The economy of push and pull
By Lana F. Flowers
Northwest Arkansas’ economy is no longer exempt from unemployment swings and economic vagaries, but is now more aligned with other metro areas. An unemployment rate around 7 percent in Benton and Washington counties is evidence of this.
“We have seen our lack of growth moderate very similarly to that of the nation,” says economist Kathy Deck, director of the Center for Business and Economic Research at the University of Arkansas’ Sam M. Walton College of Business. Deck conducts a quarterly business forecast breakfast.
“One of the things that has been so interesting about this recession is how similarly all of the metro areas have behaved,” Deck says. “We are moving together. You don't see a lot of exceptionalism. And that is the big shift here in Northwest Arkansas.”
The region used to have a “push economy,” in which businesses pushed offices and employees into the area, says Ed Clifford, president and chief executive of the Bentonville/Bella Vista Chamber of Commerce.
“Now, we are into a ‘pull economy.’ We have to work harder to attract businesses and get their employees to move or expand here,” Clifford says.
Having employees concentrated in just a few sectors is an economic risk. Clifford notes that an anchor industry in an average metropolitan area employs about 1.9 percent of the workforce, while anchor industries in Northwest Arkansas employ about 12 percent of the total workforce.
“And that is dangerous,” Clifford says.
Northwest Arkansas must diversify to remain healthy, a development that Deck notes is on the horizon.
The Fayetteville-Springdale-Rogers Metropolitan Statistical Area, on which federal funding is based, covers Benton, Washington and Madison counties in Arkansas along with McDonald County in Missouri. Within that area, a number of new industries are taking root, including arts, sports entertainment and sustainability.
“The best days for Bentonville and its downtown are ahead,” says Bentonville Mayor Bob McCaslin.
Bentonville will soon have its arts district, anchored by the Crystal Bridges Museum of American Art, still under construction, and the 21c Museum Hotel breaking ground this fall.
Springdale’s Arvest Ballpark and resident team, the Northwest Arkansas Naturals, is in its third season. The ballpark has about 175 employees and also attracts 70 opposing teams, along with national media and talent scouts, each year.
“It's safe to say, just in operating the business, it cost $15 million to $20 million in expenses for those first three years,” says Eric Edelstein, the team’s general manager.
The money is spent locally, he notes.
“There's very little brought in from outside the region and the state.”
Sustainability is another growth area, with Wal-Mart encouraging suppliers to adopt its packaging scorecards and sustainability index. The University of Arkansas Applied Sustainability Center in Fayetteville, where related degree programs are being developed, is a partner in the effort.
“We are where sustainability and business meet,” Deck says. “We have a number of firms in Northwest Arkansas gearing up around this idea that a business rationale can be sustainable.”
Small businesses and economic recovery
FedEx Office recently conducted its third annual “Signs of the Times” small-business survey. What do small business owners say?
• 72 percent say SMB (small and medium busineses) will be the driving force behind continued economic recovery.
• 51 percent say their business has already recovered or will recover from the recession by the end of the year.
• 42 percent expect to increase spending on advertising and marketing.
• 18 percent say they expect to increase staffing.
Lana F. Flowers has more than 20 years of daily journalism experience and has lived in the area since 1991. E-mail Lana at fashionablewords@yahoo.com or follow her on Twitter: RogersLana.
