Talk Business & Politics September/October 2015 by Talk Business & Politics

September/October 2015

John Brummett In Search of Progressive Cities Rex Nelson Explores Football, Money & Saturdays in the South I-55: A Troubled Bridge Over Water Charisse Childers, Career Pathfinder CJRW’s Darin Gray Takes the Helm

First & Foremost Arkansas’ First Ladies Champion Their Cause

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Gina Radke Galley Support Innovations

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Contents September/October 2015 5 Publisher’s Letter Commentary

7 Christy Garrett

Marketing the Affordable Care Act

9 Randy Veach

Common Sense Food Labeling

57 Martin Thoma

Your Brand Is a Theory, Not a Logo

59 Brigette Williams

Preparing for Weekend Travel Profiles

18 Chef Shuttle

Front Door Delivery

22 Red Five Security

A Protective, Entrepreneurial Spirit

24 CJRW’s Darin Gray

A New CEO Takes the Helm

Industry

36 Energy 38 42 44 48

Falling Pump Prices Manufacturing Lockheed Loses JLTV Bid Startups Apptegy Shares School Content Health Care Rethinking the Private Option Smile for Possible Dental School

Hometown: West Memphis

52 A Troubled Bridge Over Water

68 69 70

Regional Northwest Arkansas Wal-Mart Shakes Things Up Home Sales Top $1 Billion Children’s Hospital Branches Out

Northeast Arkansas

71 Visitors Come Home to Johnny Cash 72 John Correnti’s Steel Mill Heaven 73 A New Jobs Tool for the Delta 74 75 75

Central Arkansas A New Look for Daisy Bates Conway App Developer Adding Jobs Satisfaction High at Clinton National

50 Insights 76 Leadership

Sixth Sense: Work-Life Balance

78 Executive Q&A

Career Education Leader Charisse Childers

82 Back Talk 4

10 Cover Story: Four First Ladies Four of Arkansas’ First Ladies are part of a team hoping to restore the Old State House Museum’s inaugural gowns exhibit, but their contributions extend further.

Features

26 Where Have All the Liberals Gone? John Brummett surveys the state for the bastions of progressive thought that once influenced state politics. He finds them re-assembling in Little Rock and Fayetteville.

60 Saturdays in the South Rex Nelson explores the number of colleges fielding football teams in Arkansas as the sport’s popularity and revenues keep on expanding.

TALK BUSINESS & POLITICS | SEPTEMBER/OCTOBER 2015

COVER PHOTO BY BOB OCKEN

From the Publisher

Hope for the Upcoming Season Talk Business & Politics is owned by River Rock Communications and is published six times a year. For additional copies, to be included in our mailing list, or for information about advertising, contact Katherine Daniels at katherine@talkbusiness.net. September/October 2015 CEO Roby Brock roby@talkbusiness.net Art Director Bryan Pistole DesignMatters LLC bryan@designmattersllc.com Editor Bill Paddack bill@talkbusiness.net Contributing Writers Steve Brawner Jeanni Brosius Wesley Brown John Brummett Kerri Jackson Case Michael Hibblen Todd Jones Rex Nelson Casey Penn Johnathan Reeves Jamie Smith Kim Souza Michael Tilley Michael Wilkey Photographers Stephanie Dunn dunnmsteph09@yahoo.com Tim Rand pix@trand.com Bob Ocken bob@ockenphotography.com Kat Wilson katographic@gmail.com Vice President Operations Stephanie Baker stephanie@talkbusiness.net Vice President Sales & Marketing Katherine Daniels katherine@talkbusiness.net

The new season is right around the corner and you can already sense the electricity in the air as Arkansans prep for high expectations. I’m not talking football season – although that will offer plenty of excitement – Election Season 2016 is closer than you think. With the state Legislature moving up primary election day from the third week in May to the first week of March, expectations are that Arkansas will be a pivotal state for presidential delegates among Republican and Democratic contenders. Even though we have two pseudo-home state candidates in Mike Huckabee and Hillary Clinton, delegates are apportioned, not winner-take-all, which means the state will remain a battleground for supporters. While we’re accustomed to seeing Clinton and Huckabee on occasion, we’ve already seen Donald Trump and Ted Cruz scoot through Arkansas as they motor around the South. Expect to see more. Not only is Election Day 2016 earlier, lawmakers also moved up filing dates in order to accommodate the new primary day. By early November, we’ll know who has paid filing fees at the state and local level and how legislative races in particular will shape up. We are already hearing from a number of folks jockeying for position. We’ve had dropouts, jumpins, party switchers and some surprise retirements. I always say that every election cycle is different and brings its own unique interest to it. Next year will be no exception. We may see a U.S. Senate race that is expected to bring a new face to Arkansas politics – former U.S. Attorney Conner Eldridge, a Democrat. The Supreme Court Chief Justice race now looks incredibly interesting with the early retirement of Jim Hannah. Godspeed for a quick recovery from the health condition that caused him to step down. Several legislative races that Democrats held in 2014 may see renewed targeting by Republicans looking to increase their strong majority gains. In truth, there are a number of GOP primaries that may see interesting battle lines drawn over the private option and other party-splitting policies. And the possibility of ballot issues ranging from term limits to medical marijuana to campaign finance reform also offer real political intrigue. As your candidate puts on a red jersey or a blue jersey, let’s hope for an exciting season – campaign season, that is. I’m expecting a lot of trick plays, possible overtime and major points scored throughout the coming months. Count on us to bring you all the latest news on this front.

Sincerely,

Printer Democrat Printing & Litho River Rock Communications 8308 Cantrell Road Little Rock, AR 72227 501.529.1737

Roby Brock CEO

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TALK BUSINESS & POLITICS | SEPTEMBER/OCTOBER 2015

Commentary

Among the Challenges of ACA Are Ever-Evolving Regulations By Christy Garrett Christy Garrett is director of marketing and business development for QualChoice Health Insurance.

he Affordable Care Act has resulted in a significant number of changes in health care and health insurance across the nation and in Arkansas. This has led us to reevaluate our strategic approach to the marketing of health insurance products and services. One of the most positive changes we have seen is that the law has made insurance more of a priority for all consumers. Health insurance is no longer a choice – it is the law. This has resulted in an increase in potential consumers, and increased awareness of the need for health insurance. Health insurance is becoming more of a lifestyle product than simply a medical product. Our goal is to become our member’s partner in health – to not just communicate with our customers about their claims or providers, but to engage them in conversations about their health and their continuum of care. We want to help them understand how to stay healthier and improve their lives beyond their medical claims. From a marketing perspective, this is a revolutionary change in the way we sell and market our products. The number of consumers who are shopping for and purchasing health insurance on their own has grown significantly. We have seen an increase in traffic to our online product portal for individual plans. And with government regulation of open enrollment periods, our business is now much more seasonally driven.

A quality, competitively priced product that is delivered by caring and responsive professionals will always be marketable.

CHIEF CHALLENGE That touches on what is probably the biggest challenge of the ACA – the continually evolving regulations. We have to constantly stay

up-to-date on new rules and how they impact our product design and benefits. We have to engage our customers in conversations about what the changing rules mean for them. One of the challenges all insurance companies face is that as we are communicating directly to more consumers there can be a language/ understanding barrier. The health literacy rate – the level of consumer understanding of health-care terminology – in our state is low. Many people have not had health insurance before or have been covered through an employer, so many of the terms are new to them and are therefore challenging to understand. So, as marketing professionals we are getting better all the time at taking these complicated laws, rules and regulations and explaining them so the average consumer can understand them. COVERAGE STANDARDS Another marketing challenge is that the health-care law has established many standards in coverage that have, to a degree, commoditized the market. In the past you could differentiate yourself from competition through product design, but that is becoming more of a challenge. A result is that we are seeing some really innovative product and service offerings come from other areas of the business. I think being faced with new challenges is often when people can be their most creative. One aspect of industry and brand perception that will be interesting to watch is how insurance companies will be perceived as the Private Option evolves in the state. There is a great deal of speculation about what will happen with the Private Option and, regardless of what the future holds, those of us who are participating will, to some degree, have our brands associated with this program. Of course, what happens with the Private Option is largely beyond our control, but we will continue to take care of our customers and their families and let our customer service, compassion and professionalism speak for what kind of company we are. Ultimately, how we engage with our consumers has more impact on our brand than any marketing we will ever do – and it’s why we are so dedicated to offering the best customer experience we can. A quality, competitively priced product that is delivered by caring and responsive professionals will always be marketable.

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Commentary

Food Labeling Act Addressing GMOs: Good Common Sense By Randy Veach Randy Veach, who farms cotton, soybeans, rice, wheat, corn and milo in and around the community of Lost Cane near Manila in Mississippi County, is the president of the Arkansas Farm Bureau.

he Safe and Accurate Food Labeling Act, passed July 23 in the U.S. House of Representatives, is common-sense legislation that affirms the federal government’s role at the top of America’s food safety pyramid. It creates a single, unified standard for food to be labeled as “GMO free” as part of a U.S. Department of Agriculture program modeled after the popular USDA Organics program, and it protects food companies and consumers from a costly and confusing patchwork of state-by-state labeling laws. The proposal passed the House by a 275-150 margin, including support from all four members of the Arkansas delegation – Congressmen Rick Crawford of Jonesboro, French Hill of Little Rock, Bruce Westerman of Hot Springs and Steve Womack of Rogers. A companion bill is likely to draw Senate attention this fall. Almost as if on cue, we have heard loud complaints from some anti-Genetically Modified Organism (GMO) campaigners, who have ramped up their volley of rancor and confusion in an effort to demonize science and efficiencies designed to feed a growing world. American farmers have used GMOs for more than two decades. In that time, every major scientific and health organization, including the U.S.

The World Health Organization, the American Medical Association, the National Academy of Sciences and many other organizations have found GMOs to be perfectly safe.

Food and Drug Administration, has concluded GMOs are as safe as any other food. These truths have been problematic for anti-GMO groups, who initially tried to create fears of health risks. The overwhelming scientific consensus has forced these activists to change their attack to something that also is flawed: a claim that their efforts help consumers’“right to know.” As a general notion this seems logical, but when applied to the GMO debate it is clear that labeling mandates to address this “right to know” is something that actually is a “right to confuse” consumers. Forcing food companies to label every product that has any GMO ingredients would also be a massive and expensive undertaking. A study by Nature Biotechnology found that mandating labels to such a massive number of products would cost the government $1 billion, while a study done by a Cornell University professor said that state labeling mandates could increase the average American family of four’s food costs by $500 a year. Historically, the government has limited labeling requirements to information that is essential for consumers to know. As the Center for Science in the Public Interest, a consumer group, recently testified before Congress, “If we mandated everything on a label, consumers don’t know what is the most critical information … The things that are most critical are either safety information or nutritional information. This doesn’t qualify there.” Again, the overriding factor in passage of this measure is the safety of genetically enhanced foods. The World Health Organization, the American Medical Association, the National Academy of Sciences and many other organizations have found GMOs to be perfectly safe. Nearly 2,000 independent, peer-reviewed studies support these findings. The Safe and Accurate Food Labeling Act is common sense in action, and I applaud the members of our House delegation for their ability to see through the rancor and confusion. We look forward to working with Sens. John Boozman and Tom Cotton as the issue comes to the U.S. Senate this fall.

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Cover Story

First Priorities 10

TALK BUSINESS & POLITICS | SEPTEMBER/OCTOBER 2015

Current and former Arkansas first ladies – long active with various causes – are working with the Old State House Museum Associates to restore the popular gowns exhibit. From left, Ginger Beebe, Susan Hutchinson, Betty Tucker and Gay White visit at the Governor’s Mansion about the project they share – restoring the gowns exhibit.

By Roby Brock & Bill Paddack

n exhibit that is by far the most popular one at the Old State House Museum in Little Rock is in need of preservation treatment and some very familiar faces have stepped forward to help out. www.talkbusiness.net

Cover Story: First Ladies The Arkansas’ First Ladies’ Gowns exhibit, which happens to be the largest exhibit of its kind outside the Smithsonian Institution, showcases gowns worn by the first ladies of Arkansas to the Inaugural Ball from 1889 to the present. A number of the gowns have been available for viewing by the public since 1955 and some are showing signs of deterioration. That’s why a number of former first ladies are working to help restore the dresses. Each dress can cost anywhere from $12,000-$15,000 to preserve and Department of Heritage officials said that their fundraising hopes to preserve the 27 gowns currently in the exhibit. Also, a new HVAC system is needed specifically for the exhibit in order to control dust and humidity. Current First Lady Susan Hutchinson, along with the board of directors of the Old State House Museum Associates (a nonprofit group established to support the museum), will host a lunch on the grounds of the Governor’s Mansion on Tuesday, Oct. 6, to raise funds to preserve the gowns.

Individuals and organizations are invited to purchase tickets to help the cause, and Hutchinson has been joined by some of her

“I’m finding that people of Arkansas are very responsive to their first lady. I’m trying to use that in a positive way.” – First Lady

Susan Hutchinson predecessors to help bring awareness of the need as well as to promote the fundraising event and more.

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TALK BUSINESS & POLITICS | SEPTEMBER/OCTOBER 2015

FIRST LADIES TO THE RESCUE Talk Business & Politics Editor-in-Chief Roby Brock recently sat down for an afternoon of conversations with four first ladies at the Governor’s Mansion to discuss the importance of the gowns exhibit from a historical and heritage perspective. The four women – Gay White, Betty Tucker, Ginger Beebe and Susan Hutchinson – shared their thoughts on why the gowns exhibit needs this major preservation effort. “I think the people of Arkansas think it’s important. It’s the number one exhibit at the Old State House. It is the biggest draw by far,” said Gay White, whose husband Frank served as governor from 1981-83. “It’s a part of history. One of the reasons why people like it so much is it personalizes the political office of governor. It shows there is a personal side to it. It speaks to the strength of the women who were behind the governor who were a very integral part of their success.” Betty Tucker, wife to former Gov. Jim Guy Tucker, who served from 1992-1996, also touched on the historical significance of the

exhibit and its items. “Having gowns from the period of time when all of the different governors were in office is a wonderful way for anyone to go and visit the museum, particularly for young people who are interested in history. To be able to see the visual representation of a period of time is very important,” she said. “We all had a part in Arkansas history being married to the governor,” said Arkansas’ most current former first lady, Ginger Beebe. Her husband Mike served as the state’s chief executive from 2007-2015. “So many people who visit our state come to the Old State House … It’s important that we preserve these gowns. They’re treasures and they need to be restored.” Current First Lady Susan Hutchinson said the visual history of the exhibit can take visitors to a walk back in time. “You get a sense of what was going on, what styles were, what kind of woman was she that she chose these things to wear and present herself to the public?” Hutchinson said when she was deciding elements of her gown, she was cognizant the dress would provide insight on this period in Arkansas life. “I knew this would be reflective of the times, reflective of me and my personality. Not to be a style for Paris, but to be a good reflection of Arkansas,” she said. “As people 100 years from now look back – I hope it will make history come alive for them, help them understand the times we were in. It has all these other consequences when people look back into history.” OLDEST GOWN DATES TO 1889 The idea to collect and display the gowns of Arkansas’s first ladies originated at a 1943 fashion show held by the Arkansas Pioneers Association, featuring First Ladies Mabel Parnell, Anne Brough and Elwalda Robinson. During the 1950s, the original gown collection was sent to the LeBeouf

Company of New Jersey for conservation. Since this original treatment, the first ladies’ gowns collection has been on exhibit at the museum in varying configurations. The collection was the first exhibit to showcase Arkansas history at the Old State House Museum, debuting in 1955. The oldest gown in the collection is from 1889 and belonged to Mary Kavanaugh Oldham Eagle, the wife of Arkansas’s 16th governor, James Philip Eagle. When the museum reopened in 1999 after a three-year structural renovation, the current version of the gowns exhibit opened on the second floor of the west wing in cases specifically designed to minimize deterioration caused by light, dust and humidity. SIGNS OF STRESS Nevertheless, while the gowns have always been preserved according to the highest professional standards of the day, some deterioration with age is inevitable. During a routine survey of artifacts in 2014, Jo Ellen Maack, the museum’s curator, noticed signs of stress on certain gowns. Upon closer inspection it was determined that a textile conservator should evaluate the collection. The museum staff worked closely with renowned textile conservator Harold Mailand of Textile Conservation Services to create a prioritized list of conservation needs for the gowns. These needs have been identified, preservation treatment has begun and the museum is redesigning the gallery in order to better interpret Arkansas first ladies. “The Arkansas First Ladies Gowns at the Old State House Museum are, through the years, our most popular artifacts,” Bill Gatewood, the museum’s director, said. At the event on Oct. 6, a seated lunch on the lawn of the Governor’s Mansion will be followed by a special presentation in the Great Hall. Hutchinson and five of Arkansas’ former first ladies (Ginger Beebe, Janet

Huckabee, Betty Tucker, Gay White and Barbara Pryor) have committed to be present for the event and will attend a special reception for table sponsors before the luncheon. Persons interested in ticket inquiries ($150) can contact Sammye Johnston at sammyejohnston@gmail.com or (501) 664-1879. BEYOND THE GOWNS While the gowns exhibit has drawn a bipartisan background of help, plans for the renovated attraction want to do more to interpret the impact first ladies have had on Arkansas politics, policy and culture. Each first lady has championed causes to promote and lend their names and credibility toward. Those causes include childhood immunization and health, working with seniors, children’s and adult literacy, arts and humanities, hunger relief and more. While their husbands largely dealt with public policy and daily media interaction at the Capitol, the first ladies’ work was often underreported and underappreciated. They toiled publicly and behind-the-scenes with their efforts, while their work moved the needle for many important initiatives. Beyond the gowns and the title of the position, here are how several first ladies have made a difference in Arkansas. Gay White In her 30s at the time with three teenagers, Gay White said “family first” was required when she and Frank lived in the mansion. “I didn’t have an agenda,” she said other than normal motherly duties. But aside from family, she quickly was drawn into several arenas that spoke to her personal interests. www.talkbusiness.net

Cover Story: First Ladies “I had always had a love of older people – now I’m glad I did because I am one. At that time, I was only 32 or 33 years old. I had a real fondness and empathy for older people, so I was on the White House Council on Aging. I spent a lot of time visiting with older groups and hearing their concerns and needs,” she said. White was the first first lady to bring a touch tour to the Governor’s Mansion for those who had physical challenges. “We invited a bunch of students from the School for the Blind,” she said. “We had identified many things we thought would be interesting.” White continued, “One of the most memorable things that I can recall is we had a group of physically challenged students come to the mansion. I gave them a tour and I remember there was one boy who had cerebral palsy. Someone mentioned he could play the piano. His body was distorted and I thought to myself, ‘That can’t possibly be.’ But they rolled him up to that piano and he played the most beautiful song I’ve ever heard.”

Gay White also worked to promote awareness of those with mental disabilities. Betty Tucker An educator by profession, Betty Tucker quickly stepped into a role to help bring attention to one of her husband’s early policy successes – K-3 summer school. The goal of the initiative was to help children in early childhood catch up on deficient reading skills so they would not lag behind in their later years. “I really believe that if you can catch a child early, you can avoid a lot of problems later in the school years,” Tucker said. She toured the state in the summer of 1993 pushing the reading recovery program, which ultimately had success with three-

fourths of the children involved. The influence of the bully pulpit of the first lady’s post surprised Tucker initially. “It’s way more powerful than I realized until I was there. People do listen and people in Arkansas, perhaps because we have a small population and people know one another, are very generous about inviting you into their homes and into their lives and into their communities – telling you about the things they care about,” she said. “It’s pretty easy to have an impact.” Tucker also worked to promote the arts as first lady, including with the Arkansas Arts Center to highlight Arkansas artists through mansion displays for visitors to see. Ginger Beebe Ginger Beebe also learned early that the title of first lady carried considerable influence and opportunity. “People stand up and listen. You can really use the position to bring awareness about issues that not only are important to

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TALK BUSINESS & POLITICS | SEPTEMBER/OCTOBER 2015

me, but I think important to a lot of people in this state,” she said. Her husband Mike tapped the first lady’s popularity and intellect early by asking her to conduct a listening tour around the state to help with his initiative to improve care for those with mental illnesses. “Mike asked me if I would go out and listen to families whose children suffered from mental illness,” she said. “I did that for a couple of months and put together a report to give to the Commission on Behavioral Health. That was really the first time I realized that, ‘Oh my gosh, people are really listening to me. I have this power to engage people.’” She later championed efforts to reduce childhood obesity, provide hunger relief and expand awareness of the arts. Ginger

Beebe also made it a priority to open up the mansion’s Great Hall for nonprofit events through lower user fees. She noted it helped the fundraisers be more profitable for their different causes. Susan Hutchinson Fresh on the job and with less than a year as first lady, Susan Hutchinson has wasted no time taking up projects. “I’m finding that people of Arkansas are very responsive to their first lady. I’m trying to use that in a positive way,” she said. Her top priority currently is raising awareness of child abuse and neglect and finding ways to improve the services that can help children in need. She has been a longtime supporter of the Children’s Advocacy Centers of Arkansas, which works with child victims of abuse. “I want folks to know that there are wonderful things that are happening for children in spite of some terrible things that might have happened to some children,” Hutchinson said. She knows the crimes against children are

very underreported and can leave lasting scars that carry throughout adulthood and weaken communities. You’ll likely find her doing more in the near future to promote music and the arts and sciences. “I’m a musician – I play the piano not well enough to be paid, but well enough to volunteer to play at churches that couldn’t afford a pianist,” she said. Later this fall, she’ll play with the Arkansas Symphony Orchestra at an event to raise money for the Governor’s Mansion. As for the power of the first lady’s pulpit, Hutchinson says she’s “in awe” of it. “It’s a classroom experience every day and the subjects seem to change every day and all through the day,” she’s observed. “It has the prestige and a sense of power and position with it, unlike any other spouse position that you can have.” Four living former first ladies of Arkansas were unable to participate in our recent interview session and photo shoot – Betty Bumpers, Hillary Clinton, Janet

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Cover Story: First Ladies Huckabee and Barbara Pryor. Here’s a brief look at their years in the Governor’s Mansion. Betty Bumpers It was the early ’70s when Dale Bumpers became the state’s 38th governor, serving from 1971-75. As first lady – and later while her husband served as a U.S. senator – Elizabeth Callans Flanagan “Betty” Bumpers became known as an effective advocate for childhood immunizations and world peace. She initiated a campaign to immunize all of Arkansas’ children against childhood diseases. That Every Child by ’74 program proved to be a very successful campaign, delivering immunizations to more than 350,000 children on just one Saturday near its peak. As a result of the program, the

state attained one of the highest childhood immunization rates of any U.S. state, and the program was adopted by the U.S. Centers for Disease Control and Prevention as a model for nationwide use. Hillary Clinton Hillary Diane Rodham Clinton has served in a variety of roles and positions through the years and is currently seeking the Democratic nomination for president. A former United States secretary of state in the administration of President Barack Obama from 2009 to 2013 and a former U.S. senator representing New York from 2001 to 2009, she served as first lady of the U.S. from 1993 to 2001 while Bill Clinton was president. During her tenure as first lady of Arkansas from 1979 to 1981 and 1983 to

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TALK BUSINESS & POLITICS | SEPTEMBER/OCTOBER 2015

1992, she led a task force that reformed Arkansas’ education system and sat on the board of directors of Wal-Mart and several other corporations. She also practiced law with the Rose Law Firm in Little Rock. Additionally, she worked on issues ranging from children’s well-being to domestic violence against women. Janet Huckabee While Mike Huckabee was governor from 1996 to 2007, Janet McCain Huckabee co-chaired the Campaign for Healthier Babies in Arkansas, which promoted child immunizations. She also co-chaired the Habitat for Humanity and launched the Rapid Response Team of the Central Arkansas Chapter of the American Red Cross. An advocate for tourism in Arkansas, the Janet Huckabee Arkansas River Valley Nature Center, which sits on 170 acres of land at Fort Smith, was named in her honor. She’s currently busy accompanying her husband on the campaign trail as he seeks the Republican presidential nomination. Barbara Pryor David Pryor became the state’s 39th governor in January 1975. As first lady, Barbara Jean Lunsford Pryor belonged to the Committee of One Hundred for the Ozark Folk Center, a statewide volunteer advocacy organization, and was a member of the Board of Directors of Goodwill Industries. She was involved with the Arkansas Repertory Theater, Arkansas Children’s Hospital, the Little Rock Public Schools and the Arkansas Arts Center. She also worked to help develop the film industry in Arkansas.

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Profiles Service PHOTOS COURTESY OF CHEF SHUTTLE

From left, Chef Shuttle CEO Ryan Herget, Rogers Mayor Greg Hines and Clark Benton of Chef Shuttle NWA at a ribbon-cutting ceremony in Northwest Arkansas.

Delivering the Goods Ryan Herget and his Chef Shuttle company take pride in delivering a personal touch along with a meal from a favorite restaurant. By Kerri Jackson Case

TALK BUSINESS & POLITICS | SEPTEMBER/OCTOBER 2015

n March 2014, Ryan Herget was standing in the dispatch center for Chef Shuttle. He’d bought the name of a defunct food delivery business a month previously and was determined to make something out of the company. That’s when the name LaFrance appeared on the order list. He told the dispatcher he’d deliver the “Star of India” dinner to the family. He wanted to meet him. “I knew that they’d taken USA Drug from one store to a regional powerhouse before they sold the chain,” Herget said. “I didn’t know exactly how, but I knew I wanted to be involved with them. They knew what they were doing.” Three weeks later, Dale Capital Partners, a private equity firm run by Jason LaFrance, formed a partnership with the then 23-yearold Herget. “It was obvious from that first interaction, he was someone who would hustle and work hard,” said Dan Andrews, COO of Dale Capital Partners. “[Herget] doesn’t just have the drive, but the vision to make the company grow.” A mentorship from the firm was as interesting to Herget as the actual investment. “There are a lot of places you can go to get capital,” he said. “But I want to eliminate mistakes I don’t have to make. I want someone who can give advice with the money.” EXPANSION PLANS Chef Shuttle takes pride in the personal touch for all its customers, not just the ones with money to invest. Herget still delivers orders whenever he can, although that’s getting to be less and less frequently. With operations in Little Rock, Conway, Cabot, Benton, Bryant, Fayetteville, Springdale, Rogers, Bentonville, Memphis and Hot Springs, he does a lot more managing these days. Especially since he plans to expand into six to 10 more markets across the Southeast in the next 12 months. The 2013 University of Mississippi graduate didn’t plan to own this kind of business. He came back to his native Little Rock with the plan to go into insurance. But soon after graduation, he began to see the potential for “last mile delivery.” “Nobody wants to wait for what they’ve ordered,” he said. “They want it now. So the trick isn’t necessarily to deliver food from

restaurants to people’s homes, that’s just the most obvious place to start. What we want to do is use this to build the infrastructure so we can deliver anything people want to their homes.” Herget believes the real business he’s building is the proprietary system that tracks traffic patterns, weather and anything that’s predictable. Meal delivery (500-600 per day in Little Rock alone) keeps his systems busy from 11 a.m. to 1 p.m. for lunch and then from 6 to 8 p.m. for dinner. That leaves a lot of down time during the day for other options. He’s considering everything

“We really do help some people. We make their lives just a little easier. I’m proud of that.” – Ryan Hegret

Chef Shuttle driver Zedric McBride.

from groceries to dry cleaning to liquor store deliveries. Not that they advertise it, but they have already been known to grab a gallon of milk for a customer on the way to their house. “We have people who have ordered from us nearly every single day since we started,” Herget said. “Many of them are homebound. When they ask for a little bit of extra help, we’re gonna do that.” VALUING CUSTOMER SERVICE It’s the attitude of going the extra mile for

that last mile of delivery that Dale Capital and Herget believe sets Chef Shuttle apart from other deliver services. “I try to think about it from the customer point of view. What would make me want to recommend this business to my friends? We know the speed of our growth is because of referrals. Customer service has to be why,” he said. The Chef Shuttle model is also the first in most markets to only charge customers a delivery fee and driver tip. Most other services add an upcharge to the menu. Chef Shuttle negotiates a commission from the restaurants to keep the service at a price point customers are comfortable paying. A little over a year ago, there were five people running Chef Shuttle. Today there are 250 people on the payroll, mostly drivers. That speed of growth has presented some challenges, mostly how to keep customer service at top quality while hiring a lot of people at once. Despite careful planning and counsel, there have also been a few unforeseen glitches, like the Arkansas Razorbacks’ football game against Georgia at War Memorial Stadium last fall. People were ordering, using the golf course as the address with notes like, “I’m on the ninth hole wearing red.” At one point, 40 of the company’s 50 drivers were wandering around the golf course trying to find hungry customers. Then the game let out, and they were stuck in stadium traffic. “That was not our best day,” Herget said. “We were barely six months old. It was a mess. But we learned a lot about how to dispatch events like that. Now we’re prepared. Something like that won’t happen again.” It’s the ability to learn and move forward that has investors so pleased. “We typically don’t invest directly in a business,” Andrews said. “But this partnership has succeeded beyond our wildest dreams.” Herget is also slightly surprised by how quickly things have grown, but finds the work satisfying. “I get that it’s absurd to say that a food delivery business is changing people’s lives,” he said. “But we make a real difference for some of our customers. We deliver to a lot of people who are sick or homebound for some reason. We deliver to parents with newborns. We really do help some people. We make their lives just a little easier. I’m proud of that.” www.talkbusiness.net

Profiles Service PHOTOS COURTESY OF KRIS COLEMAN

A Protective – and Entrepreneurial – Spirit Intelligence analysis, security operations and system design are all part of Kris Coleman’s Red Five Security firm. By Casey L. Penn

TALK BUSINESS & POLITICS | SEPTEMBER/OCTOBER 2015

“T

he world is getting more challenging,” warns Red Five Security President and CEO Kris Coleman. “On the security front, there are greater risks, especially outside our United States borders. If you do it wrong, it can bite you.” Coleman, 45, a born-and-bred Arkansan and graduate of the University of Arkansas, has made a career of quietly – and effectively – ensuring the safety of many. His Washington, D.C.-based company provides discreet security solutions to a select group of public and private-sector clients that include corporate executives, diplomats, celebrities and other highnet-worth individuals in the United States and abroad. An early interest in national security and international intelligence has been an asset to Coleman’s life and his work. “I’ve long had a curiosity, and a sense of service, to my country,” said Coleman, who grew up in Fort Smith. “My parents taught me to be grateful for my freedoms and to respect other cultures. From an early age, I wanted to be successful in a way that gave back to the community. Government service and intelligence was the way I went about doing that.” While still in college, Coleman was recruited by the CIA – as a student first and later as an employee. While there, he conducted protective operations and threat assessments, and he developed counterterrorism and law-enforcement strategies. Coleman left the CIA in the late 1990s to become a special agent for the Federal Bureau of Investigation. A past member of the bureau’s enhanced SWAT Team and an FBI-certified instructor in firearms, protection, surveillance and counter-surveillance, Coleman was also in charge of running international organized crime and terrorism investigations. After leaving the FBI, Coleman worked as a consultant in the private sector. He founded his own company in 2004, seeking to fill a need in the market while putting his background to use. “There are plenty of commoditized security providers out there,” Coleman says. “Red Five is less about putting an off-the-shelf security apparatus in place and more about understanding and answering a family’s or executive’s specific security needs.”

CLOAK AND DAGGER So what does Red Five do, exactly? Coleman sums it up nicely and discreetly. “In the end, we are problem solvers,” he says, bringing to mind sly smiles, firm handshakes and the words Bond, James Bond. Duties are customized to each client and largely confidential, but there are specifics he can share about his work. Assignments typically fall into three categories: intelligence analysis, security operations and security system design. In those areas, Red Five may provide training, program development, protective detail and more. For instance, Red Five may provide protection to the family of a foreign diplomat, a former board member of a

“Kris has always run faster than most and put in more effort than most, which is evidenced in his business and Red Five’s growth.” – Matt Ramsey of Excivity

Fortune 500 company or a company under a sophisticated cyber threat (i.e., a company that has been hacked or a CEO who is thinking about carrying his iPhone into China). “With regard to the uniqueness of our work, a week doesn’t go by when I don’t get a phone call where the client says, ‘You probably haven’t heard this before,’ or ‘This is going to sound a little weird,’” Coleman says with a smile. “I tell them, ‘We do weird well.’ Our team is high end, many former CIA. We take that expertise and apply it in a manner that supports our clients.” In Arkansas, Red Five has done work for Walmart (executive protection) and other clients. Coleman would like to expand the

company’s reach in the state. “I would like to connect with international clients headquartered here whose operations extend beyond U.S. borders,” he says. Individual or executive protection, particularly near the border, can be sensitive, Coleman indicates. “You’re dealing with different personalities, law enforcement, security compliance, deployment of firearms, international borders, etc.,” he says. UNDERSTANDING THE THREAT In one case, a corporate client, publicly traded, who operates near the U.S. border, was concerned about criminal activity coming across the border, criminal surveillance of his executives and the potential for kidnapping. “Red Five worked with the client to understand the assets to protect and the threat against those assets,” Coleman shares. “We did a third-party threat vulnerability and risk assessment on the CEO and other executives. The report was briefed to the board, which then made resource decisions about what to spend to protect its executives and its assets.” About five years ago, El Paso Electric hired Red Five to evaluate its security needs and to help develop and implement a security department within its company, which serves approximately 400,000 customers in west Texas and southern New Mexico. “Kris came in with his team and conducted a robust assessment that opened our eyes to some gaps in our security,” recalls Wayne Soza, vice president for compliance and chief risk officer. Soza expressed gratitude for Coleman and the time he spent to understand the company’s internal culture before planning any strategies. “He and his team were outstanding, and I enjoyed working with them.” Red Five has a diverse, experienced team to carry out its work. “Many of our directors and operators are former government, military or federal law enforcement. It’s CIA, FBI, Secret Service, Department of Energy, Department of State,” says the CEO. “It’s a lot of experience packed into about 80 employees.” With world travel being the norm for Coleman and his team, Red Five is able also to tap into a network that expands into Europe, the Middle East, the Far East, www.talkbusiness.net

Profiles: Red Five Security South America, etc. “It’s important to have security experience and knowledge where the client is going to be,” Coleman says. “We don’t propose you consult from a single office in a U.S. city and then try to tell people what’s happening in Yemen. You need that network, and that’s where we’re very strong. “For a number of clients, we keep track of where they are going and what their contingency plans are for getting out. We give them accurate and timely intelligence prior to their departure to those locations. We help them design facilities in those overseas locations to make sure they can weather the challenges being presented to them in high-risk environments.” Red Five is growing, and recently opened a fourth office in Scottsdale, Ariz., which is in addition to offices in Washington, D.C., Laguna Niguel, Calif., and Sunnyvale, Calif. As for continued growth, Coleman has set only one ceiling. “When the company becomes too big to hire good people,” he says, “we will stop growing. I’m not going to do work that’s below us.” NURTURING THE ENTREPRENEURIAL SPIRIT Coleman’s first business experience came during his high school years, from working for his father’s construction company during summers. “There was an entrepreneurial spirit in the family that helped me understand what it takes to run a small business,” Coleman recalls. “My family – and Fort Smith – gave me a solid foundation in my values, and Fayetteville’s creative and open-university atmosphere helped me understand how Walmart, ABF, USA Truck, Tyson’s and Stephens developed and have flourished in Arkansas.” Knowing that his small business is helping to drive the U.S. economy brings Coleman a sense of accomplishment. Even more than that, he says, is the reward of hearing a client express newfound peace of mind after he and his team have handled something for them that was threatening or somehow unpleasant. “The second most gratifying thing [about that] is seeing a group of people that I brought together accomplish great things and in giving back to the community.”

“Red Five is less about putting an off-the-shelf security apparatus in place and more about understanding and answering a family’s or executive’s specific security needs.” – Red Five Security President/CEO

Kris Coleman

TALK BUSINESS & POLITICS | SEPTEMBER/OCTOBER 2015

Through Red Hands Helping, an informal group within the company, Red Five supports food drives, Wounded Warrior Project, Little League and more. “We place wreaths on the gravestones of our armed forces at Arlington Cemetery,” adds Coleman, who allots time and resources to these things on at least a quarterly basis. Matt Ramsey, president of cyber and technology security company Excivity, calls Coleman a colleague and a friend. “My company has been pulled in to support Red Five’s cyber security offerings,” Ramsey says. “Kris and I talk about business, leadership and family. Kris has always run faster than most and put in more effort than most, which is evidenced in his business and Red Five’s growth,” he explains. “As a small business leader, you are the master of many, and you have many masters in your clients, employees and family. Kris keeps his eye on the ball with the end goal of having a better life balance.” Finding that balance, Coleman says, takes focus, help from others and a little down time, too. “I’m an avid list maker, and I know how to delegate to people who can execute – that’s important. I get out there and see the troops. The other part of being successful is staying fit and healthy. You need a plan in place to do that if you’re going to manage the stress.” To decompress, Coleman likes a little adventure, and some hometown fun. “I like motorcycling. I do a couple of long rides each year, and it’s hard to beat the scenery, roads and low traffic of the Ozarks,” he says. “That’s always a great ride. I frequently get back to the Bikes, Blues and BBQ in Fayetteville. My brother and parents are still in Arkansas. I always love to get back there to see friends and family, and to take in a ball game. There’s no other sports team besides the Razorbacks. ‘Course, that goes without saying. It’s part of where I’m from.” Coleman is a member of the American Society for Industrial Security, the Society of Former Special Agents of the FBI and the Association of Former Intelligence Officers. He is also the author of a copyrighted protective intelligence methodology for Hunter Harris, now inashisPrIME©. fourth melon-selling season, executives known For more is a big believer in Cave City watermelons. information, visit red5security.com.

ADVERTORIAL

Highways Need More Revenue, But Not More Tax Increases By David Ray

David Ray is the State Director of Americans for Prosperity – Arkansas.

In May, Governor Asa Hutchinson appointed a 25-member Working Group on Highway Funding. The group is composed of legislators, local elected officials, and industry experts charged with finding a solution to the state’s highway funding shortfall. After just a couple of meetings, it’s clear that many on the Working Group would like to see the legislature raise Arkansas’s gas tax in order to generate more revenue. “Other states are doing it,” they say. But this would be a mistake, and legislators should exhaust all other available options before considering another tax increase. For starters, let’s acknowledge that there’s a highway funding problem. Nobody seems to disagree on that point. But there’s certainly not a revenue problem: the state ended its fiscal year June 30th with a $191 million surplus. The money exists – but not enough is making its way to the Arkansas Highway Transportation Department (AHTD). HIGHWAY REDUCTION Part of the problem is that Arkansas has far too many state highway miles in place: 16,430 to be exact. While our state ranks 32nd in the nation in terms of population, we have the 12th largest number of highway miles of any state in the country. Many arterial city streets, such as Cantrell Road and Broadway in Little Rock are classified as state highways, thus placing the burden for maintenance and upkeep on AHTD instead of the localities that predominantly use those streets. To make matters worse, until the early 70’s many legislators passed bills to change many low-volume rural roadways into state highways so that their local elected officials wouldn’t have to bother with them. Transferring these urban arterial streets and low-volume rural highways back to the cities and counties would substantially alleviate AHTD’s burden. ACCOUNTABILITY IN SPENDING Another thing that jumps off the page is that AHTD only sees $0.64 of every dollar in highway funds that are collected. Cities and counties siphon off a whopping $0.32 cents of each dollar in the form of “turnback funds,” ostensibly for the purpose of maintaining their own roads. But nobody really knows what they spend that money on, since there’s no annual reporting required. Much of this money undoubtedly gets spent on things other than roads and bridges. We’re not exactly talking about pocket change here either; we’re talking

about hundreds of millions of dollars. If the legislature is going to give away that kind of money to cities and counties, the least they could do is demand accountability in return. And if cities and counties don’t want to be held accountable for their turnback funds, they should receive less of them. THERE’S PLENTY TO GO AROUND One potential solution that many states use is diverting a modest amount of general revenues to supplement highway funding, particularly on things that have a nexus to transportation, like the sales taxes on items like tires and car batteries. Detractors say this would rob money from other worthwhile programs, but the fact is that transportation is a core function of government and legislators should arrange their spending priorities accordingly. Some have proposed using some of the state’s surplus money for roads or diverting future “General Improvement Funds” funds (which are basically an earmark slush fund for legislators) to the highway department. None of these are bad ideas. Anyone who thinks there isn’t room for savings in state government isn’t looking very closely. LEAVE GAS TAXES ALONE The simple truth is that Arkansans cannot afford any more tax increases. Our taxes on both gasoline and diesel are already higher than any state that borders us. Unfortunately, the same is true of our personal income taxes, and our sales tax is the second highest of any state in the country. Elected officials must be able to prioritize the core needs of government ahead of nonessential programs. Less than three years ago, the sales tax was raised to pay for more highways. At the time, AHTD claimed this would make our state’s highway system “among the best in the nation.” This time around, another tax increase isn’t the answer. Raising gasoline taxes takes more money straight out of the pockets of hardworking Arkansans. The median family income in America is still 1.7% lower than it was six years ago. Thankfully, falling gas prices have offset some of this difference. Any increase in gas taxes, big or small, would cut into this relief at the pump. Raising taxes is the lazy way out of this mess. Finding other solutions will be harder, but it’s worth the effort. www.talkbusiness.net

Profiles Service PHOTOS BY BOB OCKEN

Expect More Change Thatâ&#x20AC;&#x2122;s the word from new CJRW CEO Darin Gray as he and the agency embrace not only new space, but also the ever-evolving needs of their clients. By Roby Brock

TALK BUSINESS & POLITICS | SEPTEMBER/OCTOBER 2015

he “C” in CJRW stands for “Cranford” – one of the original founders of the Arkansas advertising powerhouse – but it might as well stand for “change.” In an industry and within an agency that is undergoing massive transformations, Darin Gray was recently tabbed to be the new CEO and chairman of the 50-plus-yearold Little Rock-based advertising, marketing and public relations shop. Gray will also retain his title as president, which he inherited when he came on board less than two years ago. “Obviously, this world is changing. Our clients’ needs are changing,” Gray said in a recent Talk Business & Politics interview. “You’re seeing this industry as a whole try to respond to those things, be more flexible, more nimble, more understanding of their specific industries. And that just takes a lot more moving parts than what we used to have.” Gray, who lives in Springdale and once led the Northwest Arkansas Business Journal, will work from CJRW’s Northwest Arkansas office as well as its new headquarters at the entrance to downtown Little Rock’s Creative Corridor. The new Little Rock digs give the agency – which represents clients such as Arkansas Parks & Tourism, Oaklawn, Tyson Foods and Centennial Bank – more abilities to serve its clients with advancing technology. AN ABUNDANCE OF CHALLENGES Gray said between the industry tumult, staff turnover, leadership transitions and

technology advances, the change CJRW has undertaken has provided plenty of challenges. “I would say this agency has probably gone through more change in the last year and a half than most companies will go through in a decade. That can be stressful, but when necessity calls for it, you have to respond to the call,” Gray said. Gray, 50, succeeds Wayne Woods as chairman and CEO. “Over the course of the last 18 months,

confidence Wayne and the Board of Directors have placed in me to lead this great firm,” Gray said. “CJRW is an iconic Arkansas business that has helped countless clients succeed since it was founded. It has clearly set the standard for excellence in our industry and we will continue to set that standard moving forward.” BACKGROUND Gray began his professional career in the economic development arena while working

“I would say this agency has probably gone through more change in the last year and a half than most companies will go through in a decade.” – CJRW CEO

Darin Gray the decision to designate Darin as my successor as chairman and CEO has been validated time and time again,” Woods said. “He has broad experience in leading, managing and growing businesses and has played an instrumental role not only in our move to Main Street, but in positioning us for continued success moving forward.” Woods, 67, cited expansion of the firm’s digital and interactive division and realignment and reorganization of several divisions as part of the agency leadership move. “I could not be more humbled by the

for the Arkansas Industrial Development Commission (now AEDC) and as an economic developer for the Rogers-Lowell Area Chamber of Commerce. A graduate of the University of Oklahoma Economic Development Institute and the Arkansas Community Development Institute, he is a past chairman of the Arkansas State Parks, Recreation and Travel Commission. He is also a founding member of the Northwest Arkansas CEO Forum and currently serves as a board member of the Center for Missions Mobilization. www.talkbusiness.net

Feature

TALK BUSINESS & POLITICS | SEPTEMBER/OCTOBER 2015

To Little Rock and Fayetteville â&#x20AC;&#x201C;

nearly every one.

By John Brummett The author of this article is a regular columnist for the Arkansas Democrat-Gazette.

www.talkbusiness.net

What does living fearless mean? I’m one of 2,700 Arkansas Blue Cross and Blue Shield employees serving almost one million Arkansans every day. At Arkansas Blue Cross, we’re serious about providing our members with the peace of mind that comes from knowing they can get the health care they need. Twenty-seven hundred employees helping almost a million Arkansans live fearless.

I AM THE

SHIELD Odell Nickelberry Arkansas Blue Cross and Blue Shield employee

TALK BUSINESS & POLITICS | SEPTEMBER/OCTOBER 2015 MPI 3737

Feature: Progressive Cities

few days after the completion of the Republican revolution in Arkansas – this would have been sometime last November – one of Little Rock’s most active and insightful progressive Democrats, political science professor Jay Barth, announced to no one in particular what he was going to do. He said he was going to work on making Little Rock the most progressive city possible. Implicit was the admission that the state as a whole was lost for now for progressive Democrats, also known, of course, as liberals. Barth’s was an interesting assertion, managing to blend resignation and hope and tactical thinking. Sometime after that, one of the few remaining center-left members of the Arkansas Legislature, second-term Democratic state Rep. Warwick Sabin of midtown Little Rock, got asked about his political future by a local newspaper columnist.

Sabin said he enjoyed legislative service, even in the minority, and, unlike others, had not given up on the Democrats’ competitiveness statewide. But he said there was, in fact, a non-legislative political office that interested him.

You could say that Arkansas is Little Rock and Fayetteville surrounded by Oklahoma. It was mayor of Little Rock, next open in 2018. In fact, Sabin said he had given no serious thought to the looming state Senate seat opening in his neighborhood with the decision of David Johnson not to run again

in 2016. You see, he couldn’t take a fourterm state Senate term in ’16 and run for mayor in ’18. POLITICAL OPPORTUNITIES Even with Little Rock’s unique and odd hybrid government structure that features both a full-time elected mayor and a fulltime city manager, the mayor’s office could provide the liberal or the progressive, or the mere moderate Democrat, with political and policy opportunities not nearly as accessible in a Republican-overrun General Assembly. City elections are nonpartisan, of course. But that doesn’t mean they are non-philosophical. That a candidate runs without a “D” beside the name doesn’t mean he isn’t a “D” or prone that way. The same goes for the “R.” We’re kidding ourselves to say local public office is civic and not political. As Sabin saw it, a Little Rock mayor could lead by leaving the administrative role to the co-existing city manager and working full time to maintain high visibility, set a progressive agenda, engage the community,

Announcing Matthew A. Waller, Ph.D. Interim Dean Sam M. Walton College of Business

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Feature: Progressive Cities reach out to neglected neighborhoods, encourage downtown and technological development, protect the environment and look for innovative localized ideas for a fairer tax structure and addressing crime and incarceration issues. ‘SAD STATEMENT’ Any implied criticism of the current mayor, Mark Stodola, who could always run again, is unintended or at least unfortunate. Times and circumstances and landscapes change. It is a “sad statement,” Sabin said, that state legislative service is generally considered superior to the job of leading the state’s largest and capital city. It speaks to our “diminishment” of a job that should be valued more highly, he said. (Perhaps it also speaks to the absence of true home rule, or local control, in Arkansas, where city and county governments exercise only the authority expressly delegated by state government. We’re full of irony in Arkansas. We say we support local

control, but we don’t. We say we oppose centralized government, but we don’t.) Mayor is a bona fide major office in a national context, held currently by such prominent, high-octane political forces as Rahm Emanuel in Chicago and Mitch Landrieu in New Orleans. An op-ed article in a recent Sunday New York Times explained that U.S. Sen. Bernie Sanders of Vermont, the socialist Democrat firing up liberals in his surely quixotic bid for the Democratic presidential nomination, got his start as a credible political player by getting elected mayor of Burlington, Vt., and performing well. The op-ed article pointed out that the civil rights movement had been accelerated by leading African-American politicians who got elected mayors of major American cities – Andrew Young, Maynard Jackson, Harold Washington and Tom Bradley. With Vermont and perhaps a few other curious places excepted – Eureka Springs, for example – modern-day America is conservative and Republican in rural areas

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and liberal, or at least Democratic, in urban centers and university towns. James Carville once said Pennsylvania was Philadelphia and Pittsburgh surroundedby Alabama. STATE NOW TYPICAL So Arkansas is now wholly typical. Its rural expanse is Republican. For concentrations of liberal and Democratic thought and action, it has one of each, meaning urbanized Little Rock and university-town Fayetteville. You could say that Arkansas is Little Rock and Fayetteville surrounded by Oklahoma. So Barth was on to something with his musing about emphasizing Little Rock. And Sabin was onto something with his consideration of the mayor’s office, so much so that Kathy Webb – the social activist who, while openly lesbian, rose to the co-chairmanship of the Joint Budget Committee in three successful terms as a state representative, and who now sits on the Little Rock City Board of Directors – also is

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TALK BUSINESS & POLITICS | SEPTEMBER/OCTOBER 2015

giving thought to that race. Sabin and Webb have shared Starbucks coffee to talk about how it probably wouldn’t work for both of them to run, since they are like-minded friends coming from the same part of town and sharing some of the same key constituencies. Webb said in an interview that she was struck by this fact: Upon learning a few weeks ago that David Johnson would not seek re-election, it took her only a matter of minutes to realize that, while she had loved her service in the Legislature, she was not nearly as interested in seeking Johnson’s vacated Senate position as in pursuing political and policy objectives in the context of municipal politics and activism based in Little Rock. She accepts, she said, that the state, generally speaking, belongs to the Republicans for a while. But she said progressive aims can still be achieved on a local level and spring from there. So let’s go back to Jay Barth, at lunch in July at Community Bakery in downtown

Little Rock, one of the few places in town, he pointed out, where blacks and whites hang out together. DIFFERENT PATH IN FAYETTEVILLE Speaking this time as less the activist and more the analyst, Barth explained that Fayetteville had a more direct route than Little Rock to being this kind of progressive Democratic refuge. Little Rock’s problem, he said, is the same malignancy that has plagued it forever – the racial divide in a city now about 48 percent white and 42 percent black. Fayetteville is 82 percent white, which means only that it doesn’t confront the kind of racial chasm stifling Little Rock. Fayetteville’s progressive coalition can form – and in fact has long existed – without the natural and lingering distrust of polarized and nearly equally divided communities of black and white. In Little Rock, Barth said, a politically victorious progressive coalition must merge the interests of the historically poor,

neglected and resentful inner-city AfricanAmerican neighborhoods with those of white progressives. Many of those white progressives are young professionals who advocate revitalization of downtown areas (like the River Market and South Main), high-tech development, historic preservation and eco-friendly lifestyle advancements, like bike lanes. That is not an easy or natural coalition, which gets demonstrated nearly every time the Little Rock Board of Directors meets and Erma Hendrix, the representative of east Little Rock in Ward 1, espouses a politics of black resentment. It’s a style of politics for which she has plenty of substantive justification, thus one to which she seems thoroughly entitled. Younger black leaders less resentful themselves, at least by style, tend to defer to her out of personal and generational respect. KEY ELEMENT Barth himself got a vivid lesson in the unnatural coalition when he sought a state

The Delta Challenge is coming back to Arkansas! November 5, 2015 | 6:30 pm Arkansas Venture Center Little Rock Register by October 29 at DRA.gov/entrepreneur www.talkbusiness.net

Feature: Progressive Cities Senate position from a downtown district covering black neighborhoods. He lost the Democratic primary in May 2010 to Linda Chesterfield, who is African-American, and who ran a late radio spot happening to mention that Barth was white and gay. A major element of the progressive Little Rock coalition that Barth, Sabin and Webb talk about is the gay, lesbian and transgender movement, one not naturally or easily allied with the African-American community. For one thing, many blacks resist the notion that the gay rights movement rivals in moral urgency theirs for civil rights. It’s a point that Webb acknowledges when she says she has experienced job and housing discrimination for being gay, but that, yes, she always had “the privilege of skin color” not available to African-Americans. And there is a religious element. Black church-goers in the community are about

and returned to his home and wound up working on Mike Beebe’s gubernatorial staff. He got appointed by Beebe to complete a term ending in 2017 on the powerful state Highway Commission. He also works as an executive with First Security Bank in Little Rock.

as apt as white church-goers to believe homosexuality is a sin not to be encouraged. All of that is not exactly like, but in some ways akin to, the tensions that have flared on the national campaign trail for Bernie Sanders. He tends to draw large and enthusiastic crowds of white liberals cheering his message of economic justice. He has been heckled, though, by people saying his color-neutral message of economic justice gives insufficient attention to the distinct and deeper problem of racial injustice. That brings us to Frank Scott, 31-year-old African-American native of Little Rock who graduated from the University of Memphis

view that, in public life, it is important that everyone communicate and try to work together on policy. And that means the black community must not isolate itself from the gay community, but seek common ground. He said the city can make progress only if we have effective lines of communication between the sinners we all are. In fact, Scott is among about a dozen young leaders, black and white, who meet irregularly at Barth’s house in the Governor’s Mansion district under the name of “One City.” They try to forge lines of communication and keep them open. Sabin regularly attends. Webb was recently a guest speaker. Both Sabin and Webb said the prerequi-

COMMUNICATION IMPORTANT Scott merely stares at you with maybe the slightest grin when you suggest that the best way to bridge this divide is with a black mayoral candidate galvanizing the black community but appealing at the same time to whites with Beebe-trained and bank-flavored establishment credentials. As it happens, Scott will leave the Highway Commission in 2017 and the mayor’s office is next up for election in 2018. Scott also is an ordained Baptist preacher who believes and preaches that homosexuality is a sin. But he said in a recent inter-

An almost all-white university town with vibrant public schools, it [Fayetteville] is dominated by a different kind of liberal politics and governance, one unburdened by Little Rock’s challenges in race relations and racial justice.

TALK BUSINESS & POLITICS | SEPTEMBER/OCTOBER 2015

site for any white political leader in Little Rock seeking to forge a coalition with blacks is to attend to that objective genuinely long before announcing for office and finding oneself with a sudden vested interest. Both pointed to their work in the black community. Both, for example, mentioned a coming project to retrofit a donated Central Arkansas Transit bus as a mobile farmers market offering fresh produce and running regular routes in black neighborhoods mired in a “food desert,” meaning an area without a major supermarket or any grocery source offering much more than processed options. NEW KIND OF MAYOR The Arkansas Innovation Hub that Sabin heads is pushing the project and Webb is advocating it through the Arkansas Hunger Relief Alliance she heads. So what Sabin and Webb portend is an emerging progressive emphasis in politics and policy in Little Rock. They signal a new kind of mayor who is more visible, engaged and proactive – and perhaps more bold – than the last two supremely nice and competent if understated mayors, Jim Dailey and Stodola. Scott may portend the same thing, though he is less established politically than Sabin and Webb. He might be more of a consensus figure than a personally bold one. He might combine African-American and business backing in a compromising way more typical of the modern history in Little Rock, where nearly everything has been a business-citizen activist negotiation. Instead of having a mayor or city manager, we have both. Instead of having ward or at-large representation, we have both. Webb pointed out that many big-city mayors lead governments that have control over the public school systems. She said that we can’t or needn’t do that in Little Rock, but that the city political leadership must become more engaged in championing the public schools. And Sabin said that a model for the kind of mayoral leadership he envisions is the ongoing performance of Baker Kurrus as the state-appointed superintendent of the Little Rock public schools.

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Feature: Progressive Cities He cited Kurrus’ high community profile and his reaching out successfully to now-supportive teachers, parents, staff and students. He pointed out that Kurrus is winning plaudits even before any actual accomplishments in improved student performance can be quantified. Sabin thinks Little Rock needs a mayor like that – meaning not necessarily a liberal, which Kurrus isn’t, but a highly engaged and visible leader. For decades Fayetteville has been something along the order of what Barth, Sabin and Webb imagine for Little Rock. But it is an entirely different landscape. An almost all-white university town with vibrant public schools, it is dominated by a different kind of liberal politics and governance, one unburdened by Little Rock’s challenges in race relations and racial justice. So it spends its time on the kinds of issues white liberals worry about – social justice for gays, lesbians and transgender persons,

and quality of life, or what’s called “new urbanism.” “New urbanism” mainly means eco-friendliness with walking paths, biking lanes, jogging trails and high-density development that takes up less land and uses fewer and hidden parking spaces so that people will walk more, or ride a bicycle, or pile in a car together. It seeks a return to neighborhoods as they existed before cars. Fayetteville has ordinances limiting what one can do on the portions of one’s own residential property that bound a stream or extend to a hillside. It has “canopy” policies requiring tree plantings on otherwise barren industrial park land. WHAT’S HAPPENING IN FAYETTEVILLE? Fayetteville’s challenge seems to be merging the mainstream liberal with the zany one. But there is this other challenge:

Conservatism is creeping in on the western side of town, which just elected a Tea Party type to the city council. And the affluent northeastern section has elected fullthrottled conservative Republican Charlie Collins three times to the state House of Representatives. So here’s what’s happening in Fayetteville right now: • By a 6-to-2 vote, the City Council has referred to the voters again a more tightly written ordinance to ban discrimination against gays, and the Chamber of Commerce has endorsed this version after opposing the last one. At this writing, passage was expected. • The Fayetteville Planning Commission has voted to relax a parking-space requirement for new commercial development. The premise is that a merchant ought to be allowed to build to street-side and forgo parking space if he believes his enterprise can succeed that way. When the local newspaper

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TALK BUSINESS & POLITICS | SEPTEMBER/OCTOBER 2015

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editorialized that the grand purpose of such a relaxed policy was to encourage walking and biking to the store instead of taking the car, those of the “new urbanist” persuasion in Fayetteville replied: Why, yes, exactly, that’s the idea – because it creates a better quality of life. The theory is that, in the new economy, the progressive concept of “new urbanism” can be golden. That’s because job development is now as much about individual talent as brick-and-mortar. Talented people can now live anywhere and do their work remotely through technology. So new jobs will go to a place with 35 miles of trails, which Fayetteville offers, and with streetside shops in neighborhoods suitable for walking and biking. And that’s especially so if the community welcomes cultural diversity with a ban on discrimination on account of sexual orientation or gender identity. Or at least that’s the progressive thinking of Arkansas’ university town/ AHCA ad half page horizontal.pdf

The theory is that, in the new economy, the progressive concept of “new urbanism” can be golden. That’s because job development is now as much about individual talent as brick-and-mortar. liberal refuge. To come full circle: Let’s mention again Charlie Collins, the conservative Republican state legislator who champions tax cuts and guns on college campuses. He said public policy in Fayetteville as a university town – and probably in Little Rock as a capital city – is influenced by non-natives bringing outside ideas. And he says those kinds of people don’t bring liberal

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9:55 AM

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ideas exclusively. Not all quality-of-life ideas come from “new urbanists,” he said. They can come from Republicans. Collins intends to seek re-election to the Legislature in 2016, but, for after that, he declares himself open to whatever opportunities to influence public policy the ever-changing landscape provides. He mentioned Congress. He also mentioned mayor of Fayetteville.

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Industry PHOTO: SHUTTERSTOCK

TALK BUSINESS & POLITICS | SEPTEMBER/OCTOBER 2015

Going Down Look for prices at the pump in Arkansas to ratchet downward in the fourth quarter. By Wesley Brown

rkansas and U.S. motorists will likely see pump prices continue to move lower for the rest of the year, and may well see local gas prices ratchet down near the S2 level ahead of the holiday season, according to the U.S. Energy Information Administration’s short-term energy outlook released in August. The U.S. Department of Energy’s statistical arm forecasted that it expects monthly average gasoline prices to decline from their July level to an average of $2.11 per gallon in the fourth quarter, a decline of nearly 46 cents. At the same time, the national average price for regular unleaded gasoline had fallen for 27 consecutive days, the longest streak of consecutive declines since January, according to the American Automobile Association (AAA). Overall, pump prices moved lower by 19 cents per gallon over this period, with U.S. motorists saving six cents per gallon week-over-week, and 17 cents per gallon month-over-month. That average price is 89 cents per gallon lower than this time last year. ‘TRIPS MORE AFFORDABLE’ AAA officials predicted that the gas price decline would accelerate as crude oil prices continued to move lower. “It feels good to see gas prices drop during the middle of the busy summer driving season,” said Avery Ash, AAA spokesman. “Millions of people are hitting the roads right now and these gas savings should make their trips more affordable.”

If the EIA’s $2.11 per gallon prediction for U.S. gas prices holds up in the fourth quarter, pump prices in Arkansas will likely be near $2 if the state’s recent trend of being 10 to 20 cents cheaper than the national

If the EIA’s $2.11 per gallon prediction for U.S. gas prices holds up … pump prices in Arkansas will likely be near $2 if the state’s recent trend of being 10 to 20 cents cheaper than the national average continues. average continues. For example, in August motorists across the state were paying an average of $2.31 per gallon to fill up their tanks, some 17 cents cheaper than the national average, according to AAA. Pump prices in the state’s metro-

politan areas ranged from a low of $2.26 per gallon in the Fort Smith area to a high of $2.33 per gallon in Pine Bluff and the Fayetteville-Springdale-Rogers area. Drivers choosing to fill up the tanks with a higher-grade of gasoline should expect to pay an average premium of $2.78 a gallon across the state. Big rig drivers and other diesel fuel users will see pump prices at about $2.48 a gallon, down a whopping $1.23 per gallon from a year ago. OUTLOOK HIGHLIGHTS Here are additional highlights of the EIA’s short-term energy outlook (STEO): North Sea Brent crude oil prices averaged $57 per barrel in July, a $5 decrease from June. Brent crude oil spot prices fell further in early August, settling at $48 per barrel on Aug. 7. The recent price declines reflect concerns about lower economic growth in emerging markets, expectations of higher oil exports from Iran and continuing actual and expected growth in global inventories, the EIA said. Natural gas working inventories were 2,912 billion cubic feet (Bcf) on July 31, 23% higher than a year earlier and 2% higher than the previous five-year average (201014). EIA projects inventories will close the injection season at the end of October at 3,867 Bcf, which would be the second-highest end-of-October level on record. U.S. regular gasoline monthly retail prices averaged $2.79 per gallon in July, a decrease of a cent per gallon. EIA forecasts U.S. regular gasoline retail prices to average $2.41 per gallon for all of 2015. www.talkbusiness.net

Industry PHOTOS COURTESY OF OSHKOSH DEFENSE AND LOCKHEED MARTIN

Oshkosh Defense won the competition to build vehicles for the U.S. military with this version of the JLTV.

This production-representative Lockheed Martin JLTV was made at the companyâ&#x20AC;&#x2122;s facility at Camden.

TALK BUSINESS & POLITICS | SEPTEMBER/OCTOBER 2015

The JLTV Decision

Oshkosh Defense beats out Lockheed Martin and AM General for the coveted $30 billion deal to build vehicles for the U.S. military. By Talk Business & Politics Staff

rom the perspective of Arkansas and Lockheed Martin, it’s a superproject that got away. But for Wisconsin and Oshkosh Defense, it’s a momentous victory. After courting three of the nation’s largest defense contractors for the past three years, the Pentagon on Aug. 25 announced Wisconsin-based Oshkosh Defense as the winner of a $30 billion award to build nearly 55,000 of the Joint Light Tactical Vehicle (JLTV) for the U.S. Army and Marine Corps over the next 25 years. It’s the vehicle that will replace the iconic Humvee. The Army selected Oshkosh over two other competing firms – Lockheed Martin and AM General – that also participated in the program’s engineering and manufacturing development phase, which began in 2012 and concluded earlier this year. Each vendor delivered 22 prototype vehicles as part of JLTV development, which were utilized as part of an intensive, 14-month competitive test. Lockheed had planned to manufacture the vehicles at its facility in Camden. “While the JLTV will not be manufactured in Arkansas, our participation in this project will ultimately benefit southern Arkansas,” Arkansas Economic Development Commission Executive Director Mike Preston said. “Lockheed Martin has added some of the most advanced technology in manufacturing at their Camden facility and I have no doubt this combined with the area’s workforce will bring growth opportunities to the company in the near future.” Meanwhile, Oshkosh CEO Charles L. Szews called it “a big victory for our employees and really the state of Wisconsin”

to be awarded the deal. “This contract is the most significant contract in our 98-year history,” Szews said. FLEXIBLE VEHICLE Sean Stackley, the assistant secretary of the Navy for research, development and acquisition, said Oshkosh successfully met the military’s conditions and stipulations. “With America’s soldiers and Marines in

“From the state’s perspective, we did everything we possibly could do.” – AEDC Executive Director

Mike Preston

mind, the program team successfully met both services’ requirements for affordable, achievable capability advancements that will make a true difference,” Stackley said. “[The] award brings us a step closer to delivering a flexible vehicle that balances the payload, performance and protection critical in the operating environments of today and tomorrow.” As the loser of the JLTV bid, questions concerning Lockheed’s Camden operation will need to be answered. Workers at the

defense giant’s facility in South Arkansas had spent several months getting the plant production-ready. In early August, Lockheed officials announced the Camden factory had begun work on eight companyfunded prototypes, or Production Representative Vehicles (PRVs), ahead of the announcement by the Department of Defense. According to some JLTV experts, Lockheed Martin’s bid was weakened by the fact that it had no defense contracting experience as a so-called OEM, or original equipment manufacturer. After the Arkansas Legislature approved the passage of an $87 million bond financing package in late May, Lockheed officials said they would invest more than $125 million in the East Camden facility. Approximately 600 new full-time positions would have been created at the facility and as many as 655 indirect jobs would have been created in South Arkansas as a result of this project, officials said. With Arkansas not winning the bid, the bond financing deal will not go through. Arkansas Gov. Asa Hutchinson was disappointed that Lockheed did not get the contract, but still sounded hopeful about the efforts and what they may bring in the future. “While Lockheed Martin was not selected as a contractor by the Department of Defense, the state of Arkansas did the right thing by supporting Lockheed Martin to make sure they were competitive,” Hutchinson said. “There is no doubt that we were competitive in terms of price, our workforce is second to none, and I remain very grateful for Lockheed Martin’s investwww.talkbusiness.net

Industry: The JLTV Decision ment and confidence in our Camden facility. That investment will pay off in the longterm.” The Army plans to eventually purchase 49,099 JLTVs while the Marine Corps plans to eventually buy 5,500 of the vehicles for $30 billion through 2040. For the Army, initial operating capability on the nextgeneration JLTV is expected in the fourth quarter of fiscal year 2018. This is the second time that Arkansas has

been the finalist for a vehicle manufacturing superproject, only to come up just short of victory. In February 2003, Arkansas lost a hard-fought bid to San Antonio, Texas, for an $800 million Toyota Tundra manufacturing plant. Since then, the state has worked on shoring up technical skills of Arkansas’ workforce, which many experts said was the main reason that the Toyota plant went to Texas. During the recent legislative session,

the state passed a series of workforce development and job skills training bills that were a central part of Hutchinson’s economic development agenda. WINNING STRATEGY As the JLTV winner, Oshkosh spokeswoman Jennifer Christiansen told Talk Business & Politics in May that the reason why the Wisconsin defense contractor and truck builder should be selected to build the JLTV was very simple. “Experience,” she said. “Oshkosh Defense has decades of experience designing, manufacturing and sustaining the U.S. military’s heavy, medium and mine-resistant ambush protected all-terrain vehicle (M-ATV) fleets,” she said. “In developing our JLTV solution, we applied in-theater experience to develop the next generation light vehicle with unprecedented protection and off-road mobility for our troops.” According to Oshkosh’s application submitted on Feb. 10 in response to the request for proposal (RFP) for the JLTV, the Wisconsin company said it is “fully prepared” to begin production of the allterrain vehicles immediately. According to sources, the company’s bid was the lowest of the three finalists. “Our troops deserve the best vehicle and technology our government can provide, and no other company serves this mission more effectively than Oshkosh,” said U.S. Army Major General (Retired) John Urias, executive vice president of Oshkosh Corp. and president of Oshkosh Defense. “Our JLTV proposal reflects Oshkosh’s heritage of building high performance tactical vehicles, and an unparalleled commitment to providing our troops with the most capable and reliable JLTV at an affordable price.” STATE CAN COMPETE Not long after the Pentagon had awarded the contract to Oshkosh Defense, AEDC’s Preston expressed disappointment in the outcome but said Arkansas put the best possible bid on the table. “From the state’s perspective, we did everything we possibly could do,” Preston said. “With such strong support from the

TALK BUSINESS & POLITICS | SEPTEMBER/OCTOBER 2015

legislature, and obviously the governor and the entire congressional delegation and the local folks in southern Arkansas and specifically in the Camden area, and how we were quickly able to turn everything around and get it to Lockheed and back to the Department of Defense on time – we felt we were in a great position.” Preston said state officials would “debrief ” with Lockheed Martin officials once the Maryland-based defense contractor has a chance to meet with Department of Defense officials to get further details on what the Army and Marine Corps criteria was in awarding the contract to Oshkosh. “This is a great military vehicle that is going to phase out the Humvee. It’s tougher and stronger, and either company they went with, it was going to be a great battlefield tool for them to use. And in the end, it’s all about protecting our men and women who are in service, so we are happy to support [Oshkosh] to make our military stronger,” Preston said. Preston also said the debriefing will likely be more detailed at the federal level, but said at some point state economic development officials will sit down with Lockheed Martin officials when they are able to share on the process. “We want to get as much information as possible,” he said. “We would love to sit in some formal briefings with Lockheed, and if we have to, reach out to folks in the Department of Defense to learn from this. We want to be as prepared as possible when the next one comes around.” THE ‘NEXT ONE’ Preston said one positive from the highstakes contest to win the JLTV award that spanned more than a decade was that the state of Arkansas built a strong relationship with the nation’s largest defense contractor. He said the investment that Lockheed made in the company’s Camden operations ensures that the defense giant will be in Arkansas for a long time. “Arkansas and Lockheed Martin are partners and we value their presence here in the state,” Preston said. Asked if Arkansas has any other superprojects on the horizon, Preston laughed

and said Arkansas is always looking for the “next one.” “We work day in and day out here, and we have a full and robust pipeline of projects. We are hitting singles and doubles every day and landing projects that are smaller and might not get the attention because obviously home runs get the attention, but we are looking for the next pitch that will be a home run or the next superproject.” Preston continued: “This [JLTV bid] does

show that Arkansas has the ability to compete for a superproject. We have the means to do it, we are nimble and we can come together and have a legislative session very quickly. We have a governor who is extremely supportive of economic development, and I think a lot of states and businesses took note of what we were able to do with this project … and they know our team is very proactive and looking for that next lead that will be the next home run.”

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Industry PHOTO: SHUTTERSTOCK

TALK BUSINESS & POLITICS | SEPTEMBER/OCTOBER 2015

Revolutionary Approach Apptegy develops a complete platform for schools to easily update information for distribution via various channels. By Todd Jones

hen Jeston George sold his direct marketing company two years ago, he was looking to start a new business that did more than just make money. After discovering that his nephew’s school didn’t make information about campusrelated events easily available to the public, he got the idea of building mobile apps for schools and school districts. “I would get a notice the morning of an event and I had no way of knowing before,” he said. “So, I checked to see if the school had an app I could put on my phone to keep up,” he explained. The school did not have an app and George felt like he had found an opportunity. He was looking to do something with technology and realized that building apps for schools could have a huge impact on the way schools engage with their communities. The mission of Apptegy is simple, says the founder and CEO. Apptegy helps schools build better connections with their communities by using the best technology available. ‘ONE MORE THING TO UPDATE’ As he began planning, researching and talking to school districts, George made a unique discovery. “We would talk to districts, and they would tell us, ‘An app is great, but it’s just one more thing we would have to update.’” In doing his research, he found that the real need wasn’t an app, but a unified publishing platform that makes it easy for schools to update the various channels they

have to use to communicate across the spectrum. “We are helping the schools build a better relationship with their community,” said David Allan, chief marketing officer for Apptegy. When George went back to his idea, he pivoted and developed a complete platform for schools to easily update information – in some cases critical information – that can be pushed out to all of the various channels including Facebook, Twitter, websites and other social media.

“This is so easy, why isn’t every school district using this?”

– Dr. Donnie Whitten, Arkadelphia superintendent

A PACKAGED SOLUTION “When a school district signs up, they get the whole package,” George said. “We do the upfront work, get them set up with the website and their native app for the Apple and Android stores,” explained Josiah Brann, iOS developer/project manager. Then, the school gets to use the company’s publishing platform, called ThrillShare, to operate its digital channels.

The platform comes with an app that school-approved publishers can use to push out information, including notifications and an alert system. The platform is easy to operate and, according to George, it helps to “remove the technological barrier.” George added that while technology is supposed to make things easier, with each new function – such as social media and websites – it has often made it harder for school districts. “This has been the norm.” he said. “We want to flip the norm.” Apptegy started with a handful of customers while working out any problems, however, the company has recently doubled in size and now has 14 school districts signed up for its product, including the Arkadelphia School District. Dr. Donnie Whitten, Arkadelphia’s superintendent, has definitely been pleased. “This is so easy, why isn’t every school district using this?” Whitten said. One thing George is proud of is the user experience related to design. One of the team members is responsible for design and the result is a very modern, clean design experience for the school district. Venture capital is helping support growth. “We have raised from Hayseed Ventures [started by John James], Tonic and FAF. John James and Hayseed is our lead investor. John is also on Gov. Hutchinson’s STEM Task Force,” George said. Although Apptegy is an Arkansas company, it plans to also market outside the state. www.talkbusiness.net

Industry PHOTO BY ROBY BROCK

Gov. Asa Hutchinson, who outlined a seven-point plan to the Health Reform Legislative Task Force, answers questions from members of the media.

TALK BUSINESS & POLITICS | SEPTEMBER/OCTOBER 2015

Rethinking the Private Option Consulting firm compares Arkansas’ program with those in other states for legislative panel; governor offers a seven-point plan. By Steve Brawner

rkansas, the state that first expanded the Medicaid population without expanding traditional Medicaid, can learn from states that have created their own versions of the private option, legislators were told in August. John Stephen, managing partner of The Stephen Group consulting firm, and Richard Kellogg, senior consultant, compared Arkansas’ private option to alternatives that have been enacted or proposed. The two testified before the Health Reform Legislative Task Force on Aug. 19. The private option was created from a provision expanding Medicaid in the Affordable Care Act that became optional after a U.S. Supreme Court decision affirmed the act’s constitutionality. Many states refused the federal funding and did not expand their populations. Arkansas instead used those Medicaid dollars to buy private insurance for households with incomes up to 138% of the federal poverty level. This year, the Legislature agreed to fund the program through the end of 2016 while creating the task force to consider changing the private option in the context of overall health-care reform. The task force earlier in the day heard a presentation from Gov. Asa Hutchinson, who offered a seven-plank plan for reforms. The Stephen Group said that under the terms of the waiver Arkansas received to enact the private option, the program has no incentives to promote healthy behavior, no mandatory premium contributions and no employment-related programs. Its health savings account provision isn’t meaningful. There’s no co-payment for using the emergency room in non-emergencies, but recipients do have a co-payment for primary care physician visits, giving them an incentive to

use the emergency room. That’s an important issue considering that private option recipients are engaging in a higher percentage of repeat emergency room visits than the traditional Medicaid population. Kellogg said many private option recipients have not previously had insurance and must be taught how to use it. Also, emergency rooms need to be trained to connect non-emergency patients with primary-care physicians. OTHER STATES’ REQUIREMENTS The firm compared Arkansas’ program to ones in other states. In Indiana and Michigan, households with incomes above 100% of the federal poverty line help pay for premiums, which is one of Hutchinson’s proposals. In Indiana, they also pay up to a $25 co-payment for non-emergency use of the emergency room. In Pennsylvania and Iowa, they pay $8 if their household incomes are above 100% of the federal poverty level. In New Hampshire, unemployed recipients are referred to the state’s employment department, which is another of Hutchinson’s proposals. Arizona’s submitted proposal also includes a work requirement and a five-year time limit. The Stephen Group told legislators that Arkansas’ Medicaid program is managing at least nine waivers from the federal government, including the one making the private option possible. To simplify things, legislators were encouraged to seek a single waiver for all programs, as Rhode Island has done. Controlling the growth of the private option is critical, but more important is overall Medicaid spending. Legislators were told that the federal Centers for Medicare and Medicaid Services is projecting Medicaid

will grow 5.9% per year from 2015 to 2024. If nothing changes with Medicaid, the state could have to spend $75 to $100 million in new revenue annually just to sustain the program. GOVERNOR’S PLAN In laying out his seven-point plan that would continue Arkansas’ participation in the Medicaid expansion through the private option while requiring recipients to participate in employer-sponsored plans and pay premiums, Hutchinson said he continues to oppose the Affordable Care Act, otherwise known as Obamacare. However, he added, “We need to deal with the reality but push to expand the flexibility given to our states.” Hutchinson said the state must continue to participate in a federal-state partnership in a way that allows the state to pay for current costs, provide coverage to current beneficiaries, incentivize work, and save on costs. He described the private option as a “pilot program” that needs to be changed. Here are his proposals: • Require those eligible for the private option to participate in employer-sponsored insurance when available, while the state provides assistance to help them pay their premiums that would be equal to the current coverage they receive through the private option. This would require a Section 1115 waiver from the federal government. • Require private option recipients with incomes of more than 100% above the federal poverty level to pay premiums up to 2% of household incomes. • Implement work-training referrals for unemployed and underemployed private option recipients. www.talkbusiness.net

Industry: Private Option • Eliminate non-emergency medical transportation benefits, which would save $14.7 million annually, discourage unnecessary medical visits and make coverage comparable to private plans. • Limit access to private market coverage to working individuals. The unemployed would be enrolled in traditional Medicaid. Those currently in the private option segment of the population (with incomes between 100% and 138% of the federal poverty

level) might not have 100% of their current premium subsidy. Hutchinson suggested a sliding scale tied to income as a potential cost savings. • Create cost savings of at least $50 million a year through reforms such as reducing reimbursements, implementing managed-care organizations, and/or expanding the state’s payment improvement initiative. Hutchinson said that while legislators don’t have to agree to all of those proposals, “You’ve

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TALK BUSINESS & POLITICS | SEPTEMBER/OCTOBER 2015

got to say yes to something because we have to realize the savings.” • Strengthen the Medicaid program’s integrity with audits and checks. Hutchinson said that as of July 1, there were more than 250,000 Arkansans on the private option, a number he thinks will shrink to 220,000 as Arkansas redetermines eligibility based on income. The cost difference between those totals is $15 million per month, or $180 million a year. COST-BENEFIT ANALYSIS Hutchinson, who graduated from college with an accounting degree, presented a cost-benefit analysis. Saying no to the Medicaid expansion would be costly. Ending Arkansas’ participation would remove $1.4 to $1.7 billion out of the state’s economy and end health-care coverage for 220,000 people. Participating in the Medicaid expansion will have a positive impact on the state budget of $115 million in 2015 and will have a positive impact of $124 million in 2016, he said. But that number shrinks each year as Arkansas becomes responsible for some of the cost of the program, which is currently funded by the federal government. By 2021, the private option will have a negative impact of $50 to $60 million each year on the state budget. He said his proposals can be done without a state-run health insurance exchange, the online marketplace where individuals and small businesses can purchase coverage. Most states, including Arkansas, participate in the federal exchange, healthcare.gov, but Arkansas is building a state version with a $99 million grant from the federal government. Hutchinson questioned why the state exchange is necessary. “Why are we building the state exchange rather than relying on the continued partnership with the federal government?” he asked. Hutchinson told legislators that they are “on a short timeframe.” He said the task force needed to make its recommendations in time to pass legislation next year. He said legislators need to work with the Obama administration rather than wait for the next one, which may or may not be more flexible. “Please be politically realistic, be cost-minded, but please set aside why and how we got here,” he said.

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TALK BUSINESS & POLITICS | SEPTEMBER/OCTOBER 2015

A Dental School in Arkansas? Chancellor says first UAMS dental students ‘at least three years’ away By Steve Brawner

rkansas is one of only a few states that does not have its own dental school. That could change in a few years, as the University of Arkansas for Medical Sciences is exploring that option. But it’s not going to be easy, and it’s not going to be cheap. “If everything went as quickly as it could go, I would say it’s at least three years from now until a student would actually enroll,” Dr. Dan Rahn, UAMS chancellor, said. UAMS started its Center for Dental Education in 2012 with the idea of eventually opening a dental school. It includes a dental practice where students in their fourth year at the University of Tennessee Health Science Center College of Dentistry can serve rotations and have clinical experiences. Rahn said he told the UAMS board of trustees during its January meeting that the next year will be focused on developing a full-fledged dental school. He has appointed a task force, a consultant will be engaged, and facility and equipment needs will be assessed. Public funding and private philanthropy also will be sought. Eventually, the school would perhaps graduate 30 to 40 students a year, about the number Arkansas needs to produce annually. ‘CAPITAL INTENSIVE’ “Building a dental school is like building a hospital, so historically they’ve been capital intensive. But there are some newer, more

innovative educational models out there, and that’s what we really need to explore,” he said. The high cost of building a dental school has been one of the reasons Arkansas does not have one, Rahn said. Another is a histor-

“Building a dental school is like building a hospital, so historically they’ve been capital intensive.” – Dr. Dan Rahn UAMS chancellor

ic division between oral health and the rest of the health-care industry. “Dentistry has been seen as a separate profession that’s somehow different from other health professions, but the relationship between oral health and total physical health

is a very strong and direct one, so I think that we’re now realizing that they’re just very important members of the health care team,” he said. Currently, the state’s prospective dentists fan out to six out-of-state schools, many of them to Memphis, said Billy Tarpley, the Arkansas State Dental Association executive director. A 2012 survey of the association’s members found that more than 60% said they would either support a state-operated dental school or would support it under the right circumstances. “One of the things that other states have enjoyed is the ability for dentists in that state to kind of rally around that school,” Tarpley said. “Right now, Arkansas dentists rally around six different schools, so we lack that cohesiveness that many other states enjoy.” THE STUDENT DEBT FACTOR Whatever UAMS creates, Tarpley hopes it’s affordable. Today’s dental school graduates nationally average $249,000 in student debt. Setting up a practice costs somewhere around $100,000 per operator, he said. Those kinds of dollar figures make it less likely that a young dentist will set up his own shop, especially in an underserved area. Instead, they are more likely to work in a large group or corporate practice. “We have young dentists in Arkansas that are literally coming out of school with debt way north of $300,000,” he said. www.talkbusiness.net

Insights

Going Green Mobile solar lab is available for schools. What’s green, has a half dozen solar panels and drives all around? It’s the Green Mobile, a Winnebago that has been transformed into a solar energy laboratory. Created through a grant from the Arkansas Energy Office (a division of the Arkansas Economic Development Commission) with support from the Arkansas EPSCoR Program, ASSET Initiative II, the Green Mobile is used for training initiatives throughout the state. It features six 235-watt solar panels mounted on the driver’s side that can power all elements of the lab and can be used for solar energy demonstrations. The Green Mobile has previously been based at the University of Arkansas at Fayetteville and now will work out of the University of Arkansas at Pine Bluff. The goal of the mobile initiative is to expose Arkansas students to fun and interactive projects in the science, technology, engineering and mathematics (STEM) fields. “The Green Mobile is an extremely valuable educational tool for Arkansas,” said Gail McClure, Arkansas National Science Foundation EPSCoR Director. “It has been used in programs in Northwest Arkansas for the past three years and we are excited about the opportunity to move it to UAPB. This transfer provides an opportunity for schools in Central and South Arkansas to have access to programs on solar energy.” To schedule the Green Mobile for a school visit or public event, contact Chris Snider at 501-683-4405 or chris.snider@arkansas.gov.

The Arkansas Economic Development Commission lists infrastructure among the competitive advantages for doing business in the state. Here are some transportation statistics the agency touts about The Natural State:

Insights is compiled by Talk Business & Politics Editor Bill Paddack. Possible items for inclusion can be sent to him at wbp17@comcast.net.

TALK BUSINESS & POLITICS | SEPTEMBER/OCTOBER 2015

Mid-South Becomes Part of ASU System

Watergate Details Among Thornton’s Papers at UA

In early July, Mid-South Community College, which has made a name for itself through its successful workforce training programs, received a new name. The West Memphis school is now Arkansas State University Mid-South. In announcing the newest member of the ASU System following approval by the Higher Learning Commission, System President Dr. Charles L. Welch touted the addition. “Mid-South is an outstanding addition to the ASU System,” he said. “We appreciate the support of the Higher Learning Commission and are ready to work with Mid-South’s leadership to build on the institution’s national reputation for innovative workforce training.” ASU Mid-South, which serves almost 2,000 students in Crittenden County and the surrounding area of the Delta, originally was established as a vocation-technical school and became a comprehensive community college in 1992.

Of interest to political researchers in the Ray Thornton Watergate Hotel Papers, which were made open to the public by the University of Arkansas at Fayetteville libraries in July, are historical materials that detail Thornton’s time as a member of the House Judiciary Committee, when he served on a special six-person committee investigating Watergate. In July 1974, members of the special committee drafted articles of impeachment against President Richard M. Nixon. Thornton proposed articles charging the president with obstruction of justice, abuse of power and contempt of Congress, which were subsequently incorporated into the full Judiciary Committee’s articles of impeachment, ultimately leading to Nixon’s resignation that August. Thornton is a native Arkansan, longtime congressman and former University of Arkansas president. His papers join those of some of his contemporaries – including the late Congressman John Paul Hammerschmidt and Sens. Dale Bumpers and David Pryor – that are held in the extensive Special Collections at UA.

DIVING INTO THE PROBLEM “This will likely mean more cliff diving and kicking the can – the major varsity sports in Congress.” – Congressman Steve Womack

R-Rogers, on distractions and bickering that slow progress on appropriation bills in Washington, D.C. www.talkbusiness.net

Hometown, Arkansas PHOTOS COURTESY OF JOHN WEEKS

TALK BUSINESS & POLITICS | SEPTEMBER/OCTOBER 2015

I-55 Bridge Staying Open Economic impact of possible closing gets officialsâ&#x20AC;&#x2122; attention in both Arkansas and Tennessee. By Michael Wilkey

bridge connecting Arkansas with Tennessee and one of the major east-west corridors in the United States will remain open as officials use another method to get a project on the Tennessee side completed.

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Hometown: West Memphis The plan to close the I-55 bridge at Memphis for nine months in 2017 has been canceled for at least a year as officials plan to do a more comprehensive economic impact study, according to state Sen. Keith Ingram, D-West Memphis. Tennessee also plans to use a construction management model, meaning the bridge will remain open as construction workers complete their project. Officials with the Tennessee Department of Transportation (TDOT) announced the decision July 24 after several meetings in West Memphis and Memphis to discuss the issue. A meeting several weeks earlier on June 1 brought several hundred people to the West Memphis Civic Center to express opposition to the move. At the time, Ingram said the meetings and discussions between officials on both sides of the river made an impact. The I-55 bridge, or “Old Bridge,” is one of two vehicle bridges that cross the Mississippi River at Memphis. The I-40

bridge, or “New Bridge,” was completed in the 1970s. Opponents of the original TDOT plan have said the closure of the “Old Bridge” would snarl traffic on the “New Bridge” and have a devastating impact to business on both sides of the river. Also, the closest bridges along the river are in Helena and Dyersburg, Tenn. Ingram said he spoke to Tennessee highway officials at the time about the overall project, showing officials alternatives for the project. He also provided information to Tennessee officials on the economic impact. A 2006 study from the Tennessee Department of Transportation measured a huge impact. “If the existing bridges were lost due to an earthquake or other catastrophic event, the overall economic impacts to the region could be in the range of $4.176 billion to $4.316 billion,” the study noted. Ingram said the loss would average about $21 million a week locally and $45 million a week on a

regional basis. Locally, the area is home to a Union Pacific rail yard in Marion that brings in products from around the country, Ingram said. Also, Ingram said he heard from a Connecticut cotton firm about the agricultural impact of a move, if it were to happen. “They said the cost of transporting could be the death knell for cotton warehousing in Memphis,” he said. In a statement, Tennessee Department of Transportation Commissioner John Schroer said the message was received loud and clear. “Over the past several weeks, we have heard from residents, business owners, elected officials and other stakeholders in Memphis and in Arkansas, and we understand there is a significant level of concern over a full closure of the Memphis-Arkansas Bridge,” Schroer said. “We want to take the opportunity to address those concerns before moving forward with construction.” Ingram said the two bridges are two of the major north, south, east and west corridors

Arkansas Arts Council • Arkansas Historic Preservation Program • Arkansas Natural Heritage Commission Delta Cultural Center • Historic Arkansas Museum • Mosaic Templars Cultural Center • Old State House Museum ArkansasHeritage.com 54

TALK BUSINESS & POLITICS | SEPTEMBER/OCTOBER 2015

in the nation, with the nearby I-40/I-55 intersection at West Memphis being one of only two places in the country where two major interstates intersect. Ingram said he worked with Gov. Asa Hutchinson’s office on the issue to get the word out. In his Aug. 1 radio address, Hutchinson spoke about the issue. “If you live in East Arkansas, or travel to Memphis on occasion, you received some good news this week: the plan to close the Interstate 55 bridge over the Mississippi River has been put on hold. Some 40,000 vehicles cross that bridge every day. The only other access to Memphis is the I-40 bridge, which handles even more traffic,” Hutchinson said. “Imagine the congestion with an additional 40,000 cars and trucks on I-40 – already one of the most traveled interstates in the country. Also, imagine the disastrous impact on commerce, tourism and daily living.” In the radio address, Hutchinson said he met with Gov. Bill Haslam, R-Tennessee, at a recent Republican Governors Association

meeting in Colorado. “I sat down with Gov. Bill Haslam to talk about the bridge closing. He greeted me by saying that he had good news. He had read the prep material from our office, talked with his transportation commission, and delayed construction on the project. The bridge will remain open, and life and business will continue without disruption,” Hutchinson said. “There is a longterm, economicdevelopment issue at play here, too. Because there is another possibility we don’t want to imagine: an industry deciding not to locate in Arkansas because it didn’t want to risk another bridge closure similar to I-55. At times, government can seem like

“At times, government can seem like a graveyard for common sense. When that happens, it’s important for those in charge to take charge.” – Gov. Asa Hutchinson a graveyard for common sense. When that happens, it’s important for those in charge to take charge. A simple application of communication and common sense can make a big difference.” W E A LT H M A N A G E M E N T LIFE INSURANCE C O R P O R AT E B E N E F I T S

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TALK BUSINESS & POLITICS | SEPTEMBER/OCTOBER 2015

Commentary

Brand Inciter: Your Brand Is a Theory, Not a Logo By Martin Thoma Martin Thoma writes about branding on talkbusiness.net and a longer version of this article appears there. Email him at martin@thomathoma.com or follow him on Twitter: @MartinThoma

our brand is not real. That is, it does not exist as a tangible, concrete element. Your brand is not your logo. It is not your product. It is not your company. Despite the fact that nearly everybody – your executive team, the media, your customers, your employees – may at any given time refer to these things as your brand. Your brand is not a thing; it is a theory. Theories are mental constructs – ideas really – designed to describe observable evidence. The best theories match the observed very closely. The theory of your brand is that there is some aggregate reputational “stuff” accumulated in the minds of your customers and others. IT’S AN IDEA Just as physicists espouse multiple theories about the underlying nature of the universe, brand thinkers have different ways to express a universal truth: your brand is not a thing, it’s an idea. And it’s not your idea; it’s everybody’s. Some brand theorists say, “Your brand is what other people say when you leave the room.” Others say, “Your brand is a promise.” In our practice we say, “Your brand is the sum total of all that is known, thought, said, felt, experienced and perceived about your company, service or product.” So what can you do with your brand, the theory? Because your brand exists in the minds of your customers and others, you can study it by surveying, interviewing or watching your customers.

It’s your responsibility to articulate and define just what that brand is and what it stands for.

Ask them what they think, feel and say about your company, product or service. This drives insight into where your brand stands today. We use all manner of studies in our practice; online surveys are readily available and some of the tools are even free. TEST, DEFINE, REFINE You can test it. As you articulate your own brand theory, you can test it against your stakeholders. In brand development exercises with our clients, we often posit one to three draft positioning frameworks that we then test against the customer base. Which is the most relevant and resonant with customers? Which will give us the most leverage in the marketplace? Which is unclaimed by a competitor? You can define it. It’s your responsibility to articulate and define just what that brand is and what it stands for. Some great definition tools we advocate include the brand purpose, a statement of why your brand exists and the brand principle. You can refine or evolve it. No theory is static. They evolve over time as their authors gather more and more information. No brand is static, either. StubHub just modified its logo to remove the visual reference to ticket stubs – a decision driven by its evolving strategy to broaden its business beyond ticketing. StubHub’s management is working to evolve its brand – and key brand expressions like the logo – so that customers don’t experience a cognitive dissonance between their perceptions and reality. Companies that change faster than their brands can get into all kinds of trouble. You can evangelize it. Nothing is more powerful than an idea. Ideas are spread by evangelists. It’s not happenstance that one of the most powerful, admired and effective brands in the world – Apple – went to market initially with people whose title was “evangelist.” Guy Kawasaki, now a highly regarded author, speaker and tech-tweeter, was Apple’s first evangelist. While he was making Apple’s brand, Apple made his. If your brand is a theory, you can’t own it, control it, dictate it, mandate it or command it. But it’s still one of the most powerful ideas you can have for developing, managing and growing your business.

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Commentary

Disaster Preparation Means Success On and Off the Field By Brigette Williams Brigette Williams is the regional director of communications for the American Red Cross serving Arkansas and Oklahoma.

eptember shifts our attention to two of Arkansas’ favorite pastimes – football and futbol aka soccer. For the American Red Cross, it reminds us to remind you that it’s National Preparedness Month. The days are set aside to start or improve your readiness for natural and man-made incidents big or small. So, what better time for you to assess your travel readiness to ensure your comfort as you journey to and from football stadiums and fields near and far to be ready for the unexpected. The first step is to respect the changing nature of Arkansas weather. Look no farther than the University of Arkansas and its response to severe weather. Without hesitation, as millions of captivated viewers watch around the country, Arkansas Razorback games are halted and the Donald W. Reynolds Razorback Stadium emptied of football players, coaches and more than 80,000 fans as severe storms are more than half an hour away from Fayetteville. Why? UA officials understand if you can hear thunder you could be struck by lightning – safe shelter is needed quickly. Likewise, once the storm moves through, an additional 30 minutes is allowed to pass before fans are allowed back into the stadium. It may prolong the game, but it’s safety first, since there are more games to cheer for.

A few easy steps can ensure an enjoyable football travel season.

RED CROSS EMERGENCY APP You can easily be just as weather aware and prepared whether you’re in Jonesboro, Pine Bluff or in Dallas at a Cowboys game with the American Red Cross Emergency app.

A quick download from your iPhone or Android app store and you can select to receive alerts for more than 30 watches and warnings from severe storms, tornadoes and floods to winter weather. The second step is to know weather and road conditions along your trip’s route from start to finish. The Red Cross Emergency app will keep you informed on weather. A check with the Arkansas Transportation & Highway Department on social media and I Drive Arkansas (www. idrivearkansas.com) will keep you current on road closings and detours due to construction or weather conditions. With confidence your vehicle is road ready, fill up the gas tank and keep it no less than half filled. Between the possibility of an accident clogging traffic for hours or a need to make a lengthy detour, that’s one less worry of how long you can run the car, especially if temperatures require air conditioning or heat, an ample gas supply is a necessity. A phone charger keeps you fully powered to talk as much as you like, rather than believing the 20% power notification will last you for the hour it may take you to reach your destination. A tip to conserve your power is to text; it uses less energy. Of course, restrict texting until you’ve pulled off the road or you have a buddy who’ll text for you. While we all live by our GPS, keep a paper map handy. We’ve all experienced missed directions at the end of a journey via GPS directions. An old-fashioned paper map can be helpful. ALWAYS INCLUDE A FIRST-AID KIT The third step – if you or your passengers are on timed medication, take it with you. A first-aid kit should always be in your car. A pack of bottled water and non-perishable snacks can come in handy, too. If you travel with pets, remember to pack supplies for them. Need ideas? Check out the Red Cross Pet First Aid app. It includes tips on the top emergencies for dogs and cats, plus veterinarians and pet-friendly hotels across the country. A few easy steps can ensure an enjoyable football travel season. For more information on how to increase your disaster preparedness, visit redcross.org/Arkansas; Twitter @RedCrossArkansas, Facebook/AmericanRedCrossArkansas.

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Feature

TALK BUSINESS & POLITICS | SEPTEMBER/OCTOBER 2015

By Rex Nelson ILLUSTRATION BY SHAFALI ANAND

The number of schools fielding teams continues to grow as the sportâ&#x20AC;&#x2122;s popularity and revenues keep on expanding. www.talkbusiness.net

Feature: College Football

our American colleges and universities added football this season. One of them, Lyon College, is in Arkansas. The first college football game of the 2015 season in Arkansas occurred Aug. 29 at the Batesville High School stadium when Lyon hosted Tabor College from Hillsboro, Kan. It was the first time in more than six decades for the private liberal arts school to field a team. There were just 35 players at what then was known as Arkansas College in the fall of 1949. Marcus Kaufman coached both football and basketball at the Presby-

ered at Edwards Common on the campus, Lyon President Donald Weatherman said the school expected at least 65 players to begin attending classes in the fall of 2014 with numbers approaching 100 players by 2015. Little Rock attorney Perry Wilson, the chairman of the Lyon board of trustees, said the addition of football would bring additional revenue, lead to an enrollment increase and excite Lyon alumni and the community. In September 2013, Hendrix College at Conway began playing football for the first

“With more than 1 million high school students playing football and more than 70,000 spots on college teams, there’s plenty of room for expansion. These colleges clearly recognize that football can play an important role in encouraging students to continue their educations by enticing them to enroll.”

– Archie Manning

terian-affiliated institution. In the fall of 1950, there again were about 35 players who came out for football. Soon after that season ended, the school’s board of trustees decided to drop the sport, and Kaufman moved on to be an assistant football coach at Pine Bluff High School. It was a long hiatus. In June 2013, school officials announced that football would return. Speaking to a crowd of almost 100 people who had gath-

time since 1960. The Warriors defeated Westminster College from Fulton, Mo., in an afternoon game before a packed stadium in Conway that September afternoon. Hendrix was among 12 U.S. colleges and universities that launched football programs in 2013. Lyon is the only school in the state that competes in football at the NAIA level, and Hendrix is the only Arkansas school that competes at the NCAA Division III level.

TALK BUSINESS & POLITICS | SEPTEMBER/OCTOBER 2015

Granted, it’s a long way from the Southeastern Conference brand of football that’s played at the University of Arkansas in Fayetteville. But the fact that the state of Arkansas has had two schools add intercollegiate football programs in the past three seasons is proof that college football – at all levels – has never been hotter. STEADY INCREASE The number of U.S. schools among all NCAA divisions, the NAIA and independents offering football stands at 773 this fall, an all-time high. The number of schools playing NCAA football (FBS, FCS, Division II and Division III) steadily increased from 484 in 1978 to 663 in 2014. There have been 32 football programs added at the NCAA, NAIA and independent levels in just the past four seasons. David Knight, the chief legal counsel at Stephens Inc., in Little Rock and the chairman of the Hendrix board, is quick to list the benefits of football: “Scholarathletes are an important part of our student body. The fact we didn’t offer football was affecting us both demographically and from an admissions standpoint. There are many excellent high school students in Arkansas and across the country who fit the Hendrix academic program very well yet went other places because we didn’t offer the sport they love to play.” At places like Hendrix and Lyon, it’s about getting more male students on campus. At traditional football powers such as Arkansas, it’s about money – big, big money. NETWORK’S EARLY IMPACT The SEC announced in late May that it would distribute $436.8 million out of an NCAA-record $455.8 million in revenues between its 14 institutions. Arkansas and each of the other SEC members received $31.2 million. That’s up from $20.9 million per school the previous school year. The SEC distribution is composed of revenue generated from the SEC Network, other televised football games, bowl games, the SEC football championship, televised basketball games, the SEC men’s basketball tournament and NCAA championships. Make no mistake, however, that football

steers the ship in the SEC. The SEC cable television network, a joint venture with ESPN, launched just before the 2014 football season and was an immediate success. “With less than 10 months of SEC Network money on the books and in spite of a host of one-time startup costs, the venture with ESPN is already fully distributed within the geographic footprint, nearly fully distributed nationwide and exceedingly profitable,” Andy Staples of Sports Illustrated wrote from the SEC spring meeting in Destin, Fla., in late March. “For comparison’s sake, the Big Ten Network needed five years and some serious carriage fights with major cable providers to become profitable. Both cable channels should be cash cows for their leagues’ members in the future, but the early impact of the SEC Network is nothing short of stunning. By the same token, the success of the Big Ten Network and SEC Network – combined with the new media rights deal the Big Ten will negotiate for its first- and second-tier rights next year – will create in the next few years a new class within the class system that just got created. The Power Five conferences (the ACC, Big 12, Big Ten, Pac-12 and SEC) have built a wide revenue gap between themselves and everyone else, but the Big Ten and SEC are about to build their own gap between themselves and the rest of the Power Five. They’re the Titanic Two, and everyone else is looking up at them on the balance sheet.” The SEC Network is in 65 million homes. Increased revenue from the network will further fuel the facility arms races at Arkansas and the SEC’s 13 other schools. NEW CENTER FOR RAZORBACKS This year the UA is unveiling its 55,000-square-foot Jerry and Gene Jones Family Student Athlete Success Center, which cost almost $23 million. The building features 11 large tutoring rooms that will be available for groups of six to eight athletes. Twenty smaller rooms will be available for groups of two to four. There’s also 5,000 square feet of open student and lounge space in addition to large and small computer labs. Twenty-five offices house academic counselors and other staff members. There’s a dining hall with a capacity of

During the spring game, Lyon Coach Nick Palese (above) talks to quarterback Tanner Stevenson, QB Dwane Robinson (right, below) tries to escape the outstretched arms of Nick Bernier and running back Cedric Cooney (bottom) tries to elude a defender.

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Feature: College Football 250 people, a full-service kitchen and a 150seat auditorium. The building is nothing short of plush. There are wood-lined accent walls and river rock, glass and metal railings and floor-to-ceiling windows to bring in natural light. The Jones family, owners of the Dallas Cowboys, donated $10.65 million to the project. The building was designed by WD&D of Little Rock and Heery International, Inc., of Atlanta. It was constructed by VCC of Little Rock. ARKANSAS’ MASTER PLAN The Student-Athlete Success Center

complements the Fred W. Smith Football Center, which opened just before the 2013 football season. The 80,000-square-foot facility includes an NFL-quality locker room, team meeting rooms, training rooms, equipment room, lounge and study area, coaches’ offices, a reception area for recruits and displays outlining the history of Razorback football. The $40 million facility, which is adjacent to Donald W. Reynolds Razorback Stadium, is named after the chairman of the Donald W. Reynolds Foundation. Near the football center, two new practice fields and a parking deck were completed prior to the 2012 season.

The Student-Athlete Success Center and the Football Center are part of an athletics facilities plan expected to cost more than $300 million. The plan calls for the construction or renovation of more than a dozen athletic facilities on the UA campus. That master plan was unveiled in October 2011. Frank Broyles, Jeff Long’s predecessor as UA athletic director, began the modern era’s push for improved facilities in the late 1990s when he traveled the state raising money for the expansion and renovation of Razorback Stadium. The $110 million project, which included a $20 million gift The UA spirit squad (far left), senior quarterback Brandon Allen (left) and students “calling the Hogs” (below) are likely to be familiar sights this fall.

PHOTOS COURTESY OF RAZORBACK COMMUNICATIONS

A pair of fans watch from outside Donald W. Reynolds Razorback Stadium as fireworks are shot after a Razorback score.

TALK BUSINESS & POLITICS | SEPTEMBER/OCTOBER 2015

from the Reynolds Foundation, saw the stadium’s capacity increase from 51,000 to 72,000. The areas beneath the stands were completely enclosed with a brick-andglass façade, concourses were widened and restrooms were replaced. The south end zone was enclosed with the addition of 7,300 seats and a food court. The improved stadium debuted in 2001. Since then, the rush to improve facilities has spread to other schools in Arkansas. ASU SPORTS NEW PRESS BOX Across the state at Jonesboro, work was completed this year on a press box

and private suites at what’s now known as Centennial Bank Stadium at Arkansas State University. ASU held a news conference in August 2014 to announce a $5 million gift from alumnus Johnny Allison of Conway. Construction on the stadium began before the end of the 2014 season. The press box was expanded from 7,120 to 38,000 square feet. It features 20 suites, 42 loge boxes and 344 club seats. Improvements also were made to concourse restrooms, concession areas and ticket booths. ASU’s stadium was built in 1974. It has grown through the years from its original capacity of 16,343 to more than 30,000 seats.

When ASU moved up from what’s now the FCS to what’s now the FBS in 1991, a deck was added to one side of the stadium. In 2001, a new scoreboard and video board were installed at a cost of more than $1 million. An end zone facility for coaches and players was built in 2002. In 2012, the school announced plans to build a $22 million football operations center. Money is still being raised for that facility. UCA’S DISTINCTIVE FIELD In Conway, meanwhile, the University of Central Arkansas (which plays at the FCS level in the Southland Conference) added

ASU cheerleaders (above), the traditional Red Wolf Walk (right) and players running onto the field means it’s time for a Red Wolves game at Centenial Bank Stadium in Jonesboro.

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Feature: College Football luxury suites to Estes Stadium in 2012 while also adding a strength and conditioning complex to the school’s indoor practice facility. The thing that received the most attention, however, was UCA’s decision to replace its natural grass field prior to the 2011 season with an artificial surface that featured the school’s colors of purple and gray rather than the traditional green. “The decision to install synthetic turf was one that came quickly,” Brad Teague, the UCA athletic director, said at the time. “We decided to use that opportunity to do something unique. We didn’t want to copy Boise State (which has blue turf) or Eastern Washington (which has red turf), so we

developed our own color scheme.” The luxury suites are the top floor of a dormitory that was built adjacent to the stadium. Following a multimillion-dollar appropriation by the Arkansas Legislature, the University of Arkansas at Pine Bluff built the 16,000-seat Golden Lion Stadium at a cost of $14 million in 2000. The school later added the $5 million J. Thomas May Athletic Field House and a football practice field, giving it perhaps the best football facilities in the Southwestern Athletic Conference. IMPROVEMENTS ACROSS THE STATE Even the six schools in Arkansas that

Estes Stadium (below) is famous for its purple-and-gray-striped field. Jonathan Woodard (bottom) makes a tackle and Jatavious Wilson (right) picks up some yardage in action by the Bears last season.

TALK BUSINESS & POLITICS | SEPTEMBER/OCTOBER 2015

compete at the NCAA Division II level – Arkansas Tech University, Harding University, Henderson State University, Ouachita Baptist University, Southern Arkansas University and the University of Arkansas at Monticello – have been busy making facility improvements since the turn of the century. Harding, for example, transformed its Alumni Field into First Security Stadium. During the 2011 season, the school opened the Jim Citty Football and Athletic Training Complex at one end of the stadium with a spacious locker room, weight room, training facility, classrooms and meeting rooms. In Russellville, a $6.7 million addition at one end of Buerkle Field in 2001 included

offices, reception areas, a lounge, meeting rooms, a weight room, a film editing room, a dressing room and a training area. A dormitory was built adjacent to the stadium in 2007 and included a new press box and private suites for football games. Restroom and concession facilities were upgraded, and a larger scoreboard was unveiled. In Arkadelphia, Ouachita began tearing down the home side of A.U. Williams Field soon after the end of the 2013 season and unveiled the multimillion-dollar Cliff Harris Stadium to start the 2014 campaign. The Tigers responded by going undefeated in the regular season and winning their second Great American Conference championship in four years. On the other side of U.S. Highway 67 in Arkadelphia, Henderson (which won GAC conference championships in 2012-13) is improving parking and adding a new main entrance to Carpenter-Haygood Stadium. The school completed its 19,235-squarefoot Formby Athletic Center adjacent to the stadium in 2003 and installed an artificial surface at the stadium in 2011. This year, an artificial surface and lights are being added to the football practice field. In Monticello, UAM dedicated an indoor practice facility, offices and meeting rooms at one end of Convoy Leslie Cotton Boll Stadium prior to the 2009 season. In Magnolia, Southern Arkansas added artificial turf to Wilkins Stadium just prior to the 2006 season. AB’S JUNIOR COLLEGE GAME At Arkansas Baptist College in Little Rock, President Fitzgerald Hill (a former assistant head football coach at the University of Arkansas) created the state’s only junior college football program in 2007. Years earlier, when Hill was the assistant head coach and recruiting coordinator under Houston Nutt in Fayetteville, Charles Ripley of Little Rock had worked unsuccessfully with Hill to establish a junior college football program at Pulaski Tech. “We’re filling a void,” Ripley said on the eve of that first season at Arkansas Baptist in 2007. “Serving the underserved is our motto. Our foundation is taking care of our own. We don’t need other states taking care

of our kids.” Former Ole Miss and New Orleans Saints quarterback Archie Manning now chairs the National Football Foundation and College Hall of Fame. He applauds the expansion of college football at places such as Hendrix and Lyon. “With more than 1 million high school students playing football and more than 70,000 spots on college teams, there’s plenty

of room for expansion,” Manning says. “These colleges clearly recognize that football can play an important role in encouraging students to continue their educations by enticing them to enroll.” And at places like the UA, it can also mean millions of dollars in revenue. College football, a sport that began in 1869, has never been a bigger business. And there’s no end to the growth in sight.

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Regional: Northwest Arkansas

Shopping List Shrinkage, supercenter sales, inventory and possible job cuts are among the items getting attention from Wal-Mart Stores’ executives. By Kim Souza

COURTESY OF THE CITY WIRE

Shrinkage. Supercenter sales. Stocking shelves. Stuff in storage; aka, too much inventory. Those are some of the “urgent agenda” item edicts from the corporate offices of Wal-Mart Stores, Inc., with the urgency likely being spread through the supplier chain. And if that’s not enough, add this to the list: the retail giant and its Sam’s Club division are in the process of cutting up to 1,000 corporate headquarter jobs by Nov. 1, according to several sources familiar with the situation. The cuts would happen through layoffs and attrition, and may include up to 200 vice presidents. Wal-Mart Stores did not confirm nor deny that layoffs are planned and would not provide a statement. This is the second local corporate layoff by the retail giant this year after about 50 positions were eliminated in February. Wal-Mart Stores’ cash cow, the supercenter format, and the major overhaul under way is showing modest progress based on the retailer’s 4.8% uptick in second quarter U.S. sales and with same-store comps of 1.5%. It’s a marked improvement over the flat metric reported a year ago, and may also factor in a more confident consumer. U.S. store revenue totaled $73.959 billion in the quarter ended July 31. This comprised a whopping 62% of the retailer’s total revenue in the quarter as Sam’s Club sales were flat and international sales dropped 9.6% from the year-ago period. While the U.S. top line growth was notable, the retailer’s operating income was down 8.2% to $4.819 billion as Wal-Mart spends more to boost wages and training. Not helping were reduced margins from

lower than expected pharmacy reimbursements and rising “shrink” (difference between product bought from suppliers and product sold to customers) related to the retailer’s fresh food business and efforts to clean up inventory issues. CUTTING COSTS Wal-Mart Stores CEO Doug McMillon said he is not happy with the lack of expense control in the recent quarter.

“We will manage these items closely with a continued commitment to efficiency …” – Wal-Mart Stores CEO

Doug McMillon “For the back half of the year, we will manage these items closely with a continued commitment to efficiency, cutting costs where appropriate, even in a period of investment,” McMillon said in the company’s earnings statement on Aug. 18. Shrink is one of the “urgent agenda” items being addressed by Walmart U.S. CEO Greg Foran and his senior execs. “We are reviewing the end-to-end inventory management process with a special focus on shrinkage and working to close gaps. Investments are being made in training programs for store and asset

TALK BUSINESS & POLITICS | SEPTEMBER/OCTOBER 2015

protection associates as well as investments in staffing in high shrink areas of the store,” Foran explained in the release. The re-introduction of greeters at the front of the store is a way the retailer is stepping up efforts to monitor theft. Roughly 8,000 department managers are being put back in supercenter stores to better control inventory and help with customer service. A complete retaining and decluttering in the retailer’s back room, particularly the supercenters, is also under way because management says that is where shrink and other inventory issues arise when product is not marked down to sell. OTHER CHALLENGES Foran said some of the lost margin was related to the retailer’s pharmacy prescription business. He said reduced reimbursement rates from pharmacy benefit managers is an industry trend that cuts into the retailer’s margins on prescription sales. “We are also seeing a lower mix of higher-margin cash transactions, reflecting a marketplace shift in which more customers are now benefiting from greater drug insurance coverage. While we are taking a number of actions to lessen the impact, we expect to have pressure on pharmacy for the rest of the fiscal year,” Foran said in the earnings report. On a positive note, Foran said the retailer’s “urgent agenda” efforts to better control inventory are taking root. In the recent quarter, sales growth outpaced inventory increases for the first time in several quarters. The company reported inventories of $45.007 billion as of July 31, down from $45.451 billion during the same period in 2014.

Regional: Northwest Arkansas

Home Sales Value Will Top $1B a Bit Earlier This Year By Kim Souza

COURTESY OF THE CITY WIRE

Multiple offers, higher appraisal values and a single day on the market are just a few signs of a glowing hot local real estate market in Benton and Washington counties. In the first seven months of the year, agents in the two counties sold 4,752 homes. Unit sales are up 13.43% in Benton County, and trending more than 15% higher in Washington County. Total sales volume for the two-county area is up 21.4% to $944.027 million. That led local agents to say the region would top $1 billion in sales before the August report is released. The region posted $1.391 billion in home sales in 2014, but didn’t surpass $1 billion until early October. In Benton County, sales volume through July has doubled since 2012. In Washington County sales volume has risen 53% since the same period in 2012, which was a decent year, according to MountData.com. PACE ACCELERATES George Faucette, CEO of the local Coldwell Banker franchise, said that through July their sales are up a little over 10% this year versus 2014. He said the pace has accelerated substantially since May. “It may slow slightly for the remainder of the year, but we are projecting an increase for the full year of between 10-12%. Given our large starting base, we will be very pleased with that,” Faucette said. While interest rates are expected to move higher this fall, Faucette said he expects the increase to be modest.“My estimate is somewhere between 0.25% and 0.50%. If that is accurate, that means long term rates will top out, at most, 4 1/2%,” he added. July home sales totaled $176.741 million in the two-county area, rising 21.5% from

$145.453 million reported a year ago. Tami Fagan, an agent with Crye-Leike Real Estate in Fayetteville, said the market rally is about as good as she can stand. Fagan, often a top 10 producing agent in her company, said she recently listed a home in Fayetteville on a Sunday afternoon. Another agent sent her an offer that evening before the listing became public on Monday morning. She said within minutes of the public listing on Monday she had four showings scheduled and two more offers had come in. The sellers accepted an offer that same day. “That is what we are seeing in this market

with homes priced to sell. Prices overall have come up, even in troubled neighborhoods like east Springdale and west Fayetteville that took a beating in recent years. The biggest problem we have now is finding enough listings for the buyers in our market,” Fagan said. Local agents say one of the reasons prices are moving higher is supply and demand – there simply are not enough listings on the market to satisfy the growing number of buyers in an area that continues to grow jobs and population at more than twice the national rate.

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black-tie gala , a business event or ing nn pla e u’r yo er you need . To see Wheth Center has ever ything ncenter.com tw the Fayetteville Town it and testimonials, vis features, floor plans www.talkbusiness.net

Regional: Northwest Arkansas

Children’s Hospital Plans $184 Million NW Arkansas Expansion By Jamie Smith

COURTESY OF THE CITY WIRE

This year’s annual Color of Hope Gala on Aug. 7 in Rogers benefitting Arkansas Children’s Hospital came with a special announcement as officials confirmed the hospital’s intent to construct a new, 225,000 square-foot campus in Springdale. The initial estimated investment is $184 million during the next five years, with the facility set to open in 2018. The Springdale campus is part of the hospital’s plan to “blanket the state with services that will improve access to pediatric care and improve the health of children throughout our state,” ACH President & CEO Marcy Doderer said. The plans start with a land donation,

announced during the gala. The campus will be constructed on 37 acres donated by David and Cathy (George) Evans, Gary and Robin George, and their families. The land is near Interstate 49 between Don Tyson Parkway and Highway 412, bordered by South 56th Street and Watkins Avenue across the street from Arvest Ballpark. At the gala, Robin and Gary George spoke of the “quick and easy access to health care” for children that the new hospital will provide. “Arkansas is called the Natural State and children are our greatest natural resource,” Robin George said. The need in Northwest Arkansas for the intense, high-quality child healthcare that

ACH provides is increasingly evident. Last year, an estimated 21,000 children were treated at the ACH Clinic in Lowell and more than 450 children were transported to Arkansas Children’s Hospital in Little Rock via Angel One helicopters and ambulances. As the population in Northwest Arkansas continues to push beyond 500,000 residents, the estimated number of children needing pediatric care also is expected to increase. ACH officials said that with the proposed site location, 70% of Northwest Arkansas residents will be able to reach ACH’s services within 30 minutes or less.

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Regional: Northeast Arkansas

Johnny Cash Boyhood Home, Dyess Colony Draw Thousands By Johnathan Reaves

COURTESY OF KASU FM 91.9

It’s been a year since the official opening of the Johnny Cash Boyhood Home and the Dyess Colony, and Dr. Ruth Hawkins, executive director of Arkansas State University’s Heritage Sites program, says the past year has been very busy. “We really just considered this phase one of the project. We are working right now on rebuilding the Dyess Theatre. This will serve as a visitors’ center eventually,” Hawkins said. “We are currently looking at renovating all of the farmstead buildings at the Cash home, the smokehouse, the barn, the outhouse and the chicken coop. There are a lot of plans in the works.” She says the site has hosted thousands of visitors. “We have had visitors from all over the world and from all over the country. I think we have seen visitors from 30 different countries and maybe 40 to 45 states. People are really thrilled with what we have here, and they are coming away saying that they now really understand where Johnny’s music came from.” Hawkins says the Dyess Colony and the New Deal era served as a major inspiration for Cash’s music. “This is a chance for people to not only learn about Johnny Cash, but also to learn about a very important part of our history with the New Deal era; the fact that this was an agricultural resettlement colony,” she said. “So many people come here and they have no idea that we have so many great exhibits in the Administration Building. They come here to see the Boyhood Home, of course, but we have exhibits that tell the story of life in the Dyess Colony, as well as how the Colony developed, and how growing up in the Colony impacted his music.”

RESTORATION WORK CONTINUES Hawkins says work continues in the next phase of restorations as work is currently being done at the Dyess Theatre. “We are about to put the roof on the

purpose room where people can see orientation films and more.” Hawkins says the Cash family played an integral role in bringing the Johnny Cash Boyhood Home to where it was in the

The Boyhood Home of Johnny Cash at Dyess.

“This is a chance for people to not only learn about Johnny Cash, but also to learn about a very important part of our history …” – Dr. Ruth Hawkins Theatre,” she said. “The framing has gone up and things are really moving along. The contractors expect to have the building finished probably before Thanksgiving. We expect to be moving in probably in the spring. This will house our admissions area, our gift shop, and it will house a multi-

past. As work continues at the site, she says the family still provides items that can be placed in the home for the public to see when they take tours. Cash lived in Dyess from 1935 until his high school graduation in 1950. www.talkbusiness.net

Regional: Northeast Arkansas

Officials Mourn the Death Of Big River Steel’s Correnti By Talk Business & Politics Staff Big River Steel made leadership changes in late August in the wake of the unexpected death of John Correnti, its former chairman and CEO. Correnti, 68, died unexpectedly Aug. 18 on a business trip. Dan Murray, who had served as a member of Big River Steel’s board of directors, was appointed chairman, and Jim Bell, construction manager at Big River Steel, was elected to the board. Former Chief Administrative Officer David Stickler was named CEO. “John’s death came as a shock to the entire Big River Steel family,” Stickler said. “Our investors and board of directors moved rapidly to make these appointments so that

we can continue the momentum in pushing forward John’s legacy of building a growthfocused company. Given the outstanding team of managers and operators John assembled, Big River Steel is well-positioned to not only complete the construction and start-up of our facility in Arkansas as scheduled, but to also pursue additional steel industry expansion opportunities as they arise.” Big River Steel is constructing a $1.3 billion steel mill near Osceola that is expected to open in July 2016. Officials from Northeast Arkansas were among the many across the state who had praise for Correnti.

Clif Chitwood, executive director of Great River Economic Development Group, said Correnti had the common touch and was at ease with everyone from the business leader to the construction worker. “He was a great man. I would say that he has had the greatest impact of anyone on Mississippi County since Robert E. Lee Wilson,” Chitwood said, noting Correnti played a role in building two steel mills for Nucor and the Big River Steel project. “The sheer number of jobs in this county, I would say, will be about 10,000 jobs, which in this day and time is enormous. He will be missed.”

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