Sports metaphors flowed with the champagne last week as Arkansas officials enjoyed a rare moment of unanimity. Everybody agreed that having the world’s largest food processing company locate a plant in Jonesboro that would employ 1,000 people, for a start, was great news.
Gov. Mike Huckabee could hardly contain his enthusiasm in an expansive interview last week, following the announcement on July 27 that Nestlé USA would build a frozen-food processing plant in the northeast Arkansas city.
“This is a big one,” Huckabee said. “This is a trophy for the wall … When you land a Nestlé, you’ve pulled the king mackerel into the boat.”
But beyond the cheerleading, Huckabee agreed that the groundwork had been laid years ago by Jonesboro leaders for the Nestlé recruitment. Jonesboro’s success offers a valuable lesson in economic development and contrasts with an otherwise strong effort from the second-place finisher, Tupelo, Miss.
The plant, scheduled to open in 2003, will be operated by Nestlé USA’s Prepared Foods Division, headquartered in Solon, Ohio. The $165 million facility will enclose 325,000 SF of manufacturing space. In addition, Millard Refrigerated Services will partner with Nestlé to build a 200,000 SF refrigerated warehouse to serve the plant. The two operations are scheduled to employ more than 1,000 when production begins.
Initial payroll at the plant is expected to reach $27 million, with most jobs paying between $25,000-$28,000. Based on a 40-hour week, such an income means average hourly wages of $12-13.50.
“They’re good jobs,” Huckabee said.
The Prepared Foods Division, one of eight Nestlé USA business entities, employs about 5,000 people and operates three other U.S. frozen-food processing plants — in South Carolina, Utah and at the Solon headquarters — company spokeswoman Roz O’Hearn said. Annual sales reached $1.6 billion in 2000.
Nestlé USA is owned by Nestlé S.A. of Vevey, Switzerland, the world’s largest food company, O’Hearn said.
The plant will produce Stouffer’s and Lean Cuisine brand frozen food. The company expects the plant to expand and is building accordingly, O’Hearn said.
The Plan
The Nestlé plant joins a growing list of food-producing companies with major industrial facilities in Jonesboro. That’s no accident, said Jonesboro banker Wallace Fowler, former chairman of the Arkansas Economic Development Commission.
“Several years ago, [economic development organizations] Jonesboro Unlimited and the Jonesboro Industrial Development Corp. hired a consultant to come scope us out and tell us what we ought to be doing and who we ought to go after,” Fowler said last week.
The consultant, Midwest Research Institute of Kansas City, recommended targeting food companies, said J. Niel Crowson, an AEDC commissioner and Jonesboro businessman. The food industry was “going through a renewal growth process,” Crowson said.
As a result, Nestlé was preceded by Post, Swift Eckrich, Frito-Lay and Riceland Foods, among others, with manufacturing operations in the city. Craighead County, which includes Jonesboro, enjoys an unemployment rate of 3.7 percent, the local chamber of commerce says, a full point lower than recent statewide figures.
The city’s success in recruiting food-processing industries has developed a momentum of its own, Huckabee said.
“Frito-Lay being in Jonesboro was a factor in helping Nestlé realize that there must be something there,” he said.
The Team
Fowler, Crowson and Huckabee all cited the extraordinary teamwork between local and state officials as the Nestlé deal, in the works for about a year, heated up.
Henry Jones III, president and CEO of the Greater Jonesboro Chamber of Commerce, said the city-owned water and electricity utility will build a $5 million wastewater pretreatment plant to serve the two new facilities. Huckabee termed Jones’ orchestration of the various factors sought by the company “superb.”
The state, in addition to offering a wide array of tax incentives based on job creation and business growth, will chip in with work force training through Arkansas State University.
“No dollars are changing hands [at this time],” said ADED spokesman Andy Mayberry of the incentives. “It’s all based on the number of jobs created, annual payroll.”
Finally, Jonesboro Mayor Hubert Brodell and Craighead County Judge Dale Haas won nods from all sides.
“The political leadership offered by the mayor and the county judge was instrumental,” Huckabee said.
The Closer
Fowler, who has served Democratic administrations and contributed heavily to Huckabee’s gubernatorial opponent Bill Bristow in 1998, nevertheless praised the Republican governor’s energetic efforts in the Nestlé deal.
“Gov. Huckabee did an excellent job” in persuading Nestlé officials during the company delegation’s final visit to Jonesboro this summer, Fowler said. “When they stepped off of the plane, we were No. 2.”
But by meeting the Nestlé officials as their plane arrived and holding one-on-one consultations with them, Huckabee cinched the deal, according to Fowler.
“It just solidified our case,” he said.
Huckabee didn’t dispute Fowler’s assertion, but eagerly grabbed a baseball allusion to put his contribution in perspective.
“Like on a good baseball team, you have a closer,” he said, referring to a relief pitcher who can be relied upon to get the last few outs.
“I think that’s the way economic development ought to work,” Huckabee said, returning to the business world. “You’re the deal closer. CEO to CEO. I tried to tell them the truth about Jonesboro and about Arkansas. Not only was it a wonderful place to live, they would find a sense of community and a good business climate and a strong work ethic.
“I impressed on them that we really wanted them.”
The Opportunities
Nestlé favored the area’s “industrial infrastructure that already exists,” O’Hearn said, along with an “enthusiastic work force, good quality of life,” residential areas, medical institutions and schools.
Plants such as the one slated for Jonesboro typically generate considerable peripheral business opportunities, she said.
Vast quantities of raw materials are required to run the operation, and most of it arrives by truck, she said. Nestlé ships a considerable amount out of the plant via refrigerated carrier, she said, only part of which is transported by company trucks. The rest is sent on common carriers.
Aside from local jobs created by the plant construction, the facility will use “tremendous amounts” of materials such as plastic film, corrugated cardboard and wooden pallets.
“They use a wide range of products,” Fowler said. “All industries today have to go on just-in-time inventory. It’d be nice to be across town or across the street with your goods.”
The Model
Though declining to name specific communities, Huckabee said Jonesboro’s example is being repeated across Arkansas.
“We have certain areas that have really tried to gear themselves toward aerospace,” he said, while others have targeted tourism and manufacturing.
“In those areas, they’ve clearly recognized their resources and their strengths.”
Crowson cited Blytheville’s partnership with Nucor Steel, facilitated by the city’s proximity to the navigable Mississippi River.
In a press release announcing the Nestlé deal, Huckabee promoted a recent economic development tour he took with Arkansas Department of Economic Development Director Jim Pickens.
“We talked about building partnerships,” Huckabee said. “This is a great example of building a partnership. The people at Jonesboro have worked for months with those of us at the state level to make this happen.
“This same type of thing can happen all across our state if we all work together.”
Crowson agreed.
“It’s a good example if people follow what the governor tried to communicate in the economic development conferences,” he said.
Nestlé Questioned Flag Issue
A recent vote by Mississippians to retain their state flag design may have worked against Tupelo, Miss., in its bid to wrest a $165 million industrial plant and 1,000 jobs from Jonesboro.
Tupelo was the last alternate site in consideration.
David Rumbarger, president of the Tupelo-Lee County Community Development Foundation, who worked for months to secure the Nestlé USA frozen-food processing plant, confirmed last week that he discussed the matter with Nestlé officials for about two hours in response to company questions about the state flag. The flag prominently features the Confederate battle flag.
Nestlé USA is a division of Nestle S.A. of Switzerland.
Arkansas officials declined to speculate on Nestlé USA’s reasons for passing on Tupelo, preferring to concentrate on the attributes of the Jonesboro bid. A Nestlé spokeswoman did the same.
And Rumbarger said he did not believe the flag and recent vote were deciding issues. But the flag and news coverage about it has affected economic recruiting, he said.
“Probably it does impact our state, just based on the press after the vote,” Rumbarger said.
The CDF, along with the state Chamber of Commerce and numerous other business organizations, endorsed changing the flag to deemphasize the Confederate symbol, which some feel represents slavery.
Of the 11 states that formed the Confederate States of America from 1861-1865, five, including Arkansas, commemorate the CSA in some form on their flag. Arkansas’ flag features a diamond containing four stars, one of which represents the Confederacy. The flags of Alabama and Florida have red diagonal crosses reminiscent of the battle flag.
But only Georgia and Mississippi prominently featured the battle flag in its original colors on the state flag, while South Carolina flew a battle flag over the state capitol. Recently the South Carolina legislature voted to move the battle flag to a less prominent place on the capitol grounds, while Georgia lawmakers adopted a new state flag displaying a small Confederate flag as one of five that have flown over the state.
In contrast, Mississippi citizens voted overwhelmingly this year to retain the flag, adopted in 1894, as is, to the distress of business groups like the CDF.
“There’s certainly some vociferous folks here who believe that the maintenance of that 1894 flag is the best thing they can do for economic development in the state,” Rumbarger said.
A high profile company which produces consumer goods such as Nestlé is more likely to shy away from possible controversy than a company that produces industrial materials, Rumbarger said.
The National Association for the Advancement of Colored People voted July 10 to condemn the current flag but did not advocate economic action against the state.
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