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Explaining the math behind a billion dollars in proposed investments in Arkansas

Owens Corning breaking ground on a new facility in Russellville.
Arkansas Economic Development Commission
Owens Corning breaking ground on a new facility in Russellville.

Governor Sarah Huckabee Sanders ended 2023 with a graphic online touting the growth and successes of her first year in office. One of those numbers included more than a billion dollars in proposed investment. Ozarks at Large's Matthew Moore spoke to Clint O’Neal, the executive director for the Arkansas Economic Development Commission, to go into greater detail about what this investment means for the state of Arkansas. In the interview, the question was raised about the methodology of how U.S. News and World Report determines their rankings. You can find their methodology here.

Clint O’Neal: We track proposed investments by announced projects and then we track it by signed incentive agreements. I don't have the numbers in front of me but if you look at the announced projects, so the ones that went public, like Dassault Falcon Jet, you know, having their event in December saying we're investing $100 million I think the largest one of the year was with Westrock Coffee in the investment there with SIG SAUERthose that were that were kind of out in the news publicly, that was just over a billion dollars. But then if you look at the signed incentive agreements, those are ones that you know, some of them were announced in 2022. And we signed the agreement in 2023. Some we announced in 2023, but probably won't sign the agreement until 2024. And then some are more some small expansions, some small business programs and they all don't make a press release or make a splash. So the total there of the sign incentive agreements is around $2 billion. And that's really how we've more been in a pattern of keeping score at AEDC. So I think if you look at the last three years, there was one year that was higher because of the US Steel announcement in January of 2022. That's the largest economic development announcement project by capital investment in the state's history and $3 billion alone. But last year 2023 was definitely about 20% higher than the average of the last three years and was higher than than any year with the exception of that one and 2022.

Matthew Moore: We'll have a breakdown of the companies who have made the announcements in the proposed investments on our website. But as I looked through that list, there were a couple of things that really kind of stuck out to me and let's kind of focus on some of those. The first one is that nine different counties are listed as places for investment where these companies will be making investments, including some that are not Pulaski County, Washington County, Benton County. That seems pretty significant. 

CO: Absolutely, yeah. So you know, in economic development, to us working with a lot of companies that are doing multi-state location analysis, you know, we would never say hey, you ought to go here instead of here within Arkansas. We're champions for Arkansas. Sometimes it comes down to where the real estate is available. Or sometimes it comes down to where they have supplier or customer relationship or some sort of supply chain needs. It's great to win a project everywhere you know, the projects in Central and Northwest Arkansas, provide good jobs and Arkansans are known for driving far distances for a good job. But anytime that we can land a project, in a more rural community, it's so much more special. It means a lot to those communities. So yeah, looking forward to more of those.

MM: So eight of these investments that we've seen are new to the state of Arkansas. Can you walk us a little bit through what the process looks like to bring in outside investment into the state? 

CO: Yeah, I'd say it starts with marketing. It starts with elevating the image of what it's like to live and do business in Arkansas. I think whether it be a domestic project or an international project, you have a small percentage of the population that are on one end of the other. You know, some would say I have a very favorable impression of Arkansas. I know that Arkansas businesses have been successful there. I know that the world's largest company is headquartered there, or I went on vacation there and I had a wonderful experience. Some might say, I've heard less than favorable things about Arkansas. You know, those people are wrong, but they're out there. And then you have so many people that are in the middle that give us a fair shake.

I would say in terms of the business climate in the United States, generally the central part of the country, and what I would call “SEC Territory” mostly in the southeast has a fairly favorable reputation for business. So if a company is looking around, hey, we need some capacity to manufacture a product or we need a place to put in an office for technology business. I think that the SEC territory has generally favorable outlook. So we work hard to get on the radar screen of site selection consultants and company executives so that when they have a project, they give us an opportunity, you know, it's a real milestone for us. I always say my favorite project is the next one, you know, love those opportunities to compete for projects.

So when we get a request for information, a lot of times those companies are looking for that first impression of Arkansas with their specific project in four major categories, real estate, workforce, business cost, and then just the overall customer service. Is this a community? Is this a state that really wants us to be here? Are they going to help us? Are they going to be an advocate for our business? Or are they going to be one of those states that have more heavy-handed government regulation or kind of see themselves as more of a regulatory state agency more than a proactive champion for business? You know, number one on that list is really going to come down to workforce: am I going to be able to find the people that have the skills that can do the job. However, a lot of times the first threshold is really more on the real estate side, because if you don't have a 200-acre rail serve side or 100,000 square foot existing, vacant industrial building, and it's not worth exploring that and so a lot of times that real estate component is the first one. Certainly business cost is always important. That's everything from taxes to utility costs to the cost of labor. Or the cost across the board, everything that factors in with some offsets by economic development incentives. And so if we can put together a compelling case for Arkansas, you get to that next step, which is a site visit. From then on, You just looking to survive the round of cute and be the one left that they said is the best place to do business.

MM: Well, that ties in really well into my next question here. We've seen at least 11 of these companies who have made proposed investments are manufacturing based companies. Is a lot of that because of the workforce in Arkansas, and what sort of impact does that have on, you know, a state's workforce who, you know, relatively speaking, pretty low unemployment, but is that a specific kind of workforce that say other states may not be able to offer? 

CO: In some cases, definitely. Yeah. You know, when it comes to manufacturing, you have so many advanced manufacturing companies so Westrock coffee, for example, they announced publicly that their average wage would be around $70,000. So you've got hundreds and hundreds of jobs that are good paying jobs for the steel industry, for example. You know, we had a public announcement there with Big River Steel and U.S. Steel and these companies report wages that are oftentimes in the six figures. And so these are these are good jobs. These are highly skilled individuals. A lot of times it requires a great degree of automation and technology. And so, you know, the difference between a manufacturing job and a job in the technology sector is not as far apart as it once was. And so when it comes to Arkansas, we really have a skill base of those in the aerospace and defense industry.

Companies like Lockheed Martin and Aerojet Rocketdyne and R2S the Raytheon Rafael joint venture, they recognize that companies like Dassault Falcon Jet, they recognize that they could have done that project and other places but they have workforce in Arkansas that gets the job done. It kind of makes them say okay, we have the confidence to hire more people like you. And so I think that rings true whether it be some of those target industries like the steel industry like timber and forestry products, you've got really good workforce development institutions around the state the University of Arkansas Monticello has a great program, training those in the timber and forestry products industry; food and beverage; firearms and ammunition; distribution and logistics supply chain activity around northwest Arkansas and the graduates that the University of Arkansas is producing. Arkansas has a diverse economy and that helps us but some very concentrated kind of niche programs that that go hand in hand with the graduates that are being produced in the success that we're finding in economic development.

Finally, these proposed investments are very exciting, but it's also important to examine the current status of the economy in Arkansas as well. You know, we've seen statistics from places like U.S. News and World Report that ranks Arkansas 35th in the nation when it comes to the economy. 40th in infrastructure and 47th in healthcare. How do you see this investment helping to elevate those rankings for some pretty concerningly low numbers?

CO: Yeah, it's really interesting, these ranking agencies have methodologies all across the board. You know, we can quote quite a few rankings that are favorable to us came out last week with rankings region by region, Arkansas was number one in the South Central Region. United Van Lines came out with their rankings of inbound movers Arkansas was fourth in the country there. You know, especially when you have ranking agencies that have a mix of objective and subjective measures, Arkansas comes out Number one or in the top 10 in a lot of these and unfortunately we come out being ranked below in some of these.

I think it's more of a matter of looking at the real companies that are finding success and asking them. So you know, one thing that we do with our marketing is rather than going too deep into these ranking agencies that have methodologies across the board, we do more of an executive voice of interviewing executives that are finding success in Arkansas and asking them why choose Arkansas, what's so special about Arkansas? We've done these type of interviews with with leaders of hydro and with Dassault Falcon Ket and with WestRock coffee and with Dillard’s and others. I think the numbers speak for themselves when it comes to companies putting their confidence in Arkansas. I think there was one that came out in the last few weeks about Arkansas being the second most favorable state to start a business. So success when it comes to entrepreneurship. We'll continue to look at economic development in those three areas of job growth: entrepreneurship and small business; existing businesses and their growth; and then recruiting new ones to the state. And so we've had some success in 2023, and all three of those categories. Look forward to seeing continued success in those and I think that we're setting the stage with good public policy. When you take a look at the tax cuts over the years that have taken us down to now 4.4% individual income tax rate 4.8% on the corporate income tax side. I think with favorable public policy and with the right workforce strategy and the things that we're doing, I'm confident that we'll see continued success.

Ozarks at Large transcripts are created on a rush deadline by reporters. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of KUAF programming is the audio record.

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Matthew Moore is senior producer for Ozarks at Large.
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