The opening of a $16 million Peds Legwear plant in Hildebran, N.C., is the latest activity promoted by Wal-Mart as proof of its ongoing commitment to return manufacturing jobs to the United States. Wednesday’s (March 11) opening even included the attendance of U.S. Under Secretary of Commerce for International Trade Stefan Selig.

“There has never been a better time to expand operations in the United States, given our attractive consumer market, thriving culture of innovation, and talented workforce,” Selig said in a statement.

Peds president Michael Penner said Wal-Mart’s commitment to purchase $250 billion in additional products made in the U.S by 2023, state and local government incentives helped make the new plant a reality.

Peds invested $7 million to rescue International Legwear Group (ILG), a failing sock company based in Burke County, N.C., which is an area hard hit by the recession and offshoring of textile production. Within 10 days of ILG’s announcing its liquidation, Peds re-hired workers who had been laid off and saved the company’s ongoing accounts.

“Today, the business is thriving,” Penner added. “The work force is expected to reach 150 employees by the end of this year, and sales have already quadrupled. We are on track for creating 205 jobs by 2018.”

Penner said the company invested in 90 machines from Italy that allow the company to knit yarn into tubes and then add toe seams.

“In the past these were two separate labor intensive processes, and manufacturers would send socks to Mexico or Central America to sew the toe, apply dye, and press and package the socks,” he said.

Cindi Marsiglio, vice president of U.S. Manufacturing at Walmart, said the collaboration with Peds Legwear is bringing U.S-made quality products to its 140 million weekly customers and is in line with its commitment to U.S. manufacturers, creating American jobs and helping strengthen local economies across the country.

Socks manufactured at the new facility are sold in the U.S., as well as in Canada, Mexico, and South Korea, Wal-Mart said.

Two years into Wal-Mart’s 10-year U.S. manufacturing initiative, Marsiglio recently told The City Wire that that there are more projects in the pipeline today than ever before, from concept to commitment and everything in between. While she would not provide an estimated number of projects, in October 2014 she said there 150 projects in various stages.

In terms of investment, Marsiglio said the spending is on par with the two-year target with the estimated prorated portion of $250 million 10-year commitment. The funds are being allocated based on three areas:
• New items sourced from current U.S. suppliers;
• New suppliers bringing new or improved items; and
• Those suppliers looking to bring some of their manufacturing onshore, which is by far the toughest piece of the puzzle and the most time-consuming.

Marsiglio said Wal-Mart doesn’t have a specific target spending among these three areas. 

“We are seeing a lot more production in the U.S. for items added to our inventory as we are buying more from those we already do business with. Some existing manufacturers are expanding their plants as they take on new customers and more business and others are adding shifts. We are still seeing stable interest among those who want to onshore production and plan to build new facilities which is exciting and most difficult to complete,” Marsiglio said.

Mike Harvey, chief operating office of the Northwest Arkansas Council, applauded Wal-Mart’s efforts to onshore manufacturing, noting that it appears to be more challenging from some than others. He said when an industry’s supply chain and workforce has been missing for 20 years or more, it’s difficult and time consuming to put all the pieces back in place. 

While there was hope Wal-Mart’s efforts would pay dividends in its own backyard, Harvey said there are a couple of hindrances at work. He said there is not enough ready, suitable manufacturing real estate in the region and the more importantly the 4.9% unemployment rate and present openings going unfilled in local manufacturing jobs is a bigger red flag.

Harvey said Wal-Mart’s efforts to collaborate where they can to bring U.S. manufacturing back even in a small scale is positive for the nation’s economy.

Two-thirds of products Wal-Mart already sells are made in the United States, but Marsgilio said many of those are food items given the retailer’s huge grocery presence.

“We want to increase that percentage with this $250 billion commitment and our buyers are very engaged in the process. Again, that’s because our customers want to buy local when they can, and it’s also many times cost effective for us,” she said.

What are the costs of a few sick turkeys in north Arkansas? A little more than $4.19 million if you are Tyson Foods Board Chairman John Tyson, and almost $50 million if you are one of the largest institutional shareholders of Tyson Foods’ stock.

All told, the market value of Tyson shares fell more than $905 million this week.

Investors flew the coup after word broke Wednesday (March 11) that a pathogenic strain of Avian Influenza H5N2 was detected in Tyson Foods’ home state of Arkansas. The bird flu strain was found in a turkey flock in Boone County as part of a Butterball turkey growing operation. More than 16.1 million shares traded hands on March 11, almost four times the three-month rolling average of 4.4 million.

Shares of Tyson Foods (NYSE: TSN) closed Thursday at $37.56, down $2.22 from the March 10 closing price – the day before the avian flu news was made public. For the past 52 weeks Tyson Foods shares have traded from a $44.24 high to a $34.90 low.

Tyson wasn’t the only poultry company hit. Pilgrim’s Pride and Sanderson Farms saw share prices dip 7% and 6%, respectively on fears that export markets will remain closed. More than 40 markets already have bans in place since this strain was first discovered in the Pacific Northwest in January.

But for now, the losses are only on paper for those who held on to their Tyson shares. Spokesman for several poultry companies and some market watchers played down the exposure from the recent H5N2 detection saying there had been no link to their farms or chicken operations. Daniel Jones, analyst with Seeking Alpha and manager of Avaring Capital Advisors, said the market moves weren’t rational, especially given Tyson Foods’ diversified meat business. Jones said the $905.3 million market cap loss of Tyson Foods this week is likely “a drastic overreaction.” He said Tyson Foods is at the epicenter of what's going on, given that its headquarters are located in Arkansas. 

“While the source of the avian flu appears to be a flock of over 40,000 Butterball turkeys (which officials said will be culled and kept out of the food supply), Tyson processes around 40 million heads of chicken a week. Of its 106 food plants in operation in the U.S., 15 of these are located in Arkansas while one other seems to border Arkansas and Texas. Some 57 of its 106 food plants process chicken, 14 of which are based in Arkansas. Assuming that this data is correct and that each chicken processing plant produces the same amount of chicken per week, that's about 9.8 million chickens processed per week or 510.64 million chickens per year,” Jones concluded.

He said in the rare event that Tyson Foods’ chicken supply is negatively impacted by the avian flu, there could be up to $2.73 billion in sales lost if the company shuttered its Arkansas-based chicken plants for a full year.

“The probability of this happening is so slim, however, that it's not even worth considering since management attests that the business performs over 280,000 tests in its labs across the country on a monthly basis, covering microbial, chemical and serological topics. Even if the business is exposed to the avian flu directly, any loss would likely be relatively minor and short-term in nature,” he noted.

The more realistic threat is the loss of exports. Jones said $4.7 billion of Tyson Foods' $37.58 billion, or 12.5%, in sales came from countries outside the U.S. in 2014. This represents a 17.5% rise over the $4 billion reported two years earlier. Jones estimates that about $341.14 million is generated annually from Tyson’s Arkansas-based chicken facilities. He said a ban on Arkansas-based chicken exports would likely be temporary at best.

Another local chicken company, Simmons Foods, is privately owned. Simmons execs said the company maintains a program for the early detection of avian influenza as a part of its rigorous and ongoing commitment to biosecurity.

“Every flock is tested for avian influenza as a part of our standard processes. While no avian influenza has been detected in any of our operations at this time, we are supporting our ongoing biosecurity program with increased security measures during this time of heightened risk. We want the public and our local communities to know that all efforts are being taken by poultry companies to assist government agencies in containing and eliminating the disease,” said Donnie Epp, communications director at Simmons.

Tyson Foods also tests all of its flocks before they leave the farm. While the H5N2 strain poses no threat to humans, according to the USDA, it is deadly to poultry. Avian flu can spread rapidly through a flock, killing birds in as little as 24 hours.

Tyson shares began to tumble prior to the bird flu notice. The shares trended higher in early March and reached a closing price of $42.39 on March 3.

Weak commodity prices are causing oil and gas producers and related oilfield and drilling specialty firms to revisit their earlier announced 2015 capital plans, including a growing number of companies that operated in the shale play.

Southwestern recently announced it was cutting 40% of its investment in the unconventional Arkansas shale play. BHP has also cut its budget in the Arkansas shale play to only $100 million – a fraction of its original spending plans when it bought those assets for $4.75 billion in 2011.

And although crude oil prices have crept up slightly in the past few weeks, the U.S. Energy Information Administration said in its short-term energy forecast Tuesday that the recent uptick is simply a reflection of “falling U.S. crude oil rig counts and announced reductions in capital expenditures by major oil companies, along with lower-than-expected Iraqi crude oil exports.”

That means for many of the companies that are tied to the Arkansas natural gas sector, 2015 may turn out to be a lost year given the fallout from oil and gas prices. Midstream operator, Crestwood Equity Partners, a master limited partnership that operates natural gas liquids and pipeline facilities across the Midwest and East Coast, has announced a workforce reduction for the first half of 2015 “to better withstand any sustained downturn in commodity,” the company said in its recent fourth quarter earnings report.

VOLUMES DECLINE IN ARKANSAS SHALE PLAY
Of note in that quarterly report was the fact that Crestwood’s natural gas “gathering volume” in the Fayetteville Shale was down nearly 30% from a year ago.

“Due to the recent decline in commodity prices and expectation for a prolonged period of price weakness, many of our customers have indicated a lower level of development activity across our asset portfolio in 2015,” said the Houston based pipeline and storage owner. “As a result, we have initiated a program to immediately realign Crestwood’s cost structure while maintaining our strong commitment to safety, compliance and customer service.”

According to Crestwood officials, the Houston midstream operator owns 171 miles of pipeline and storage systems in the heart of the Fayetteville Shale in Van Buren, Faulkner, Conway and White counties. The assets are composed of five separate systems known as Wilson Creek, Prairie Creek, Twin Groves, Woolly Hollow and Rose Bud.

Crestwood has fee-based contracts in the Arkansas shale play with BHP, Exxon Mobil’s XTO, BP and Chesapeake Energy. Company officials did not respond to Talk Business inquiries concerning whether or not any of Crestwood’s employees in Arkansas will be affected by the company’s ongoing downsizing.

THOUSANDS OF OILFIELD JOBS CUT
Meanwhile, oilfield service giant Baker Hughes announced in January it would lay off 7,000 mostly in the first quarter of 2015, saying that it expected the crude oil price slide and drilling slowdown to worsen for much of the year.

The layoffs will trim about 11% of Baker Hughes’ 62,000-plus workforce across the globe. The Houston oilfield giant said it expects to book a one-time charge in the next period in the range of $160 million to $185 million for severance, and said it is reviewing its facilities for possible closures.

And with rig counts in the Arkansas shale play down to single digits and many companies largely giving up drilling projects in 2015, there is no word if Baker Hughes’ downsizings will touch its Arkansas operations.

“When we reflect on the marketplace, the bearish sentiment that has pervaded our industry is understandable, considering the steep drop in commodity prices in recent months,” said Martin Craighead, chairman and CEO for the Houston oilfield giant. “While market demand ended up being more resilient in the fourth quarter than many had predicted, the recent declines seen in rig counts will clearly affect results in 2015. We are taking proactive steps to manage the business through these challenges, and we are well positioned financially for the months ahead.”

Baker Hughes and oilfield rival Schlumberger are largely responsible for bringing many of the next-generation drilling and fracking technologies to the Fayetteville Shale that allowed natural gas companies to get more wellhead production with fewer rigs. Those technologies have generated a nationwide shale-driven oil and gas boon that has made the nation’s past dependence on foreign energy sources a faint memory.

Schlumberger also has announced cost cutting plans – letting go 9,000 workers worldwide and slashing $1 billion in spending on future exploration and production as it seeks to control costs amid collapsing crude prices. The world’s largest oilfield services company, which opened a regional, 20-acre office in 2007 hiring over 100 employees, said the companywide layoffs will impact about 7% of its employees.

The Houston-based oilfield conglomerate said that its capital expenditures are expected to be $3 billion for 2015, compared to $4 billion in 2014. Although neither company has announced any Arkansas layoffs, the loss of high-paying jobs in the oil and gas sector has been noted in both state and national labor figures over the past 12 months.

In Thursday’s session on the New York Mercantile Exchange, oil prices fell to a six week low as Brent crude oil fell 0.8% to $57.08 per barrel. West Texas Intermediate crude declined $1.12 or 2.3% to $47.05 per. NYMEX natural gas futures contract settled at $2.713 per million British Thermal units (MMBtu), down 8.4 cents. The EIA expects the Henry Hub natural gas spot price, which averaged $4.39 per MMBtu in 2014, to average $3.07 per MMBtu in 2015 and $3.48 per MMBtu in 2016.

The Energy Department forecasters expect international Brent crude oil prices to average $59 per barrel in 2015 and $75 per barrel in 2016. Prices for the benchmark light, sweet Texas crude is expected to average $7 per barrel and $5 per barrel below Brent in 2015 and 2015.

Arkansas’ publicly traded concerns held their own this week as many U.S. stocks got caught in the broader market’s downdraft with the Dow Jones and S&P 500 falling for the third straight week.

During an up-and-down week that saw oil prices continue to fall, the dollar strengthen, and consumer optimism taking a hit, the Dow Jones Industrial Average gained nearly 300 earlier in the week but lost those gains by Friday’s closing bell. The nation’s top blue chip index fell 145.91 points on Friday, or 0.8%, to 17,749.31.

The biggest news among Arkansas stocks came during the mid-week session when S&P 500 component Tyson hit a snag after the U.S. Department of Agriculture reported a suspected case of avian influenza, or bird flu, in Arkansas. Since Wednesday’s opening bells, Tyson’s stock has been on the downward path and closed Friday at $37.42.

Since touching a high of $40.82 in Monday’s session, Tyson’s shares have declined nearly 8.3%, losing nearly $1 billion in total market value as an average of 5.7 million shares have traded hands over the past 10 days. Tyson’s shares are down nearly 10% over the last 12 months, touching a high of $44.24 on April Fool’s Day in 2014.

BANKING RIVALS ENJOY STRONG STOCK PERFORMANCE
Meanwhile, other advancers in this week’s session were Arkansas’ regional banking rivals, Simmons First, Bank of the Ozark and Home Bancshares. The fast-growing Arkansas banks have continued to benefit from recent out-of-state acquisitions and strong quarterly earnings performances.

Among the group, Conway’s Home Bancshares was the clear winner, climbing to finish the week at $33.95, a gain of $2.01 from Monday’s opening bell price of $31.84.

Other winners in this week’s session included America’s Car-Mart, Murphy USA, Dillard’s and J.B. Hunt. ArcBest Corp. also regained its footing after an unusual blip in last week’s session where the Fort Smith trucking firm lost more than 7% of its market value. It ended this week’s session at $40.85, up 2% for the week.

In the losing column, Windstream continued to trade at or near its 52-week low. The Little Rock telecom closed out the week at $7.54 after Wall Street analyst Michael Rollins of Citigroup said Thursday that the company’s ongoing financial restructuring can support a higher valuation, calling it a “win-win” situation for shareholders. Still, Windstream lost ground over the 5-day session after touching a weekly high of $7.91 on Wednesday. For the week, Windstream shares shed 16 cents, closing Friday just pennies off its 52-week low of $7.42.

Other Arkansas decliners for the week were Acxiom Corp., Deltic Timber, Murphy Oil and market bellwether and Dow Jones component Wal-Mart Stores. After announcing executive changes this week to improve its U.S. grocery division, shares in the world’s largest retailer closed Friday at $81.90, down 1.1% for the week.

Not surprisingly, Murphy Oil fell in tandem with crude oil prices, which fell nearly 10% during the week. Light sweet crude fell $2.21, or 4.7%, to settle at $44.84 a barrel on the New York Mercantile Exchange. Murphy ended the week at $46.83, down 3.4% for the week. The El Dorado-based oil giant is down a whopping 22.7% over the past 12 months, and well off its 52-week high of $68.43 last summer when oil prices were trading over $100 per barrel.

As natural gas drillers and oilfield equipment firms continue to cut their capital spending in the Fayetteville Shale, there are already signs that severance tax collections in Arkansas began to weaken at the beginning of the year.

The state’s record tax revenues from natural gas production – which have been supported by former billion dollar capital budgets that poured into the Arkansas shale play over the past decade – will eventually start to slide because of lower capital spending in the shale, according to John Shelnutt, chief economist at the Arkansas Department of Finance and Administration (DFA).

“Yes, eventually the decline in capital spending will impact production and tax revenue,” Shelnutt told Talk Business & Politics on Tuesday. “The rig count in Arkansas had already declined precipitously before this news.”

The news that Shelnutt was referring to was the fact that severance tax collections for the month of January were down year-over-year for the first time since February 2013.

That came after Arkansas’ severance tax collections hit a record for the month of December, rising a whopping 81% to $7.8 million compared to $4.3 million a year ago. For the three month period ended Dec. 31, 2014, collections were up 41.6% from $14.1 million for the same quarter of fiscal 2013, according to tax data compiled by the Revenue Division of the Arkansas Department of Finance & Administration.

The monthly and quarterly totals are a record for those respective periods, as new drilling techniques and high well production continues to fill state tax coffers. At the end of fiscal 2014, which officially ended on June 30, 2014, severance tax collections in Arkansas reached an all-time high of $77.3 million.

SEVERANCE TAX DIP
That pace continued through the first six months of fiscal 2015 with collections at an all-time high of $44.8 million at the halfway mark. But momentum came to halt in January as collections for natural gas production were down 4.8% to nearly $6.3 million, compared to almost $6.6 million during the same period a year ago.

“The decline in capital spending will be a delayed effect though,” Shelnutt said “In the short run, natural gas severance is still being influenced positively by the earlier surge in gas production now moving into the full-rate tax category of the natural gas severance law.”

Shelnutt explained that the controversial severance law change from the special session of 2008 allowed for tiered tax rates for cost recovery of shale, or so-called high cost natural gas wells. That would be followed by full-rate taxation after a designated cost recovery period.

“Much of that initial drilling and production surge is now migrating into the full rate gas column in the rate structure,” the Arkansas economist said. “But in general, prices are the main determinant of this valued-based tax system that started with the law change in 2008, from a volume-based system previously.”

FEWER RIGS
As Shelnutt stated, the number of drillings actively in operation in Arkansas through March 13 (Friday) fell by one from the previous week, continuing the production swoon in the state’s unconventional shale play driven by continued downward pressure on natural gas prices, according to Baker Hughes’ weekly national week count.

Overall, the number of rigs operating in Arkansas is now down to only 11, falling to its lowest level since Dec. 12, 2014, when there were only 9 rigs in operation. Two years ago, there were 27 rotary rigs operating in Arkansas, with 25 of those located in the state’s unconventional shale play.

The number of drilling rigs in Arkansas peaked in September 2008 at 59, when the wellhead prices for sellers at Henry Hub topped $8.60 per million cubic feet (Mcf). Since October 2011 when the state’s rig count hit 34, that number has trended downward.

Nationwide, Baker Hughes reported that the number of oil and natural gas rigs actively drilling through Friday fell by 67 rigs to 1,125. The rig count is down 684 from the same time last year. The number of oil rigs fell 56 to 866, while rigs drilling for natural gas are now at 257, down 11.

As previously reported by Talk Business & Politics, Southwestern Energy recently announced it was cutting 40% of its investment in the unconventional Arkansas shale play. BHP Billiton has also cut its budget in the Arkansas shale play to only $100 million – a fraction of its original spending plans when it bought those assets for $4.75 billion in 2011.

Weak commodity prices also are causing oil and gas producers and related oilfield and drilling specialty firms to revisit their earlier announced 2015 capital plans, including a growing number of companies that operated in the shale play.

The U.S. Energy Information Administration reported last week that the decline of spot oil and natural gas prices has reduced oil and natural gas production tax revenues in some of the largest oil- and natural gas-producing states. That report didn’t mention Arkansas, but noted that Texas’ tax revenue from oil and gas receipts in January was down 40%.

Shelnutt also noted the effect of Arkansas severance tax collections for crude oil production, mainly in the emerging, liquids rich Haynesville Shale oil and gas play that encompasses most of northern Louisiana and a few adjacent counties in South Arkansas. For January, Arkansas’ oil severance collections fell 34% to nearly $1.5 million, compared to $2.24 million a year ago.

With around 60 convenience stores in the two-county area of Northwest Arkansas, one might think that’s enough. But c-store operators Kum & Go and Casey’s General Store continue to invest in Benton and Washington counties. And Wal-Mart is also getting into the game.

Wal-Mart appears to like the quick trip format and is including mini-convenience stores near many of the fueling stations of new Neighborhood Market stores. 

Kum & Go has built or remodeled 14 stores in the two-county area in the past three years and Casey’s General Store is at 19 and counting. Both of the Iowa-based chains say their multimillion investments in Northwest Arkansas are paying off.

Wal-Mart has the Walmart To Go in Bentonville, Walmart Campus store at the University of Arkansas and of a growing number of the mini c-stores cropping up in the region. Add in nine White Oak Stations and handful of EZ Mart’s and mom and pop operators and the density between convenient stores and people stands at about one store for every 8,333 local consumers.

Statewide the density is one c-store for every 1,600 people which is tighter than the 1 for 2,100 density level across the nation, according to Jeff Lenard, spokesman for the National Association of Convenience Stores.

Based on those calculations there is still more room for growth in Northwest Arkansas. Lenard said Texas and Florida are two of the states attracting major investment from c-store chains. But he also points out that retailers from JoAnn Fabrics to Ikea furniture or Old Navy and Home Depot each offer some type of food and drink beverage near their cashier areas as they recognize consumers enjoy finding food in unlikely places.

Nielsen reports that 2014 was another record year of growth for the U.S. convenience store sector with 152,794 stores at year-end, up about 1% from 2013.

"Our continued growth, even during a sluggish economy, shows that our core offer of convenience resonates more than ever with our customers, whether they visit us for a fuel fill-up, quick snack or drink, or stop by for fill-in groceries or healthy take-out meals," said NACS Chairman Steve Loehr, vice president of operations support at LaCrosse, Wisc.-based Kwik Trip.

Neilsen said the link between fuels and convenience retailing continues to grow. Overall, 83.5% of convenience stores 127,588 sell fuel, a 0.7% increase (930 stores) over 2013. Convenience stores account for 33.9% of all retail outlets in the United States, according to Nielsen, which is significantly higher than the U.S. total of other retail channels including drug stores (41,799 stores), supermarket/supercenter (41,529 stores) and dollar stores (26,572 stores).

FOOD, SERVICE QUALITY IMPORTANT
Lenard said there are a couple of trends playing out in the c-store space. First he linked to $4 gasoline in recent years, noting that consumers made fewer trips and were led to try food offerings at their local convenience stores who have invested in “fresh” and made-to-order entrees.

“You take someone who fills up and then goes inside and tries a fresh sandwich or other food and they are pleasantly surprised by the experience and then converted. We are seeing some chains offering samples at the fueling station in some cases to get consumers to try the food,” Lenard said.

He said long gone are days when gas station food is the punchline of a joke like in National Lampoon’s Vacation when Chevy Chase’s character Clark Griswold uttered, “I am so hungry that I could eat a gas-station sandwich.”

Food Channel celebrity Anthony Bourdain is noted as saying, “Proximity to petroleum products is rarely an impediment to a great meal.”

Consumers are also more comfortable trying food from different formats which is seen in the rise of the food trucks and the diverse c-store food offerings such as gourmet bakeries who cater weddings to freshly made pizzas, burgers and even sushi. Lenard said he visited the White Oak Market Pinnacle Station in Rogers a couple of years ago and it ranks on his top 10 convenience store operations in the country. 

“I hope to get to the Walmart To Go in Bentonville and The Cube, which is a drive through convenience format in Norman (Oklahoma) soon,” he said.

Lenard also notes that convenience store chains offering ready-to-eat foods have to be careful to provide quality products and customer service equal or better than area restaurants. 

“If a customer tries a food item at a convenience store and has a bad experience or the quality is not up to par they might not say anything to the store but they will tell others and they won’t likely try it again, which could be damaging to a store’s brand,” Lenard warns.

He said there is a big reason why Wal-Mart and competitor Target are focusing on smaller stores because the days of 45-minute grocery shopping trips are not the norm.

“People want to get in and get out quickly most of the time,” Lenard said.

BEVERAGE BOOM
However, the c-store is not a substitute for a grocery store. Lenard said 84% of the products purchased in a convenience store are consumed within one hour of purchase. He said the c-store is more aligned with a quick-serve restaurant (QSR) with the difference being that beverages drive sales at a c-store and food drives the purchases at a QSR.

Last year former Walmart U.S. CEO Bill Simon told The City Wire that the stand alone convenience store it built in Bentonville was “too expensive to replicate on a mass scale.” He said the retailer used the format as a testing lab to see what would sell and what consumers most wanted when they entered the store. Beverages were the biggest opportunity for added sales in this format.

Simon also said the fueling stations were a key component in the new Neighborhood Markets because they are traffic generators. The solution to selling more beverages has been accomplished by the retail giant who now has the mini-convenience stores at the fueling stations. The retailer also is putting a large beverage center in the front of its Neighborhood Market formats where shoppers can get a milk shake, cappuccino, slushy, soda, tea or coffee by the cup. 

The retailer removed by-the-cup beverage stations from its supercenter designs a few years ago, but they could be coming back.

The story at Tyson Foods is an ever-changing saga as the meat giant continues its metamorphosis away from commodity-based business models to more consumer-branded and higher-margin products following the $8.55 billion acquisition of Hillshire Brands in August 2014.

At Tyson Foods’ presentation at the Consumer Analyst Group of Europe (CAGE) annual conference in London on Wednesday (March 18), executives told analysts that Tyson’s branded product portfolio, operational execution and other improvements from the acquisition of Hillshire Brands give them the confidence to reiterate fiscal 2015 guidance of $3.30 to $3.40 adjusted earnings per share.

This comes on the heels of roughly $1 billion in market cap losses over the past two weeks after confirmation of a highly pathogenic strain of Avian influenza in a Butterball turkey flock in Arkansas and in neighboring Missouri. While analysts typically agree that risks to a diversified protein company like Tyson Foods are present given the continuing spread of the H5N2 bird flu strain, any catastrophic event is unlikely.

Tyson execs said they continue to grow with consumer demands from working closely with McDonald’s to provide chicken raised with no human-sensitive antibiotics to revamping and expanded brands like Jimmy Dean into more products than just breakfast sausage. From healthier, cleaner label lunch meats to expanded flavor profiles in frozen chicken, Tyson executives said they are dialed into what consumers want and prepared to deliver.

Aside from sharing growth opportunities, Tyson Foods Chief Financial Officer Dennis Leatherby said Tyson Foods realized $60 million in synergies (increased revenue, cost reductions, better margins, etc.) from the Hillshire deal in the first quarter of 2015 (October through December 2014) which was slightly ahead of projections. 

“We are on pace to meet or exceed more than $225 million in annual synergies this year. We have strong cash flows that give us options for the future. We have the size, scale and flexibility to serve customers and consumers in multiple channels, and we’re creating value for our shareholders,” Leatherby said at the conference. “It is gratifying to be in control of our own destiny, and we’re looking forward to telling our growth story to investors in Europe.”

SHARES RALLY
Tyson Foods shares (NYSE: TSN) began trading lower on Wednesday but rallied with the broader markets in the early afternoon session following the Federal Reserve’s decision to keep interest rates unchanged through April with the possibility of raising them thereafter as economic data dictates.

Tyson shares rose more than 2% on the Fed’s announcement trading above $39 a share for the first time since the H5N2 was detected in Arkansas. Tyson shares are likely still undervalued by Wall Street, according to Credit Suisse analyst Robert Moskow.

Tyson shares closed above $39.50 on Wednesday, which is still below the $42 target price projected by Moskow and the $44.24 high price reached in March 2014. His projected Tyson earnings of $3.36 per share are in line with corporate guidance, but Moskow remains neutral on the stock.

EXPANSION
Tthe meat company also announced a $47 million investment on a new boxed beef warehouse associated with its plant in Lexington, Neb. Construction is expected to begin this spring and will include a 50,000-square-foot warehouse. The addition is designed to improve the "flow, efficiency and capacity" of the Lexington facility's boxed beef storage and distribution systems, and should be finished in mid-2016.

The new warehouse is not expected to add jobs to the plant, which employs more than 2,700 people.

Leatherby said Tyson will continue to invest in its own facilities to increase efficiencies, but the company’s primary goal for its cash flow is to reduce the $3 billion debt it took on to purchase Hillshire Brands.

He said despite the low interest rate, the company wants to retire as much of the debt as soon as possible to be in the position to return more equity to investors through share buybacks and perhaps allow for more strategic acquisitions to enhance the company’s growing value-added business.

Retailer Target, following Wal-Mart’s lead, announced Wednesday (March 18)  it would raise its minimum wage to $9 per hour in April. The federal minimum wage is $7.25 per hour but at least a dozen states have set higher minimum pay rates being ushered in the in the next couple of years.

UltraViolet, a woman’s advocacy group, along with other union interest groups have been pressuring retailers and fast food companies to raise wages and are claiming victory since Wal-Mart Stores, T.JX and now Target Stores that have done just that.

Wal-Mart recently said starting wages would be $9 in April, next year employees after some six months of training will earn at least $10 an hour. This impacts about 500,000 of the retailer’s 1.3 million workers. TJX, parent of T.J. Maxx, will also raise starting wages to $9. 

In unrelated news, Target said last week it would lay off about 1,700 workers and close out another 1,400 open positions as part of a $2 billion cost savings plan.

As the University of Arkansas men’s and women’s basketball teams prepare for their respective NCAA tournaments this week, some workplace managers may fear that productivity will come to a halt when red-clad Razorbacks fans and other college logo-adorned devotees come to work on Thursday.

The Arkansas men’s basketball team will return to the NCAA Tournament as the No. 5 seed in the West Region and will take on No. 12 seed Wofford in Jacksonville, Fla., on Thursday at 8:50 p.m. The No. 10 seed women’s basketball team will face Northwestern in their first round game in Waco, Texas on Friday at 11 a.m.

For the men, the NCAA Tournament appearance will be Razorbacks’ first since 2008 and the program’s 30th overall. Arkansas earned an at-large bid after finishing second in the SEC regular season standings and second in the SEC Tournament.

The questions for some Arkansas employers during March Madness is just how to handle all chaos from office betting pools, impromptu Razorback pizza and cheese-dip parties, and the inevitable strain on corporate networks and servers from the hours of desktop live streaming during the month-long tournament.

The National Federation of Independent Business recently posted a video on its website to help business owners deal with March Madness in a way that is not disruptive to the workplace.

“The bad news for employees is that the majority of the games take place from 9 a.m. to 5 p.m. during the weekday,” Beth Melito, senior counsel at NFIB’s legal center said. “This means that employees can and mostly will follow along on their computer, iPad and smartphones to watch games and track (March Madness) brackets while at work.”

Melito offered some tips for employers to embrace all the “madness” in a manageable way. Those suggestions include establishing a “game central” location at work, relaxing dress codes, keeping office pools low key and voluntary, and checking on the legal ramifications of high-stakes bracket contests.

LOSS OF PRODUCTIVITY OR MORALE BOOSTER?
Challenger, Gray & Christmas Inc. has put out an annual survey estimating the actual cost in terms of lost wages paid to distracted and unproductive workers that participate in March Madness office pools. This year’s survey estimates that 50 million Americans participating in bracket contests at work, cost employers near $1.9 billion in lost productivity.

“That figure may be on the conservative side, considering this year could garner a lot more interest from even casual basketball fans eager to see if Kentucky can continue its undefeated season through the tournament,” John A. Challenger, CEO of Challenger, Gray & Christmas said in a news release.

“If Kentucky plays their first tournament game during the workday, it wouldn’t be shocking if every single working person in the state called in sick for the day or took an extra-long lunch break,” Challenger joked.

Challenger’s estimate is based on the number of working Americans who are likely to be caught up in March Madness; the estimated time spent filling out brackets and streaming games; and average hourly earnings, which, in January, stood at $24.78, according to the Bureau of Labor Statistics.

But a new OfficeTeam survey suggests that March Madness may actually be good for the workplace. In the OfficeTeam poll, half (50%) of senior managers interviewed said activities tied to the college basketball playoffs boost employee morale, and more than one-third (36%) felt March Madness has a positive impact on workplace productivity. These results are up from 32% and 27%, respectively, in a similar survey conducted one year ago.

“Employers that encourage staff to enjoy events like March Madness recognize that these activities don’t have to be viewed as negative workplace distractions,” said Robert Hosking, executive director of California-based staffing service firm. “Organizing friendly contests or watching big games together can give employees much-needed breaks and opportunities to build camaraderie.”

OfficeTeam also identifies five mistakes workers should avoid when celebrating March Madness.
• Going against the playbook. Before participating in any tournament-related activities, find out your company’s policies on employee breaks, accessing the Internet for non-business purposes and decorating workspaces.

• Taking too many time-outs. If your employer is OK with it, take occasional breaks to check scores or talk hoops with colleagues, but make sure to keep up with your assignments.

• Failing to have a game plan. If you want to take time off to watch the playoffs, let your boss know as far in advance as possible so he or she can manage workloads.

• Being a poor sport. It’s fine to root for your favorite school, but don’t get overly competitive in the office.

• Not being a team player. Even if you aren’t a sports fan, try to join in on celebratory activities to bond with co-workers.

SILOAM SPRINGS MANUFACTURER GETS INVOLVED
No doubt, some Arkansas employers recognize that Thursday will be like a national holiday in Arkansas as the Razorbacks prepare for their matchup. Alternative Design Manufacturing and Supply in Siloam Springs is holding a 20% off online sale through March 20 on all Razorback related products through its Osage Eagle Products brand.

Jay Martin, marketing manager for the Northwest Arkansas manufacturer, said the company is holding its “March Mania” sale on its lineup of licensed Arkansas Razorback products through March 20.

“Knowing that Arkansas is in the tournament, we thought this would be a great time to take advantage of the fact that we are approved to manufacture Razorback licensed products – plus we wanted to have a little fun,” he said.

Martin said the company was started by University of Arkansas alumni and Razorback fan Eddie Lloyd and his son, company president Grant Lloyd, making steel caging products for the poultry and animal laboratory industries. In the past few years, the company has diversified into the product licensing arena through Osage Eagle Products, and makes license plates, wall art, yard signs and other University of Arkansas and Arkansas State University labeled products.

Langston, also a University of Arkansas alumnus, said Thursday will be a big day for Razorback fans and admitted that not a lot of work will probably be done.

“We have a bracket contest that I have been running for the last three years, and we get ten to 15 of our 50 employees involved,” he said. “You get bragging rights for a year if you win. Our owners are very interested in making work fun and support this endeavor.”

Wal-Mart Stores’ Mexican division announced plans to further slow down its expansion efforts this year amid a sluggish Mexican economy and weakening peso retated to slumping oil prices.

Chief financial officer Rafael Matute made the announcement on Wednesday (March 18) during a meeting with analysts. Walmart International CEO David Cheesewright first mentioned the slowed expansion in October.

Walmex sold assets and begin to focus on its supermarket business amid the macro-economic slowing in 2014 which has continued.

"This year, 2015, will be a year of pause," Walmex CEO Enrique Ostale told analysts. "We're looking for a greater return on our investments."
 
The company said it will spend $809.45 million this year on maintenance and the expansion of its sales floors. Malute added the company would expand its total sales floor area by 2.4%.

Walmex opened 132 outlets last year, and expanded its total shop floor area by 3.9%, down from the 4.4% originally expected.

Same-store sales fell 0.2% in Mexico last year, hurt by weak demand and tough competition. Last month the retailer reported a 40% rise in fourth-quarter profit last month.

”Making and Remaking America’s Downtowns” is the focus of the National Town Builders Association (NTBA) Spring Roundtable occurring in Arkansas this week. The group will tour Bentonville as a pre-familiarization tour to the main conference held in central Arkansas Friday through Sunday, according to Blair Cromwell, spokeswoman for Visit Bentonville.

A group of 30 people from around the country will join Bentonville city planners, developers, and place makers for a day long behind the scenes experience of this small Arkansas town that has garnered national attention over the last several years. NTBA members will begin their trip in Eureka Springs on Thursday morning (March 19) and travel to Bentonville that afternoon. They will spend the evening dining at Tusk and Trotter followed by an afterhours event at the Hive at 21c Museum Hotel hosted by Rob Coleman, CEO of ERC, the company responsible for the Thrive project in downtown Bentonville.

Friday morning (March 20) NTBA members tour various downtown destinations to learn how Bentonville implements its award winning master plan with transformative projects. The group will end its experience in Bentonville with a tour of the city’s trail system followed by a visit to Crystal Bridges Museum of American Art and Eleven.

The NTBA is the only town and urban developer association in which the knowledge and experience gained from creating robust town centers is freely shared. Members of the association are town builders committed to smart growth, responsible development, and peer support through networking and collaborative education.

The Spring Roundtable attendees travel to central Arkansas on Friday afternoon through Sunday to tour The Village at Hendrix in Conway, the River Market in downtown Little Rock and Argenta Arts District in North Little Rock.

Restaurants and foodservice operators continue to look for ways to win favor with the diverse and huge demographic known as the Millennials who comprise about 27% of the U.S. population.

A recent report from the NPD Group found this huge cohort has two distinct life-stages — elders between 25 and 34 years old and the younger group between the ages of 18 and 24. The report found that both groups are spending less money at foodservice venues than they once did.

Companies like Springdale-based Tyson Foods are also watching the Millennial generation with respect to food preferences. Andy Callahan, vice president of retail operations at Tyson Foods, said Wednesday (March 18) that this segment of the population is also driving the snack craze, consuming up to 7 small meals a day, unlike other generations.

The market research company said that for U.S. restaurants and foods service outlets, Millennials represent about 14.5 billion visits and $96 billion in spending, which is 23% of total restaurant spend, but this cohort has reduced visits and spending in the past few years. Specifically, NPD found older Millennials more likely to have children have cut back the most on restaurant visits, making 50 fewer visits per person over the past several years. Younger Millennials, those who are 18 to 24, made 33 fewer visits per person.

Annual per capita restaurant spend for younger Millennials is $1,240, which is down $146 per person compared to their spending in 2007. Older Millennials’ annual per capita spend is $1,369, down $213 per person, according to the NDP report.

DEMOGRAPHIC TRENDS, DEMANDS
The research found several reasons why Millennials have reduced their restaurant visits, with the most frequent being money. The group with young children cite budget restraints which has them opting for less expensive at-home meals. Another trend noted in the research is that about half of Millennials enjoy cooking. They say cooking at home saves money, they can control tastes and make healthier meals.

“Even with their cutbacks Millennials still make a lot of visits to restaurants and to encourage more visits, restaurant operators need to offer them a ‘good deal,’ which to Millennials means reasonable and affordable items that are of good quality and the right quantity,” said Bonnie Riggs, NPD restaurant industry analyst. “In other words, they not only want to get their money’s worth, they want good food and service.”

Food industry experts like Chris Egan, president of Kansas City-based Service Management Group, said that regardless of price point, Millennials expect a great dining experience.

"Affordable fast-casual and fast food restaurants with locally sourced goods, exotic flavors, and service levels historically reserved for higher-quality restaurants will most likely garner a disproportionate share of Millennial dining spending."

MILLENNIAL FAVORITES COMING TO NWA
A separate report from YouGov Brand Index recently released its top list for restaurants that most resonate with Millennials based on repeat business. For Millennials who already patronize Jimmy John’s, 83% of them say they would consider eating there again the next time they are looking to dine out. The next highest scorers among their own current customers are Chipotle (82%), Chick-Fil-A (78%), and Whataburger (76%). Subway rounded out the top five with a 73% loyalty rate.

Two of those chains are investing in Northwest Arkansas, with Whataburger and Chipotle adding new locations in Fayetteville.
Whataburger is under construction at 1956 Martin Luther King Jr. Blvd. in Fayetteville. A second location has been approved at 4335 S. Pleasant Crossing Blvd. in Rogers.

Chipotle, which already has locations on Dickson Street in Fayetteville and South Walton Boulevard in Bentonville, is opening a new eatery at 3379 College Ave. in Fayetteville, according to permits on file with Arkansas Department of Health.

Other restaurants coming soon to Northwest Arkansas that have already found favor with the Millennial generation include:
• Pei Wei Fresh Kitchen at 4895 W. Pauline Whitaker Blvd., Rogers; 
• Smashburger at 500 S.E. Walton Blvd., Bentonville; and
• Uncle Maddios, make-it-your-way pizza at 2012 S. Promenade Blvd., Rogers.

Startups are nothing new for Clint Lazenby. He has been for many years an investor and mentor in the local entrepreneur scene. But this time around the retail veteran took the dive himself with Bill Gerads and two other industry professionals to launch #OnShelf late last year.

#OnShelf is a third-party supplier company that offers a set of services for product inventors, manufacturers who are looking to get items into retail stores. Based in Bentonville, Lazenby and Gerads and two other partners soon to join the firm full-time have amassed 27 years in merchandising and operations for Wal-Mart Stores, two decades of domestic sales, consumer packaged goods (CPG) experience, and national account responsibility as well as 16 years in international sales, distribution and foodservice.

“We are able to leverage our global network to provide a comprehensive range of services from direct sales calls to the evaluation of markets on a global basis,” said Gerads. “We offer a turnkey option for small to median-size manufacturers including the sales presentation to retailers and the day-to-day management of that retail business, but that’s just part of what we are equipped to do.” 

The team has connections with the gamut of retailers from mass merchandisers like Wal-Mart, Sam’s Club, Target and Costco to dollar stores, top grocers and drug stores along with specialty retailers and online players like Amazon. They are also dialed into the international arena with experience and connections to Tesco, Carrefour, RTmart and others.

Another part of the company’s strategy is to enlist independent sales reps across the country that have relationships with key retailers such as Target in Minneapolis or Publix in Tampa. Gerads said part of his duties include recruiting independent sales reps.

Lazenby and Gerads each have logged time overseeing international sales for multiple CPG companies from ConAgra to Mars Inc., with Gerads also spending the past six years as senior director of global supply development at Wal-Mart.

The tandem said they have known each other for several years and kept bumping into one another in various work or civic functions. This past fall Lazenby said the timing felt right for the team to give this startup venture a go. Lazenby, an investor in Acumen Holdings and NewRoad Ventures, jumped in with both feet in October 2014 after more than eight years with ConAgra Foods/Lamb Wesson. Gerads said he left Wal-Mart in January and came onboard full-time. The other two partners will soon join the venture.

Gerads said they are bootstrapping the lean operation themselves and there is no shortage of potential customers looking for help and insight on how to get products into various retailers. With former Wal-Mart execs making up half of the foursome, Gerads they can’t help but use the everyday low cost strategy in this startup venture.

“For us, now it seems that time is the biggest shortage we face. We want to focus on those products and ideas that have the most potential and we have the team to evaluate that potential and then manage and grow sales opportunities for our customers,” Gerads said.

Gerads said the company is working with a local manufacturer and some suppliers in household chemicals, toys and sporting goods. Given the team’s past experience in the pet category along with foods, they expect to see more potential and small suppliers looking to grow their business with additional product innovation and multiple channel exposure. Gerads said they also will work with a partner that furnishes store merchandising services such as checking modular set-ups and stock levels. 

The partners declined to disclose their one-year revenue projections, but said they have three potential revenue streams that consist of consultant fees, percentage of sales generated at retailers and retainers for the ongoing management services.

The partners know it will take time and effort to build out the business clientele but say they are pleased with the results they’ve seen in just three months time.

#OnShelf partners are not deterred by larger competitors in the market, saying a bigger threat for them is making sure they recognize the right items that customers want.  Gerads said entrepreneurs with no experience in retail are leaning on them to analyze the market potential, get the product mock-up, make the presentation to retailers, handle the logisitics and service of accounts they get placed into retail. That goes for products headed to Wal-Mart, Kroger, Cabella’s or some dozen other retailers, including international.

“We have the knowledge and connections to help, but without the right products that consumers want, it doesn’t matter,” Gerads said.

Main Street Siloam Springs is looking for artists to provide three outdoor art installations and is seeking proposals at this time. Any form of public art suitable for outdoor installation (including sculpture, murals, sidewalk painting, etc.) will be accepted and may be on any theme or subject inspiring to the artist and suited for public display, the group noted in a release.

Artists whose work is chosen will receive $800 in funding for supplies, the cost of installation, and payment. Outdoor art installations will remain in place in downtown Siloam Springs for a one year period.

Each of the pieces selected will be revealed during Beyond the Frame: Experiencing Art in Downtown Siloam Springs, a series of exciting summer art events featuring an outdoor art market and art walk with indoor gallery exhibits.

The deadline for proposals is Friday May. 1, artists will be notified by Friday, May 15 of their selection and further timelines.

Applications are also being accepted for outdoor art market vendors and artists whose work will be featured in indoor gallery exhibits as part of the art walk.
Applications to participate in the art market or indoor gallery exhibits can be accessed through this website link. .

The outdoor art installations are part of the Downtown Connectivity and Master Plan which was developed by Main Street Siloam Springs and unanimously adopted by the City of Siloam Springs Board of Directors in 2014 with the input of more than 500 community members. The group has slated May 9, June 13, July 11 and August 8 as summer art events that will feature the chosen projects.

A Northwest Arkansas-based logistics company announced a major expansion and partnership Monday (March 23)  that will mean enhanced warehousing and fulfillment capabilities for current and potential customers of both companies involved.

On Time Logistics (OTL) is moving from its approximately 25,000 square foot warehousing space on Emma Avenue to a 48,000 square foot building (40,000 square feet of warehousing and 8,000 of office and administrative space). The new location is at 1710 Powell Street, also located near downtown Springdale. OTL will now have nearly double the amount of warehousing space and almost double the amount of docks available. The move should be complete by the end of March.

This added capacity will make it possible for OTL to handle its new partnership with Banded, a hunting and outdoor gear company. OTL will manage all of the warehousing and order fulfillment for Banded included all the inbound and outbound orders for individuals and the brand’s retail providers.

“We see this move as a great opportunity to grow the fulfillment side of our business in Northwest Arkansas,” said Steve Jones, owner/founder of On Time Logistics. “Partnering with Banded Brands is a great step towards making this a reality.”

According to the Banded Nation website, Banded Brands, Banded Nation and Maxx Outdoors recently developed agreements with Banded Holdings Inc. to bring together all entities under one operating company. Banded Holdings is based in Fayetteville. The company will have an office in the Powell St. location as well.

The Run Bentonville Half Marathon slated for 7 a.m., Saturday, March 28, has already registered some 2,300 participants for its various events. This marks the event’s fifth anniversary and organizers are preparing for another turnout, according to Blair Cromwell of Visit Bentonville.

The event begins with the half marathon at 7 a.m. leaving the Bentonville Square, which is followed by the 5k and then fun run.

Cromwell said last year 2700 people participated in the event and race officials feel they will likely exceed this number for 2015. 

“We typically have 500 or more people register the week of the race. People are waiting to see what the weather forecast may be or they are already avid runners and jumping in a half marathon or 5k at the last minute is something they are already conditioned to do,” says Layne Moore, race coordinator for the Bentonville Parks and Recreation Department.

Weather.com reports that the forecast should be near 54 degrees for the high on Saturday with zero precipitation and only light winds. This is ideal running weather according to Mike Rush of Rush Running Company.

Cromwell said this particular event has garnered national attention in the past thanks in part to its corporate sponsorships also snagging the “Best Half Marathon in the South” title by Competitor.com.

Also on tap for this event participants and the general public are invited to a Runner’s Expo on Friday, March 27 from 10 a.m to 6 p.m. This event will showcase health and fitness services.

The Expo is followed by a Pasta Party from 6 to 8 p.m. at Bentonville High School where Olympian and Hall of Famer Craig Virgin will speak.

Online registration for all races ends at midnight on Tuesday, March 24. After that participants need to register in person at the Downtown Activity Center at 215 SW A Street.

Runners may also register at the expo on Friday from 10 a.m. to 6 p.m.  There is no race day registration.

A town hall meeting slated for 6:30 p.m. on March 31 in Elm Springs aims to answer questions and concerns regarding a proposed wind farm just outside of Springdale. If built, it would be the first large wind energy project in Arkansas.

Elm Springs Mayor Harold Douthit has a few questions about a proposed 80-megawatt wind farm planned for development in unincorporated Washington County, about a mile west of this small city in Northwest Arkansas. That’s why the city administration has called meeting.

“The CEO of Dragonfly Industries International will be here to answer the concerns of folks around the site,” Douthit said. Some residents have said they are concerned about the project being harmful and unsafe.

Dragonfly officials told The City Wire they aren’t prepared to discuss specifics of the project until they complete preparations for the town meeting. The company is wanting Elm Springs to annex the 311 acres west of town for the wind farm. Published estimates are the project will cost about $100 million to develop. Dragonfly has not said how many jobs might be created in the construction and operation of the wind farm or the overall economic impact of the project.

“This is cutting edge technology, clean air, environmentally friendly,” Douthit said, “It’s what the green movement is all about.”

If developed as planned, it could be the first wind farm in Arkansas.

A spokesman at Ozarks Electric Cooperative Corp. in Fayetteville said the electricity generated by 80 megawatts could power about 20,000 homes, “if all conditions were right.” The land where the farm would be built is in the Ozarks service area.

But others have said it is likely Dragonfly would sell the electricity generated from the wind farm to American Electric Power, the parent company of SWEPCO, which has a distribution plant about a mile away as “the crow flies” in neighboring Tontitown, Douthit said.

Another option could be a partnership with Clean Line Energy Partners, a Houston-based company seeking permission from the U.S. Department of Energy to build a 3,500-megawatt, direct current line that would transmit power generated on wind farms in western Oklahoma through Arkansas to Tennessee. This line would furnish electricity to the Tennessee Valley Authority for distribution in southern and southeastern states.

Opposition to the proposed wind farm has been organized around a Facebook page, named “Stop the Elm Springs Wind Farm.” The main opponent is Jonathon Hamby. Douthit said he is concerned opposition is coming from outside the Elm Springs community because there are only about a dozen residents who live around the property where the farm would be built.

If the property is annexed into the city, the benefits would include police and fire protection and a lower tax base but the company would still have to get the proper approvals from federal and state agencies. Dragonfly has not made an official request to the city for annexation of the property.

“The city’s voice is moot in the issue now,” Douthit said.

Douthit said the planned site is on a hill and according to what he has been told by Dragonfly officials, the site would be surrounded by a 25-foot berm with trees planted on top of the earth barrier.

Douthit said he has learned that the turbine itself looks like a jet engine without the visible blade of the traditional windmill-style turbine. A computer atop a 100-foot pole the turbine is on controls each turbine remotely. The computer can move the turbine to pick up the wind flow. As the wind passes through the enclosed turbine, it picks up speed. Each pole is designed to hold two turbines.

“It doesn’t make the ‘whoosh whoosh’ noise that the propellers make,” he said.

His information comes from a meeting he and other city officials had with Dragonfly in December. He said he also looked at the company’s website.

“It appears to me there will be a wind farm. The question is whether it will be in Elm Springs or Washington County,” Douthit said.

Like a snowball gains momentum as it rolls down hill or a tornado gains strength as it moves across the plains, a similar phenomenon is happening in downtown Springdale. City and Chamber officials agree that “it’s Springdale’s time to shine.”

This one-time sleepy city in the middle of the region appears to be awakening from a decade-long nap and there are signs the growth and revitalization effort are expected to continue behind the growing popularity and use of the Razorback Greenway Trail.

Jesse Core, a former city councilman and Tyson Foods system analyst who started a brewery business several years ago, said he is excited to see the renewed interest in his adopted hometown.

“I am a huge supporter of downtown Springdale,” said Core, who now owns Core Brewing Co. on Lowell Road. He recently added a distillery and plans to open a pub in a portion of the former Ryan’s Department Store on Emma Avenue later this year.

The department store closed in 2013 and last year Downtown Springdale LLC, funded by the Walton family, purchased the San Jose Manor building at 202 E. Emma Ave in 2014. The $1.22 million Walton investment is considered another catalyst in the revitalization of the downtown area. Specific plans for the building haven’t been announced. The building fronts on Emma between Spring and Commercial streets.

Core said he will use about 2,000 to 2,500 square feet for his pub, which he hopes to open this fall but doesn’t have a specific date yet. 

“We’ve agreed it’s going to happen,” he said, although the commitment is only a verbal one right now.

“I have always felt downtown was a winner,” Core said. “Even when I was on the City Council, I said people should invest in downtown.”

DOWNTOWN INVESTMENTS GROW
“The Chamber has tried several times to deal with downtown issues for the last 25 years,” said Bill Rogers, vice president of communications and special projects for the Springdale Chamber of Commerce. 

What’s different these days is “a passion, enthusiasm, optimism about the potential for downtown,” Rogers said. ”The Greenway Trail has given hope and potential for investment.”

Mayor Doug Sprouse also credited the Razorback Greenway Trail with boosting the momentum in revitalizing downtown Springdale. The trail runs alongside Spring Creek, which was covered years ago by large concrete culverts to control flooding in the downtown area. Those culverts are being opened to expose the creek, work that the city is overseeing as its part of the regional Razorback Greenway.

“The heart of the Greenway Trail is right here in Springdale,” Sprouse said.

The new Turnbow Plaza and park, where the Greenway cuts through downtown is where the officially opening of the trail will be held with a ribbon cutting on May 2, he added.

In addition to the trail, major investments from the Walton, Tyson and George families and others who have invested in downtown redevelopment have been a major impetus. For instance, Tyson Foods announced in January it planned to move its hiring center and company store to the former Orscheln Home and Garden Center on Emma Avenue, across the street from the original corporate office for the company. The building was also home to the former Springdale Morning News operation.

“Tyson has broadly hinted there is more to come,” Rogers said. Tyson’s plan to move 25-26 people to the downtown location is also important because it brings people downtown, he added.

On the other end of Emma Avenue, local businessmen Tom Lunsford and Brian Moore have purchased the Apollo Theater and plan to turn it into an event center. The pair has invested in the building and are spending what Rogers described as a “significant amount” for a new roof. The building stood empty for at least 10 years, Rogers said.

Local resident Phillip Taldo recently purchased the former Watson Furniture building but no plans have been announced for that red-brick structure, Rogers said.

“There has been a definite entrepreneurial movement in the last two years,” he said.

Several sandwich shops have opened or plan to open soon, joining a downtown mainstay Spring Street Grill, famous for its homemade pies served fresh everyday.

Edward Jones Investments recently had a Chamber ribbon cutting at its new location on Emma Avenue.

“Downtown Springdale is a buy, not a sell,” Rogers said.

Sprouse also acknowledged the work of the Downtown Springdale Alliance, which he was instrumental in starting when he was first elected mayor.

“I grew up here,” Sprouse said. “I remember when downtown was the center of everything. It still can be significant. It’s a great opportunity for businesses.”

CATALYSTS, INVESTMENTS
Sprouse said the City Council recently approved a $150,000 expenditure for a downtown master plan.

“That will really help potential investors,” Sprouse said.

The downtown area goes beyond Emma Avenue, the downtown main street. He said the boundaries included in the downtown area run from Quandt Street on the south to Huntsville Avenue on the north, with U.S. 71B, Thompson Avenue on the west to Arkansas 265 on the west. That area includes Mercy Medical Center and the Jones Center. The Rodeo grounds are just outside that area.

“Five years from now, there will be aspects of downtown we won’t recognize. We’ll go ‘wow, it doesn’t look anything like it used to,’” Rogers said.

He pointed to the changes that have come to downtown Bentonville, saying, “There’s no reason downtown Springdale can’t have the same change of attitude.”

OTHER SPRINGDALE DEVELOPMENT
Rogers said other areas of Springdale are ripe for commercial development, namely Elm Springs Road, west of Interstate 49, where Wal-Mart recently opened a supercenter and Macadoodles opened its first Northwest Arkansas liquor store. Miles James, a noted Fayetteville restaurateur, recently announced he would open a pizza restaurant next to the liquor store.

Another area on the commercial watch list is around Arvest Ballpark and the new Sam’s Club store on Sunset Avenue.

Rogers also noted top attractions located in the downtown area, including the Jones Center, the Arts Center of the Ozarks, a top community theater; the Arkansas and Missouri Railroad excursion train and the regional museum at Shiloh Museum.

“Find me a downtown with this kind of infrastructure,” he said. 

Other notable facts about Springdale are it’s the fourth largest city in Arkansas, running neck and neck with Fayetteville, it boasts the second largest school district in Arkansas behind Little Rock, and more jobs have been created in Springdale since 2010 than anywhere else in Arkansas, according to Rogers.

“The (Razorback Greenway) Trail was a start and kicked off a major change in attitude. Now, individuals, longtime residents, the Chamber, businesses and the city, are all pulling together,” Rogers said.

Airline travel remains popular in Northwest Arkansas and the Fort Smith area, with enplanements for the first two months of 2015 up 6.89% and 2.87%, respectively, at the two commercial airports.

The activity is not a surprise considering the trend in overall U.S. travel and tourism spending. The federal Bureau of Economic Analysis reported March 18 that real spending on travel and tourism rose at an annual rate of 4.5% in the fourth quarter of 2014, after rising 3.4% in the third quarter. Leading contributors to the rise was air travel and recreation and entertainment, according to the BEA report.

Travel gains are likely to continue at the two airports. Airlines for America, the trade association for most of the major airlines, predicts Spring 2015 travel will rise to its highest mark in seven years. The group says approximately 134.8 million passengers – 2.2 million per day – are expected to fly on U.S. airlines during March and April compared to 132.2 million passengers in 2014, a 2% per day increase.

“A4A attributes the increase in spring air travel to rising U.S. employment and personal incomes, an improving economy, the highest consumer sentiment in a decade and the continued affordability of air travel, which remains one of the best bargains for consumers,” John Heimlich, A4A vice president and chief economist, said in a statement. “To meet the extra demand, airlines are adding seats to the marketplace, in part by deploying new and larger aircraft on many routes.”

XNA, FORT SMITH TRAVEL
Enplanements at the Northwest Arkansas Regional Airport (XNA) totaled 88,139 for the first two months of 2015, up 6.89% compared to the same period in 2014. XNA ended 2014 with 640,537 enplanements, up 10.15% over 2013, and more than the record of 598,886 enplanements in 2007. The 2014 gain also marked the third consecutive year of increased traffic at the airport.

XNA had 43,708 enplanements in February, up 6.93% compared to February 2014.

The airport is served by five airlines that provide connections to 10 U.S. cities. XNA’s first full year of traffic was 1999, and the airport posted eight consecutive years of enplanement gains before seeing a decline in 2008.

Enplanements at the Fort Smith Regional Airport total 13,409 for the first two months of 2015, up 2.87% compared to the same period in 2014. Enplanements at Fort Smith totaled 92,869 in 2014, up 9.87% compared to 2013.

February enplanements at Fort Smith totaled 6,489, up 4.45% over February 2014. The airport offers flights to Atlanta and Dallas-Fort Worth through Delta and American Airlines.

The Bill & Hillary Clinton National Airport in Little Rock posted enplanements of 130,598 for the first two months of 2015, down 8.74% compared to the same period in 2015. The airport was the only one of Arkansas’ largest commercial airports to not post an enplanement increase in 2014. Enplanements in 2014 totaled 1.038 million, down 4.32% compared to 2013.

February enplanements in Little Rock totaled 61,945, down 10.82% compared to February 2014.

The most recent federal data – U.S. Department of Transportation – show 59.903 million enplanements in the top 100 U.S. airports between February and November 2014, up 3.24% compared to the same period in 2013.

ENPLANEMENT HISTORY (Fort Smith Regional Airport, since 2000)
2014: 92,869
2013: 84,520
2012: 86,653
2011: 86,234
2010: 86,129
2009: 78,432
2008: 87,030
2007: 99,127
2006: 94,717
2005: 102,607
2004: 92,928
2003: 90,493
2002: 87,944
2001: 95,419
2000: 104,182

ENPLANEMENT HISTORY (Northwest Arkansas Regional Airport, since 2000)
2014: 640,537
2013: 581,487
2012: 565,045
2011: 562,747
2010: 570,625
2009: 540,918
2008: 571,845
2007: 598,886
2006: 586,320
2005: 583,940
2004: 511,714
2003: 448,228
2002: 400,063
2001: 374,122
2000: 367,157

Fitness chain World Gym announced the closing of three Northwest Arkansas locations with a Facebook post on Tuesday (March 24).

“Due to unforeseen circumstances beyond our control we have been forced to close our Bentonville and Lowell World Gym locations. Springdale and Fayetteville World Gym remains open and available to all customers,” the company notes in the post.

Owners Tania and Rhett Garner said three of their World Gym locations were in leased space and terms of a new lease could not be reached. The owners said they own the locations in Springdale and Fayetteville, which is why those sites will remain open, according to a letter from the owners posted to Facebook early Tuesday.

Members quickly responded with disgust noting that they had have been unable to cancel their billing and using other locations in Washington County are not convenient for members living in Bentonville, where two sites are closing. They want refunds without penalties.

“You just took a check from a friend just last night for the Bentonville / Lowell locations knowing you closing as of today. Bad business,” notes Darrin and Andrea Brothers of Bentonville.

The owners apologized in their letter for the inconvenience vowing to take care of all its members. Meanwhile Fitness for Less and Planet Fitness in Bentonville have been active in the Facebook feed wooing disgruntled members their way.