By Jack Rogers
From the January/February 2018 Issue
Gov. Asa Hutchinson’s economic development strategy for Arkansas is focused like a laser on substantially improving the Natural State’s business climate and making targeted investments to stimulate market-driven growth. The governor has moved aggressively to lower taxes, reduce regulations and increase the speed to market by cutting permitting time, all of which are improving job growth. The results speak for themselves: Arkansas has achieved record-high employment, creating more than 60,000 new jobs during the past three years.
“These jobs are facilitating growth in an area where the state has made a conscientious decision to invest funds to help stimulate growth, market-driven growth created by the state’s overall business climate and new start-up businesses,” Gov. Hutchinson said, in an exclusive interview with BF.
The business-friendly environment in Arkansas is the foundation of an ambitious economic development juggernaut that is establishing lucrative new growth sectors and expanding traditional industries in AR.
Cybersecurity is one of the hottest emerging growth sectors, expected to generate up to a million new jobs nationwide in coming years, and Arkansas is putting the pieces in place to be a major player.
AR is funding a dedicated Cyber Range at the University of Central Arkansas. In conjunction with this innovative program, AR will soon host a cybersecurity accelerator program designed to leverage the leadership position of Metova, one of the fastest growing digital technology companies in Arkansas. Metova has a government division dedicated to providing state-of-the-art cybersecurity technology, training and IT services to the federal government. Metova’s training environment is used by the Department of Defense and Intelligence Community to not only secure our country’s most important networks but also train our nation’s cyber warriors.
Gov. Hutchinson told BF that Metova will be a key asset in an ongoing effort to increase the security and growth potential of a select group of the state’s thriving technology-enabled businesses. As part of this effort, AR rapidly is upgrading its digital infrastructure.
“Arkansas has been establishing state-of-the-art high-performance computing infrastructure all over the state, utilizing federal funds from organizations like the National Science Foundation and partners in the private sector to pave the way for Arkansas to develop strength in cybersecurity and particularly data analytics,” Gov. Hutchinson told BF.
“One example would be the Blue Ribbon Commission, a public-private partnership that recently released recommendations and an action plan on how we can advance data analytics capabilities at our higher education institutions that will help Arkansas businesses like Walmart, Tyson and Acxiom address big data issues,” Hutchinson added.
Gov. Hutchinson has enlisted AR’s educational system in the high-tech push with an initiative that requires computer-science education in every public school.
“By implementing the computer science education initiative, Arkansas has already become a leader in some ways,” he told BF. “The number of students taking computer science classes has increased by more than 400 percent since the initiative was implemented, and more than 6,000 students in the state are taking computer science courses this year. Many other programs and people are hard at work ensuring that today’s students receive the training they need to become tomorrow’s innovators. We plan to utilize the strong partnerships we’ve built with industries in Arkansas that rely on a STEM workforce to competitively retain these students in the state.”
Arkansas recently adopted a new formula for funding state colleges and universities, a “productivity model” that will increase the percentage of Arkansans who are workforce-ready and equipped with degrees and industry-recognized certificates. “Knowing that higher education is also vital to economic development, Arkansas is changing the way it funds its colleges and universities to place the priority on accountability, student success, and program completion rather than enrollment,” the governor told BF. “The goal is to increase the number of Arkansans who are career-ready with degrees and industry-recognized certificates. This means bringing businesses, education and workforce together.”
The Career Education and Workforce Development Board is comprised of representatives from various industrial sectors and nonvoting members from various state agencies. The Workforce Initiative Act created a program awarding planning and implementation grants by the Arkansas Higher Education Coordinating Board to regional organizations in an effort to create economic development strategies. The Arkansas Workforce Innovation and Opportunity Act distributes federal funds to workforce investment boards across the state. These initiatives have established a role for business leaders to set priorities, create partnerships, fund successful programs, and coordinate state agencies behind the Governor’s Workforce Cabinet.
AN EMERGING FDI POWERHOUSE
Anyone who considered Arkansas a backwater as a destination for foreign direct investment had their eyes opened when Sun Paper of China decided to build a $1.3-billion bio-products mill in AR, the largest single investment in state history. Arkansas provided $102 million in incentives to seal the deal, including funds provided by the Governor’s Quick Action Closing Fund for site preparation and equipment, and up to $3 million from the Arkansas Economic Development Commission (AEDC) for workforce training.
Gov. Hutchinson and the AEDC have conducted three trade missions to Asia, including a recent trip to China and Japan. Risever, a Chinese company, signed an MOU to open its first factory in Arkansas. The governor proudly told us the state’s FDI push is bringing in a bonanza of new business.
“I am pleased to report that Arkansas is a national leader in FDI growth over the past two years,” Hutchinson said.
“We have seen particular interest from China, whose growing business climate is noticing what other worldwide companies are doing and where they are locating. Over the past two years, five Chinese companies have announced they will create a total of 1,650 new jobs in Arkansas and invest just under $1.5 billion. One of these companies, Shandong Ruyi Technology Group, will create 800 new jobs in Forrest City, making it the largest job-creation announcement in the history of Arkansas’ Delta Region.”
Shandong Ruyi will process more than 200,000 tons of Arkansas cotton, almost the state’s entire crop, to be spun into yarn for textile use.
“We’re a small state and often aren’t the first state that comes to mind [regarding FDI], but we have a proven track record of success with growing businesses,” the governor told us. “We have a pro-business climate that is welcoming to international companies. Our international offices are committed to meeting the needs of international companies, and having a representative familiar with both local and American business practices gives companies a level of comfort when they choose to invest in the U.S.”
HIGH TECH COMES TO TIMBER
Arkansas has a long history as a leader in the timber industry, and the state is deploying new technology to transform unused timber into a new growth sector.
AR has nearly 19 million acres of timberland, with forests covering about 54 percent of the state (with an average growth rate of 1.6 trees per tree removed, Arkansas has one of North America’s most sustainable timber supplies of pine, oak and other hardwoods). The industry employs almost 70,000 through direct and indirect employment. Associate, bachelor, and master degrees are offered at the University of Arkansas at Monticello’s School of Forestry and Natural Resources. The school also is home to the Arkansas Forest Resources Center, where students and researchers from across the state study forest-based natural resources.
Arkansas is aiming to achieve “zero waste” of its timber resources by working with technologically advanced mills to convert unused timber products into biomass energy.
“When it comes to the future of our forests, high-tech means there is nearly zero waste,” said Hutchinson. “The goal is for 100 percent of the biomass removed from the forest to be used for a salable product through efficient conversion technologies, recycling, wood fiber or generating energy from renewable sources. These adaptations and the renewable nature of the products play an important role in producing a resource that is making our planet greener and more sustainable.”
As a state with a strong base of commodities, industrial as well as agricultural, Arkansas has a big stake in the outcome of the renegotiation of the North American Free Trade Agreement (NAFTA). Canada continues to be Arkansas’s largest trading partner. accounting for just below $1.2 billion in exports in 2016, or 20.39 percent of total exports. France was second, and Mexico was third with almost $700 million in exports in 2016, or about 12 percent of total exports.
Canada is the top destination for four of the state’s top 10 commodities: machinery ($192 million), plastics ($101 million), cereals ($61 million), and paper/paperboard ($60.6 million).
Mexico and Central America were the largest foreign markets for Arkansas poultry in 2015, accounting for 49.37 percent of shipments. Total Meat and Edible Offal exports increased by 28.17 percent in 2016. Canada was the top market for Arkansas rice in 2016 ($61 million).
“As the United States considers the future of NAFTA, the nation must be careful that it does not harm global trade,” said Gov. Hutchinson. “Arkansas must be able to continue its access to North American markets unimpeded by unfair trade barriers. Otherwise, there will be serious harm to Arkansas’ agriculture and retail and manufacturing sectors.”
AN INTERACTIVE JOB CREATION MAP
The AEDC recently launched an Interactive Job Creation Map for AR, which Gov. Hutchinson has described as “an indispensable tool for recruiting industry to Arkansas.” AEDC’s map shows where the 15,834 new jobs are located and uses a time-lapse time line to track the growth since 2015. A mouse-click on the highlighted locations produces specific information including company name, the announcement date, the number of new jobs created and the amount of capital investment. The Arkansas Job Creation Map can be found in the “Map Room” at www.ArkansasEDC.com.
“This map tells the story that Arkansas has been writing over the past three years,” Hutchinson said. “It will be an excellent resource for Arkansans and prospective investors alike, clearly demonstrating the rapid amount of economic growth Arkansas has seen since 2015.”
When we asked Gov. Hutchinson to identify a perception of Arkansas that he would like to change, he gave us the kind of candor you expect from the Natural State. “What we have found is that most people don’t have a perception about Arkansas one way or another—we just aren’t on their radar,” he said. “We definitely want to change that. Arkansas is a great place for business; we just have to keep telling our story and get the word out. Once people learn about what we have to offer, especially if they come here in person, they are more likely to think positively about Arkansas.