Keys to help grow the Fort Smith regional economy include building cultural and recreational amenities that appeal to valued members of the workforce, and pushing back against a federal regulations on businesses.
Such was the consensus of panelists gathered for the 2016 The Compass Conference held Friday morning (May 6) in conjunction with the First Friday Breakfast of the Fort Smith Regional Chamber of Commerce. The event was held at the Fort Smith Convention Center.
Rodney Shepard, Arvest CEO in the Fort Smith region, told the audience prior to the panel discussion that the regional economy is doing better than in years past, but said for growth to continue, regional leaders will have to acknowledge the shift in priorities of where people decide to live and work.
“Folks are now looking for a place to live, and then they will look for good employment,” Shepard said.
‘RECRUITMENT OF HUMAN CAPITAL’
Shepard’s point was the first topic addressed by the panelists. Panel participants were Tim Allen, Fort Smith chamber president and CEO; Mike Barr, CEO of WeatherBarr; Steve Clark, CEO of Propak Logistics; Judy McReynolds, CEO of Fort Smith-based ArcBest; and Clay Nickel, director of Investment Strategy for Arvest Bank. Roby Brock, CEO of Talk Business & Politics, moderated the discussion.
McReynolds, head of one of the largest less-than-truckload and logistics companies in the U.S., said the Fort Smith area has a good workforce.
“They care about my company. They care about doing the right thing,” she said of people they are able to hire for their headquarters operation.
However, she said, regional leaders and institutions have to do more in terms of workforce development and quality of life to “gain more momentum” with the good things happening in the region.
Allen agreed, saying economic development has shifted in recent years with the “recruitment of human capital” just as important as infrastructure and incentives.
Clark said creating a “more progressive” quality of place is as much about employee retention as it is job recruitment. He said the overall “quality of space” is now an essential ingredient to economic growth in any city, and said that in his travels and experiences a “well-developed downtown” is “just one of the hallmarks of a progressive community.”
THE LABOR ISSUE, SKILLS GAP
Nickel took a broader macroeconomic view of the labor force by noting that an improved economy is creating a “labor constraint” that not only drives up wages and benefits, but requires more expense to train those who, for whatever reasons, are returning to the labor force. Many of those re-entering the labor force are those without the soft or hard skills required in the changing economy, resulting in a “large segment” of people who could be further left behind.
A sign of the emerging labor constraint is an emerging shift in how corporations spend cash. In recent years much of that spending has been to pay owners or shareholders. But more companies are now redirecting cash to paying higher wages, benefits and boost training costs in order to better compete in an environment with fewer available and/or qualified workers.
Barr picked up on the worker issue, noting the skills gap in manufacturing that resulted when manufacturers added equipment to boost productivity. The advanced machinery requires workers with more technical skills, and those people are hard to find, Barr said.
He said schools and universities in the Fort Smith area are doing a good job of helping meet that skill need, but more needs to be done and state government needs to do more in terms of supporting skilled trade education.
Allen said manufacturing of today is not necessarily the blue-collar field it once was.
“The days of thousands of people driving sheet metal screws are over,” Allen said, adding that a modern manufacturing plant can be a place with advanced equipment where high-tech skills are needed.
He said the Fort Smith chamber is working with area high school students to educate them about how manufacturing has changed. He said they often receive feedback from students who are interested in manufacturing as a career path.
Near the end of the panel discussion Brock asked what could harm economic growth.
Barr said recession in the U.S. energy sector has the potential to trickle into other industries and “really hold back” the national economy.
“While it’s great at the gas pump, it’s not good for the overall economy,” Barr said of low energy prices.
McReynolds, who also serves on the board of directors of Oklahoma City-based OG&E and Fort Smith-based First Bank Corp., said a “common theme” she hears in board rooms are how businesses are held back by “strangling” state and federal regulations. She said the trucking industry has benefitted from safety regulations and other state and federal rules that create a better operating environment, but many agencies are going too far.
“It’s gotten to a place where it needs to be reined in,” McReynolds said.
Clark agreed, and emphasized that the business community is not seeking an unfettered system in which to operate, adding that it’s not a “pro-greed” request to pull back regulations but a “pro-business” request.
“Changes are needed … when just the burden of accidental non-compliance is egregious,” Clark said.
As to broader risks to the U.S. economy, Nickel said a “low recession risk outlook” exists, but he believes economic growth will continue for the near future. He predicted a “fairly stable, but relatively slow growing U.S. economy.”
The Compass Conference is held each year as part of The Compass Report. The quarterly Compass Report is managed by Talk Business & Politics, and is sponsored in the Fort Smith area by Arvest Bank. The report is the only independent analysis of economic conditions in Arkansas’ three largest metro areas.
The Compass Report for the Fort Smith area posted a C grade for the fourth quarter, better than the C- from the third quarter of 2015 but down from the C+ in the fourth quarter of 2014.
Although the region’s jobless number declined (5.1% in December 2015, compared to 5.5% in December 2014), the number of jobs were relatively flat. Non-farm employment in the metro area ended December at 114,200, down from 114,300 in December 2014. However, the number of unemployed moved in the right direction. There were 6,132 unemployed in December, down from 6,502 in December 2014.
Sales tax collections in the metro area were up slightly, with $4.292 million reported in December in four regional counties, up from $4.284 million in December 2014. The metro hospitality (tourism) sector returned to a growth trend. The sector had 9,100 jobs in December, better than the 8,900 jobs in December 2014.