Optimism builds, hiring expected to grow in NWA small business sector

Jobs continue to be the catalyst that drives Northwest Arkansas' regional economy and for the first time since 2009 the small business sector is more optimistic about future hiring, according to a new report from the Northwest Arkansas Council.

The report was unveiled Monday (March 10) by the Council in collaboration with five local chambers of commerce and focused heavily on small business retention. 

Economic development teams met with 529 local businesses in 2013 and found that 2,037 planned new hires over the next three years with $195 million in planned investment out to 2016. One in five of the businesses surveyed said they plan to expand within the next years.

Small businesses accounted for 367 of the companies surveyed last year in this combined effort. Another 167 large or “prime” companies also were interviewed.

“Our Chambers really got out there last year and stepped it up. They talked to a lot of companies. We went from 459 (interviews) to 529. Our annual target annual is 450,” said Mike Harvey, chief operating officer for the NWA Council.

He said the interviews uncovered more than 2,000 new jobs planned, with three employers responsible for about half that number. The rest were small employers planning to add 5 to 10 people. Harvey said this type of activity among the small business sector is significant because it has not been involved in the broader economic recovery for the most part.

“One of the things that really jumped out at me from the 2013 surveys was the number of small companies who reported rising revenue,” Harvey said.

The report shows 57% of the smaller companies surveyed said total revenue in their Northwest Arkansas location is increasing. Another 31% reported stable revenue. Harvey said it’s significant because it’s twice the number reported a year ago and also uses a larger cohort of small businesses, banks, retail and service segments. He said the larger companies reported nearly the same data as last year.

This research, according to the Council, indicates the local small business sector is finally recovering after years of stagnant and even shrinking revenues.

STRENGTHS, CHALLENGES
Harvey said the businesses also saw the local economy as a positive metric, and it was mentioned among the top three strengths. A year ago it wasn’t among the top 10 positive strengths reported by local businesses.

Employers identified more than three times as many “community strengths” as “community weaknesses” when asked about Northwest Arkansas. The “strengths-to-weaknesses” ratio was similar in 2012, Harvey said.

The Affordable Care Act and Dodd-Frank banking regulations were listed among the top concerns of the businesses surveyed. Harvey said lack of public transportation is an area of concern among some of the industrial manufacturers. Road infrastructure constraints were also seen as ongoing  challenge as was the need for competitive airfares out of Northwest Arkansas Regional Airport.

He said there is also a lack of skilled workforce needed for “big data” and information technology (IT) jobs in the Wal-Mart supplier community. Other businesses also reported skilled labor and unskilled labor shortages.

Mike Malone, CEO of the NWA Council, said the council was formed to work on the region’s challenges and promote the good news as well. He said job creation is a big part of that good news. He said the region still has growing pains as its infrastructure is always playing catch-up to ongoing population growth.

“Last year Northwest Arkansas ranked No. 4 out of 400 metro areas for job growth, creating 9,580 job, an increase of 4.56%,” Malone shared at Monday’s event.

BUSINESS EXPANSION
Cindy Christopher, human resource officer at Gates Corporation in Siloam Springs, said the company closed a facility in North Carolina last year and added lines of production to the plant in Siloam Springs. 

She said 30 families have relocated to Siloam Springs as a result. At least two families also brought along grandparents who came out to help with the move and decided to follow along. Christopher said 36 families were offered transfers to Siloam Springs and all but six accepted.

Lance Eads, director of economic development for the Springdale Chamber and Commerce and a GOP candidate in the Arkansas House District 88 race, said one local firm — ORC Products — was recently able to expand its business into a larger location because of contacts made during the routine business retention meetings. The firm does government contract work.

Matt Crafton, president of Crafton Tull in Rogers, said his firm brought on six new engineers last year because of work created from the tax program that is funding road construction in Northwest Arkansas and around the state.

Bill Locke, owner of Admiral Moving Services in Fayetteville, said his firm is a direct recipient of work the chambers are doing to recruit and expand businesses in the region. Admiral has purchased 10 acres in Fayetteville and plans to build a larger facility in the city’s Commerce District.

“We started 11 years ago with four people and two trucks, today we employ 85 and have 45 pieces of equipment. We do commercial and business relocations. Regionally we see a lot of inbound growth to Northwest Arkansas, even though Arkansas is a neutral state. Enough people are leaving Little Rock and the Delta area to make the state appear neutral, but I can tell you this MSA is a vey inbound area,” Locke said.

He also addressed talent shortage in the region. Locke said they do work for a Wal-Mart supplier who furnished IT services. 

“This supplier moves 65 people in here each month, they stay for 90 days and they are shipped out to another assignment. If there were enough local talent for these IT jobs I am almost sure the 185 positions would be filled locally,” Locke said.

Roger Thomas, a principal at Telecomp, said his firm provides computer and telecommunication services for the Wal-Mart supplier community. Swirl, an advertising and marketing firm out of San Francisco, plans to relocate five or six people to Bentonville, but Thomas said the company may bring more from San Francisco over time. He said Swirl is a new client of Telecomp.