Of decades past and future

by Talk Business & Politics staff ([email protected]) 380 views 

Roby Brock and Michael Tilley with Talk Business & Politics discussed the long decade of the 2010s and hung out a few predictions for what’s to come in the 2020s. Here’s an excerpt from their conversation.

Roby: Michael, 10 years ago, we were knee-deep in the recovery in the aftermath of the Great Recession, wondering which companies might survive and seeing some early signs of the Arkansas banking growth spurt that would materialize. What did you think the decade would hold, if you can recall your thoughts from that far back?

Michael: Being based in the Fort Smith metro, my concern 10 years ago was more focused on how the regional economy would survive following the likely closure of Whirlpool’s Fort Smith plant. Officials with Benton Harbor-Mich.-based Whirlpool were for years untruthful about their plans for the plant and would eventually shut it down in June 2012. At the time, the plant employed about 1,000 but was home to more than 4,500 jobs at peak production. The region has yet to recover from the loss. For example, October employment in the metro was down 10,703 jobs from peak employment of 125,426 in June 2006, a drop of 8.5%.

Other than that, I’ve been pleasantly surprised at how steady the growth has been in most sectors of Arkansas’ economy through the decade. What would you say were the top negative and positive economic events of the decade?

Roby: I think Arkansas was pretty blessed to be on the acquiring side of so many bank buyouts. If it had gone the other way, where would our financial sector be? The state’s largest banks were uniquely poised to capitalize on the opportunities that were out there. I know Dodd-Frank was something to complain about, but acquisitions led to tremendous growth for major state banks and allowed them to navigate those regulatory hurdles effectively.

Two other positives would be the rebound in the housing market during the decade. I didn’t predict that we’d see some of the consistency that we’ve seen year-over-year. It’s been surprising. The other big positive — which later flipped — is the Fayetteville Shale Play. All of that investment and activity early in the decade sustained Arkansas’ economic climate in a way that other states would envy. Of course, there were later environmental concerns, and certainly, the rapid shut-off of gas exploration around the play was an unexpected negative.

The suddenness of the Fayetteville Shale decline along with the one-time hype of wind energy, which was another significant energy and manufacturing story for Arkansas during the decade, reminds me to be more cautious as we look into the new decade. Solar is now red-hot, pun intended. It seems here to stay, but the lessons of gas and wind make me cautious about getting overly excited. What will you be watching for on the business front in the ’20s? Will they be roaring or boring?

Michael: Three things could make for exciting business headlines in the next 10 years. One is, as you noted, the emergence of solar power use by many Arkansas cities and counties. Technology has undoubtedly made solar more affordable and more efficient, and there is no reason to believe the pace of technology in this area will slow. If the speed of adoption by local governments and other groups continues, there may arise the need for the existing utility regulatory environment to address the new realities. It will be interesting to see how legacy utility providers respond to such changes. It will also be interesting to monitor savings from solar power and see if promises match reality.

Another area to watch is the state’s manufacturing sector, which has seen slow but steady growth since reaching employment lows in 2013. Arkansas’ manufacturing sector had 163,500 jobs in November, ahead of the 161,100 jobs in November 2018. Manufacturing, once the state’s largest jobs sector, has shed 84,100 jobs — down 34% — since reaching a record of 247,600 in February 1995. The sector reached a low of 152,000 jobs in July 2013. Another factor to watch is the type of manufacturing jobs. Ideally, the state will be home to more higher wage, higher tech manufacturing jobs than the low-tech jobs that offer low wages and are often not long-term employers.

And then there are amenities. Arkansas enjoyed what I think were impressive gains in the past decade concerning quality of life infrastructure and events. Crystal Bridges Museum of American Art in Bentonville, the Unexpected Festival in Fort Smith, and a significant increase in bike and walking trails statewide are just a few examples. Will amenity growth continue, and will the amenities help — as they are often promised to do — with job growth? The tourism industry benefited from such amenities, but will it reach other economic sectors in verifiable ways?

But enough about business. You spend a lot of time with politicos in central Arkansas. What do you see generating frequent political headlines in the next decade?

Roby: Certainly, the 2020 Presidential election will mean more nationally than it will in Arkansas as I see the Red Tide of Republicanism holding steady in the state. Don’t look for an overnight Democratic return to power in Arkansas. There may be some interesting ballot issues to consider in November. Passage of a highway plan would stoke a lot of construction activity.

Congressional and legislative redistricting will be the next big political story. In the 2021 General Assembly, we’ll see a shrinking 3rd Congressional District with more Benton and Washington County influence. It will be the district to watch for the next decade. Unless the redistricting and reapportionment process changes, which it could, I think Republicans could further complicate any potential Democratic rebirth by redrawing legislative lines. There would be some easy ways for them to squeeze recent Democratic gains or momentum and cement more victories for the next 10 years.

Finally, I’ll say Election Year 2022 could be redefining for the state. I see a fight brewing between moderate Republicanism and ultraconservative Republicanism. Arkansas has been governed by pragmatists for decades, regardless of party, but 2022 might see a further tilt right than we’ve ever seen before. I’ll give you the last word: what is your political prognosis for the ’20s?

Michael: Growing up Republican under the tutelage of Ada Mills in Johnson County, I am concerned your note about the 2022 election year is likely to be a reality. The Republican Party I knew is not the GOP of today. Indeed, Arkansas has had pragmatic leadership in the governor’s office for many decades, but cultural warriors who want government policy to reflect their theology more closely is not a recipe for good government or an environment conducive to broad economic growth.

Unfortunately, my political prognosis is along such lines; that for the next decade too many state laws and regulations related to taxes, schools and universities, infrastructure, human services, healthcare, economic development, civil liberties and other key issues will be filtered through lenses other than best practices, proven constitutional and/or case law, demographic inclusivity, or will be “solutions” in search of problems.

And then there is Razorback football.

Roby: I’m too exhausted to think about the past decade of Razorback football, or the next one. Let’s say if the football program responds like the Arkansas economy did this decade, I’ll take it. Woo pig.

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