Category Archives: Business and economics

With 600 jobs at stake, reality beats ideology

By Steve Brawner
© 2015 by Steve Brawner Communications, Inc.

This week, state legislators, many of them elected promising to fight big government, voted for a lot of it, coming and going. They did so because today’s realities trump their political ideologies.

The legislators voted in special session for an $87 million bond package, paid for by Arkansas taxpayers, to help Lockheed Martin win a federal government contract to build 55,000 Joint Light Tactical Vehicles near Camden. In other words, state taxpayers will go into debt so the federal government can spend money.

This is corporate welfare at its most naked. Almost all of the package, $83 million, is going directly to a global company with $45.6 billion in sales last year, dwarfing Arkansas’ state budget. The practice is so ingrained that, during a press conference on the Capitol steps Tuesday, when asked why taxpayers should give his company money, a Lockheed representative simply turned and walked away from the podium, letting Gov. Asa Hutchinson answer the question.

All of this should be contrary to somebody’s political ideology, and yet of course legislators said yes, because in this case, reality is far more important. And the reality is that this project is expected to create at least 600 jobs and perhaps far more in south Arkansas, which badly needs them.

This would be the auto plant Arkansas has long wanted, but it’s even better because the customer is almost guaranteed to buy the plant’s products. Moreover, in addition to Uncle Sam’s 55,000-vehicle order, foreign governments will come shopping. Suppliers would locate close to the JLTV factory, creating more jobs. The presence of the JLTV facility would increase the area’s defense presence; already, hardware such as the Patriot missile is produced there. And if the state does this auto plant right, maybe civilian auto manufacturers could be persuaded to locate here as well. These things tend to snowball.

Those are realities. Here’s another one: Legislators knew the next potential large employer might want to locate in their district. They’d better play ball with south Arkansas lawmakers, because someday they may need their votes.

Finally, there’s this reality. Lockheed Martin is competing against two strong companies, Oshkosh and AM General, maker of the Humvee. The Pentagon has already decided that these 55,000 vehicles will be built somewhere, so Arkansas taxpayers will pay for them regardless. If 600 jobs are to be created, it might as well be in Camden.

Human beings need foundational beliefs lest we twist in the wind. For lawmakers, those foundational beliefs might include – actually, I hope they include – an aversion to big government and corporate welfare.

But there’s a difference between foundational beliefs, which allow room for difficult moral judgments and common sense, and rigid political ideology, which runs everything through a filter and requires new facts to conform to prior beliefs, or to be ignored.

Outside of this session, legislators and others are talking about difficult issues that won’t be settled in three days: how Arkansas’ health care system should look; how it should fund highways; how it should reform its prison system; what it should do about the Common Core.

If lawmakers are willing to vote for the JLTV package because it’s better to do so than not, then let’s hope they are willing to accept some other realities as well, and then work within them. Ideologically, they may hate the private option, but the reality is that it now provides health insurance for a quarter million Arkansans who mostly wouldn’t have it otherwise, so if they want it to go away, they should replace it with a better idea. The reality is that highways are badly underfunded, so if lawmakers’ ideology says that taxes are bad but roads are good, they need to offer creative ideas that are consistent with their foundational beliefs but not hamstrung by rigid ideologies.

If it were up to me, the federal government would buy fewer than 55,000 JLTVs. We’re going to pass part of the cost to our kids, and that’s not right. But if they’re going to be built, I hope they’re built in Camden by my fellow Arkansans. All things being equal, I think you take care of your own first.

It’s a foundational belief.

K through job education

By Steve Brawner
© 2014 by Steve Brawner Communications, Inc.

The elected official in the state Capitol making the biggest impact next year will be Gov.-elect Asa Hutchinson. The second most impactful elected official may be a 74-year-old grandmother with an agenda.

That would be Sen. Jane English, R-North Little Rock.

English spent her career in economic development and will use her chairmanship of the Senate Education Committee to try to change how Arkansas educates and develops its workers. She says the education system is composed of too many disconnected silos – K-12 public schools over here, colleges and universities over there, career education in a third spot, etc. – that don’t always prepare students for the workforce.

“We typically think of education as K through 12, but for me, education is K through job,” she said after selecting the chairmanship.

She wants to reform a system that did not serve the state well enough during her career in economic development. There’s also this motivation: “I have a 17-year-old granddaughter, straight A student, takes AP (Advanced Placement) courses,” she said in an interview Dec. 12. “She’s going to play softball with the Lady Razorbacks. Well, she’s fine with this whole pattern. But then I have a grandson, that may not work for him. I had a grandson, and it didn’t work for him at all. He was not an AP person. He was never going to college, but he has a good career now.”

English is not the first or the only one making this point. Lt. Gov. Win Rockefeller would say the education system is like a string of water pipes laid end to end but not fastened together. Hutchinson talked a lot about workforce development in the gubernatorial campaign. In September, the State Chamber of Commerce hosted a summit highlighting the need for Arkansas’ education system to be more responsive to the job market.

Changes already are occurring, particularly at the local level, to make the system more connected and responsive. Many high schools offer students opportunities to earn significant college credit. Bearden High School students are bussed to Southern Arkansas University Tech each day for academic and career classes. At Maumelle High, students basically select a major and take classes that are tailored to their interests and that prepare them for a job. Colleges and universities are becoming more responsive to workforce needs. The University of Arkansas – Fort Smith, for example, created a robotics program after surveying local industries and discovering a surprising number needed training in that area.

Despite these individual successes, Arkansas needs a more comprehensive overall strategy, a reallocation of resources, and a different mindset. And that’s where English has become a pivotal figure. In February, she switched her vote on the private option – until then, one vote short of passage in the Senate – from no to yes in exchange for a commitment from Gov. Mike Beebe to focus on the issue. As a result, for much of the year she chaired weekly meetings each Monday with various state education and economic development officials. Shane Broadway, director of the Department of Higher Education, says one of his staff members jokingly referred to the meetings as “English class.”

English said the meetings have produced no concrete proposals, though she has some ideas. She said many of the needed changes don’t require legislation.

Whatever the Legislature passes will be the result of collaboration and compromise. English’s main role will be to continue doing what she has already done: serve as a catalyst. Broadway said state agency heads were already discussing the need for changes, but English’s switched vote was the spark. As she explained it, “Sometimes you have to have something wild that starts things in motion and gets people to start talking. Otherwise, you’re just churning around forever and ever.”

The private option, prisons, and other issues will get the most attention this session. But, quietly, significant workforce development changes could occur. The facts are clear, the need is obvious, and the agreement is broad. Too many students aren’t being prepared for actual jobs, while too many jobs are unfilled because workers with the right skills aren’t available.

Now the Senate Education Committee is headed by someone whose top priority is doing something about it. We’ll see if the other legislators speak English’s language.

Water, water everywhere, but not enough below

By Steve Brawner
© 2014 by Steve Brawner Communications, Inc.

It makes up about 71 percent of the earth’s surface and about 60 percent of the adult human body. All our lives, it’s been available in abundance, particularly in Arkansas, and it still is, but we’ll have to change the way we obtain it. And it won’t be cheap to make that change.

I’m talking, of course, about water. Arkansas consumes about 11 billion gallons a day – enough, over a year’s time, to cover every inch of the state 4.2 inches deep.

Eighty percent of that amount is used for agricultural irrigation, according to a draft of the Arkansas Water Plan 2014 Update. Updates are completed every couple of decades by the Arkansas Natural Resources Commission.

The report ranks thermoelectric power second in water use, at 11 percent. Drinking water makes up only 3.5 percent. According to Ed Swaim, the commission’s water resources division manager, almost as much water is used for flooding fields for duck hunting (a yearly average of 259.2 million gallons a day) as is used in all manufacturing (291 million gallons a day, and dropping).

About 71 percent of Arkansas’ water comes from underground, and that’s a problem, because we’re using up groundwater far faster than the water cycle can replenish it. Currently, about 8.7 million acre-feet per year are being pumped, but the water can only be replenished at a rate of 1.9 million acre-feet a year, Swaim says.

That means water tables are falling, fast, and have been for a long time. Farmers are drilling their wells deeper and deeper to get the same water.

Unlike some states, Arkansas can solve this problem fairly easily. Conservation measures will help some. More importantly, the state is covered with rivers, lakes and streams. We have so much surface water that, according to the Water Plan, the state can meet its needs by simply diverting surface water for crop irrigation. The Water Plan says we have enough to do this without detracting from water-bound transportation or harming fish and wildlife – an assertion with which not everyone will agree. Arkansas can meet its needs without even touching the mighty Mississippi River, which would be a headache because that river borders other states.

The Water Plan estimates it would cost between $3.4 billion and $7.8 billion to do this, which would come from a variety of government funding sources and user fees. In other words, the farmers would pay for part of it, and then pass on the costs to consumers. Arkansas’ annual agricultural production is valued at $9.7 billion, according to the plan. Without water, it would be a lot less.

In his book “The Seven Lamps of Architecture,” the English critic John Ruskin wrote, “Therefore, when we build, let us think that we build for ever. Let it not be for present delight, nor for present use alone; let it be such work as our descendants will thank us for, and let us think, as we lay stone on stone, that a time is to come when those stones will be held sacred because our hands have touched them, and that men will say as they look upon the labor and wrought substance of them, ‘See! this our fathers did for us.’”

The quote is displayed on a placard on the second floor of the Arkansas State Capitol – a building still as sturdy as when it was completed a century ago.

Not to be too negative here, but we don’t talk much about building for forever these days. Today’s thinking is more about making the monthly payment on the 15-year and 30-year bank note. On a larger scale, problems aren’t solved so much as patched temporarily. Much of our political system, and indeed our economy, is based on buying time – until the next election or the next harvest or the next quarterly report.

In this case, Arkansas has a growing threat to its economy and way of life – current and especially future. For a while, farmers can keep just drilling deeper. But at some point, the wells will go dry.

So we’ve got a problem, and we’ve got a solution – an expensive one. But what choice is there? There’s plenty of water around us, and not enough beneath us.

“That girl” makes good money as a welder

By Steve Brawner
© 2014 by Steve Brawner Communications, Inc.

If you were asked to describe a welder, it probably wouldn’t be much like Tori Huggins.

The 29-year-old graduated Hendrix College in 2007 an All-American in basketball with a degree in theatre and kinesiology – and $40,000 in debt she couldn’t repay.

“I was that girl that went back to my parents’ house, living in the basement,” she said.

Many years earlier, Huggins had been singed by a spark while her dad was welding and refused to go anywhere near the activity again. But during college summer breaks, she’d done some basic welding in a boat factory in her hometown of Clinton, and she continued working there after college.

After a tornado destroyed the factory, she decided to get serious about welding and discovered she loved it. Soon she was traveling the country working in nuclear power plants and earning enough to pay off her debt in three years. She bought a car and a house in Conway.

Today, she teaches welding at the Plumbers and Pipefitters Joint Apprenticeship Center in Little Rock, a state-funded program where 12 students learn a skill that in 18 weeks will take many of them from minimum wage backgrounds to $18 an hour. She tries to encourage more women to follow her example. Classes are free and also available in Fort Smith and El Dorado. The school’s phone number is 501-562-4482.

Huggins this past Tuesday shared her story during a panel discussion at Jobs Now, a summit sponsored by the Arkansas State Chamber of Commerce. Before an audience of 500, she wore a smart business suit and spoke confidently alongside her fellow big shots on stage.

The conference’s purpose was to consider ways to match unemployed and underemployed Arkansas workers, like Huggins once was, with the tens of thousands of skilled trade jobs that are remaining unfilled and those that will be available as older workers retire. Steve Williams, CEO of Maverick Transportation, said he had parked 100 18-wheelers because he couldn’t find reliable drivers. That job starts at $52,000.

Two common mentalities clearly need to go by the wayside.

One is that learning a trade is somehow inferior to going to college. Too often, young people are encouraged to make good grades so they can get a scholarship – and if they don’t go to college, well, maybe they can get a job in construction or something. Skilled tradesmen often earn higher salaries than college graduates, and their jobs require no less brainwork.

“We don’t put in nuclear powerhouses by being a bunch of idiots,” Huggins told me. “You’ve got to know offsets, you’ve got to do fractions and multiplication and all this stuff, and at times even a little bit of calculus here and there.”

The other outdated attitude is that “getting an education” means leaving home for four years after high school. Colleges and universities should be oriented toward nimbly moving students of all ages to employability in an ever-shifting economy. Moreover, as Dr. Glen Fenter, president of Mid-South Community College, said during the panel discussion with Huggins, all students should graduate high school with a job skill, not just a diploma.

Some of this is already happening – the state-funded Plumbers and Pipefitters Joint Apprenticeship Center being an example. At Northwest Arkansas Community College in Bentonville, some students, instead of earning credit hours, obtain certificates that move them straight into jobs with Walmart and its suppliers. Many high school students take concurrent credit classes that shorten their college careers. At Maumelle High School, students declare a “pathway” and leave school with a marketable skill.

How do we get more of this? Joe Quinn, Walmart’s senior director of pubic affairs and government relations, said in the panel discussion that the next governor should make workforce development a signature issue.

Both Asa Hutchinson and Mike Ross have shared ideas on the campaign trail. Hutchinson favors economic development plans tying together high schools and two-year-colleges based on regional opportunities. Ross has called for sending reports home with eighth and 11th grade students projecting common careers and salaries when they enter the workforce. “Too many people today are going to college and getting degrees in what makes them feel good rather than where the jobs are,” Ross told school board members this summer.

That’s sort of what happened to Huggins, but in a good way. She got a degree that made her feel good, and now she has a career that makes her feel good.

A drugstore quits cigarettes

By Steve Brawner
© 2014 by Steve Brawner Communications, Inc.

CVS Pharmacy, a national drugstore chain, stopped selling cigarettes last week. This was big news because it was so unusual. And if anyone is wondering why the United States is spending far too much money paying for health care that isn’t making Americans healthier – those first two sentences should help explain it.

The chain is rebranding itself as “CVS Health” as it empties its shelves of the tobacco products that contribute to one in five American deaths, according to the Centers for Disease Control and Prevention (CDC). The company did not have a sudden epiphany that tobacco is bad for us. It’s trying to find a market niche as a health care provider. Like other pharmaceutical retailers, it also is offering basic medical services such as flu vaccines and blood pressure tests.

This is a welcome change because drugstores – which supposedly sell us products to make us well – are among the unhealthiest retailers in the country. The national chain in my area – I won’t use the name, but it’s new slogan contains the word “healthy” – sells cigarettes, candy and colas behind or near the cashier, who is located only feet from the doorway. Rows upon rows of candy, in fact, are sold in that store, along with chips and other salty snacks. It does sell cereal, and there’s a small refrigerated section that contains juice and milk, along with frozen pizza and ice cream. The gas station that changes my oil sells bananas, oranges and apples. Not so this drugstore, where virtually every grocery item is a processed food. The drugstore does sell bottled water, which, though a waste of money, is at least good for you.

You can’t really blame the drugstores for this. I guess they have every right to sell us what we have every right to buy, and Americans in general and Arkansans in particular buy a lot of tobacco, candy and processed foods. According to the CDC, an estimated 41.1 million Americans, or 18.1 percent of us, smoke cigarettes. In Arkansas, it’s 27 percent, ranking the state 49th, and not in a good way. More than one-third of Americans are obese.

The United States spends about 18 percent of its gross domestic product on health care – far more than other industrial countries. Some say it has the “best health care system in the world,” and if you judge it by one metric – the ability to treat certain serous diseases, that’s true. But it’s burdening us and future generations with unsustainable debt, and was doing so long before Obamacare was created.

The health care system itself is partly to blame. Among its biggest problems is that it rewards all the wrong behaviors. It pays medical providers far more money for treating diseases than it does for curing them and pays them almost nothing for prevention. A pharmacy selling us cigarettes and then selling us drugs (and charging the government for them) to treat the effects of those cigarettes? That’s the American way.

But just as it’s very hard for schools to educate students without parental support, it’s difficult for the health care system to treat patients when we don’t treat ourselves. Americans see “health care” largely as the act of taking a pill, right now, to make us feel better, right now. It’s no wonder drugstores sell cigarettes and candy. They’re drugs. One produces a nicotine high, and one produces a sugar rush.

So while we’re talking about state and national policies, we also have to talk about personal responsibility. In fact, the conversation must start there, even if it’s a little uncomfortable, just as writing this column has been. (Most are.) As Arkansas Surgeon General Dr. Joe Thompson said recently as we discussed various forms of health care reform, “If we don’t get control over our obesity and of our hypertension and our tobacco use, it doesn’t matter how much money we’re spending. We’re going to sink the boat.”

Will a drugstore clearing its shelves of America’s most harmful drug keep that boat afloat? No, but it certainly can’t hurt. It made its choice based on free market principles. Let’s hope the market rewards it, and that others freely follow its lead.