Gov. Asa Hutchinson and Arkansas Department of Commerce Secretary Mike Preston speak to reporters via video conference during a trade visit to Japan and China in late 2015. (Photo by Wesley Brown)
Gov. Asa Hutchinson and his right-hand man Mike Preston ended the popular Republican governor’s eight-year tenure in office the same way they started: hunting for new jobs to grow the state’s 1.3 million-plus worker labor pool.
Four days before leaving office, Hutchinson and Preston held their last press conference on Jan. 6 at the local headquarters of fast-growing Apptegy. The education technology company is the first startup birthed by Little Rock’s Technology Park to reach full maturity.
Founded the same year that Hutchinson entered office in 2015, Apptegy currently has nearly 400 employees at its Riverdale headquarters. It occupies over 60,000 square feet with plans to expand its footprint in 2023 with 300 new employees. In commending Apptegy and its founder, Jeston George, Hutchinson noted that one of his primary goals as governor has been to attract higher-paying technology jobs to Arkansas.
“Since taking office eight years ago, one of my primary goals was to increase technology companies in Arkansas,” said Hutchinson, who often refers to himself as the state’s chief job recruiter. “There are so many opportunities for a variety of tech solutions, as Jeston George and Apptegy have shown us. It only takes one great idea — and the support of public and private partners — to take an idea to fruition. I’m proud of what Apptegy is becoming, and I’m proud that we have been a part of their success.”
During the 2015 legislative session, Hutchinson successfully pushed through legislation to expand technology offerings in school districts statewide, including funding for teacher training in computer science. That legislation also included the creation in 2015 of the Arkansas Computer Science and Technology in Public School Task Force. That public-private panel studied the computer science needs of the state and recommended strategies to grow the state’s technology-based workforce.
Since then, the state’s 45th governor annually takes a tour across the state to encourage participation in the computer coding program that resulted. He has also drawn national attention to the computer science education program, including hosting the first National Computer Science Summit for State Leaders in Little Rock in June 2019.
For all his work, state Education Department data in 2020 showed that the number of students enrolled in computer coding classes in Arkansas jumped dramatically from 1,104 students in 2014 to 9,813 students in 2019. Also, the number of certified coding teachers during the same period have grown from 14 to 225.
During an interview at his office at the State Capitol in July, Hutchinson said he considered persuading Preston to come to Arkansas one of his most important early administration hires. Preston, 31 at the time, became one of the nation’s youngest state economic development directors when he took the reins at the Arkansas Economic Development Commission (AEDC) only days after the end of the 2015 legislative session.
“First, there is not anyone better in terms of managing economic development than Mike Preston. That is the reason I brought him here and we had great success in the first term,” Hutchinson said of the Florida native.
“Whether you are looking at Sig Sauer or whether you are looking at Big River Steel, each of those [deals] took the combination of my engagement at the highest level of those companies, along with Mike and his team doing the hard work of competing with those other states in terms of our incentives and matching these companies with the right locations.”
The governor and Preston’s close bond, which includes a weekly basketball scrimmage at Episcopal Collegiate School near the State Capitol, now enters a new phase as Hutchinson considers a possible run for the president of the United States. Preston would not speak to the Arkansas Advocate concerning his next career move.
Department of Commerce spokeswoman Chelsea Kelley told the Advocate that under Hutchinson and Preston’s leadership AEDC has signed incentive agreements with 513 new and expanding companies. Those projects, she said, have resulted in 27,900 new Arkansas jobs and total capital investment of $14.36 billion in the state. The average hourly pay for those jobs is $21.24 per hour, which is nearly double the state’s current $11 per hour minimum wage.
In 2022, Kelley said, AEDC has signed 33 new incentive agreements, which is expected to result in 4,097 new jobs with an average wage of $27.01.
“These new or expanding companies plan to invest $4.3 million,” she said.
Besides technology, Hutchinson has also attracted key niche industries to Arkansas, ranging from blue collar-focused auto parts manufacturers, the steel industry, gunmakers and ammunition suppliers, and defense contractors. In the white-collar sector, Arkansas has also seen rapid growth in financial technology (fintech) and banking and the emerging electric vehicle (EV) and autonomous car market.
Among the biggest developments has been the growth of the state’s defense contracting and aerospace industry operations. Calhoun County’s sprawling Highland Industrial Park in Camden is home to several of the nation’s largest defense contractors in Lockheed Martin, Aerojet Rocketdyne and Raytheon Technologies, and American Rheinmetall Munition Inc.
In northeast Arkansas, the development of Big River Steel in Osceola has spurred the expansion of Arkansas’ “steel corridor” in Mississippi County and others nearby. Just a year ago, Pittsburgh-based steel conglomerate U.S. Steel Corp. announced plans to build a $3 billion, 6.3 million-ton mega mill in Arkansas to better compete for an original auto manufacturing facility.
When completed, the new steel mill will be the largest economic development project in Arkansas history, making Mississippi County the top steel-producing county in the country. Besides U.S. Steel, current steel producers in the Northeast Arkansas county include North Carolina industrial giant Nucor Corp., Nucor Yamato, Nucor Hickman, Majestic Steel USA and Koch Metallics.
More recently, Hutchinson and Preston have focused on the technology and retail sectors, starting with Amazon’s announcement in July 2020 that it planned to build a 1 million-square-foot fulfillment center at the Port of Little Rock, central Arkansas’ largest industrial park. Since then, company officials said that the Seattle-based online retail conglomerate has opened its second fulfillment center in North Little Rock and other company operations across the state, creating over 1,500 jobs in Arkansas.
At the beginning of the 2021 legislative session two years ago, Hutchinson announced the creation of the state’s first Future Mobility Advisory Council (FMAC), a task force committed to attracting businesses, innovators and creatives to Arkansas to aid in developing the state into a global giant in next-generation transportation.
During their eight-year partnership, Hutchinson and Preston have also completed several international trade missions, including a rare U.S. visit to Havana, Cuba, in late 2015 after the decades-long U.S. trade embargo was temporarily lifted under former President Barack Obama.
That Cuba visit came on the back end of a whirlwind, globetrotting job recruiting tour that typified Hutchinson’s first term as the state’s business-focused governor. In fact, Hutchinson’s first year in office included trips to Silicon Valley, Las Vegas, Paris, France, and a 10-day Far East business excursion to Japan and China, all with Preston by his side.
“Without the effort that we put into it; we wouldn’t have the kind of growth that we experienced in Arkansas. We wouldn’t have the momentum, and we wouldn’t have been able to do the tax cuts we’ve done because that has [also] led to more job creation and growth,” Hutchinson said during an interview with Preston at his State Capitol office this summer. “So, in every way, ([our partnership] has been essential to all the other objectives that I have had from being able to transform our state.”
McDonald takes the reins
While Gov.-elect Sarah Huckabee Sanders has drawn cabinet officers from Florida, Arizona and Kentucky, she stuck with homegrown talent to deliver her economic development and business growth agenda when she announced before Christmas that former Entergy Arkansas CEO Hugh McDonald would be her new Department of Commerce secretary.
“As governor, I’m ready to unleash bold reforms to make Arkansas the best place in the nation to start and grow a business — and I’m proud to announce that Hugh McDonald will help me accomplish it as Secretary of the Department of Commerce,” Sanders said in a statement.
“We will work together to responsibly phase out the state income tax, foster an environment for our businesses to create thousands of higher paying jobs, and grow our state’s economy, while attracting businesses nationwide and worldwide to make Arkansas their home. My vision for our state’s economy will take us to the next level, creating a brighter, more prosperous future for all Arkansans.”
“I am honored that Governor-elect Sanders has tapped me to lead the Department of Commerce and confident that her economic reforms will take our state to new heights,” McDonald said. “Together, we will foster a business-friendly environment with a strong workforce development pipeline that allows businesses to recruit and retain highly skilled workers.”
Sanders has provided few details of her economic development agenda beyond her Dec. 22 press conference naming McDonald to his new post. When asked if Sanders plans to push any business-related legislation during the upcoming session, administration spokesman Judd Deere said there was “nothing to announce” to date.
A popular choice among the business class and chamber of commerce set, McDonald brings possibly the strongest credentials ever to the job of growing the state’s economy during uncertain economic times. He will also replace Preston in the dual role as director of the state Economic Development Commission (AECD), which was placed under the Department of Commerce during Hutchinson’s statewide government reorganization in 2018.
In highlighting McDonald’s resume, Sanders’ office sent out a press release on Dec. 27 with top legislative and business leaders touting McDonald’s credentials. One of those testimonials came from longtime State Chamber of Commerce President and CEO Randy Zook, who said McDonald brings unrivaled executive experience to state government. The State Chamber recently released its biennial legislative agenda, highlighting the business community’s top policy priorities.
“He brings an in-depth knowledge of Arkansas and its economy, down to the plant level and the electric load all across the state, so he has an intimate knowledge of the working parts of the state that is going to hold him in good standing with businesses,” said Zook. “He also got a strategic orientation from his role as (Entergy Arkansas) CEO, so he is going to take a well-informed, carefully considered approach to accelerating the efforts of the administration.”
Zook also commended Sanders for her focus on improving Arkansas education standards, noting he sees that as a key economic issue in retooling the state’s workforce and attracting top businesses to Arkansas.
“We fully support (Gov.-elect Sanders’) efforts to take some constructive steps in making sure that the results from K-12 education are dramatically improved as soon as possible,” said Zook. “We just have to get literacy and numeracy rates up to a whole lot better than where we are. The results are that companies are hard-pressed to be able to find enough people who are capable of doing the work that is available.”
Zook noted that while the state’s civilian workforce peaked at an all-time high of 1,385,981 workers at the beginning of the pandemic under Hutchinson, thousands still have not come back to work. In the most recent unemployment report on Dec. 16, Arkansas’ jobless rate held at 3.7% with 1,351,744 workers in the state’s labor pool. That is well above the 1,330,685 workers that were in the workforce following the COVID-19 recession in September 2021, but there are still nearly 27,000 Arkansas workers on the sidelines, he said.
“We’ve got way too many people who are under-skilled and poorly prepared to add value in a work setting so they won’t end up in low or minimum wage positions,” Zook said. “We got a whole lot of jobs that are going begging now because there are not just the right people with the skills in the right place to do the work.”
Zook said he has not seen any business-focused bills put forth by the Sanders administration ahead of the 2023 session but said that the State Chamber would support legislation to make Arkansas corporate tax policy more competitive with surrounding states.
“That is a general statement, but the devil is in the details,” he said. “There are some things down in the weeds that need to be corrected that get in the way of attracting capital, investment and employment opportunities, so we will work on those.”
With the state holding a $2.78 billion surplus heading into the session, Zook said the State Chamber will monitor the state’s fund balance as the Sanders administration settles into office. The chamber executive added that the Federal Reserve’s Open Market Committee’s ongoing monetary policy that focuses on raising interest rates to cool inflation will likely lead to a recession in 2023 or 2024.
“We are going to support efforts to keep the state healthy in terms of cash balances and not go overboard in creating a problem because there is going to be a recession,” said Zook. “It may not be this year; it may be next year but there is going to be a slowing of the economy because that is the only way the Fed is going to get inflation down to where they want it to be. Here’s hoping for a soft landing.”
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