What was called a correction at the end of 2006 became a full-blown slump by early 2007.
Many developers told us they were actively divesting their portfolios. Liens and foreclosures have led to lawsuits and bankruptcies, and the wrangling will continue into 2008. Multi-storied projects that were the talk of the town just over a year ago have been scrapped for less lofty goals, or altogether.
Area banks saw a 40 percent increase in past dues from the first quarter to the third quarter. But bankers were also plagued by a rash of armed robberies, and even a heisted night deposit safe.
Some longstanding partnerships dissolved: two partners – Bill Schwyhart and Robert Thorton left the Pinnacle Group to form their own yet-to-be-named company; and Rebecca Garner left Garrison Asset Management, an incarnation of a firm she built and sold to Tom Garrison, to be a fixed income adviser with Decatur, Ill.-based Investment Planners Inc.
The business community mourned the deaths three people who greatly influenced commerce in Northwest Arkansas, and possibly the world. Matriarch of Wal-Mart, Helen Walton, died April 14; John Lewis, rainmaker and founder of The Bank of Fayetteville died June 1; and Gregg Ogden, founder of Athletic World Advertising died Aug. 18.
But not all the news was bad. Retailers and restaurants are still flocking to the Pinnacle Hills area in Rogers and companies like Crye-Leike are actively investing in Northwest Arkansas. And, economists say the oversupply is dwindling, though slower than many would like.
Following are some of our other observations about business news during 2007.
Best Bank News
It was the year of the female executive in Arkansas banking. Candace Franks was appointed as the Arkansas State Bank Commissioner by Gov. Mike Beebe in June, and in October Mary Beth Brooks, president and CEO of The Bank of Fayetteville and Susie Smith, senior executive vice president and chief operating officer with Little Rock-based Metropolitan National Bank, were both named “Top 25 Women to Watch” by U.S. Banker magazine.
Worst BlackBerry Owner
We know a lot of executives who are hardcore, dedicated BlackBerry users – those who return e-mails while on vacation standing in line at Walt Disney World – but when we interviewed Jay Howard, CEO of I.O. Metro, in July, he told us he was on his fourth BlackBerry in two years. He wears them out, he said. He also grew a $250,000 investment made in 2005 into $5 million in 2006 revenue and has plans to franchise the furniture store.
We’ll keep our eyes on Research In Motion Ltd.’s stock prices (and I.O. Metro, too).
Many “green” champions that are making “sustainable” business “everyday” business come to mind (Fourfrogs LLC, pb2 Architecture, Stitt Energy Systems Inc. and EGIS Natural Development Inc., CaseStack Inc.), but we have to tip our hats to Wal-Mart and Uniliver and their still-in-progress national rollout of concentrated laundry detergent. With bottom line savings of 5 million pounds of plastic, 25,000 gallons of diesel fuel and 26.3 million SF of cardboard by Uniliver brands since 2005, there’s a great fiscal example for many Wal-Mart suppliers to follow.
Worst Legal News
Statewide, many bankers scratched their heads and wondered what precedent may be set by developer Tom Terminella’s $50 lawsuit against Metropolitan National Bank. Alleging breach of contract and bad faith by MNB, Terminella filed the lawsuit in response to the bank’s foreclosure on two loans worth $14.4 million
There were several new or new-to-market products/inventions written about in the pages of the Business Journal during 2007. Some of our favorites were University of Arkansas professor Z. Ryan Tian’s titanium nanowire-enforced paper; Mike Graham’s Spa Toter, a trailer that transforms into a retail display, then folds away for easy transport; and Wayne Woolsey’s safety-inspired product line for hunters under Wayne’s Wicked Enterprises brand name.
Midwest Mall Properties, a partnership between Doyle Rogers and John Flake of Little Rock, and Sam Mathias of Springdale, purchased the Northwest Arkansas Mall, a mall in Oklahoma City and a mall in Colorado Springs. The deal closed Dec. 29, 2006, but didn’t become public until 2007. The cost? About $400 million.
Best Laid Plans …
Say what you will about some of the other stalled developments in Northwest Arkansas, but the Renaissance Hotel project has become a pet peeve. At least the others didn’t involve spending $3.7 million of taxpayer money on site that’s still essentially a hole in the ground months after city leaders were originally told it would be complete.
At least the fines ($23,000 monthly) charged to developers John Nock and Richard Alexander by the city for lost tax revenue can soften the sting of the downtown Fayetteville eyesore.
Runner up: The Barber Group’s Bellafont project in Fayetteville.
NBC affiliate KNWA-TV brought broadcast sensationalism to the market in their coverage of the high gas prices in Northwest Arkansas.
The station burned up plenty of gallons trekking from El Dorado to Denver stalking oil executives and even staked out a local convenience store for days on end, all to tell us something we’ve known for years – that gas is more expensive in this part of the state.
Management at the Nexstar-owned station has changed in recent months, so we’ll be curious to see if it tempers its “shock factor” coverage.
Best Stock Performance
Fort Smith-based motor manufacturer Baldor Electric Co. started 2007 in a big way when it completed its acquisition of Reliance Electric Co. for $1.8 billion from Rockwell Automation Co.
The company’s stock value has fluctuated over the course of the year, and is down from its July high of $51.96. But it’s still ahead at $36.32 as of Dec. 7, up 10 percent from $33.01 for the same period in 2006.
Net income for the third quarter rose 102 percent year over year, from $12.2 million to $24.6 million. In June, the company sold off the Reliance power services division for $80 million to decrease debt load and avoid competing with its own customers that provide similar services.
Best Media Coverage
Our “Outtakes” media review section was a casualty of the recent redesign, so we’ll take some space here to thank the Arkansas Democrat-Gazette for writing about the $1,345, 36-inch LG television in, of all places, state auditor Jim Wood’s office.
Wood said it’s part of his responsibility to “stay informed” by watching CSPAN and MSNBC and that he’s a “visual learner” who learns more from television than newspapers.
The D-G also told us the Lt. Governor Jim Halter, who has proposed a state lottery as a way to make ends meet, at least got more bang for the buck by spending $1,089 on a 37-inch Phillips TV.
We’ve wondered from time to time how anything ever got done in the days before cell phones, but we’re quite stumped on how other departments get along without giant flat screen televisions.
“If you’re a slacker, you’ll end up working at KFC whether your parents are successful or not.” That’s what Tyler Garman, the 28-year-old president of The RoArk Group Inc. of Rogers, told us about being a third generation Garman to run the business.
We cringe when we hear “It is what it is.”
Most of us have said this at one time or another, but what does it mean? After all, how can something be anything other than that which it is?
Our translation: “Well, I guess I’ve got to say something about this less-than-ideal/moderately dire/terminally hopeless situation, so here’s a meaningless platitude that will hopefully come across as a Zen-like, sage proclamation on the state of things.”
We’re dying to hear someone say, “Well, it is what it isn’t.”
Best Restaurant Openings
Despite multiple restaurant closings – mostly in Fayetteville – we have to give a nod to two eateries. Whole Hog Café opened a location in Fayetteville that we think is sure to give long time contender Penguin Ed’s BBQ a run for its money, and Ruth’s Chris Steak House opened in Rogers, which may give old timers Herman’s Ribhouse and Fred’s Hickory Inn pause.
Both newbies excel at our favorite food group: meat.