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Location, Workers Key to Fort Smith’s Economic Growth

7 min read

Manufacturing towns tend to take some knocks in an economic downturn, as production slows down and employers shed jobs. Fort Smith is no exception.

But while the recession has been tough, the area’s civic and business leaders are focused on attracting new employers and helping existing ones thrive.

"We’re a manufacturing community mainly, and when sales are down, manufacturing is down," said Paul Harvel, executive director of the Fort Smith Regional Chamber of Commerce.

(Click here to read about new manufacturers starting up at Chaffee Crossing.) 

In 2010, some employers in the region – including Trane, Southern Steel & Wire and Rheem – announced layoffs. But there was good news as well, as several high-profile projects broke ground and expansions at existing companies were announced.

Mitsubishi Heavy Industries Ltd. recently broke ground on a $100 million wind turbine manufacturing facility that could eventually employ 400. Umarex USA, which makes and imports air guns and has been in Fort Smith for several years, opened a new headquarters and distribution facility. The site will eventually phase in manufacturing and could triple its employment within three years to 120.

This summer, Oxane Materials Inc. of Houston, Texas, opened a plant in nearby Van Buren that makes materials used in natural gas extraction. The $15 million facility will employ 50 people initially and could expand to as many as 300 employees within a few years.

Nestlé Nutrition announced in July a $90 million expansion of its Gerber baby food facility in Fort Smith that will add about 50 jobs by September 2012.

And Harvel said chamber executives know of four existing employers in the region that are planning a combined $200 million in expansions in the next few years. He could not disclose any names, but he said he was confident the expansions would occur, although the timing will depend on the pace of the overall economy.

 

New Mayor

Fort Smith voters just elected the city’s first new mayor in 20 years. Sandy Sanders worked for 32 years at Whirlpool Corp., was director of the Fort Chaffee Redevelopment Authority for several years and served a brief stint as interim executive director of the Chamber of Commerce.

"At the time I was at the chamber, I became convinced the city needed a person with a business and economic development background in the mayor’s position to do more than just ceremonial kinds of activities," Sanders said.

Though Sanders pointed out that Fort Smith’s city administrator form of government makes the mayor’s role largely that of a figurehead, he said his connections and relationships within the economic development sphere would be helpful in attracting new employers.

"When site selectors come to the state and then when the state comes to Fort Smith to talk about issues, I’ll have the experience and background to deal effectively with that," he said.

Sanders said he would like to see the city’s leaders – in both the public and private sectors – come up with new avenues for promoting growth. One idea he mentioned would involve taking about $100,000 from the mayor’s office’s annual budget of $250,000 and putting it into a fund that would mirror the Governor’s Quick Action Closing Fund, which has provided incentives to help seal the deal for such projects as Hewlett-Packard’s Conway facility.

"I’d like to be able to do that for three years, so that if at the end of 2011 we have not had an opportunity to do that, we’d have $100,000, then $200,000 the next year," he said.

The money would be moved for up to three years, by which time "if we haven’t utilized any of it, then we’d have up to $300,000 that we could use as a good use of tax money to help grow jobs in Fort Smith," he said.

The plan wouldn’t involve eliminating any positions, just reductions and adjustments of some expenses, and, of course, it would have to be approved by the city’s attorney, Sanders said. 

Such a fund could also be used to help existing employers expand. "I think focusing on existing jobs is as important as trying to bring in new jobs to Fort Smith," he said "They’re already here; we don’t have to recruit them."

Another idea Sanders said he would pursue was creating a Fort Smith venture capital fund, with area banks and investors contributing money and administering the fund, which would help entrepreneurs get their businesses off the ground.

One of the Fort Smith Board of Directors’ first orders of business will be to find a replacement for former city administrator Dennis Kelly, whom the board fired in a 4-3 vote on Nov. 2.

Another pressing issue for the board is shoring up a roughly $1 million shortfall in funding for the Fort Smith Convention Center.

Several ideas have been floated, including seeking a third party to replace the city as the center’s operator and a 1 percent tax on prepared food. Fort Smith does not currently have a local-option hotel-motel-restaurant tax.  

Sanders said the convention center was an important economic engine for the city and that city leaders should consider all options.

 

Strengths and Weaknesses

One of Fort Smith’s advantages in attracting new business is its location, said Mat Pitsch, intermodal program manager for the Western Arkansas Planning & Development District Inc.

"We currently touch two boundaries of the continental 48 with I-40," Pitsch said. "If we can get nine stoplights approved headed north of here through the Bella Vista Bypass, we’ll touch a third boundary going to Canada via Interstate.

"We have a 12-foot approved channel on the river, we have three Class I railroad services, and we have the second-longest runway at our airport in the state," he said. "We’ve got the makings of a pretty good storm if it would start raining here."

Pitsch is also executive director of the Regional Intermodal Transportation Authority for Western Arkansas. RITA was started last year to facilitate freight transportation in the area. Its board is made up of three representatives each from Fort Smith, Van Buren, Crawford County and Sebastian County.

RITA works with various government agencies, businesses and economic development organizations to plan and find funding for large transportation projects.

RITA has sought to secure funding for rail and port improvements, as well as funding for I-49, which will include the Bella Vista Bypass and eventually connect New Orleans with Winnipeg, Manitoba. Officials from RITA met with U.S. Transportation Secretary Ray LaHood last summer, and have met with all of Arkansas’ national legislators as well.

Other advantages Fort Smith has are a work force that is familiar with manufacturing and the University of Arkansas at Fort Smith, which collaborates with employers to provide customized training, Sanders said.

"Since we’re a manufacturing culture still to a good degree, we speak the language that manufacturers are interested in," said Kermit Kuehn, director of the Center for Business Research & Economic Development at UAFS. "I think our labor rates are very competitive and cost of living is very competitive nationally."

About 20 percent of the jobs in Fort Smith are directly related to manufacturing, but the sector has been shrinking, Kuehn said.

Manufacturing has been in "a steady decline probably since the early 2000s period. In the ’90s, for example, it was in the area of 30-plus percent of the work force. So it’s been on a steady decline more than just this recession," Kuehn said.

However, "I think there’s no question that it will always be a major component," he said. In addition to the manufacturing positions, "you’ve got the secondary jobs that flow from that presence, and you’re talking a good chunk of our economy is tied to manufacturing."

 

Curb Appeal

One area many people would like to see improved is Fort Smith’s curbside appeal, Sanders said.

The city has made strides toward sprucing up its entry points, with upgraded medians and new landscaping at the I-540 entrance to Grand Avenue, Kuehn said.

Downtown is another area that has seen big improvements in recent years. Several restaurants have opened, condos have replaced dilapidated structures, and a huge new museum on the riverfront is planned for the near future.

The U.S. Marshals Museum – a 50,000-SF $50 million project – will likely be an anchor for further development, once it is completed. Exactly when that will happen isn’t certain, but the museum’s staff has raised about $6.7 million since July 2009, said Jim Dunn, executive director.

"We don’t have a timeline as such for completion, because we are proceeding at our donors’ pace," Dunn said.

That pace has no doubt been affected by the recession, but Dunn said he was happy with the level of fundraising so far.

"I believe that the museum has enormous potential to attract growth. The projected attendance is 115,000" annually, he said. "That’s a lot of people and traffic."

Dunn said he is excited about next month’s release of the remake of "True Grit." Although much of the story is set in Fort Smith, none of the film’s production took place there – just as with the 1969 original, which inexplicably featured snow-capped mountaintops in what was supposed to be Indian territory-era Oklahoma. Nonetheless, the film could raise Fort Smith’s profile and spark more interest in Old West history, Dunn said.

"There is a great deal more to the U.S. Marshals than just Fort Smith and the Old West," he said. "But still, that’s an important part."

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