacyStar has blocked for its application for Android, BlackBerry and iPhone smartphones. PrivacyStar is the Conway-based startup founded in 2008 by Jeff Stalnaker and Josh Smith. The company is backed by First Orion Corp., a private venture company chaired by Charles Morgan, the former chairman and CEO of Acxiom Corp.

$38 Million

The total amount of cash that Little Rock city leaders have in the coffers for so-called “21st century” job creation. Under the Little Rock Future’s referendum, the City of Little Rock could use $10 million for land acquisition at the Little Rock Port and $22 million for land acquisition and infrastructure development of a Research Technology Park “so that new jobs focused on the 21st century can be created.” The city also has the option to use $6 million to recruit new businesses to locate in Little Rock.

1 Million

Cups. Every Wednesday at 9 a.m. at the Little Rock Chamber, the AVC hosts a highly caffeinated forum to hear stories from startup business owners, innovators, venture capitalists and other interested parties on how to promote entrepreneurial activity in Central Arkansas. Little Rock is the newest location – and the 33rd nationwide – to host 1 Million Cups. The forum was founded by the Kansas City-based Ewing Marion Kauffman Foundation. Interestingly, the Little Rock weekly event is powered by Westrock Coffee, not the entrepreneurial-minded Starbucks. Westrock is the startup coffee venture created by Scott Ford and his private investment group, Westrock Capital Partners. Ford, of course, is the former president and CEO of Alltel Corp. The Little Rock businessman led the $27 billion leveraged buyout to a Goldman Sachs investment partnership in 2007 and later directed the $28 billion sale of the company to Verizon Wireless in 2009.

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948

11

5

1

Days. On Nov. 11, 2011, the first seven members were named to the newly created Little Rock Technology Park Authority. An initiative of the Little Rock Regional Chamber of Commerce, the City of Little Rock, the University of Arkansas at Little Rock and the University of Arkansas for Medical Sciences. It took the board some 948 days before it named a new director for the tech park.

Under-the-radar tech hubs. In late May, the SpareFoot blog ranked Little Rock third on its list of “America’s Top 5 Under-the-Radar Tech Hubs.” According to the blog’s methodization, SpareFoot looked at midsize metro areas (500,000 to 1 million residents) that appeared in a 2013 report from the Ewing Marion Kauffman Foundation, a nonprofit that focuses on entrepreneurship. The report zeroed in on the density of tech startups in U.S. metro areas.

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Arkansas scholars. In early June, the first class of the Arkansas Fellowship was announced. The scholars, or “fellows,” will include 11 recent graduates of six different Arkansas colleges and universities. Each of them will be employed by an Arkansas company for the next two years while participating in educational, civic and other enrichment activities organized through the program. The goal of the program is to develop the next generation of entrepreneurs and business leaders in the state of Arkansas.

Just one ride in a streetcar on Little Rock’s River Rail line downtown can take you by all the major players in the mushrooming economic bubble for Central Arkansas’ current startup and tech boom. The new office of the Little Rock Technology Park, the Little Rock Regional Chamber of Commerce and the planned office space for new AVC headquarters are all on the route of the CATA trolley system’s Main Street Corridor. After hitting all the key destinations in downtown Little Rock, the trolley will also carry transit riders across the Arkansas River to the Argenta Regional Innovation Center in North Little Rock. The Innovation Hub, headed by State Rep. Warwick Sabin, is another key driver in the area’s expanding startup activity. A three-day pass on the River Rail costs just $5. The streetcar boards and drops off passengers at 15 designated stops in the downtown area.

Number of members of the AVC Leadership team. As part of the launch of AVC, Lee Watson and Mike Steely were named to the leadership team as co-founders. Watson is the founder of Startup Arkansas and Clarovista, a data and mobile driven consultancy business. He is also associated with Southern Coding, a technology investment group. Steely, the more outspoken of the two co-founders, calls himself a “serial entrepreneur.” He is a small business consultant for scaling business models and also serves as a mentor and judge for SXSW Pitch events. Jordan Carlisle is the third member of the AVC triumvirate. He is director of the entrepreneurship program for the Little Rock Chamber. www.talkbusiness.net

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Industry PHOTO BY DOLLARPHOTOCLUB

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Commercial Construction: Measure Twice, Cut Once Despite a lot of data, it’s hard to get a statistical grip on what’s trending in the state’s commercial construction sector. By Talk Business Staff It’s hard to gauge commercial construction health in Arkansas – or anywhere for that matter. If only it were as easy as counting the cranes across a skyline. Arkansas has certainly seen a pick-up in its heavy-duty building sector since the Great Recession, but pinpointing the exact strength of the rebound is part art and part science. There is a readily available amount of commercial permit activity that can be measured at the city level. Big projects, however, can sway analysis of the data from one year to the next leaving interested observers wondering if things are picking up or letting down. Commercial construction activity is tracked in a variety of ways. Each municipality in Arkansas is capable of providing public records for commercial permits. But it has to be aggregated and put in proper context to be useful to evaluate industry conditions. The University of Central Arkansas’ Community Development Institute tracks the permit data as part of a Talk Business & Politics collaborative. In the second half of 2012, twelve of the most populated cities in Arkansas recorded 160 commercial construction permits valued at $230,205,490. In the same period of 2013, there were also 160 commercial construction permits issued across those twelve communities with an estimated dollar value of $301,213,786, a 30% increase in valuations. However, that data is deceptive. In 2012, several cities saw large one-time projects that skewed results making year-over-year comparisons technically accurate, but maybe not truly reflective of what’s at work.

For instance in Little Rock, Bass Pro Shop began construction of a $15.5 million complex in December 2012. While a majority of the work took place in 2013, it is recorded as 2012 activity. Conversely, Springdale saw the addition of a new $18.7 million Walmart superstore in 2013 that inflated results substantially compared to the previous year. Another example involves Conway – one of the state’s thriving metro areas – and a community poised for more explosive growth such as the forthcoming $90 million Central Landing project. The 150-acre, multi-use development will repurpose the municipal airport property in the city and include restaurant, retail, medical and office space. Hotels and multi-family properties may also be included. The timing for those permits to hit city hall is still undetermined, but its impact will reverberate long after it is recorded statistically. Commercial construction activity and residential real estate development are often treated as two separate and distinct parts of the overall economy in an area. While the two certainly vary, you can’t have one without the other typically. The question of which one gives rise to the other is a hard one to answer. “That’s a chicken-and-egg question,” said Michael Pakko, chief economist with the Institute for Economic Advancement at the University of Arkansas at Little Rock. He said one thing is certain: economic opportunities are the main things that attract people to an area. In other words, if jobs are available, people will follow. In Arkansas, Pakko said the economy is still recovering and Arkansas has fallen behind the national pace in terms of job

creation. According to the U.S. Bureau of Labor Statistics, the unemployment rate in Arkansas was 6.4% in May, an improvement over the 7.5% rate posted in the same month in the previous year, and just under the national rate of 6.3%. “There’s nothing native to Arkansas about the causes of recession we had,” Pakko said. “We got dragged in with the rest of the nation, but we have been slow to pull out of it.” A look at construction sector jobs in Arkansas from 2009 to 2014 shows just how dramatically the building industry has reeled and attempted to repair in the five years of recession and recovery. In May 2009, construction employment in the state stood at 50,700 workers. Five years later according to state workforce data, there are only 47,800 estimated workers in the construction field – and that is an improvement of nearly 1,500 jobs from May 2013. Arkansas is still nearly 3,000 workers below where it was when the recession began kicking into overdrive. Pakko has noted that terrible winter weather impacted a variety of business sectors – particularly construction, which relies on dependable outdoor conditions – and that may have slowed stronger gains. “So far this year, however, job growth has stalled. From January through May 2014, total payroll employment has declined slightly. Some of the slowdown is likely associated with harsh winter weather that we experienced in the first part of the calendar year,” he said on his blog, Arkansas Economist. Editor’s note: Ethan Nobles contributed to this report. www.talkbusiness.net

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Industry PHOTO COURTESY OF P. ALLEN SMITH

The 18,000-square-foot Rose Garden at P. Allen Smith’s Garden Home Retreat has several intimate spaces. The oval garden is surrounded by live oak trees.

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Cultivating Experience Agritourism Unites Urban, Rural Arkansas By Jeanni Brosius Agriculture is an important part of Arkansas’ heritage and it still plays a large role in the state’s economy, but if state leaders and business owners play it right, the family farm could become a major destination attraction for travelers. “Agriculture contributes about $17 billion to the state’s economy, and one in six jobs in Arkansas are in agricultural,” said Zachary Taylor, director of marketing at the Arkansas Agriculture Department. “That’s about 260,000 jobs.” One way to connect urban and rural Arkansas is through agritourism, which is a relatively new term in the tourism industry. Tourists can leave the city and tour farms, pick fruit, milk cows, meander through a corn maze or just simply go on a trail ride. Agritourism is another tourism niche that is being advertised to draw people to different regions of the state. Only about 10 percent of farms participated in some kind of agritourism in 2008, according to a study by the University of Arkansas Division of Agricultural Public Policy Center. Based on the study, agritourism contributes about $7 million directly to Arkansas agriculture and about $12 million to the state’s economy. “Arkansas is in a beautiful position to take advantage of agritourism,” said Richard Davies, executive director of the Arkansas Department of Parks and Tourism. “We have the climate and the produce, and some of the best restaurants in the country to feature it. … There’s a big interest in food these days. People are interested in where it comes from. Many of the restaurants are featuring locally grown food, and people have started to notice.” The Arkansas Department of Parks and Tourism’s brochure, “Arkansas Grown Good Times: Agritourism in the Natural State,” features festivals that celebrate agriculture in

Arkansas as well as farms where people can visit and pick their own food. Davies said driving through Arkansas, it’s difficult to miss all the soybean fields, crop dusters flying overhead and animals grazing in the pastures. The brochure “helps parents answer all those questions coming from the back seat.” MOSS MOUNTAIN FARM “Agritourism is good for Arkansas because it can showcase some of the best Arkansas has to offer to visitors from out

farm and understand now more than ever before how meaningful that has been to me,” he said. “Sharing the message of good conservation practices, teaching our audience ways to grow some of their own food and improve their lives in a beautiful setting made the farm an important next step, back in 2006 when we began the restoration of the property.” The farm opened up to tourists in 2010 because of the overwhelming requests through social media and emails from Smith’s fans. He said about 6,000 to 8,000

Moss Mountain Farm

of state, help reconnect people to our rich agricultural heritage and inform them on how and where their food comes from,” said P. Allen Smith, who is the host of “P. Allen Smith’s Garden Home” and “Garden to Table” television shows. Smith also built Moss Mountain Farm – overlooking the Arkansas River Valley at Roland – because he wanted to exemplify a message that is important to him: farm life and growing food. “I had the good fortune to grow up on a

people visit the farm each year for tours, weddings and other events. “They clearly wanted to be able to come and see it firsthand,” he said. “Many of these ardent fans had followed the construction of every aspect of the farm on our PBS television show ‘P. Allen Smith’s Garden Home,’ now in its 14th season of production. It’s amusing when we have groups to the farm and these visitors can tell me exactly when certain aspects of the house or farm were featured on the show, and www.talkbusiness.net

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Industry: Agritourism honestly, they can tell me more about details than I can now remember.” Tickets for a day’s tour are $90 per person. Guests arrive at the farm at 10:30 a.m. and are taken on a guided tour of the house and gardens that includes the terrace gardens, vegetable garden, 18,000 square-foot rose garden and the poultry house, aka Poultryville. “They have lunch comprised of recipes from my cookbook, ‘P. Allen Smith’s

appearances on Smith’s television shows. Dorper sheep and a variety of heritage poultry breeds also live on the farm. SCOTT HERITAGE FARM Not so far away, in Scott, Barbara Armstrong stood atop a wooden picnic table and greeted more than 150 guests to Scott Heritage Farm. Many of these weren’t every day visitors; they were shareholders in her farm. Shareholders invest in the farm up

I finally got city water on the farm. I fill it up during summer and let the summer sun warm the water throughout the day, so that at the end of the day, I can enjoy a nice bubble bath and a glass of wine overlooking the farm.” In 2010, Armstrong moved onto a part of the Alexander Plantation in Scott, which is owned by Joan Alexander Dietz. Living in a tent, Armstrong said there was nothing but pigweed as tall as a tree and mosquitoes “as

Visitors can enjoy lunch in a beautiful setting at P. Allen Smith’s Moss Mountain Farm.

Seasonal Recipes.’ The buttermilk pecan pie is a favorite,” he said. “After lunch, guests can wander about the property and visit the gift shop. If I am in town, I like to attend the tours to meet the guests and answer questions. Accessibility and hospitality are an important part of our brand. … I want everything served at the farm to support our message of the value of good food and a meal shared. ” While touring the “garden rooms” on the farm, visitors may meet Trudy the horse or Moose the donkey, who have both had guest

front and share in the harvest. Each year, Armstrong hosts a farm-to-table dinner where she can showcase the work that has been done around the farm. “Many of our guests come back year after year, and are amazed at the growth and liveliness of the farm,” she said. “This is what it should be about. This is what I want our visitors to experience. This is a lifestyle. Many get chuckles when I tell them that my outdoor bathtub is where I spend some quality time at the end of the day with a glass of wine. … It was two years ago that

big as dragonflies” on the property. Now she has an organic farm with fruits, vegetables, chickens, turkeys, ducks, pigs, goats and bee hives. “Living in a tent; can you imagine? Mosquitoes buzzing your head, hot humid nights and, oh yeah, no water to cool off in. So, [living in a tent] was the only solution,” she said. “Shortly some funding was available, and we built a greenhouse and moved the tent into the greenhouse. It was at least dry during raining days and nights. Well, sort of – a couple of farm angels knew www.talkbusiness.net

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Industry: Agritourism PHOTO BY KIRK KELSO

what we were doing and loaned us some money. We started to build a little cabin along the Bayou. We moved the tent on a second level of the cabin. At least it was off the ground at this point … I had a very rough time and my farm angels picked me up, and helped me to finish the cabin for a safe and dry place for me and my two dogs.” The next farm-to-table family dinner at Scott Heritage Farm will be on Sept. 27.

Barbara Armstrong with her son, Lewis Curtis, a former chef on the TV show “Hell’s Kitchen.”

WHITTON FARMS Believing that agritourism is the new wave of economic development in rural communities, Jill Forrester of Whitton Farms in Tyronza said that people living in these rural areas are hungry for work; however, there aren’t very many jobs available. “Most individuals already have close ties PHOTO BY KIRK KELSO

Barbara Armstrong greets guests at her annual farm-to-table dinner at Scott Heritage Farm.

to agriculture, whether it be working on a commodity farm, raising a garden to put food on the table, canning … and the list goes on,” said Forrester, who runs the Poinsett County farm with her husband, Keith. “To me, it only makes sense to find ways in which to incorporate those experiences into economic opportunities. One of our main goals is to reinvest our efforts into creating jobs in our neck of the woods. We believe Northeast Arkansas is rich in history and filled with beautiful landscapes.” Whitton farms began by accident about 10 years ago when the Forresters were living on property that had been in Keith’s family for about a century. “We were initially mowing close to 10

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Jill Forrester of Whitton Farms began selling her flowers at a farmers’ market in Memphis before she and her husband, Keith, became full-time farmers.

TALK BUSINESS & POLITICS | JULY/AUGUST 2014

acres, and because of my love of flowers, I asked my husband to help me plant a very large cut-flower garden in April of 2004,” she said. “By July, we had so many flowers in bloom that we didn’t know what to do.” That’s when a family friend told them about a farmers market in Memphis where she could sell her cut flowers. After one day of selling flowers at the market, the couple surpassed Keith’s income for the week as a teacher. “It got us thinking that we could develop our grounds and finally be able to work alongside one another each day,” she said. “It was and has been a dream come true for us. We are both so passionate about farming, and love being outside each day watching the developments of our crops.” Ten years later, the couple owns two farmto-table restaurants, Trolley Stop Market in Memphis and Tyboogie’s in Tyronza. “We also opened Whitton Farms Cannery, in Memphis, Tennessee, a state-regulated food manufacturing facility and incubator kitchen for clients. We also operate a 100-member community-supported agriculture (CSA) program in Memphis and Jonesboro. We grow produce year round.” She said many of the clients who use the cannery also sell their items at the farmers market, and they need a regulated kitchen to prepare and cook their products. In addition to cut flowers, the farm now produces eggs, medicinal and culinary herbs, pigs, turkeys and transplants. Plans are being made to expand the farm to include trees and native plants. The Forresters were recently named Mississippi County’s Farm Family of the Year by the Mississippi County Farm Bureau and the University of Arkansas Cooperative Extension Service. The farm sells produce at the Arkansas State University Regional Farmers’ Market and the Memphis Botanic Garden Farmers’ Market, and the farm also accepts orders for pickup. For more information, visit the website at www.whittonfarms.com. For other farms and information on agritourism in Arkansas, download the “Arkansas Grown Good Times: Agritourism in the Natural State” brochure at issuu.com/arkansas/docs/agritourism.


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Cedar Falls at Petit Jean Mountain near Morrilton > Esse Purse Museum, Little Rock > South on Main, Little Rock > Bill Clark Wetlands at the Clinton Presidential Park, Little Rock www.talkbusiness.net

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Industry PHOTOS: FOTOLIA, COMPOSITION: BRYAN PISTOLE

cutline

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Nice Rides Arkansas tourism officials want motorcyclists to ‘head out on the highway.’ By Roby Brock Get your motor runnin’ Head out on the highway Looking for adventure In whatever comes our way – “Born To Be Wild,” Steppenwolf The ultimate biker anthem could serve as a marketing campaign for a new push from state tourism officials. In the last two years, Arkansas has begun marketing its scenic highways to motorcyclists who are far from the drifter image painted in cult classic films like “Easy Rider.” We’re not talking Hell’s Angels, says Arkansas Tourism Director Joe David Rice. “These are not the motorcyclists that your mommas warned you about. These are basically, as Willie Nelson would say, doctors and lawyers and such,” Rice said. Earlier this year and for the first time ever, Arkansas’ Parks & Tourism Department published the “Arkansas Motorcycle Guide” and has already fielded requests from nearly 4,000 people for the resource book. The guide lists 21 routes for riders, dates and locations for motorcycle rallies across the state, sightseeing opportunities in different regions, and, of course, hospitality stops along the Arkansas roadways. Roughly 29% of the requests for the guide have been from in-state inquiries. That number rises to about 45% when you add in the surrounding states of Texas, Oklahoma, Missouri, Tennessee, Mississippi and Louisiana. All told, requests have been received from 48 states and the District of Columbia. “We think motorcyclists present a great opportunity for us. No other state is really targeting them right now,” Rice said. “They’re riding expensive motorcycles. They’re staying at bed and breakfasts, resorts and hotels. They love Arkansas because they can come here 10 months a year.”

Rice said motorcycle enthusiasts typically skew older, travel in pairs or larger groups, and tend to be financially affluent. Statistics compiled by a 2010 Caesars Hospitality Research Summit of bikers age 50 or older showed that 59% are male. Roughly 25% reported incomes of $30,000 to $50,000 a year and another 22% earned $50,000 to $70,000 annually. About 37% of motorcycle enthusiasts surveyed were retired or self-employed, another 27% were listed as professionals, 17% were craftsmen and 11% had a background in the military or public sector. They also spend $50 or more on shopping and souvenirs on day trips. Rice said that native hospitality and the state’s natural beauty are a good combo for motorcycle recruiting. He also said a policy change made a few years ago has also endeared the state as an attraction for bikers. “We’ve got friendly people, we’ve got some really good motorcycle routes, and we don’t have a helmet law,” he said. MotorcycleRoads.com ranked its top 100 U.S. routes and Arkansas has seven roads on the list. The highest ranking is the Arkansas Pig Trail – Highway 23, which comes in at No. 9 on the Top 100 list.

Seventh Heaven: Arkansas’ Finest Motorcycle Routes The Pig Trail – Arkansas Highway 23 – comes in at No. 9 on the MotorcycleRoads.com ranking of the top 100 U.S. routes, one of seven Arkansas roads on the list. After exiting I-40 near Ozark, the Pig Trial heads north on Highway 23 through the beautiful and rugged Boston Mountains region of the Ozark Mountains to the intersection of Highways 23 and 16 just south of St. Paul. The other six Arkansas routes on the list include: No. 17, Push Mountain Road north of Mountain View; No. 21, the Talimena National Scenic Byway in western Arkansas and eastern Oklahoma; No. 31, the Arkansas Dragon, taking Highway 123 about 40 miles north of Russellville to Mt. Judea; No. 59, Highway 16 from the Pig Trail to Scenic 7; No. 87, Highway 7 (“Arkansas at Its Best”) from Harrison to Hot Springs; and No. 88, the Ozark Highlands Scenic Byway, Highway 21 north from Clarksville to Boxley.

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Industry PHOTO BY JASON SHIVERS

James Hayes Art Glass Co.

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Made In Arkansas Artisans find there’s still a market for handmade, quality craftsmanship. By Kerri Jackson Case As global business and manufacturing continue to push for more productivity from workers, more efficiency from machines and more money for their shareholders, there has been a quiet but deliberate decision by some to reclaim the artisan crafts of the past. Sites like Etsy (www.etsy.com) and Artfire (www.artfire.com) boast more than 400,000 vendors of handmade crafts and $50 million in venture capital invested across those artists, according to the Craft & Hobby Association. High-end vendors also sell their wares on curated sites like Arkansas-based Bourbon and Boots (www.bourbonandboots.com) or at exclusive shows like the Renegade Craft Fair (www.renegadecraft.com), which holds 14 events across the country each year, and The Little Craft Show (www.thelittlecraftshow. com) held annually in Fayetteville. It’s impossible to talk about fine art in Arkansas without the name of James Hayes (www.hayesartglass.com) included in the conversations. The Pine Bluff native has been promoting art and artisans in the Natural State since 1988, when he graduated from Hendrix College with a degree in art. He felt he should specialize in one particular medium to build a business, and glass blowing appealed to him. Today, his works of hand-blown glass are on display literally all over the world. “The Clintons created a business boom for me,” Hayes said. “When he was elected, people became interested in art from Arkansas in a way they hadn’t been before that. I benefited quite a bit from that.” Hayes said he always knew he wanted to make something with his hands, but he didn’t want to be chained to a bench all his life. His father owned a dental laboratory. He made bridges and crowns for years, but he didn’t get to spend much time calling on the dentists for whom he worked. Hayes

said he learned from him the value of a personal connection with clients. He personally delivers as many pieces as possible to clients, galleries and gift shops. “People want to feel a connection to the things in their lives,” he said. “They want to know the story and the person behind it: whether that’s food, cocktails or art.” Little Rock soap maker Stephanie Hamling believes connection has been the key to her success with Southern Girl Soapery (www.soapguildstores.com/ southerngirlsoapery). “I’m not selling soap,” she said. “I’m selling a story. Southern flair and nostalgia have a value that’s ephemeral, but it’s worth quite a bit to some people.” She knows most people are content to pick up something off the shelf at a big box retailer, and she understands that convenience. However, she credits the local food movement with softening the ground for businesses like hers. “My customers want to know what they’re buying, where it came from, what exactly is in it,” she said. “When they buy local food, they’re supporting the farmer, not just the food. It’s the same for soap and many other products.” Beyond the connection between artisan and customer, both Hayes and Hamling spend time with other artists and manufacturers. The communities they have created through their businesses connect them to others in similar work as well as the crafts and traditions of generations before them. Springdale native Jamie Walker understands very well the generational connection of handmade crafts. The owner of Walker Woodworks (www.jwalkerwoodworks.com) grew up piddling around in his dad’s shop. His father was the shop teacher at Springdale High School for many years

before he retired. Walker wasn’t terribly interested in woodworking when he was young. As he aged a bit, he found it handy to be able to make some small pieces for personal use. “I think there’s been almost a bit of craft revolution,” Walker said. “I kept seeing all this really cool stuff, and I would think, ‘I could do that too.’” Over time, he began to realize how much he liked working with wood, particularly reclaimed lumber. “There is always a story from reclaimed wood,” he said. “I think a certain group of people are just tired of everything being plastic and the same. They like to know who made things and where they’ve come from, especially if it’s close to home. People are proud of where they come from. They want their homes to represent that.” Walker and his father were able to get some of the wood from the old O.L. Gregory Vinegar Company Vats in Rogers. He also secured old bookshelves from Young Law Library at the University of Arkansas. He uses those to make slide frames, stack vases and hex candle holders. He’s even got a small amount of bleacher boards from the old Springdale Bulldog gymnasium. Fellow alums love frames made from wood that connects them to their past. Hayes, Hamling and Walker all recognize the double-edged sword of technology. While certain advances have made their skills less necessary, social sites that promote handmade, artisan crafts are important to the ongoing success of their businesses by opening up new markets. They feel strongly that it matters to keep these traditions and crafts alive. They understand their customer base is a specific kind of consumer. Still, they remain encouraged about the future of skilled crafts and art in the state. “Some people don’t get it,” Walker said. “But a lot of people do.” www.talkbusiness.net

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Industry PHOTO COURTESY OF BAD BOY

Scott Lancaster standing next to The Outlaw

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Bad Boy Mowers A Homegrown – and Still Growing – Success Story By Bob Qualls Scott Lancaster cringes at the mention that Bad Boy Mowers started in a garage. While the idea for the popular zero-turn mower was conceived in a garage when founders Phil Pulley and Robert Foster began tinkering with what became the prototype, Lancaster says the actual manufacture of Bad Boy Mowers began in a 20,000-square-foot facility in Batesville’s Industrial Park. That was in 2002, when the company started out with 20 employees. Twelve years later, Bad Boy occupies an 800,000-squarefoot facility and employs more than 400 people. That original 20,000-square-foot plant now houses only the parts and service departments. And those departments will soon be moving to a new 60,000-squarefoot building as the company continues to expand. Lancaster, Bad Boy’s general counsel, said the company had a record-breaking month in April, when it produced 7,020 units. It was the best month in the company’s history, and the reason why it continues to grow. Lancaster said the company had double-digit growth last year, and it has already exceeded 2013 figures in the first quarter of 2014. “We will probably produce in the neighborhood of 30,000 [units] this year, give or take a few,” Lancaster said. “That’s a double-digit increase from last year. Since the inception of Bad Boy, each year has been a record year over the previous year.” Bad Boy is now at production capacity, so the expansion is planned to meet the growing demand for the company’s mowers. When the parts and service departments move to the new 60,000-square-foot building on the current Bad Boy campus, the fabrication department will expand into the parts and service area, Lancaster said.

He described the fabrication area as the “bottle-neck” of the manufacturing process because it takes longer to shape the metal and weld the pieces together than it does to actually assemble all the parts. The expansion will speed up production by adding fabrication machines, which are automated and use robotic welders. Bad Boy also will add another powder-coat paint line to speed up that process as well. The company currently has six assembly lines, and Lancaster said two more would be added with the expansion. The expansion will cost about $8 million. Lancaster told the Independence County Economic Development Commission that the expansion would add at least 150 new jobs that would pay from $19.50 to $20 an hour. Bad Boy is expanding its product line as well. It builds its mowers on demand and sells them through dealers around the country. One of its largest dealers is Tractor Supply Co., a large retail chain that is the leading U.S. retailer in its market. It operates more than 1,300 stores in the U.S., so its desires are important to Bad Boy. The manufacturer asked Tractor Supply to list the products it would like to see Bad Boy provide. At the top of the list was a rotary cutter, the kind that is pulled by a tractor and used to mow pastures, roadsides and even light brush. So, Bad Boy designed and built a prototype of a five-foot model that it planned to “soft launch” in June. “Our initial feedback from showing it to dealers and other potential customers over the last few weeks is that it is going to do very well,” Lancaster said. “It’s a great combination of superior quality over its competition at a very competitive price.” Like all of Bad Boy’s products, it will have

the distinctive powder-coat orange color. Lancaster said the company manufactures everything on a Bad Boy mower that has that orange color.

AUTOMATION MOTIVATION Bad Boy Mowers are built in a state-of-the-art

manufacturing facility in Batesville. The company has invested heavily in the latest automation, including steel fabricating lasers, cutters, benders and robotic welders. Its powder-paint coating system is also fully automated. It is computer programmed depending on the parts moving through the paint line. Aside from pressing the “start” button, the human touch is only needed for touch-up during the process that applies the rust-resistant, powder-coat finish that gives the mowers their distinctive orange color. Bad Boy doesn’t even leave the shipping of its products to others. It operates a fleet of 29 specially equipped tractor-trailer rigs with trailers that carry two decks of mowers in one shipment. Bad Boy designs the trailers as it does its products. Having its own trucking company ensures timely delivery of its mowers, General Counsel Scott Lancaster says. The company employs a full-time master engineer, who designed the new rotary cutter that Bad Boy will soon manufacture. Its mowers are shipped to the dealers completely assembled and ready to mow. The 18-wheelers also help advertise the company. Each rig is decorated with the Bad Boy logo, a photo of the mower and often a photo of a celebrity endorser like Willie Nelson with the slogan, “On the Road Again.” These are a few of the reasons why Bad Boy is the fastest growing mower company in the world. www.talkbusiness.net

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Industry: Bad Boy Bad Boy is getting help with its expansion project from the Governor’s Quick Action Closing Fund and the Arkansas Economic Development Commission in the form of a $2.2-million grant. Lancaster calls the grant a “three-bank pool shot” because it will serve three purposes. For one, it is helping the transition of Bad Boy’s Melbourne facility to another company, Air Ready MRO Services, Inc., an aircraft repair company. When Bad Boy moved its multi-terrain vehicle operation to Batesville, it no longer needed the Melbourne plant, which once housed a Boeing Aircraft plant. Bad Boy was acquiring the facility on a lease-purchase arrangement. The Izard County Economic Development Commission wanted to re-acquire the building so that the aircraft company could move into it. Part of the AEDC grant is helping accomplish that. “It’s a win-win situation for everyone,” Lancaster said. The second part of the “three-bank shot” is helping Bad Boy open its new rotary

cutter division. The decks of the cutters will be built in the Bad Boy plant in Batesville. Assembly will take place elsewhere. That location is still to be decided, but it likely won’t be in Batesville because of a recent action by the Independence County Quorum Court. Bad Boy requested a $400,000 incentive

grant from the county’s Economic Development Commission. It would add at least 150 new employees with the expansion. It the past few years, that request likely would have sailed through. However, last January, voters in the county failed to renew a one-fourth-cent sales tax for economic development. Without the tax,

Bad Boy is opening a new rotary cutter division.

Bad Boy occupies an 800,000-square-foot facility and employs more than 400 people.

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there is no more revenue coming in to attract industries or create new jobs. The commission has about a half million dollars that is not already committed to ongoing projects. Economic Development Director Larry Jones wants to keep that in reserve for future development of two business parks it owns – one in Batesville and another at Southside. However, a majority of commissioners wanted to create jobs quicker by providing the grants to Bad Boy and another company that also requested assistance. The commission voted 8-1 to provide a $300,000 grant to Bad Boy and a smaller grant to the other company. The commission’s recommendation went to the Quorum Court for approval, and it was rejected on an 8-2 vote with one abstention. The majority of the court sided with Jones, preferring to finish work on the business parks. Because of this, Bad Boy is looking elsewhere for its rotary cutter site. Other cities and counties are wooing Bad Boy with plenty of incentives to attract an established industry. Newport has been mentioned as

one possible location, but others are also interested. The final element in the “three-bank pool shot” is the expansion of the mower business at the Bad Boy campus in Batesville, including the 60,000-square-foot addition to increase its production capacity. Bad Boy, Inc., reorganized in recent months and spun off the side-by-side 4x4 utility vehicle line known as the Intimidator. Robert Foster, Bad Boy co-founder, is now the owner of that line, and Phil Pulley is the sole owner of Bad Boy, Inc. The Intimidator operation is located adjacent to the Bad Boy campus in Batesville. What’s behind Bad Boy’s remarkable success in its 12 years of existence? Lancaster mentions two things. “We offer a high-quality product at an extremely competitive price,” he said. And, he attributes that to the company’s workforce. “We have a very loyal group of employees. They are dedicated and good at what they do.” To illustrate that, he said that many of

those who are temporarily laid off in the fall during the company’s slow period still come to company picnics and functions. Most of them readily come back to work when called, he said, because Bad Boy offers an above-average hourly wage. The other key to success, he said, is the company’s marketing department, led by Lenny Foree, who has been with the company almost from the beginning. “Their innovative thinking has built the Bad Boy brand, and a strong image,” Lancaster said, that people easily identify. That includes the slogan, “Mow With an Attitude,” and the orange and black logo with the bulldog in it. Bad Boy also has received many celebrity endorsements, including some that were unpaid and even unsolicited. They include Willie Nelson, Merle Haggard, Zac Brown, the late George Jones and rocker Ted Nugent. Most of them actually own and use the mowers. “People love to mow with it,” Lancaster said with a smile. “It’s fun.”

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Hometown, Arkansas

Holiday lights at the Washington County Courthouse

Old Main on the University of Arkansas campus

Donald W. Reynolds Razorback Stadium

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Not Just the Home of the Hogs City leaders are doing more than keeping Fayetteville funky. By Steve Brawner

PHOTO COURTESY OF UNIVERSITY OF ARKANSAS, FAYETTEVILLE CHAMBER, AND ARKANSASMEDIAROOM

If you could choose anywhere in America to call home, would the following city make the final cut? – It was ranked by Parade magazine as the country’s most beautiful city among those with a population between 50,001 and 100,000. – CNNMoney.com called it the 15th best place to retire. – Forbes ranked it number 15 in its list of the top 100 metropolitan areas for businesses and careers. – Kiplinger’s said it was the fifth best city for mid-career professionals. – Livability.com called it the country’s 64th most livable city. You might travel far to see if that city were a good fit for you, unless you lived in Arkansas, in which case you would merely have to drive just up the road – to Fayetteville. Long known as the home of the Razorbacks, Fayetteville is more than just a college town. The city now has 80,000 residents and adds another 2,000-plus each year, according to Steve Clark, Chamber of Commerce president and CEO. Nine apartment complexes, all with more than 200 occupants and one that will have 1,000, have been built or approved in recent years to accommodate that growth, particularly

among the student population. The city each of the past four years has issued more than $200 million in permits for capital construction. “The beauty of that is, almost all of that’s out-of-state money. So the world’s discovered us,” Clark said. They are coming for good reasons, and not just the University of Arkansas. From April 2013 to April 2014, the city saw a net increase of 319 businesses and 545 jobs. Clark said the city is building its economic foundation on three pillars: “Eds, meds and innovation.” Start with “eds.” The University of Arkansas has an annual budget of $800

million and a fiscal 2013 payroll of $414.5 billion. Its Center for Business and Economic Research estimated the institution’s statewide economic impact was $725 million in 2009. It’s home to more than 25,000 students. At a time when many of the state’s other colleges and universities are experiencing flat or declining enrollment, it has added about 6,000 students in about six years and is the country’s 13th fastest growing university. It’s hired about 69 tenure track faculty and about 100 nontenure track faculty members over the last four or five years, according to its chancellor, Dr. David www.talkbusiness.net

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Hometown: Fayetteville Gearhart. According to Mike Johnson, associate vice chancellor for facilities, since 2000 it has either completed or has under contract $1.3 billion in construction, including auxiliary costs like streets and landscaping. Much of that has involved building renovations, but there has been some construction. The entirely self-funded athletics program – a rarity in college sports – is providing about $2.2 million per year to fund the school’s nanotechnology building and also Champions Hall, a classroom/lab building under construction. “We feel, those of us that work here every day, that we’ve become the institution of first choice,” Gearhart said. “People want to come here.” Gearhart isn’t satisfied. The school has embarked on a plan to become one of the top 50 public research institutions in the country. It’s also in the quiet phase of a new fundraising effort, Campaign Arkansas. The previous fundraising effort, the Campaign for the Twenty-First Century, raised more than a billion dollars. Gearhart expects this campaign will increase the university’s endowment, now about $850 million, past the $1 billion mark. Gearhart said the university’s location is part of the reason for its success. A Fayetteville native, he said it’s a beautiful place to study with a pleasant climate. Major employers donate to the college and offer internships to students. The relationship between the university and the city is good,

Fall leaves in Fayetteville

Clinton House Museum

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Campaign display at the Clinton House Museum


he said. Mayor Lioneld Jordan, in fact, worked for the university’s physical plant as a carpenter. A Town and Gown Advisory Committee with representatives from the university and the city meets about issues of common concern. “It’s hard to beat Fayetteville. It’s just a great place with a college feel,” Gearhart said. The university is not the city’s only prized educational institution. If Fayetteville has a city color, it’s not red – it’s purple, the color of the Fayetteville High School Bulldogs, who now call a new high school home. Meanwhile, Haas Hall Academy, a public charter school, was ranked as the state’s top high school for the third consecutive year by U.S. News and World Report. As for “meds,” about 5,500 people are employed in the health care sector, including 2,300 at Washington Regional Medical Center and 1,300 at the Fayetteville VA Medical Center, Clark said. UAMS Med student at the University of Arkansas

BELIEVE in Fayetteville

Fay. econ dev. 1/3 Square BELONG to the Chamber www.fayettevillear.com

Bikes, Blues & BBQ on Dickson Street

Students at the University of Arkansas between classes www.talkbusiness.net

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Hometown: Fayetteville Northwest educates future physicians, pharmacists, nurses and other health care providers. For what’s supposed to be a college town, Fayetteville has a surprisingly strong manufacturing base, with about 4,500 working in that sector, according to Clark. The largest manufacturer, Superior Industries International, employs 900 making wheels for American car manufacturers, while Tyson Mexican Original employs 700 in the world’s second largest tortilla manufacturing plant. About that same amount work in a Walmart Optical plant, while about 600 work in a Pinnacle Foods packaged foods plant. As for “innovation,” some of Fayetteville’s most important employers are smaller ones with game-changing ideas. The Arkansas Research and Technology Park provides business incubation and other services to 37 knowledge-based entities, mostly private ones. According to Phil Stafford, president, the tenants employed about 350 with

$80,000 average salaries at the end of the last fiscal year. The park works hand in hand with the University of Arkansas and is served by the University of Arkansas Technology Development Foundation. Among its current stars is Arkansas Power Electronics International, which makes transistors and other products, and BlueInGreen, which uses ozone to purify drinking water. In addition to jobs and educational opportunities, the city offers its residents a high-quality of life that Mayor Jordan is trying to improve through its transportation infrastructure. His “Mayor’s Box” design, almost all of it already built or funded, encircles the city with a boundary of streets meant to reduce sprawl. New construction on the box involves four-laned boulevards with tree-lined medians, sidewalks and bike paths. As part of the effort, the city is about to four-lane Van Asche Drive, a country lane leading to the Northwest Arkansas Mall. When that construction is complete,

significant development surely will follow. “You learn that from being a carpenter,” Jordan said of his commitment to infrastructure. “You build the foundation right; then a house you can build pretty much any way you want to. And if you don’t have the right kind of foundation, I don’t care how pretty a house you’ve got, it won’t hold up.” The city also is building a network of trails that will make it a walkable community. So far, 25 miles of paved, multi-use trails, most of which are 12 feet wide, have been laid. The city tries to average laying two to three miles of additional trails each year at a cost of about $500,000 a mile, according to Matt Mihalevich, trails coordinator. The goal is 100 miles. Included among the current total are 9.5 miles of the Razorback Greenway, a trail network leading from the south end of Fayetteville through the Northwest Arkansas region. Fayetteville’s trails are more than just nice places for exercise – they’re an alternative

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Botanical Gardens of the Ozarks


form of transportation. The main paths easily average 500 travelers a day, and there have been peaks as high as 3,000. Walkers and bikers, particularly students, use them as commuting paths that will become more important as the trail network expands. Meanwhile, the trail serves as an economic development tool because the slower pace encourages walkers and riders to stop along the way. “The trails have become for us ribbons of commerce,” Clark said. “It is as easily quantifiable as anything you could do.” Part of Fayetteville’s livability includes its amenities. The soon-to-be-built Fayetteville Regional Park will have soccer and baseball fields on 200 acres alongside the newly purchased Mount Kessler, which features parkland and natural trails. The city is home to numerous annual events, including the Walton Arts Center’s monthlong Artosphere Festival; Bikes Blues and BBQ, a motorcycle rally that attracted an estimated 400,000 last year; and the Joe

Martin Stage Race, which brought 700 cyclists to Fayetteville in May. The local farmers’ market in the downtown square is the state’s longest continuously operating one, Clark said. The Fayetteville Public Library was awarded the Gale/Library Journal 2005 Library of the Year Award. Fayetteville’s success can’t be separated from Northwest Arkansas’. The region’s metropolitan statistical area, which includes Washington, Benton, and Madison counties along with McDonald County in Missouri, ranked fourth nationally in its 2013 moving average of nonfarm job growth, according to information from the U.S. Bureau of Labor Statistics aggregated by Arizona State University’s W.P. Carey School of Business. Community economic developers in Northwest Arkansas work together to attract opportunities to the region as well as to their cities. The Chamber’s Clark points out that it takes no longer to drive from Fayetteville to Bentonville than it does to drive from one

side of Little Rock to the other. According to the UA’s Gearhart, “We try to look at it as the community of Northwest Arkansas. It’s nothing to hop in the car and drive up to Bentonville, and I do that – I think the most times I’ve done it is maybe three in one day back and forth.” The region’s future is as bright as the past few decades have been. The recent renaming of I-540 into I-49 will increase funding as well as momentum for finishing the interstate network from Canada to Mexico. Northwest Arkansas is within a month or two of reaching a population of 500,000, causing it to show up on an expanded set of radar screens for economic developers and site selectors. When that happens, more jobs and opportunities will find their way to Fayetteville – a college town that’s so much more than that. “We’re very fortunate,” Clark said. “We virtually have no crime. We have a scenic and beautiful place to be, so it works out very well.”

Dromburg Castle

Farmers’ Market

Arkansas Air Museum www.talkbusiness.net

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Leadership

Sixth Sense:

Dealing With Stress Demanding jobs, tight deadlines, dangerous conditions. Sound familiar? Life can be overwhelming at times. We asked six leaders for tips and strategies on managing the daily stress they face. By Talk Business Staff

Kevin Trainor

Tamitha Jackson

Lt. Carl Minden

Associate Athletic Director for Public Relations University of Arkansas Department of Intercollegiate Athletics Fayetteville

Legislative Analyst/Journal Clerk Arkansas House of Representatives Little Rock

Public Information Officer Pulaski County Sheriff’s Office Little Rock

For as long as there has been competition, the world of athletics has been recognized for its stressful environment. The thin line between Hall of Famers and those who simply played the game is largely defined by how athletes react in stressful situations. Working in athletics can also be stressful. Crisis management is not a responsibility you choose, it is one that chooses you, and often at a moment’s notice. In 20 years, I have faced many stressful high-profile crises and while they differ, there are fundamentals that can be applied to any line of work. Much like a quarterback leading a final-minute drive, rely on your instincts and your expertise. Take time to call a trusted colleague and get an unbiased outside perspective. Concentrate on what you CAN do, not what you cannot. Finally, take a deep breath and get back in there. It’s game time!

After 12 years with the Legislature, I’ve learned that time management, the support of a great staff and a 30-minute walk help alleviate my daily stress. During my first legislative session I tried to juggle my routine responsibilities and my legislative session duties. I quickly realized I needed to utilize my time and prioritize elements of my job. Fortunately, I work with a wonderful group of people who recognize when I’m overwhelmed and are there for support. Walking has become my therapy. Just a short walk at lunch clears my head and motivates me for the afternoon session. Walking is also beneficial in maintaining my weight. When I’m feeling stressed I tend to reach for comfort food. I’m grateful to have a job I love, but it can be quite stressful at the Capitol. Stress can be manageable. You just have to find what works for you.

Dealing with stress as a police officer and a media relations contact is often times overwhelming. Normal police work has its moments anyway, but throw in some cameras and microphones and the pressure starts to mount. I find the best way to deal with the stress is to try to slow down and focus on getting the task completed. I keep the mantra “DWI!” on a bulletin board by my desk. This DWI doesn’t have anything to do with drinking and driving. It stands for “Deal With It.” The stressors are not going to go away by avoiding them. Face them head on and get it over with. Something might not go exactly how you wanted it to, but at least it is off your plate and you can move on to the next crisis.

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Jonathan Crossley

Brigette Williams

Nick Genty

2014 Arkansas Teacher of the Year English Language Arts Teacher Palestine-Wheatley High School Palestine

Communications Information Officer American Red Cross in Arkansas Little Rock

News Director KATV Channel 7 Little Rock

Physical activity and reflection keep me going. After a long day or week, I find it necessary to hit the gym. When I come home, endorphins flowing, I think about my performance as a teacher. What could I improve? Could I have handled a given situation better? Then, I talk it out with loved ones. When I bottle up my emotions, my students and fellow teachers suffer. All professionals need to find the activities and processes that give them peace. We are not ONLY employees, we are humans. Self-preservation is an important piece to the puzzle of success. As Teacher of the Year, my schedule demands that I find the best and most personal methods for maximizing my time. When I allot myself needed reflection, I am a much better teacher, leader and professional.

Because the American Red Cross responds to disasters, one never knows what will happen from one moment to the next – an apartment fire at 2 a.m. displacing hundreds of people, a tornado affecting thousands or a disaster on the other side of the world impacting Arkansans in a personal way. Events such as these, in addition to the usual daily items, can suddenly increase stress levels. No matter how hectic things become, a few things provide me moments of Zen: • Music relaxes as well as provides focus. It’s on all of the time in my office, car and home. • As cliché’ as it sounds, laughter is a must. People may be surprised how sharing a laugh can release stress when shared with others under pressure. • And, acknowledging gratitude within the moment – of being able to help others and of being witness to the resiliency of people to persevere.

When it all comes down at one time in my business, I rely on several things to cope. Delegate. Talk with your key managers and get them involved with scheduling employees and assign these managers with tasks to help take them off your plate. Prioritize. I keep a legal pad on my desk where I write down key words that keep me on track to accomplish certain things within the day, and other tasks that can be accomplished the next day or during the week. Close the door. Most managers use the “open-door policy,” but sometimes you have to shut the door and focus down on a task that has to be completed. Breathe. Take a walk around the building, take a five-minute drive, escape and let your mind rest. Take care of yourself. Eat right, get enough sleep, drink plenty of water and engage in regular physical activity.

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Leadership PHOTO: BOB OCKEN

School of Thought Sonia Davis GutiĂŠrrez encourages students to stay true to themselves. By Ben S. Pollock

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Sonia Davis Gutiérrez is a techie dynamo, but the mellowest one you might meet. That may be because she emphasizes the artistic side of graphic design or perhaps because her business is mostly about education. She moved to Fayetteville some 20 years ago to attend the University of Arkansas, and outside of a year attending a university in Spain on a Rotary scholarship and later two years getting a MFA at Parsons School of Design in New York City, she hasn’t left. The diversity, drive and creativity of this college town fit her, and she’s reciprocated. Her base is the New Design School, which received its state private career education license in 2006 (with plans to step up work on accreditation this fall) and has had some 500 students since. How many have graduated from its 21-course curriculum? Perhaps that’s not the best question to understand the concept. The answer is six, she said, but the tally should be up to eight to 11 by the end of this summer. That’s because the students, who generally are age 18 to 25, seem to get what they come for pretty quickly. “Some people come in, and take two classes, and they have a job. Some people take one class and have a new job,” Gutiérrez said. “All they’re doing is putting on their resumes that they’ve attended New Design School and that they have HTML [Hypertext Markup Language for writing Web pages] and CSS [Cascading Style Sheets for formatting] skills.” For her, this defines the post-Great Recession new economy – “a competencybased, skill-based economy.” Gutierrez’s school and business are in the Fulbright Building on East Dickson Street. It was built in 1962 and designed by local architect Warren Segraves to house the Fayetteville Public Library, which moved to a new building in 2004. Honored local architect Marlon Blackwell extensively renovated the Fulbright for commercial tenants. The New Design School is a 501(c)3 educational organization with a for-profit partner in 3c21 Design. Gutiérrez is president of the former and principal of the latter.

This partnership defines an unusual collaborative educational process that might explain how the center’s students pick up work so readily, often before completing their coursework. It becomes obvious in the name of the business arm – 3c21 Design. With the words fleshed out, it’s pronounced “three come to one design.” The three consist of an experienced graphic designer, the student designer and the client. It’s something of a shortterm apprenticeship that accompanies the classroom education. Twenty percent of the design fees go to the New Design School. What is produced? Logos, symbols and marks, and promotional materials, including posters, brochures, postcards and stationery. And Web sites. One client is Duane Woltjen, webmaster of the nonprofit Ozark Highlands Trail Association. “Sonia was recommended to me to redesign and upgrade our website,” he said. “We engaged her Web design services, and [have] benefitted greatly ever since. Sonia is highly skilled technically, very communityservice oriented, highly creative and very skilled in communications and graphic arts. She and Mike [Davis Gutiérrez] are thriving small business founders and life partners, generous and always very pleasant.” Resident gardener Mark Cain of Dripping Springs Farm, a longtime vendor at the Fayetteville Farmers’ Market, said Gutiérrez “was instrumental in encouraging us to use a Web presence – via the website she designed for us – to announce and advertise our community-supported agriculture project,” of which she has been a part since the first deliveries into

Fayetteville. “That’s what I like about Sonia: she can inform us about the exciting possibilities of cyberspace communication while her feet are firmly planted on the ground where the veggies and flowers are planted,” Cain said. Gutiérrez’s school has another aspect that might be unusual in the 21st century: It has no Web-based classes. Students have to show up. In person. “This online thing is not working like we expected,” she said. “The completion and goal rates are low.” New Design School is fully plugged in, all the same. “We maintain a digital realm, always, with Google, a digital community, and so we can video, we can chat, we can do all that,” Gutiérrez said. “This is how we use it, as a tool. During all the ice and snow, we never skipped a day. We used it when we couldn’t meet in the physical. It’s a means, it’s not the answer. “You still need the people. There is so much that is happening with a good teacher. The teacher’s monitoring. And there’s all this other body language happening [with students] – they’re confused, they’re kind of getting it, they’re super-bored. So you modify, you modify what you’re doing. If you care. If you’re present and you’re engaged. If you’re an engaged instructor.” Second-year student James Rector agrees. “Sonia has become a great mentor and friend,” he said. “She has constantly challenged me and other students at the design school to hold strong values. In my opinion, I respect people who can stay true to themselves, and look for every opportunity to learn, which is the very core of Sonia’s influence.”

Call, or visit our website today!

501. 801. 6700 Mainstream-Tech.com/B4 www.talkbusiness.net

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Leadership PHOTO: COURTESY OF HOT SPRINGS

Fire Sparks Talk of Downtown Hot Springs Renewal

Community leaders in the Spa City are determined to revitalize a decaying downtown. By Steve Brawner 82

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For the Hot Springs community, the fire that destroyed much of the Majestic Hotel Feb. 27 didn’t just burn a historic landmark. It also sparked a discussion about how to rejuvenate the downtown area. The Majestic Hotel, which hearkened back to the city’s heyday as an attraction for gangsters and baseball greats, had sat empty and unused since 2006. According to Jim Fram, president and CEO of the Greater Hot Springs Chamber of Commerce and the Metro Partnership, it was emblematic of a citywide attitude: Somebody will fix it someday. He said someone described it by saying, “There was kind of a feeling of ‘good is good enough.’” Bryan Smith, chairman of the Chamber of Commerce and vice president of Alliance Rubber Company, said communication gaps had grown within parts of the city. The fire closed some of those gaps. “What the fire did was it actually brought a lot of people together,” he said. “When that happened, you saw a lot of people that were disappointed, that were hurt. You know, that was a landmark, and it really brought people together to start discussing, ‘OK, what do we need to do?’ Because we don’t want this to happen to any of our other structures downtown.” A citywide strategic plan prepared by Austin, Tex.-based TIP Strategies in 2011 had largely been sitting on the shelf since Fram arrived in Hot Springs from Tulsa last year. Downtown development was one of four components of the plan. The fire became a catalyst for revisiting that part. Fram, Smith and Paul Riser, owner of Riser Ford Lincoln and chairman of the Hot Springs Metro Partnership, appointed a nine-member Hot Springs Game Plan Task Force that included Smith and Riser. The task force’s marching orders included validating or repudiating the strategic plan. The task force conducted three public meetings and an online survey of community members about the downtown area. An April public meeting featured comments from Mayor Robert McCaslin of Bentonville, El Dorado developer Richard Mason, Conway Chamber of Commerce President Brad Lacy and others.

The task force released its report June 4 at an outdoor press event at the Hot Springs Convention Center plaza. Across the street, a Regions Bank building was being torn down to be replaced by a new structure. It was an appropriately symbolic backdrop, Fram pointed out. The report, which largely validated the 2011 strategic plan, said that downtown Hot Springs “is the social center of the community.” Some of the task force’s immediate recommendations include hiring a full-time downtown economic development director, creating a private downtown investment fund, formalizing the relationship between the Hot Springs Metro Partnership and the Hot Springs Downtown Initiative, and creating a new fire district in downtown Hot Springs. Among its goals for year one is publishing an investment guide for redeveloping downtown buildings, and making the Arkansas School for Mathematics, Sciences and the Arts the north end anchor of Central Avenue. Longer-term goals under consideration include a tax revenue source to pay for voter-approved downtown infrastructure projects; a performing arts center; an open air public thermal water pool; a transportation system connecting Oaklawn Park and Lake Hamilton; bringing back historic reproduction trolley cars; and developing the area around former President Bill Clinton’s boyhood home. The task force also created a map delineating downtown Hot Springs’ boundaries. Hot Springs’ economy has not been booming. Garland County ranked 326th among 428 metropolitan statistical areas nationally for its moving average job growth in 2013 after employment shrunk .22 percent. That’s according to U.S. Bureau of Labor Statistics numbers that were aggregated by Arizona State University’s W.P. Carey School of Business. Tourism has always been a vital part of the economy in the oldest national park in the U.S. National Park Service and will continue to be so. Oaklawn, which has been racing horses since 1905, is doubling its gaming area, and the Buckstaff Bath House

has been operating continuously since 1912. Lake Hamilton was created in 1932 with the building of Carpenter Dam by Arkansas Power and Light. Those kinds of attractions are competing with newer, glitzier destinations like Branson. According to Riser, however, the city’s age is part of its allure. “There’s a lot of history here, and I think the age of the city with the bathhouses and all the history that Hot Springs enjoys is something that we can build upon,” he said. Meanwhile, the city sees other opportunities for economic development. About half a dozen wealthy residents in their 40s who have sold their businesses but aren’t ready to retire have been meeting informally about future investments, and Fram is hoping they will pour some of their money into Hot Springs. The city’s large percentage of senior citizens means it can support two hospital systems, St. Vincent Hot Springs and National Park Medical Center, and also ancillary services. Arkadelphia’s Henderson State University and National Park Community College have formed a partnership so that, under one roof, students can earn their associate’s degree at NPCC and their bachelor’s degree at HSU without ever leaving Garland County. The aerospace industry employs 3,000 in the county. All of the heavy maintenance on Delta Air Lines’ regional jets is done at the Hot Springs airport. “It’s not uncommon to see 20 regional jets parked on the ramp out here,” Fram said. The task force’s recommendations are just that – recommendations. It’s too soon to know if tourists and residents someday will ride a trolley car from Lake Hamilton to Oaklawn and then to a public thermal water pool. Still, leaders are confident that the fire that destroyed a part of the city’s history will play a part in building its future. “I’m pretty excited about the direction that it’s going,” Fram said prior to the report’s release. “Like I said, I think we have beat the problems to death, and I think these recommendations are going to be some real solutions if we can kind of keep everybody together and move forward with them.” www.talkbusiness.net

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Leadership

“A lot of things just came together. … Then things started snowballing.” – Paul Latture

Latture Saying Goodbye to Expanded Port By Steve Brawner Paul Latture is driving through the Little Rock Port Authority, clearly taking pleasure in describing what he sees. “You just left America,” he says as he pulls into the parking lot of the foreign trade zone. He passes tanks filled with used oil to be reprocessed in Chicago and a silo full of cement imported from Italy. Aluminum ingots from Russia are headed to Malvern to become tin foil at an Alcoa facility. A pile of scrap metal is headed to China. A barge is being relieved of 80,000-pound steel coils bound for the port’s Welspun USA plant. They came from Russia, or maybe it’s Finland, or India, or Poland, or Germany, or South Korea. “If you think about it ... you jump in this water and start swimming, you can go anywhere in the world,” he said. “Anywhere in the world from right here.” Earlier in the year, Latture announced he was retiring as director of the Little Rock Port Authority. His retirement was effective at the end of June. His successor is Little Rock Assistant City Manager Brian Day. The staff is small, but the port’s impact on Central Arkansas is huge. About 40 employers provide 4,000 to 4,500 mostly skilled jobs and support many others. Among the largest employers: Welspun, which has 331 miles of Keystone

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Paul Latture

Pipeline pipe stacked in a field outside its facility; LM Windpower, which makes huge windmill blades; and Skippy peanut butter. Eighty percent of the port’s activity is inbound bulk materials, most of it coming from New Orleans, with steel and industrial goods its major product. Latture points out that each barge handles the equivalent of 65 trucks. “If you want 1,650 tons worth of stuff, the barge is a remarkably cheap way to get it here,” he said. The port is not tax supported and makes money two ways – unloading a barge or moving a rail car. Revenues from the sale of land are plowed back into the port’s infrastructure. When he arrived at his new job in April 1999, the port was, he said, “stagnant.” Land hadn’t been sold in a while, and the port’s finances were weak. But about that time a partnership was forming between the port, the city, the Little Rock Regional Chamber of Commerce and Entergy Arkansas. The port decided it had been undervaluing its properties, so it raised its available land from $15,000 an acre, where it wasn’t selling, to $40,000. “Everybody said you’re nuts, but all of a sudden, it’s worth something,” he said. With its dock maxed out on capacity, the port used a U.S. Economic Development

TALK BUSINESS & POLITICS | JULY/AUGUST 2014

Administration grant to build a second dock and increased barge traffic about 50 percent. A second grant doubled the dock’s size and added warehouse space. The port also added land and invested in roads, rail and utilities to service it. When Latture arrived, it had 1,500 acres under its authority. Today it’s 2,640. “A lot of things just came together,” he said. “The industries started doing well. We ended up getting some infrastructure that we sorely needed. We added more capacity, and once we did that, then things started snowballing.” The port is in a time of transition, and not just in its leadership. Most of its available land is on the wet side of the levy and, under terms of a federal grant it used to buy the land many years ago, can only be leased, not sold. Because it’s also low and susceptible to flooding, it’s hard to find takers. Only a 155acre site and a 22-acre site are for sale on the dry side. Land is available in a couple of directions, but negotiations with sellers have not begun – $10 million will buy the land but not develop it. Now that he’s retiring, he plans instead to “beat a golf ball to death.” He’s also planning on traveling extensively with his wife. Not by barge, though.


A New Day at the Little Rock Port Authority By Steve Brawner Bryan Day is taking leadership of the Little Rock Port Authority at a time of transition and opportunity. The incoming executive director is inheriting an operation that under the retiring Paul Latture has grown to 2,640 acres with about 40 employers and 4,000 to 4,500 mostly skilled employees. About half a billion private dollars and around $30 million in public money have been invested during his tenure, Latture said. Day will occupy a beautiful new, $2 million office complex overlooking the Arkansas River. But the port has all but run out of land to play with. Day, currently Little Rock’s assistant city manager, has $10 million to buy more land thanks to a sales tax passed by city voters in 2011. Just south of the port is about a 1,000acre parcel under single ownership, but negotiations haven’t begun. Other nearby land would have to be raised from a floodway and has no infrastructure. “We get one shot to get it right, and the land we purchase, it’s going to have to hold us for the next five, 10, 15 years,” he said. Before becoming assistant city manager, Day spent about a decade as director of the city’s Parks and Recreation Department. The Parkview High School graduate earned a

Bryan Day

degree in criminal justice from UALR and then went to work for the Arkansas State Parks system – first at the Ozark Folk Center and then at Historic Washington State Park, where he was the superintendent. Day, who officially started his new job on June 23, said it will be an adjustment leaving an organization of 2,000 people and

“The potential’s there to just build on it and make it even better than it already is.” – Bryan Day a $220 million budget for one with a staff of eight and a $3 million budget. But he said the port opportunity will give him a chance to expand on his relationships with government officials, business leaders and private developers. “It’s not broken now,” he said. “The staff and board have done a good job. The potential’s there to just build on it and make

it even better than it already is.” In addition to purchasing the land, Day’s other goals include finding new moneymaking opportunities within the existing operations of the port, which is not supported by tax dollars and stays in business by unloading barges and moving railcars. Infrastructure improvements will have to be made on existing and new property. Also, Day plans to emphasize public relations – among potential tenants, of course, but also within the city. “Several people have said to me, ‘You’re going way out there? What’s out there?’ And what people don’t realize is that what’s out here are thousands of jobs, hundreds of millions of dollars in private investment, and great opportunities for additional investment, and I think that one of the immediate goals has to be to get that message out to the community somehow,” he said. For now, Day plans to spend his first few weeks learning about the job with help from Latture, traveling to other ports, and meeting folks in the industry. Then he’ll start trying to follow in Latture’s footsteps. “I hope that coming out here as the director, I can really leave a positive mark on the community,” he said. www.talkbusiness.net

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Gov. Mike Beebe

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Feature

ON A MISSION Governor Mike Beebe By Talk Business Staff PHOTOS BY BOB OCKEN

On July 12, 2014, Governor Mike Beebe and Arkansas economic development officials will travel to Europe for trade meetings at the Farnborough Air Show in London, talks with Dassault Falcon Jet and others in Paris, and a recruiting mission in the Czech Republic. Beebe has also been supportive of a major effort to overhaul the state’s workforce training program. A catalyst for the new look at state efforts to coordinate industry, education and jobs was State Sen. Jane English (D-North Little Rock), who provided a swing vote on funding for the state’s private option in exchange for a new workforce approach. The private option and Beebe’s payment reform initiative are two health care programs that supporters claim are crucial to the future of medical delivery in Arkansas. At the end of June, Talk Business & Politics Editor-in-Chief Roby Brock discussed these topics with Beebe in a lengthy one-on-one conversation.

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Feature: Beebe

Q:

Roby Brock: You’re heading to Europe in mid-July for a trade mission that will take you to London, Paris and the Czech Republic. Tell me about this nine-day trip. Gov. Mike Beebe: Hopefully, they won’t kill me like they did in the China trip a couple of years ago. We were 11 days in China, 13 days counting the travel times. We were in eight different hotels in eight different cities and provinces…

Q:

Brock: And you love to travel so much. Beebe: Right, I’m just really a big traveler, that’s why I don’t go much. This trip is the air show specifically designed to address our current aviation industry

“Hopefully, they won’t kill me like they did in the China trip a couple of years ago.” – Gov. Mike Beebe presence in Arkansas from Europe. We’ll potentially get some more expansion. Everybody knows about Dassault Falcon Jet.

Gov. Beebe makes his point with Brock.

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Our number one manufacturing export for the state of Arkansas is aerospace and this is a big deal. They have this show in London one year and Paris the next year and they alternate between the two. This year it’s London and it’s a trade show for economic development. Paris, as you might imagine, is for those companies that we already have cultivated a great relationship with and we continue to cultivate that relationship. We just expanded Dassault in Little Rock…

Q:

Brock: That’s one of the fruits of your labor from your 2009 European trade mission, right? Beebe: Exactly. Now, we have expanded that with the potential for


Creating health care in Arkansas was only the beginning.

Our remarkable story began in 1888 when pioneering Sisters of Charity of Nazareth and Sisters of Mercy founded two of the state’s first hospitals, creating health care in Arkansas in the process. As we begin our next bold chapter, we proudly highlight our sponsorship by Catholic Health Initiatives (CHI) – one of the nation’s strongest health systems with academic centers, community hospitals, physician clinics and long-term care facilities across the United States. With an investment of more than $200 million in technology and facilities over the past five years alone, our commitment to Arkansas has never been stronger. We’re here for you: providing care no one else does and achieving results no one else can. We’ll continue innovating health care, creating healthier communities and challenging others to follow, as we have since the beginning. CHI St. Vincent is our new name, with the same purpose and values you’ve come to trust.

Hot Springs Infirmary Morrilton North Medical Group

CHIStVincent.com

U.S. News & World Report and Magnet® recognitions relate to CHI St. Vincent Infirmary; Pathway to Excellence® designation is for CHI St. Vincent Morrilton. Pathway to Excellence® and Magnet® names and logos are registered trademarks of the American Nurses Credentialing Center. All rights reserved.

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Feature: Beebe

“Our number one manufacturing export for the state of Arkansas is aerospace and this is a big deal.” – Gov. Mike Beebe

Q:

PHOTO COURTESY OF DASSAULT FALCON JET

even further expansion and maybe even a supplier there too. Czechoslovakia is totally different and actually it’s the Czech Republic now. They’ve had very little, if any, state gubernatorial contact in the Czech Republic and there are a number of businesses that are looking at a North American presence. It’s a fertile field because everyone is going to China and Taiwan and Paris and London and all those other places. We’d like to get in on the

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ground floor of what the Czech Republic companies might be interested in.

Q:

Brock: What kind of companies exist in the Czech Republic? Not every person in Arkansas would know. Beebe: The kinds of things you would expect: they have significant arms manufacturing, they’ve got parts manufacturing, automobile parts manufacturing.

TALK BUSINESS & POLITICS | JULY/AUGUST 2014

Brock: In recent weeks I’ve been asking a number of legislators of what they see happening in terms of workforce development. Obviously, it’s a big push from the last fiscal session to make some changes. Give me an update of where workforce education and that whole overhaul exists at this point and time. Are you satisfied with the progress that is being made? Beebe: I’m satisfied with the fact that everyone’s got it on the front burner and everyone recognizes that some coordination of effort could improve everything. We’ve got a lot of success stories and we’ve got a lot of good things that have happened. I continually point out to what happens at SouthArk Community college and how they work with businesses down there to create these process managers. All the folks in the industry are in and around South Arkansas that need specialized training


COURTESY OF GEOLOGY.COM

TRADE MISSION Arkansas’s export shipments of merchandise in 2013 totaled

7.2 billion.

$

Our top 5 international trading partners include:

1. Canada 2. Mexico 3. China 4. France 5. Hong Kong The largest merchandise export categories from Arkansas are:

1. Transportation Equipment $2.1 billion 2. Chemicals $825 million 3. Food & Kindred Products $747 million 4. Machinery, Except Electrical $546 million 5. Primary Metal Manufactures $485 million

Source: U.S. Department of Commerce International Trade Administration, Talk Business & Politics

Gov. Beebe’s trade mission in July 2014 will be his third trip to Europe and his fourth extensive overseas economic development tour.

Beebe travelled to the European continent -- including London, Paris and Hamburg -- as part of a state contingency to court new investment and meet with existing companies interested in Arkansas.

Beebe visited Cuba on an agriculture mission. While a 50-year trade embargo has prevented exchanges between the U.S. and Cuba, Beebe said he saw signs that trade restrictions might someday be eased.

Beebe traveled to France for an agricultural related economic trip. He met with French government officials interested in promoting food exports and research between the two entities. From that trip, Beebe said the National Center for Toxicological Research near Pine Bluff could also benefit from a French exchange.

Beebe made an extensive 12-day economic development tour of China and Japan in an effort to open up talks for more business exchange. He met with 11 different economic prospects that were in differing stages of possibly investing in Arkansas. Several prospects are still in the pipeline from this tour.

Also in China, Wal-Mart and Tyson Foods are two Arkansas firms with a major presence in Asia. Beebe used his high-level meetings with Chinese officials to discuss issues of importance to those companies and others. www.talkbusiness.net

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Feature: Beebe and how that community college has responded with the appropriate curriculum to make that done. Great success story. Same thing in West Memphis. Great success story with what Glen Fenter [at Mid-South Community College] has done over there to make curriculum and course offerings responsive to the needs of business and industry. Pulaski Tech has done a good job, even some of our four-year schools. You

know, Molex had trouble with engineers with the kind of engineers that they specifically needed and only Purdue and Texas A&M were turning out those types of engineers. UALR changed some of their engineering curriculum to meet those needs. So, we’ve got pockets of success stories - Fort Smith has done some good stuff. What we don’t have is the kind of

It’s never easy to make the best even better. But new leadership will help us do just that. President-elect Bill Tsutsui comes to Hendrix from SMU in Dallas, where he was Dean of Dedman College of Humanities & Sciences. After earning degrees at Harvard, Oxford, and Princeton universities, Bill built a 20-year track record of innovation and success as a teacher, scholar, and administrator at the University of Kansas and at SMU. We’ve combined a great leader with a world-class faculty and outstanding students from all over the world. That’s a win/win/win for Arkansas.

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coordinated, across-the-board, everywhere success stories that you would like to have, and workforce development may be the number one key to economic recruitment, retention, expansion. We hear stories that a lot of people are unemployed and we’ve got a lot of jobs open and waiting. But the skill levels of the people unemployed don’t match the needs of business and industry so it’s part of the state’s responsibility. We did this with Hino Motors when we totally changed that whole situation and turned something that was pretty bad into something pretty good. So the state has a responsibility to try and be responsive to the needs of business and industry primarily through its technical institutes and its twoyear colleges, but not necessarily limited to that. There are cases where our four-year schools and our four-year degrees need to be doing some of the same things. What’s going on now – and Senator Jane English deserves a lot of credit, but so does my workforce cabinet – pooling the resources from all of those different resources that currently exist and trying to do it in a comprehensive and cohesive way that gets the best bang for the taxpayer’s buck.

Q:

Brock: You mentioned earlier, and business leaders tell me, they tell you, we’ve got these job openings. Does it require something to move things faster like I have suggested: should we look for a workforce czar in the state of Arkansas? Somebody who can cut through the bureaucracy, not have to worry about the political dynamics. Does it need somebody that can be a benevolent dictator and can make this stuff happen? Beebe: That’s certainly one approach. I’m pretty much a benevolent dictator to let them know we expect results and we expect them to work together. But, there is a good point to be made that a good governor has so many plates that he has to balance from education to prisons to health care to all sorts of things that sometimes it’s hard to


devote as much time to that one topic. So if a governor is not going to do it, a czar certainly could. But you could also have an agency that with a cabinet head that you designate as a lead to go get it done. Right now, the Legislature is doing a good job of being a czar on this expanded

obituary yet. You are optimistic. Beebe: I’m always optimistic. Brock: What makes you optimistic about it with what you know in terms of the vote count down in the Senate at this point in time?

Item 2 is the actual math for all this is still present. We are going to be paying for this whether we take the federal money or not. A Joplin editorial said yesterday they are closing hospitals, laying off folks in Missouri because they wouldn’t do what Arkansas did, and it can have a catastrophic effect on

Beebe: First of all, you got about 175,000 to 180,000 primarily working Arkansans. These aren’t folks aren’t laying around doing nothing. They’re people that work for businesses that don’t carry health care coverage and don’t make very much money. Some are trying to go to school at the same time they are working 40 hours a week trying to put bread on the table. It would be very difficult to throw 180,000 people off health care, that’s item one.

hospitals, here’s why. Part of what they did in Washington – and you don’t have to like them or like what they did in Washington or like Obamacare – if you don’t like it or want to change it, go to Washington. As long as it’s not changed, what Arkansas does to take advantage is the best we can for Arkansas, our businesses and our hospitals and for our taxpayers. So, the hospitals are helping to pay for this with the federal reduction

Q:

Gov. Beebe in studio.

and collaborative effort. So I expect you’ll see, you may end up with, a bunch of czars which may be as problematic as not having one at all.

Q:

Brock: Too many cooks in the kitchen. Let’s shift our gears to talk about health care. We have seen obviously a lot of debate and a lot of political change for the private option and its potential fate. You have said that you’re not ready to write the

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Feature: Beebe in Medicare. If they don’t get the Medicaid expansion offset, they are really in the hole, it’s $28 million.

Q:

Brock: That was the crux of the Supreme Court decision that changed the dynamic of all this. Beebe: Yeah, and it’s $28 million a year just to UAMS. Here is another reason for my optimism: if you’ve got 74% of the

Legislature that is for this and 26% that is against, do you think that 74% is going to let the 26 % get away with that? I suspect there will be as much, because it takes a three-fourths vote. I expect there will be as much of that 74% as is possible to force somebody’s hand.

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Brock: Do you worry about some of the politicians that have boxed

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Brock: They’re going to have to reverse some of those tax cuts, aren’t they? Beebe: Precisely, exactly.

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themselves in a corner with their position on the private option? They can’t change it and survive politically. Beebe: You always worry about that. That’s why you may see some tweaking to the point that it allows some cover for those folks that once they look at the whole world and see the whole picture, they back off the rhetoric. When they were running and didn’t know any better and when they look at the realities, there’s a $100 million hole in the budget if they do away with it. You’re not going to take it away from education, the Supreme Court won’t let you. Prisons are already in trouble. Where are you going to get the money?

TALK BUSINESS & POLITICS | JULY/AUGUST 2014

Brock: I don’t see that happening. Beebe: Well, if they don’t, then they have a huge hole. That’s just the reality of governing. Brock: We’ll grow our way out of it governor – isn’t that what they always say? Beebe: Yeah, well I’m a fiscal conservative, I don’t do that stuff. Brock: Let’s talk about your Payment Reform Initiative. This is another health care issue separate from the private option. Hospital executives tell me they are seeing some significant savings from the Payment Reform Initiative in their health care systems. Beebe: America has to do this and I think the other 49 states are going to follow Arkansas. I think the federal government is going to follow Arkansas. The old feefor-service model is unsustainable. It’s never going to continue to be able to work. This is the way the country has to go and Arkansas is leading the way.


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Industry INSET PHOTO: TYSONFOODSINC.COM

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TALK BUSINESS & POLITICS | JULY/AUGUST 2014


A Big Appetite

Tyson Foods was in a short-term ‘food fight’ but won an $8.55 billion bidding war for Hillshire Brands. By Kim Souza

COURTESY OF THE CITY WIRE

June was a busy month for Tyson Foods as the Springdale-based food giant took steps to gobble its biggest acquisition target ever. After two weeks of back-and-forth, Tyson Foods, Inc. announced June 9 that it had submitted a “unilaterally binding offer” to acquire all outstanding shares of The Hillshire Brands Co. for $8.55 billion. The $63 per share cash offer is the largest in Tyson Foods’ history. The offer was also subject to Hillshire Brands being released from its $4.3 billion existing agreement to acquire Pinnacle Foods Inc., which includes a $163 million break-up fee. Bidding for Hillshire began in late May when Tyson competitor Pilgrim’s Pride offered $5.52 billion for the company. Tyson Foods countered a few days later with a $6.8 billion ($50 per share) offer. Texas-based Pilgrim’s countered that with a $7.7 billion ($55 per share) offer on June 3. Pilgrim’s folded after the June 9 Tyson offer leaving the Arkansas meat giant in a position to pick up Hillshire’s food brands such as Jimmy Dean, Ball Park, State Fair and Hillshire Farms. “In particular, the strength of Hillshire Brands’ products in the breakfast category would allow Tyson to capture opportunities in this attractive and fast-growing day part,” Tyson Foods said in a statement announcing the deal. The pro forma company would give Tyson the No. 2 market share ($3.3 billion) in the frozen value-added category, leap-frogging ConAgra in retail sales, according to Tyson. Tyson now has the No. 3 spot with $2.4 billion, and Hillshire ranks eighth at $1.3 billion. The prepared foods segment is now 9% of Tyson Foods’ $35.4 billion in annual sales. If the deal happens as expected, the combined companies would have annual revenue of around $39.4 billion, with 18% of that coming from prepared food sales.

Tyson said it expected to realize “annual synergies” in excess of $300 million driven primarily by operational efficiencies, purchasing, distribution, supply chain efficiencies, and upgrading raw materials. It also said its pork processing operations would benefit from stable and consistent demand for its raw materials for use in Hillshire Brands’ branded, value-added products. ANALYSTS DIGEST THE DEAL Few reviews of the Tyson-Hillshire move were favorable. Several analysts say Tyson overbid at $63 per share for Hillshire Brands at the expense of existing Tyson investors, and that the 70% per-share premium could take years for Tyson to recover. “We believe Tyson stock will be dead money at best for the next 12 months as it copes with the hangover of paying such a big price including an issuance perhaps of $1.6 billion of equity,” noted Robert Moskow, an analyst with Credit Suisse. Moskow was one of two Wall Street analysts to downgrade Tyson stock following the bidding war for Hillshire. Moskow downgraded Tyson from neutral to underperform. BB&T Capital analyst Brett Hundley downgraded Tyson Foods from a buy to a neutral position citing the bids were getting too rich to make the numbers work. “Bidding wars can sometimes leave casualties, the situation with Hillshire is starting to approach this level,” Hundley noted to investors. He said a bid over $60 by Tyson Foods would run the risk of ruining its investment grade status. “At the price of $63 per share, we believe Tyson destroyed $2 billion in value. We believe fair value for Hillshire was $47 per share including the $1.3 billion value of synergies,” Moskow said. Standard & Poor’s put Tyson Foods on credit watch with negative implications following its winning bid for Hillshire Brands because Tyson will assume more

debt to finance the high-priced deal. Tyson now has investment grade credit, two full levels above junk status, but analysts believe the meat giant could teeter on the edge of more downgrades if commodity price increases crimp margins and cash flow needed for debt repayment. Officials with Tyson Foods say they are prepared to issue debt and equity to cover the purchase, but will not sacrifice the investment grade credit rating. Fitch Rating noted shortly after the deal’s announcement that a new equity issue is the most favorable option for the company. Tyson’s ratings will take into consideration the equity used to finance the purchase as well as Fitch’s view regarding the pace of reducing debt and Tyson’s ability to garner its projected $300 million in savings. Analysts drilled Tyson executives in an investor call about why the bidding went so high for Hillshire Brands. Tyson management said Hillshire was a once-in-a-lifetime deal that will help moderate the volatility of the core commodity business, accelerate its growth rate, improve the value-added mix while also creating operational synergies – improved margins – over time. Tyson Foods CEO Donnie Smith said culturally the companies are also a great fit and the deal will pay off for shareholders over the next five years. Some analysts have speculated that Tyson could reduce capital expenditures or spin off a Hillshire division or two to strengthen their financial position. Stephens Inc. analyst Farha Aslam told Bloomberg Radio that growth among U.S. food companies is hard to achieve because Americans are spending about all they are able on food. She said the food industry is seeing several consolidations because interest rates are low and food companies generate lots of cash. “Hillshire is a strategic fit for Tyson Foods, the largest acquisition in Tyson’s history and it will take some time for them to digest it all,” Aslam said. www.talkbusiness.net

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Executive Q&A

A Noteworthy Entrepreneur Music master Glenna Cook may hold the keys to the biggest children’s learning tool since Hooked on Phonics. By Bill Paddack

Stas Filippov, his daughter, Milla, and Glenna Cook The Noteimals iOS app

Glenna Cook of Vilonia has been using whimsical drawings of a dog, a cat and other animals since the 1990s to teach piano and guitar. This creative animal note method – her husband, Neil, calls it “associative learning” – has helped numerous students learn to read notes and play songs. Now the perky pets she calls Noteimals have hopped into an app that is available on iTunes in hopes of reaching – and helping – more children. With nimble fingers, a charming smile and an ever-ready iPad, Cook, 76, loves to demonstrate just how quickly a child can soon be playing tunes like “Hot Cross Buns” and “Yankee Doodle.” We asked her to tell us a little bit about the app, how it was developed and the role of the Cooks’ former Russian exchange student, Stas Filippov, who is now an American citizen and vice president/engineering for Visual.ly in the San Francisco Bay area.

many schools and preschools as possible, as well as homes.

Why create a Noteimals app? The app came into being in hopes of getting piano and note reading into more children’s hands. So many children do not have this opportunity, but an app on a school tablet can change that.

I love your Noteimals stories – like the note D becoming “a dog who likes to dig out from under the treble clef.” Sounds like you’ve long had a knack for working creatively with your students. I hope I do; I really do care. This method works. I have had I don’t know how many children that have succeeded with Noteimals. For me, it’s about what we can do to help our children. The children of today are the leaders of our nation and the world tomorrow. Music and piano do make a world of difference. I see it every day. It is amazing and an important mission.

What do you hope to achieve with the app? The keyboard on the app can be used to play the songs available on the app or as the instrument used when teaching from the series of books available at www.noteimals. com. A child as young as three can easily get started learning to play the piano, match the animal on the grand staff to the one on the app’s keyboard, learn the differences in tone, gradually learn to use all fingers and have the wonderful joy of playing a song. What is available on the app is the first phase of three. The next phase will be a practice working toward ease in note reading. The third phase will work with timing. We would like to get the app in as

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TALK BUSINESS & POLITICS | JULY/AUGUST 2014

How involved was the former Russian exchange student who you now consider a son? Stas Filippov is an amazing partner. He has helped me from the day he heard Neil and me talking at the dinner table about my music parents wanting me to make a book from the printer sheets I had created and I just could not see how I could do it. Stas helped me find a way, even wrote a computer program to help create the first timing book. It was the greatest. He has always done the programming work. He created the first websites and found a method I could use to work with our new one. He is totally in charge of the app design and functions. I help and he relies on my music ability, but he does the rest of it. He’s very, very good.

What is the best business advice you’ve ever received? John Chamberlin [founder of Arkansas Systems] invited and encouraged me to attend the 1 Million Cup Club. We feel confident we have found an excellent advice and support organization that hopefully will help us move forward.


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Profile for Talk Business & Politics

Talk Business & Politics July/August 2014  

Talk Business & Politics July/August 2014  

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