When veteran-owned Arcturus Aerospace announced recently that it would relocate its manufacturing business and nine high-wage jobs from California to Little Rock, it was a reminder that not all corporate site selection was shut down during the pandemic.
“We are thrilled to relocate to Little Rock and join the momentum of the region’s growing aviation industry,” said Mark Greenwell, owner of Arcturus Aerospace, a firm that provides CNC machined parts to aircraft manufacturers. “Little Rock and Arkansas provide our company a skilled workforce, logistical advantages and a competitive business climate.”
Clint O’Neal, executive vice president of global business for the Arkansas Economic Development Commission, says Arcturus is not alone. Cynergy Cargo located a $3 million, 70-job factory in Crossett, and other investors are actively scouring the state right now for suitable business locations, he says. “Arkansas continues to attract business, even in the midst of national economic challenges caused by COVID-19. Since the beginning of the public health emergency, AEDC has signed incentive agreements with several companies.”
How Arkansas responded to the COVID-19 crisis, and how the state plans to facilitate economic recovery moving forward, were the topics of my recent conversation with O’Neal.
How hard did the COVID-19 pandemic and corresponding recession impact Arkansas’ businesses?
O’NEAL: It hurt Arkansas hard. We had our first COVID case on March 11. We are a COVID-19 business assistance response team. We will focus on that until it’s over. Arkansas businesses have been hit hard, but fortunately, not as hard as other states. We never issued a shelter-in-place order. That would have resulted in another 100,000 lost jobs, according to a study by Dr. Nathan Smith, economist and director of research for the Arkansas Department of Commerce. Taking a measured approach, we were able to save a lot of jobs. In terms of the public health impact, we fared better than most states. When these decisions were being made, we had such a low caseload. We took a measured, data-driven approach. We were in the bottom 10 states of COVID-19 cases when those decisions were being made, and we still are.
Through the end of May, what was your state unemployment situation like, and which industry sectors were hit hardest?
O’NEAL: Unemployment reached 10.2% in Arkansas in April, but it then fell to 9.5% in May. The average unemployment rate was around 15% across the country. We were tied for ninth lowest in the country in joblessness. Hospitality and tourism were hit the hardest. Tourism is our No. 2 industry. Hotels were able to remain open for some uses, but they were not open for out-of-state travelers. Even now, as some of the regulations have eased, are people confident enough to take a vacation? We also have a lot of automotive suppliers across the state, and they were affected as the OEMs were shut down for a while.
Does Arkansas have a roadmap for economic recovery? What will it take for most businesses to recover in your state?
O’NEAL: Gov. Asa Hutchinson put together an Economic Recovery Task Force. Steuart Walton, grandson of Walmart founder Sam Walton, was asked to lead that task force. Some 35 public and private leaders came together. Big names in the Arkansas business community joined forces for an all-hands-on-deck effort. At www.arkansasready.com, you can see a timeline of recovery, agreed upon by the Governor and Dr. Nate Smith, our secretary for public health. A lot of the discussion is more long-term. A big part of economic recovery is what happens with the school systems and to people who have child-care issues.
What resources are available to help small businesses deal with these unprecedented challenges?
O’NEAL: Early on, we looked at how we could put together resources. Most came through the CARES Act and SBA. As of May 30, there were 40,591 PPP loans in Arkansas totaling $3.2 billion statewide. We also took money from our Quick Action Closing Fund and put together a Quick Action Bridge Loan Program making forgivable loans of up to $25,000 to small businesses, as long as they retained at least 75% of their payroll on March 21, 2021. We were able to help 483 companies with this. That represents the retention of 4,707 full-time jobs and 1,903 part-time jobs. We also had some money from the Community Development Block Grant. We took $10 million from our CBDG allocation and did grants to 27 rural hospitals. These are $200,000 to $500,000 grants each.
Most significantly, we launched the Ready for Business Grant Program. This is the largest grant program we have every administered. Over a three-day cycle, we had 12,234 company applicants for a max of $100,000. The formula is based on $1,000 per full-time employee and $500 per part-time worker. This money helps companies with expenses they would otherwise not have faced. This program is a $147 million allocation to be able to fund all of the eligible applicants. We have approved 11,064 of the companies. Full-time jobs represented are 196,001. Part-time jobs are 50,220. These grants represent companies in all 75 counties. About 34% went to women-owned businesses, and 27% went to minority-owned businesses.
How many small businesses closed in your state? What percentage of Arkansas small businesses survived?
O’NEAL: We recently released an interim report from the task force. About 17,000 Arkansas small businesses were closed at one time, representing 35% of the total. That’s about 10% below other states. Having no stay-at-home mandate had a lot to do with that. A lot of the outbreaks in the U.S. took place in big cities. Arkansas is a very rural state.
What does prospect activity look like right now?
O’NEAL: We are encouraged that despite COVID-19 there are a couple of strong projects in the pipeline that have committed to move forward but not announced yet. We have had three prospect meetings in the past week. That’s more than the last three months combined.
They all came together this week. These were all face-to-face meetings. One was a traditional site visit. Another was here to meet with a local company. One was an in-state company that is exploring bringing manufacturing back from China.