Wal-Mart, Tyson Might Benefit From Recession

If a recession hits the United States, many residents of northwest Arkansas will never notice. In fact, the two largest companies here might benefit from it.

Northwest Arkansas appears to be more recession-proof than the rest of the country, largely because the two biggest companies in the area sell inexpensive consumables, goods that might even sell better during a recession than during prosperous economic times.

Wal-Mart of Bentonville sells groceries and staple goods at prices generally lower than its competition. The company had $191 billion in sales in the fiscal year that ended Jan. 31. Wal-Mart has 1.2 million employees worldwide and about 10,000 in the Bentonville/Rogers area.

Tyson Foods produces 45 million broilers a week. The company had sales of $7.16 billion in 2000. Tyson has 1,900 employees at its Springdale headquarters and 7,500 in Washington and Benton counties combined (not counting 350 chicken growers in the area).

Crunching Numbers

We asked the University of Arkansas’ Center for Business and Economic Research to crunch some numbers.

We gave Jeffrey Collins, the center’s director, gross sales figures for Wal-Mart and Tyson over the past 19 years (from 1982 through fiscal 2000). We were curious to see if the local companies saw a revenue decline during recession years such as 1991 and 1992.

Using the average annual growth rate for the years from 1982 to 2000 as zero, Collins plotted the deviations from the norm for Wal-Mart and Tyson. He also plotted the GDP growth. This provided a data that is “untrended,” Wayne Lee, chairman of UA’s finance department, said.

Throughout, Wal-Mart growth remained steady, even when the GDP plummeted in 1991. Tyson’s numbers, however, are more erratic, due primarily to acquisitions in 1984 and 1990.

But the data also shows Tyson’s sales increasing (compared to its 18-year average) in other years such as 1988, 1996, 1997 and 1998 as the GDP decreased and vise versa.

During the recession of 1991, Tyson followed the GDP into negative growth-rate territory (-13.7 percent for Tyson), but that could have been due to problems digesting Holly Farms.

Coming out of the 1982 recession, Wal-Mart remained steady for the next two years with little change in growth rate while the GDP shot up by almost 5 percent in 1984.

Click here to see the see the complete story as it appears in this week’s Northwest Arkansas Business Journal.