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Regional Report: Arkansas Making Strides in Manufacturing and Technology

Although its GDP growth has been sluggish, Arkansas boasts a low cost of doing business and of living.

Q3 2019
In June, Lockheed Martin in Camden announced a planned $142 million expansion of its facility.
In June, Lockheed Martin in Camden announced a planned $142 million expansion of its facility.
For Arkansas, the pitch to businesses begins with costs. In CNBC’s 2019 Best States for Business rankings, Arkansas ranked third for both the lowest cost of doing business in the country and the lowest cost of living.

“Arkansas has always maintained a low cost of doing business as well as a low cost of living,” says Brandi Hinkle, director of Communications for the Arkansas Economic Development Commission (AEDC).

Hinkle says low costs are among the reasons that the state is showing signs of positive momentum attracting new business investment: “The state has seen increases in both existing companies adding workers and new companies locating to Arkansas…Recent tax cuts have made Arkansas competitive with surrounding states, adding to the optimism Arkansas companies have been experiencing. And because the state has consistently had some of the lowest business costs in the country, companies are able to plan for current and future expansions here.”

Arkansas has been among the states to benefit from low unemployment rates across the United States. The state reached an all-time low rate of 3.5 percent in June 2019, slightly below the national rate of 3.7 percent.

Seeking a Collaborative Approach
Arkansas has seen particular economic development strides made recently in the areas of manufacturing and technology. According to Hinkle, the state ranks sixth in the nation for the percentage of population working in manufacturing. And Arkansas has placed an emphasis on developing training initiatives to better prepare workers for today’s jobs. For instance, the state collaborates with manufacturers to develop customized workforce training plans and teams with company leaders and school counselors to identify students with the interest and aptitude to be good fits for manufacturing careers.

Other prominent workforce initiatives in the state include Be Pro Be Proud, a statewide coalition of public and private partners to showcase career opportunities in highly skilled professions, as well as Future Fit, a 120-hour training program for military veterans, unemployed or underemployed individuals, nonviolent offenders released by law enforcement, and students who do not plan to pursue higher education. Target jobs include production operator/assembly, mechanical repair technician, and mechatronics technician roles.

These workforce efforts fall in line with Arkansas’ determination to work with business partners to develop creative solutions to the challenges that companies face when selecting new sites and setting down roots. In that vein, Hinkle says the state’s low cost of doing business includes “some of the lowest average electricity rates in the country.” She notes, “Our energy partners are … accommodating when it comes to meeting the needs of business and industry.”

Arkansas has always maintained a low cost of doing business as well as a low cost of living. Brandi Hinkle, director, Communications for the Arkansas Economic Development Commission (AEDC) The state also offers companies ready transportation access for their logistics networks. More than 85,000 Arkansans are employed at more than 80 distribution centers and 22 major trucking companies — including J.B. Hunt Transport Services — according to the AEDC. In fact, 20 percent of Arkansas’ 25 largest employers come from the transportation services sector. Hinkle says Arkansas’ intermodal infrastructure network will get products to market quickly and efficiently.

Key Industries
Agriculture remains the key ingredient of Arkansas’ economic landscape, contributing approximately $16 billion to the state’s economy each year, according to the Arkansas Farm Bureau. In particular, the state is a top exporter of rice, soybeans, cotton, poultry and feed grains, ranking first in the nation in rice production and third in cotton.

Another top-exporting industry for the state is aerospace and defense, according to the AEDC. Lockheed Martin is among the large aerospace companies that have committed to Arkansas, including announcing in June a planned $142 million expansion of its facility in Camden. The project will add 326 new jobs by 2024, according to the company.

The goal is to ensure the state has a steady flow of workers able to compete — and win — in the 21st-century knowledge-based economy. Brandi Hinkle, director, Communications for the Arkansas Economic Development Commission (AEDC) Justin Routon, site director of Lockheed Martin’s Camden operations, says he sees “an incredibly supportive environment” for businesses in Arkansas. He explains that the state’s economic development team and financial support have played a key role in enabling growth at the Camden site. Routon says the Camden operation has been a successful one, and its production makes it a natural for investing new resources: “The facility has a long record of precision manufacturing and on-time deliveries, which is the reason we continue to invest in our Camden operations and consider it as a potential location for manufacturing whenever we have a new product at Missiles and Fire Control.”

Walmart, the largest retailer in the world, has its headquarters in Bentonville, Arkansas, with plans to build a new central home on a 300-acre campus near its current site. Walmart’s presence serves as a magnet to its business partners, and hundreds of suppliers have offices in the Northwest Arkansas region, including such companies as Procter & Gamble, Campbell Soup, and Hershey, according to a CNN article about Bentonville’s growth. The heavy presence of vendors in the region has given the area the nickname “Vendorville.”

Walmart is one of eight Fortune 1000 companies to be based in the state, according to the AEDC. Other prominent companies to call Arkansas home include Tyson Foods, the largest poultry and meat processor in the country, and Riceland Foods, the country’s largest rice exporter. Other key industries in the state include steel — steel jobs have grown 39 percent in Arkansas since 2009 — and lumber. Arkansas is the fourth-leading lumber producer in the country. “We’ve seen a lot of interest lately in our timber industry,” Hinkle says. “Arkansas has nearly 19 million acres of forestland covering more than half the total area of the state.”

Efforts to Bolster Education, Technology
Although Arkansas boasts low unemployment figures and ended the recent fiscal year on June 30 with a state budget surplus of $295 million, the state’s GDP growth has been sluggish, particularly when compared to the rest of the country. Arkansas’ GDP growth in 2018 was 0.9 percent compared to the U.S. growth rate of 2.9 percent for the year, according to Talk Business & Politics, an Arkansas news site. In fact, Arkansas has routinely lagged the national average in recent years. Michael Pakko, an economist at the University of Arkansas at Little Rock, told Talk Business & Politics that Arkansas GDP growth has averaged 0.9 percent during the past five years, while the U.S. growth rate has averaged 2 percent.

In addition, although Arkansas shone in CNBC’s rankings on measurements related to cost, it did not rate as well in some other key economic development areas. In particular, the state ranked poorly in education (41st) and technology (44th). Among the efforts in the state to bolster its education and technology standing is Gov. Asa Hutchinson’s Computer Science Initiative, which is designed to attract more students to computer science and related fields. Through the initiative, the Governor has committed funding to ensure training in this area for teachers and students from elementary school through high school and beyond.

“The goal is to ensure the state has a steady flow of workers able to compete — and win — in the 21st-century knowledge-based economy,” Hinkle concludes.

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