In the face of ongoing challenges, Arkansas’ CEOs have voiced a cautiously optimistic economic outlook.
A July poll of 541 of the state’s chief executives revealed a mix of confidence and apprehension as they assessed the current business climate and looked ahead to future conditions.
The most pressing concerns among Arkansas’ business leaders continue to revolve around the labor challenges and rising costs. An overwhelming majority of survey respondents, 76%, cited those issues as their primary worries. Other concerns include government leadership, crime, artificial intelligence and the war in Ukraine.
But the intertwined challenges of finding and retaining skilled workers, combined with escalating prices across sectors, have kept CEOs on their toes more than any other issue.
One of those executives, Keith Glover, president and CEO of Producers Rice Mill Inc. of Stuttgart, said the farmer-owned cooperative has been operating with about 50 open positions and doesn’t expect hiring to pick up any time soon. The farmers served by the cooperative have had their own labor challenges, though some have been able to fill positions through a federal program that provides temporary visas for migrant workers.
Another executive who listed labor as his top concern is Tim Orellano, president of consulting firm The Human Resources Team of Little Rock. Orellano said that with the state unemployment rate hovering around a record low, it’s critical that businesses make a good first impression with potential hires. He said recruits are looking for an easy application process, wage transparency and, increasingly, information about a company’s culture.
“If I go to your website, which is the gateway or the door to knock on, because I’m interested in coming to work for you, I better get a really, really quick and easy way to know what that work environment is like,” he said. “I can see testimonials, I can see pictures, I can see videos.”
Though many executives said they’re dealing with labor shortages, 57% of those polled indicated that they were neither planning to increase nor reduce their number of employees over the next 12 months. Their stance appears to reflect a cautious approach amid uncertainties, allowing them to adapt to potential shifts in the labor market.
Mike Whittington, president of Match Point Recruiting of Bentonville, said the labor market has already loosened slightly and he expects hiring to pick up once broader economic concerns ease.
“We’re moving in the right direction,” said Whittington, whose business specializes in recruiting for financial, consumer goods and logistics companies. “I’ve had a couple of clients and candidates both say, ‘Hey, we just need some good news.’ I think once we kind of get over that hump, I think we’re gonna see sort of a more positive turn in the hiring market.
“But I get what everyone is saying, and certainly when there’s inflation and economic concerns, that’s going to be at the forefront.”
Confidence in Current and Future Business Conditions
Despite rising costs and labor challenges, most Arkansas executives expressed their belief in the resiliency of the state’s economy.
Of those surveyed, 61% expressed a very positive sentiment about the current state of their businesses, and 55% maintained a positive outlook for future business conditions.
“There are still companies out there that are downsizing in certain sectors but we’re hoping it’s going to be better as the year progresses, and certainly in the next year,” Whittington said.
But many CEOs said their outlook is clouded by high interest rates. The Federal Reserve last week decided to pause rate hikes, but officials signaled that they expect at least one more increase this year and that rates could stay higher for a prolonged period.
The increases have already complicated things for Josh Blevins, board chair and managing director of real estate investment firm Blevins Investment Group LLC. He said the Fed’s primary tactic for fighting inflation has made it harder for lenders to fund projects, leaving some in limbo and narrowing the development pipeline.
“When deals don’t pencil, it’s not like everything just gets shelved and we pick it back up when money gets cheap again … they don’t don’t just come together overnight,” Blevins said. “And so, yeah, it’s not just a temporary issue. I think there’s going to be some ramifications that are felt, even after things otherwise return to normal.”
Blevins, a Rogers native, launched his firm in Little Rock in 2008. He has since relocated to the Boston area, but maintains business interests in northwest Arkansas and is looking to grow his portfolio in the region.
Glover, the CEO of Producers Rice Mill, said high interest rates could also cause lingering issues for the state’s agriculture industry. The average age of Arkansas farmers is rising, and higher interest rates are among the hurdles discouraging younger workers from entering the industry.
“These combines and tractors and farm equipment are so costly that unless you have a family that’s already in the business or you have a connection or know somebody that you can work with that will have a plan for you … it’s very, very difficult,” he said.
Profit, Revenue and Capital Investment
About 45% of CEOs are anticipating an increase in profits over the next 12 months, underscoring a sense of cautious optimism.
Meanwhile, a slightly larger majority, 55%, are expecting an increase in total revenue during the same period, signaling measured confidence in consumer demand and overall economic growth.
Frank Cox Jr., chairman emeritus of Cox Minshall Winans LLC of Little Rock, said the marketing firm is projecting profit and revenue increases above 10%.
The industry veteran of 30-plus years, whose son Frank Cox III succeeded him as CEO last year, said the company continues to rely on a handful of simple but effective principles for success: consistency, transparency, accountability and responsiveness with clients.
“Really getting personal service from the people you do business with, you know, it seems like it’s becoming rarer and rarer as time goes by,” Cox said. “And we hate that. So we’re trying to hold on to that and we think that’s a very important part of our business.”
Looking at capital expenditures, 44% of Arkansas CEOs are expecting an increase. Their intent to invest in expansion and innovation suggests a long-term view on the state’s economic health.
The Economic Forecast Index, a metric that combines CEOs’ predictions for business conditions in the next 12 months and their assessment of the current environment, remains comfortably within the “Very Good” range. This indicates a substantial level of confidence among business leaders in the state’s economic trajectory.
The survey, conducted by Arkansas Business, polled 541 CEOs representing a diverse range of industries in Arkansas. It captured their sentiments on various economic factors and their predictions for the upcoming year.
Results were analyzed and prepared for publication with the assistance of ChatGPT.