Fort Smith-based ArcBest Corp. – formerly known as Arkansas Best Corp. – is expanding its corporate presence in the region with a $30 million plan that will see the construction of a new office building and data center at Chaffee Crossing and the addition of an estimated 975 corporate jobs by 2021.
Officials with the transportation holding company and state and local officials gathered Friday (May 30) afternoon at the Fort Smith Convention Center to make the announcement. Executives with ArcBest said holding company corporate offices and ABF Logistics employees will locate in a new office building planned for construction at Chaffee Crossing near the scenic area of the McClure Amphitheater.
“We need room to expand,” ArcBest President and CEO Judy McReynolds told the large crowd gathered at the Fort Smith Convention Center for the announcement.
Walter Echols, a vice president at ArcBest and head of real estate for the company, said the new corporate building could be between 120,000-square-feet and 150,000-square-feet. Designs are in early stages, and he is not sure if the structure will be a basement and three floors or a basement and four floors. Part of the design goal is to build a structure that blends in with the location at Chaffee Crossing near the scenic area of the McClure Amphitheater.
“We really want to tie it in aesthetically to the ridge line there,” Echols explained.
Construction on the new office complex is set to begin this fall.
The company will retain its high-profile, 195,000-square-feet corporate headquarter building on Old Greenwood Road in Fort Smith. That facility, which opened in early 1995, is expected to provide space for the consolidation of ABF Freight and ArcBest Technologies offices. Moving corporate and logistics jobs out of the existing corporate headquarters will allow room for expansion at ABF Freight and ArcBest.
“That anticipated growth, combined with space enabled by the new facility, supports the creation of 975 new jobs in Fort Smith through 2021,” noted the ArcBest statement.
There are now between 1,300 and 1,400 ArcBest corporate jobs in the Fort Smith area.
‘BETTER THAN MIDDLE-CLASS JOBS’
Grant Tennille, executive director of the Arkansas Economic Development Commission, attended the announcement event.
“Two days, two great announcements in Fort Smith,” Tennille said in his opening statement, referring to the news on Thursday (May 28) that Georgia-Pacific is investing $40 million in its Fort Smith Dixie plant.
Tennille said the investments by ArcBest and Georgia-Pacific show a faith in the people and institutions of the region, and are proof that the regional economy “can come back from tough times.” He said the regional economy will benefit greatly from the “better than middle-class jobs” – in terms of salary and benefits – that will come from the ArcBest expansion.
“The best way to grow the economy is to partner with your existing companies,” Tennille said, adding that he believes the region has the workforce and the educational institutions to provide the high-skill jobs needed to be competitive in job recruitment and retention.
Tennille also confirmed that ArcBest consolidating its “intensive” data center operations in Fort Smith sends a message to the corporate world that the ever-changing data-driven environment can find a home in Arkansas.
“We’re supporting some of the most data-intensive environments in Arkansas … that’s a fantastic message for the state,” Tennille said.
With similar “big data” operations with Bentonville-based Wal-Mart Stores Inc., Springdale-based Tyson Foods and Lowell-based J.B. Hunt, he said the challenge of Arkansas leaders is in providing the educational offerings to feed talented people into those jobs.
Tim Allen, president and CEO of the Fort Smith Regional Chamber of Commerce, said the ArcBest decision “is a testament to Fort Smith’s diverse economy.”
“They (ArcBest) know first-hand that quality of place, affordability and the tremendous asset we have in (the) University of Arkansas – Fort Smith make Fort Smith a place worth investing in,” Allen said in a statement.
Arkansas Best began as a small local freight hauler – OK Transfer – in 1923 operating in the Fort Smith area. With a market cap of around $1.12 billion, the company now employs more than 11,000 and has grown organically and through acquisitions to provide global shipping and logistics services. Fort Smith attorney Robert A. Young Jr. bought the a small regional trucking company in 1951 and through several acquisitions grew the company to a national freight carrier.
“He would have been excited about it,” ArcBest Board Chairman Robert A. Young III, said when asked what his father, Robert A. Young Jr., would have thought about the expansion news. “And he would have loved to see the growth that has allowed this to happen. … I’ve often said I’d like to have him back for 15 minutes to see it now.”
Young III, also said his father would be pleased to see the company diversify with logistics, moving operations and other non-asset (non trucking) businesses.
“He would have understood that thoroughly. He was very much a forward thinker,” Young said.
ArcBest’s largest subsidiary is less-than-truckload carrier ABF Freight System. The non-asset subsidiaries are Panther Premium Logistics, ABF Logistics, FleetNet, ABF Moving and ArcBest Technologies (formerly known as Data-Tronic.). ArcBest officials have said growth in the non-asset businesses are necessary to diversify the company’s revenue stream and to help reach a goal of $3 billion in revenue in 2014.
The non-asset based businesses in the ArcBest portfolio generated $4.459 million in operating income during the quarter, a big improvement over the $134,000 during the first quarter of 2013. Total revenue during the quarter was $577.904 million, 10.98% better than the first quarter of 2013 and well ahead of the consensus estimate of $551.35 million.
However, the company reported a loss of $5.2 million during the quarter, thanks primarily to an unusual number of severe winter weather days. However, the loss was better than the $13.395 million loss the company recorded in the first quarter of 2013. The tough first quarter follows a positive financial performance in 2013. Net income during 2013 for ArcBest was $15.8 million, much better than the $7.7 million loss in 2012 and the most the company has earned in a year since 2008.
Shares of ArcBest (NASDAQ: ARCB) closed Friday (May 30) at $42.77, down $1.01. During the past 52 weeks the price has ranged from a $44.63 to a $17.68 low.
ARCBEST PRESS RELEASE
Fort Smith, Ark., May 30, 2014 – ArcBest Corporation (Nasdaq: ARCB) today announced that it is under contract to purchase 40 acres of land at Chaffee Crossing, Fort Smith, Ark., for construction of a new corporate headquarters facility as the company continues plans for significant growth at all of its operating subsidiaries.
ArcBest, a holistic provider of transportation and logistics solutions, has exceeded the capacity at its current Fort Smith general office on Old Greenwood Road and has been leasing supplemental office space at a separate location since early 2012. The company has since outgrown the capacity at that location, which currently houses the ABF Logisticssm subsidiary personnel, as well.
ArcBest has previously announced its goal to grow total corporate revenue to $3 billion by the end of 2015, with $1 billion coming from its emerging businesses. In 2013, revenue grew 11 percent to $2.3 billion.
“As one of the area’s largest corporate employers with a bright future and growth plans ahead of us, we are excited to announce construction of this new facility in Fort Smith,” said ArcBest President and CEO Judy R. McReynolds. “With plans for growth at all of our operating companies, including ABF Freightsm, ABF Logisticssm, Panther Premium Logisticssm and FleetNet America®, it is important that we develop additional space to accommodate these expanding businesses. Our decision to build a new facility in Fort Smith for the ArcBest and ABF Logistics companies underscores our long commitment to this area, and we are grateful for the commitment from the city, the Fort Smith Chamber of Commerce and the state to help us meet our needs.”
Future plans include relocating ArcBest corporate and administrative functions and ABF Logistics personnel to the newly constructed office building which is anticipated to be smaller than the existing 195,000-square-foot corporate center facility on Old Greenwood Road.
ABF Freight System Inc., the company’s flagship subsidiary, is expected to remain located at the larger existing facility, along with ArcBest Technologies, the company’s IT solutions group. This will allow for minimal disruption to operations at these organizations when construction work gets underway at the Chaffee Crossing location. In addition, the eventual relocation of ArcBest and ABF Logistics employees creates room for growth and expansion at ABF Freight and ArcBest Technologies at the existing facility.
That anticipated growth, combined with space enabled by the new facility, supports the creation of 975 new jobs in Fort Smith through 2021.
“This announcement underscores that Fort Smith is a great American city from which to run a business with solutions that span the globe,” said Grant Tennille, executive director of the Arkansas Economic Development Commission. “We thank ArcBest for expanding their Fort Smith headquarters, which will benefit the region for years to come, and for making a vote of confidence in the strength of Sebastian County’s workforce through this action.”
Fort Smith Mayor Sandy Sanders said the new facility marked another important note in the long history for ArcBest in Fort Smith.
“For 90 years ArcBest has been an outstanding Fort Smith company, providing substantial employment opportunities for people in this area, and throughout the nation,” said Mayor Sanders. “This announcement is not only great news for the company, but for Fort Smith and the many people who will gain jobs as a result of this continued growth.”
Officials from the Chamber of Commerce also applauded the announcement.
“The ArcBest announcement today is a testament to Fort Smith’s diverse economy,” said Tim Allen, CEO and President of the Fort Smith Regional Chamber of Commerce. “ArcBest is expanding in Fort Smith because they are committed to the River Valley, as they have been for more than 90 years. They know first-hand that quality of place, affordability and the tremendous asset we have in University of Arkansas – Fort Smith make Fort Smith a place worth investing in. ArcBest is a long-standing pillar of this community. It is refreshing to know that they have been a significant part of Fort Smith’s history and will continue to be part of our future.”