Diversity Key to Fort Smith Economy

For generations, manufacturing has been the way to make a good living in Fort Smith. The 4,600 jobs at Whirlpool Corp. are so prized that, as the story goes, if you don’t have a family member already working there, you won’t get hired.

But, nationwide, companies are moving production overseas where labor is cheap and regulations aren’t as strict.

The number of manufacturing jobs in Fort Smith has declined by about 2,000 since the year 2000.

Tom Mansky, president of the city’s Chamber of Commerce, said he doesn’t see that trend changing anytime soon.

“The reality is that will probably continue,” he said. “I think we need to change our focus somewhat. We need to strongly support our manufacturing. It’s been here for years and years. But with the pressures of a globalized economy, some manufacturers feel the need to ship manufacturing overseas.”

But how Fort Smith will change that trend has yet to be explained.

Mansky said city leaders will conduct a nine-month strategic economic development study. TIP Strategies of Austin, Texas, will oversee the effort.

“We are going to benchmark ourselves and look at other communities,” he said. “A lot of it is going to concern partnering with the University of Arkansas at Fort Smith … We want to create the entrepreneurial environment so home-grown businesses can succeed.”

At the Crossroads

With excellent transportation options such as the Arkansas River, rail and Interstate 40, Fort Smith has been a mecca for manufacturing.

“We got spoiled because our manufacturing industry has been so stable here over the years,” Mansky said.

Mansky wants to recruit more manufacturing to Fort Smith, perhaps in the form of an auto parts plant, while diversifying the city’s economy with more labor options. Mansky believes an auto parts factory would be logical if Toyota Motor Corp. decides to build an assembly plant in Marion. Fort Smith would be strategically placed between Marion and Toyota’s factory in San Antonio, Texas.

About 26,000 people have manufacturing jobs in Fort Smith’s six-county metropolitan statistical area, which had a population of 273,170 and a workforce of 98,693 in 2003, according to historical data from the Bureau of Labor Statistics. The city of Fort Smith has 81,849 residents.

Whirlpool bought its Fort Smith plant from Norge in 1966 and moved operations there to escape unions in the Rust Belt. The Benton Harbor, Mich., company said it will decide next year if it will move jobs from its Fort Smith plant to a new factory it is building in Mexico. The company won’t say how many jobs might be shipped south of the border. Whirlpool pays an average of $14.50 per hour at its Fort Smith facility, which primarily manufactures refrigerators and trash compactors. The average rate in Mexico for factory labor is $2.75 to $3 per hour.

Services Shift

Manufacturing is engrained in the Fort Smith psyche. Mansky said the city needs to retain that manufacturing base while adding to its service-based economy.

“Even in manufacturing communities, you see that one of the fastest-growing areas is services,” he said. “We have noticed in our demographics that that is not a growing workforce here … There’s nothing wrong with living in a manufacturing community, but we want to have other options.”

The Bureau of Labor Statistics reports that Fort Smith has seen job growth in the services sector, but perhaps not as much as Mansky would like to see.

From 1990 through 2002, the Fort Smith MSA had a 34 percent increase in service-producing jobs, from 51,400 to 68,900. During the same time period, business and professional service jobs in the MSA increased by 67 percent. The leisure and hospitality segment lagged a little behind the business sector with an increase of 24 percent. (see chart).

That all sounds good until compared to Northwest Arkansas, where, during the same time period, service-producing jobs increased 85 percent, business and professional jobs jumped 171 percent and leisure and hospitality jobs increased by 85 percent.

“We’ve got growth, and there are a lot of regions that would like to have our growth,” Mansky said, “but we’re being compared to a region that’s growing almost faster than anywhere else.”

From 1990 to 2003, the Fort Smith MSA’s employed labor force increased by 13 percent from 82,102 to 93,235. But the 2003 number is down 3 percent from 96,134 in 2000. Fort Smith had an unemployment rate of 5.5 percent in 2003.

During that same 13-year time period, Northwest Arkansas saw its employed labor force increase by 48 percent from 110,022 to 163,041. From 2000 to 2003, the Fayetteville-Springdale-Rogers MSA had a 10 percent increase in jobs, from 148,409 to 163,041. In 2003, Northwest Arkansas’ unemployment rate was 3.0 percent.

The wheels are already rolling to bring in new retail. He said some retailers who already have stores in Northwest Arkansas are looking to open shop in Fort Smith.

“I think over the course of the next 24 months, you’ll see a retail boom here,” Mansky said.

Fort Smith is trying to embrace its history as a Western border town while luring modern retail and dining chains.

One reason, Mansky said, is so Fort Smith residents can stay in Fort Smith.

“If you graduate from college here,” he said, “we don’t want you to have to go to Tulsa or Little Rock or Dallas to find a job.”

White-Collar Shift

Three centers within the business school at the University of Arkansas – Fort Smith have been helping area business people make the shift from blue to white collar.

Vonelle Vanzant, director of the Small Business Development Center at UAFS, said the center works with 75 to 100 clients per year. The center trained more than 400 people last year for a small fee that covers only expenses.

Leslie Toombs directs the Family Enterprise Center, which is the first center of its kind in Arkansas with a membership base. The Family Enterprise Center currently has 10 members. Similar centers in other states usually try to keep membership under 30. Toombs said members pay a $500 annual fee, but non-members are sometimes invited to the center’s events since it’s still in growth mode.

Pat Eller, director for the Center for Business and Professional Development, which does contract training, served more than 115 businesses and 8,000 students last year.