Cycle of foreign investment affected by forces within our control

by Kay Brockwell (kay.brockwell@gmail.com) 258 views 

Back in 2006, the foreign direct investment picture looked bright in the Arkansas Delta.

Toyota looked at Marion for an assembly plant, and Hino Motors put a big Toyota parts plant there. Denso added a sizable factory making automotive cooling systems in Osceola, and a smaller supplier plant cropped up just across the road. Eakas Arkansas, a division of Sakae Riken of Osaka, built a facility in Wynne to make door handles for automobiles. PK USA, another Japanese firm, was looking in Marion for a location for a parts plant.

Toyota, riding the crest of the economic expansion of the Clinton White House years, was looking at Marion again, for another assembly plant.

And in 2007, it all fell apart. Between Thanksgiving of 2006 and January of 2007, the Mississippi Development Authority, under the leadership of Haley Barbour, undercut Arkansas’ bid for the Toyota plant and wooed the Japanese company to Tupelo, Mississippi. Several Japanese suppliers looking at Arkansas took a step back and adjusted their gaze eastward.

In what Arkansans could only consider a case of schadenfreude, Toyota built its plant along U.S. 79 just outside Tupelo … and it sat empty for more than two years. Toyota, like every other auto maker, saw the massive economic expansion in its industry come to a crashing halt as the bottom fell out of the economy.

The crash clamped down development in the Delta as if it had sucked all the air out of the room. Despite some major economic development wins since then, starting with Big River Steel coming to Osceola in 2014, the Delta non-farm economy has never approached the growth rate it experienced in the early 2000s.

In this decade of the 20-teens, another wave of foreign direct investment offered another shot at economic revitalization. The beachhead of that wave had touched down across the state. In Arkadelphia early in the decade, Shandong Sun Paper settled on a spot adjacent to the Clark County Industrial Park for a major pulpwood mill, the first such new operation to locate in Arkansas in 20 years.

A splash from that wave landed on the other side of the state, in St. Francis County. Shandong Ruyi Technology Group visited Forrest City in 2015, and immediately seized on the long-shuttered Sanyo Manufacturing Corp. campus as a location for its first North American cotton yard spinning mill. That project, which would increase by 50% the plant’s 1.5 million square-foot footprint and would employ 800 people in struggling Forrest City, promised an economic boon for the Delta not unlike what Toyota would have been 10 years earlier. More than 3,000 people filled out applications at job fairs after Ruyi purchased the property, and the project was announced to great fanfare in 2017.

By mid-2018, progress on the project had slowed to a trickle and then it stopped. The local team left town, to work on “other acquisitions” Ruyi was pursuing. They have not returned. A storm did some damage to one of the buildings; it remains unrepaired. The largest industrial building in Arkansas is off the market, owned by a company that seems to be in no hurry to do anything with it.

There was no economic collapse in 2018, as there was in 2007 and 2008. There was, however, the opening salvo in January of the U.S. trade war with China, filled with complaints from the U.S. regarding the alleged theft of intellectual property by the People’s Republic of China. That escalated into tariffs three months later, and now into more tariffs.

And the former Sanyo manufacturing plant still sits empty.

St. Francis County, long a Democratic stronghold in the Delta, edged toward Republican dominance in 2018. But between a stalled project that’s very easy to blame on the Trump Trade War, and farmers who are losing money due to commodity crops they aren’t selling to China, it will be interesting to see if that trend holds up, slows down or turns the other direction in 2020.

Meanwhile, the region seems to have once again missed its grab for the brass ring of economic redemption through foreign direct investment.

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Editor’s note: Kay Brockwell is CEO of Future Focus Development Solutions, an economic and community development consulting firm specializing in smaller communities. She is a former economic developer in Marion and Hot Springs. The opinions expressed are those of the author.

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