Baldor, election changes top the news cycle in 2010

The top story of 2010 was shaping up to be a contest between the changes in faces caused by the November election and the sometimes chaotic issues and actions within the city of Fort Smith.

But in late November, the Swiss invaded.

The City Wire reviewed the past year of top business, political and cultural news to develop the standard top 10 stories list. Our criteria for a top story is that the event, issue or project have a broad impact on the community, with the impact being felt for years to come. Such criteria allows us to avoid the crime news that most other media outlets can’t resist placing in their top stories lists.

With that simple criteria, we submit the following as the top stories for the Fort Smith region in 2010.

1. ABB-Baldor deal
Zurich, Switzerland-based ABB — a global power and automation systems company that employs 117,000 — announced Nov. 29 the move to acquire Fort Smith-based Baldor in a $4.2 billion deal expected to close in the first quarter of 2011.

Baldor, a maker, designer and marketer of industrial electric motors, motor drives, power transmissions and generators, employs between 7,000 and 7,500 in 26 plants in five countries and sales offices serving more than 80 countries. About 2,000 are employed in the Fort Smith area.

The boards of both companies approved the deal, which includes a $63.50 price for Baldor’s outstanding shares. The share price is 41% higher than Baldor’s closing stock price on Nov. 29 of $45.11. The deal also includes ABB assuming the $1.1 billion in debt remaining from Baldor’s $1.8 billion acquisition of Rockwell Automation subsidiaries (Dodge, Reliance) in November 2006.

The possible  news for the Fort Smith region is that ABB will not move the company headquarters.

“ABB retains Baldor management and brand. Fort Smith remains the headquarters for Baldor, and becomes the headquarters for the combined motor and generator business for North America,” noted the joint release.

Recently, the Antitrust Division of the U.S. Department of Justice made a second request for documents related to the pending $4.2 billion ABB purchase of Baldor. However, it’s not expected that DOJ will block the transaction.

2. Election changes
Who knew?

The 2010 mid-term election cycle created deep changes at almost every level of government in Arkansas.

In Fort Smith, Sandy Sanders defeated Mayor Ray Baker, ending Baker’s 20 years in the mayoral office. Baker’s poor health was likely a factor in Sanders’ win. Also, the Fort Smith Board of Directors saw three new faces — four if counting Sanders — with the election of George Catsavis, Philip Merry Jr. and Pam Weber.

But the changes didn’t stop there. The legislative delegation representing the Fort Smith area in Little Rock also saw a major shift. Voters rejected almost all Democratic candidates, even in districts with a clear trend toward supporting Democrats. As a result, of the 11 legislators representing districts within the region, only two — Reps. Tracy Pennartz and Leslee Milam-Post — are Democrats.

But the changes didn’t stop there. In the Arkansas Legislature, Republicans picked up all seven contested Arkansas Senate races and added 16 new Republican House seats to their totals. The end result is that the 35-member Senate will have 15 Republicans and 20 Democrats. The 100-member House will have 56 Democrats and 44 Republicans.

But the changes didn’t stop there. Arkansas’ seven top Constitutional offices now have Republicans in the post. Mark Darr, a Springdale businessman, defeated established and popular Democrat Shane Broadway for the Lt. Gov. job. State Rep. Mark Martin won the Secretary of State’s office, and political rookie John Thurston won the Land Commissioner office. Gov. Mike Beebe was the only top Arkansas officer to survive a Republican challenger.

But the changes didn’t stop there. Arkansas’ six-person Congressional delegation prior to November had one lone Republican, U.S. Rep. John Boozman of Rogers. The Congressional delegation now has four Republicans — U.S. Sen. John Boozman, U.S. Reps. Rick Crawford (1st District), Tim Griffin (2nd) and Steve Womack (3rd) — and two Democrats — U.S. Sen. Mark Pryor and U.S. Rep. Mike Ross (4th).

3. The Fort Smith drama
Municipal politics in the region were dominated by the city of Fort Smith. City directors were unable to resolve a funding issue for the Fort Smith Convention Center, went in several odd directions during efforts to cut the budget in response to falling revenue, and on election night (Nov. 2), fired City Administrator Dennis Kelly.

The Fort Smith board of directors spent most of 2008, 2009 and 2010 seeking a solution to plug the annual deficit. A state turnback program ended in June 2010 from which the city received about $1.8 million a year. In 2010 the city will receive only $888,723 in 2010. A fund balance will allow the city to cover the convention center shortfall for most of 2011.

The city made more than $1.43 million in budget cuts in 2010 to respond to revenue shortfalls. The biggest cut was a $717,000 reduction in payments to the city’s health & wellness fund. The cuts in 2010 and pushed forward into 2011 also include a decrease of about 28 full-time positions, and a $790,000 proposed cut to payments into the health & wellness fund.

During some of the reduction discussions, Kelly presented plans — like cutting up to 20 jobs — and broad pay and benefit cuts among the city’s about 900 employees. Both ideas created controversy and proved to be unpopular with the board of directors.

With a 4-3 vote, the board on Nov. 2 fired Kelly, who had been in the post a little more than two years. He was dismissed effective immediately, leaving day-to-day operations in the hands of Deputy City Administrator Ray Gosack.

Gosack suggested to the city board a list of more than 65 budget cutting ideas totaling more than $1.69 million. The cuts were an alternative to cuts proposed by Kelly.

4. Economic Ups and Downs
The Compass Report, the first comprehensive analysis of the Fort Smith regional economy, gave a C- grade to the first three quarters of 2010. The grade — which means that relative to the region’s historic economic performance, the economy saw no relative economic improvement or decline compared to the same period in previous years — was about the only consistent figure related to the regional economy.

The regional unemployment rate ranged from 8.9% (January) to 7.6% (April and September), with the rate rising toward 7.9% by November.

Sales tax collections were down in the early part of the year, but began to show signs of life in the fourth quarter. Tax collections in the counties and cities in the region made small gains in some cases, but it’s possible 2010 collections will mark two to three consecutive years of collection declines.

Building permit values in Fort Smith, Greenwood and Van Buren are on track to be down more than 25% in 2010 compared to 2009 — and 2009 was down compared to 2008.

The number of properties in some form of foreclosure were up more 17% in the region between January and November compared to the same period of 2009. Foreclosure action in 2010 continues an unfortunate trend that has seen a rapidly rising number of foreclosure actions in the region. In the Fort Smith metro area, there were 1,335 properties in a foreclosure action in 2009, compared to 1,084 in 2008 and just 588 in 2007.

Home sales were no better. For the first 11 months of 2010, the number of new and existing homes in Crawford, Franklin and Sebastian counties totaled 1,642, down 10.56% compared to the same period in 2009. The value of the homes sold during the first 11 months totals $209.658 million, down 6.72% compared to the $224.785 million during the first 11 months of 2009.

The bright spot was at the Fort Smith Regional Airport and area hotels and restaurants. Enplanements in Fort Smith total 79,121 for the first 11 months of 2010, up 9% from the 72,545 for the same period in 2009.Traffic at the regional airport has seen two years of consecutive dips. For the first 10 months of 2010, hospitality tax collections total $362,200, down 0.98% compared to the 2009 period. Van Buren collects a 1% tax on lodging and a 1% tax on restaurants. In Fort Smith, the first 10 months of 2010 saw tax collections total $589,679, up 2.7% over the $573,785 collected in the 2009 period.

5. National health care bill
After a Christmas 2009 vote to move a version of the controversial health care overhaul forward set the stage for this year, the reform measure stirred political passion and business uncertainty. Officers at Fort Smith-based Arkansas Best Corp., Fort Smith-based Baldor Electric Co., and Van Buren-based USA Truck said they expected higher costs as a result of the law.

The bill led to the defeat of a two-term incumbent U.S. Senator from Arkansas, while creating landmark victories at the federal, state and local levels for Republicans.  Buoyed by TEA Party conservatives, health care reform — and its perceived detrimental effects — became the rallying cry for a movement of voters.

For businesses, many were quick to take one-time charges and cut benefits as they prepared for the changes. Others stewed in indecision awaiting controversial regulations that will be formed in 2011.  From coffee shops to corporate boardrooms, the rollicking health care reform debate was the defining issue of conversation for the entire year.

6. ABF-Teamsters issues
Fort Smith-based Arkansas Best Corp., parent company of ABF Freight System, lost a legal battle to with competitor YRC and the Teamsters.

On Nov. 1, Arkansas Best filed a lawsuit seeking up to $750 million in financial damages from alleged violations of a National Master Freight Agreement (NMFA) by the International Brotherhood of Teamsters and others. On Dec. 16, U.S. District Court Judge Susan Webber Wright (Eastern District of Arkansas) granted a motion to dismiss a lawsuit filed by Arkansas Best against YRC and the International Brotherhood of Teamsters.

The NMFA, implemented April 1, 2008, was designed to cause equal labor costs and other benefit payments among trucking companies with drivers represented by the Teamsters.

However, YRC Worldwide, the largest less-than-truckload carrier in the U.S., has received three rounds of wage and benefit concessions from the Teamsters, with the most recent announced Monday (Nov. 1) that includes up to $350 million annually through 2013. Previously, the Teamsters voted to approve a 15% pay cut among unionized YRC drivers.

ABF Freight System, the largest subsidiary of Arkansas Best and a less-than-truckload carrier that competes with YRC, has been unable to obtain similar concessions from the Teamsters.

7. Mitsubishi groundbreaking, lawsuits
Despite confirmation on April 6 from Ichiro Fukue, executive vice president of Mitsubishi Heavy Industries, of the intent to build a $100 million wind-turbine assembly plant at Chaffee Crossing, Mitsubishi officials said May 20 that their Fort Smith plant may sit idle if the company is unable to seek legal relief from an alleged General Electric “scheme” to monopolize a portion of the U.S. wind turbine market.

On Aug. 23, U.S. District Judge J. Leon Holmes ruled that Mitsubishi Power Systems may proceed with its lawsuit against GE. Holmes ruling did temporarily halt action on the case until a patent infringement case is resolved.

Mitsubishi spokeswoman Sonia Williams said the company was “heartened by his suggestion that he may terminate the stay if he finds appropriate circumstances.”

On Oct. 7, about 350 gathered for the event, with many state political leaders and political candidates in the mix. It was a rare gathering of Arkansas political leadership in Fort Smith.

James Williams, a Mitsubishi executive who emceed the ceremony, said a quality workforce with a good work ethic was the primary driver in Mitsubishi’s decision to pick Fort Smith among 64 other communities bidding for the plant. He said it was clear the area was a place “where manufacturing wasn’t some lost art,” and an area in which civic leaders “appreciated” what the creation of jobs will do for a regional economy.

8. Personal losses
Unfortunately, losses in the region weren’t exclusively economic. Following are brief notes on the loss of some of those who lived in the area or had a regional impact.

• Gary Elmore, 56, a respected, influential and community-focused radio personality, passed away June 7. He also served for 10 years as the pastor of God’s House of Prayer in Fort Smith. Although losing the use of his left arm at two-years old from Polio, Elmore learned to play the drums at age 12. He played drums for Southern Gospel groups for 18 years.

He had been employed by KWHN 1320 for more than 19 years, with more than 15 years of those as news director and host of Arklahoma AM.

• Nick Bacon, one of only 25 Arkansans to receive the Medal of Honor and  the only Arkansan to receive the award for service in Vietnam, died July 17 following a struggle with throat cancer. He was 64.

For his actions in this battle, Bacon was awarded the Medal of Honor. For his military service in Vietnam and his career, he received the Distinguished Service Cross, the Legion of Merit, two Bronze Stars (with combat "V"), the Purple Heart, the Combat Infantryman Badge, and numerous other awards and decorations.

After a 21-year career in the U.S. Army, Bacon served as director of the Arkansas Department of Veteran Affairs from 1993 to 2005.

• Jim Hanna, patriarch of Fort Smith-based Hanna Oil & Gas, passed away July 19. He was 76.

After working in the oil and gas industry for about five years, Hanna opened Hanna Oil & Gas in 1962. Boosted by a solid well (Lincoln #2) in Crawford County, Hanna grew the company into the national industry player it is today. The company directly employs more than 45 people and has operations in 10 U.S. states and 3 Canadian provinces.

• Eddie Christian Jr., a prominent Fort Smith attorney known for his willingness to “challenge authority,” died Aug. 9 following a massive stroke. He was 48.

Christian Jr. was best known for his criminal defense work and personal injury work. He was admitted to the bar in 1988, and also was able to practice before the U.S. Supreme Court, U.S. Court of Appeals for the Eighth and Tenth Circuits, and the U.S. District Court for the Eastern and Western Districts of Arkansas. He was a member of the Arkansas Trial Lawyers Association and the American Trial Lawyers Association.

• Joseph Francke Rumsey III, the founder of Zero Mountain Inc., died Aug. 13. He was 90.

Zero Mountain began in 1955 in a limestone mine located in Johnson (in Washington County near Springdale). The old mine had 25,000 square feet of refrigerated and freezer space. The company today is a $50 million dollar operation that employs about 300 people and provides more than 30 million cubic feet of control temperature storage in Fort Smith, Johnson, Lowell, and Russellville.

Not only was Rumsey a successful businessman, his philanthropic support of numerous Oklahoma and Arkansas organizations is legendary and broad.

• Gayla Gregory, an Air-Evac medic who lived in Van Buren, died when a medical helicopter crashed on Aug. 31 in Van Buren County.

She taught the EMS program at Westark, and later when the school was absorbed by the University of Arkansas. Jeff Millican, with Southwest EMS, was her student in 2003.

• William R. Walker, a Fort Smith native and businessman who was a key player in Fort Smith’s industrial expansion and the expansion of St. Edward Mercy Medical Center, died Nov. 21. He was 85.

Walker graduated from Fort Smith public schools and served three years in the Pacific Theatre of WWII as a member of the U.S. Navy. After the war, he received a bachelor’s degree in business administration from the University of Arkansas and began in 1950 a 60-year career with businesses owned by his father and the Little Rock-based Stephens family. Walker would serve on the board of Stephens Inc. for many years.

Possibly his biggest accomplishment was in raising more than $2 million in the early 1970s to move St. Edward from downtown Fort Smith to the Rogers Avenue campus where it is now located.

• N.M. "Buck" Shell II, 67, of Fort Smith died Dec. 21. Buck began his career on the Arkansas River in 1969, as manager of the Pine Bluff Port. He moved to Fort Smith in 1970 to start the new Port of Fort Smith. He was made vice president of Pine Bluff Warehouse Co. in 1982, overseeing seven ports in Arkansas.

In 1996, he built Five Rivers Distribution, where he served as CEO. He was a member of the Arkansas River Basin Interstate Committee, past president of the Arkansas-Oklahoma Port Operators Association and the Inland River Port Terminals, past chairman of the Arkansas-Oklahoma Rodeo Parade Commission and the Fort Smith Water Resources Commission, past city director of Fort Smith, and past member of the Arkansas Sebastian County Sheriff’s Office.

Shell was a veteran of the U.S. Army, a 32nd-degree Mason and a member of First Baptist Church. He had a strong background in Industry and the Arkansas waterways system, helping develop the Fort Smith and Van Buren area.

9. Quality of place ups and downs
• Second Street Live!: Staff, volunteers and board members of Second Street Live! welcomed many from the region during a Mar. 7 open house at the organization’s new facility in downtown Fort Smith.

The new $2 million center — located at 101 N. Second St. — seats around 225 and has a flexible stage that can be adjusted for capacity and performance benefits. The new center also includes an art gallery that is host to various visual art exhibits. Also, the facility is open to rent for meetings, receptions and other gatherings.

Renovations to the new building began in November 2009. The building, built in 1890, has roughly 20,000 square feet divided evenly among the first floor and a basement.

• Fort Smith Regional Art Museum: Barring any construction surprises, renovation of the building that will house the new Fort Smith Regional Art Museum should be complete by summer 2011.

On Dec. 21, Galen Hunter, an architect and partner with MAHG Architecture; Leo Anhalt, with SSI Inc.; and Steve Williamson, Architectural Glass & Metals Inc., provided the media an update on museum progress.

According to Steven Jones, vice president of the FSRAM board of directors, the museum is “well over” 50% toward a $2.2 million fundraising goal necessary to renovate the 15,000-square-foot building at 1601 Rogers Ave., near downtown Fort Smith. Arvest Bank donated the former branch bank at 1501 Rogers Ave. it acquired in its $211 million purchase of Superior Federal Bank in late 2003.

Hunter and Anhalt estimated renovation costs between $1 million and $1.5 million. Part of that cost will include new glass windows recently released on the market that block up to 94% of ultraviolet rays and are more energy efficient, Williamson said.

The building is expected to include an Internet coffee shop, digital workroom, library and gift shop. Also, the entrance to the building will be in what is now the rear of the structure, with the large glass-enclosed space that was the entrance providing space for hanging art (sculptures) and the stairs to the second floor.

• Fort Smith Classic: Out in 2010 was the Fort Smith Classic, which ended its run in Fort Smith after 13 years. The Fort Smith Classic was the only PGA Tour event in Arkansas. Several of the past winners of the Classic have gone on to win big in the PGA Tour, including 2003 Fort Smith Classic winner Zach Johnson who won the Masters in 2007.

John Daly, the former University of Arkansas Razorback golfer and 1995 British Open champion, joined the Classic player list in its final year. He campaigned for someone or some company to “step up and make the commitment of becoming a title sponsor” of the Fort Smith Classic — which they haven’t had since Rheem dropped out. Daly believes the community is behind the Classic and as always volunteers are ready to help and donate long hours to help make the tournament work.

But no person or company made the move, and the PGA announced late in 2010 that it was cutting the tour from its schedule.

10. Northside High students tops in AP program
Students at Fort Smith Northside High School posted the largest increases among select students in six states who are participating in a National Math and Science Initiative designed to increase proficiency in science, technology, engineering and math (STEM) courses.

The entire Northside student body, Gov. Mike Beebe, members of the Fort Smith School Board, and other dignitaries gathered Aug. 30 in the Northside Gymnasium to celebrate the good news. Also on hand was Tommie Sue Anthony, president of the Arkansas Advanced Initiative in Math and Science (AAIMS); Tom Luce, CEO of the National Math+Science Initiative (NMSI) and Truman Bell, senior program officer for ExxonMobil.

Gov. Beebe praised the students and teachers for their efforts, saying they are “setting a curve” for the state. He said they also have proven education is not an obstacle in Arkansas.

“There are no excuses for any of you,” Beebe told the crowd of more than 1,000 students.