Arkansas Tells ABF Freight: Think About West Memphis for Terminal Move

Arkansas Gov. Mike Beebe told union representatives he would not support cash incentives for ArcBest Corp.'s new Fort Smith headquarters after subsidiary ABF Freight said it is considering moving its North Little Rock distribution center to Memphis.

Instead, the state is encouraging ABF to consider moving to the West Memphis area, if it moves from North Little Rock at all.

"We haven't got too far down that road," Grant Tennille, executive director of the Arkansas Economic Development Commission, said Monday. "We asked, 'Can you be close to Memphis and accomplish what you need to accomplish?' You can be in Memphis without being in Memphis. We brought that up and they indicated a willingness to look at it."

News about the likely closing of the North Little Rock operation came a week before ArcBest announced on Friday its plans to build a $30 million corporate headquarters and data center on 40 acres at Chaffee Crossing in Fort Smith. ArcBest will receive $16 million to $19 million over 10 years from the state's Create Rebate, a tax refund dependent upon the expected creation of 975 jobs.

The Create Rebate for the ArcBest headquarters would not be affected by ABF Freight's move out of state, said Tennille, who spoke at ArcBest's news conference announcing the project.

Beebe didn't attend the Friday news conference. His office said it would be inappropriate for him to do so while ABF Freight was considering moving jobs out of Arkansas.

Tennille said the state had been working on the Fort Smith project for more than a year when it learned of ABF's interest in an expansion at Memphis, where the subsidiary already has a facility. A Memphis economic development group offered the company $4 million to move its North Little Rock hub, part of $20.5 million plan that would enlarge the existing center and add 283 jobs.

Executives with ArcBest and ABF Freight say they haven't made a final decision about the move. The company closed or consolidated eight facilities in the fourth quarter of 2013 and 22 since January.

"Having the issue in North Little Rock play into that came up in the last 10 days, as we were getting ready to make the announcement in Fort Smith," Tennille said. "That compelled us to reapproach the company and say we need to talk about this as well."

Tim Nichols, the president of Teamsters Local 878, said Monday that he and two other union representatives met with Beebe last Tuesday to discuss ways to save the North Little Rock facility, which has about 380 union employees. Nichols said matching Memphis' offer wouldn't help because the attraction of Memphis is its close proximity to the interstate and railroad system and the Mississippi River.

"Gov. Beebe was open to provide any kind of assistance or support the state could do through his office," Nichols said. "The operational savings by the company far exceeds anything the state or city could offer. It was not good news."

ABF Freight CEO Roy Slagle met with Teamsters employees in a town hall-style meeting at the North Little Rock facility on May 28. Slagle reiterated to the Teamsters, who represent 3,000 workers in 18 companies throughout Arkansas, that no decision has been reached and no move was expected for 12-15 months, Nichols said.

"It was sort of up in the air," Nichols said as to the timeline of a possible move. "There was not any new information shared."

Tennille said Beebe has yet to meet with ABF Freight or ArcBest executives about the possible move. In his meetings, Tennille said the idea of moving to the West Memphis area was floated as an alternative.

If the North Little Rock jobs were to move to another Arkansas location, Tennille said the governor would consider cash incentives to help. The suggestion is still in its infancy, Tennille said, so there is no estimate on the cost and viability of a move to West Memphis.

If ABF Freight were to leave North Little Rock, Tennille said keeping the jobs in Arkansas was a priority for the governor.

"We don't like to provide incentives for companies to move from one location to another location [in Arkansas]," Tennille said. "If we could poach some jobs from Tennessee and save some jobs in Arkansas, we may see our way clear to participate in something like that."

Tennille said he and the governor also understand the operational allure of Memphis, but perhaps being on the Arkansas side of the river would be almost the same thing as being on the Tennessee side.

"Memphis for all kinds of reasons has become a huge logistics hub in the U.S.," Tennille said. "We try not to money-whip companies into making stupid decisions."

Nichols said Teamsters officials had been told that if ABF Freight did expand in Memphis — or some other location — then current employees in North Little Rock would be given the opportunity to move. The North Little Rock hub would be reduced to about 25 to 40 employees, Nichols said.

Nichols said he was appreciative of Beebe's understanding of the Teamsters' plight.

"The state is not going to reward the company for adding jobs in one area of the state while eliminating jobs in another area of the state," Nichols said. "[Beebe] said whatever funds the state had committed to the Fort Smith expansion was made prior to the closing of North Little Rock facility and his office is not going to support.

"We're not happy about any payback for the company because the company is not doing anything wrong, but it is refreshing the governor was in tune with our issue," he said. "That he would work with the company but also hold them accountable is unique."