The Friday Wire: Office space and ‘Oh Baby’

by The City Wire staff ([email protected]) 98 views 

Badgered Wal-Mart Board members, concerns about consumer confidence, and more notes on a U.S. manufacturing renaissance are part of the Northwest Arkansas Friday Wire for Dec. 6.

• Watching consumer spending strength
Consumer spending in Arkansas bears watching. The collections, considered a barometer of consumer confidence, ended fiscal year 2013 on a down note. Collections in the segment for the fiscal year totaled $2.124 billion, up just 1.1% compared to the 2012 period, and 1.4% below forecast.

Sales and use tax collections during November totaled $175.2 million, up 1.2% from last year and 0.5% below the forecast. October collections of the tax were up just 0.3%.

Northwest Arkansas is not necessarily immune from a possible slowdown in consumer spending.  In Benton County, sales tax collections totaled $2.829 million in the November report, down 2% from a year ago. Washington County reported November sales tax revenue of $2.789 million, up 2.12% from a year ago.

• The office space watch
More than five years ago, several Northwest Arkansas banks and commercial space developers found themselves in a situation of having too much space and not enough demand. It’s possible that the supply-demand ratio has returned to manageable levels.

As more Wal-Mart suppliers and third-party service firms are hanging shingles in Northwest Arkansas, real estate experts and retail insiders around Bentonville say the commercial office space market is tightening. Insiders estimate more than 1,300 suppliers have set up offices within a 27-mile of Wal-Mart’s home office in Bentonville in the past decade. This employment sector provides nearly 6,000 local jobs and continues to expand each year.

It will be interesting to see if developers, bankers and others are careful to avoid another supply bubble.

Following are a few stories posted this week on The City Wire that we hope you didn’t miss. But in case you missed it …

• Badgered board members
Serving on the Wal-Mart Stores Board of Directors pays a handsome amount, but it’s not without some hazards as the retail giant is regularly a target for protestors from various union-sponsored groups. High profile exec Marissa Mayer, CEO of Yahoo, has been a board member for Wal-Mart Stores since 2012, and during that time she has been dogged by protestors at numerous events when she was scheduled to speak about Yahoo.

• Better connections
The ambitious effort to expand broadband capability in Arkansas public schools moved forward as two working groups accepted an engineering report and recommended the state proceed with a potential public-private partnership. Administration and industry officials have been working on a plan to boost the state’s public schools to a nationally recommended broadband capability of 100 Mbps per 1,000 students and staff.

• Oh Baby
As a fifth generation Arkansas family farmer, Fran Free set off to the University of Arkansas to study agriculture so she could learn the latest innovation to keep the farm relevant and profitable. Oh Baby Foods, the first baby food company in the world to have all its products verified through the Non-GMO Project [Non-genetically modified organisms], celebrated its fourth anniversary in November. From offices on the Fayetteville Square, Free has put her healthy products in stores in 20 states, including the notoriously stringent Whole Foods.

$23 million: Estimated cost of construction for the Don Tyson Parkway interchange with Interstate 540. The project is slated for an August 2014 completion.

114,000: Estimated number of Southwestern Electric Power Company customers in Northwest Arkansas. The utility was on standby to handle disruptions from the Thursday-Friday (Dec. 5-6) winter weather in the area.

$376 million: Estimated negative annual impact to the trucking industry by the federal implementation of stricter driver work rules. However, federal officials say the overall economic benefit of safer conditions is $280 million annually.

489,666: Number of enplanements at the Northwest Arkansas Regional Airport during the first 10 months of 2013, up 2.8% compared to the same period of 2012.

• Legal fees
Wal-Mart Stores Inc is paying for lawyers to represent more than 30 of its executives involved in a foreign corruption investigation, according topeople familiar with the matter, an unusually high number that shows the depth of the federal probe.

• Manufacturing renaissance?
U.S. manufacturers are enjoying a 21st-century renaissance that is riveting stock investors to industrial companies, and many analysts predict this “Made in the U.S.A.” theme could be a winner in 2014.

• Razorback renaissance?
Bret Bielema's first season as the head coach at Arkansas was less than successful as the Razorbacks went winless in the Southeastern Conference for the first time in school history (first winless conference season since 1942 in the Southwest), 3-9 overall and ended the year on a nine-game losing streak.

“At some point if distractions become too much, board members might resign that post, especially since most are already running a company full-time, for which they are earning a much larger salary than a board stipend.”
– Allan Ellstrand, University of Arkansas professor and corporate governance expert, about Wal-Mart Board members who face protests because of their board membership

“I don’t know when we will be able to retire these preferred shares, whether the Treasury owns them or someone else does. We participated in TARP willingly and our bank definitely benefited from the capital infusion which helped us ride out a prolonged recovery time. We intend to pay back every cent, but we won’t put the bank in any jeopardy to do so.”
– Gary Head, CEO of Signature Bank, about the bank’s plan to repay a $16.8 million U.S. Treasury loan

"We're still growing and we're not where we want to be. As an entrepreneur, you still want to keep stabbing at it. But I think where we've been, like any business growing up it's hard – you go through times (asking), 'What am I doing? I'm not going to make it.' And our biggest thing between my wife and myself is we've just learned to trust in our faith."
– Chad Hudson, CEO of Hot Liquidation Spot, about the four-year struggle to grow the business