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Arkansas economist sees prolonged recession Sunday, Oct 5, 2008 By Roby Brock Citing new jobless figures, economist Greg Kaza with the Arkansas Policy Foundation reiterated his position that the nation has been in a recession since the first of the year and would likely remain in one for the foreseeable future. Kaza noted that negative industrial production, income and sales data also signals a troubled economy. "I don't see those employment or industrial production numbers improving anytime soon," he tells Talk Business. $1.3 billion pipeline to aid Fayetteville shale Kinder Morgan Energy Partners and Energy Transfer Partners have entered into a 50/50 joint venture - Fayetteville Express Pipeline - to develop a new natural gas pipeline. The approximately 187-mile pipeline will originate in Conway County and continue eastward through White County, through the heart of the most active drilling in the Fayetteville Shale play. The pipeline will have an initial capacity of 2.0 billion cubic feet per day. Pending necessary regulatory approvals, the approximately $1.3 billion pipeline project is expected to be in service by late 2010 or early 2011. The new pipeline will also interconnect with other pipelines throughout the region. Shale executive sees bright gas future for Arkansas At a Fayetteville Shale conference sponsored by UCA, SEECO, Inc. executive John Thaeler said that Arkansas has several advantages that should maintain the prosperity of the unconventional natural gas drilling in state. Thaeler said that despite falling gas prices, his firm had no immediate plans to reduce investments in the state unlike two of SEECO's competitors. He also said that a friendly business climate and surface proximity to shale deposits made Arkansas an attractive place to drill. Windstream CEO says no access to capital Windstream CEO Jeff Gardner revealed that tightening credit markets have delayed many opportunities for new mergers and acquisitions. In a Wall Street Journal article, Gardner said that there was no access to capital "not just for Windstream, but for anyone." Windstream has made public comments that it would like to grow through acquisition. "The reality is there's not going to be a lot happening with respect to mergers and acquisitions until this gets resolved," said Gardner. Tyson foods gets good credit news Standards & Poor's partially upgraded a portion of Tyson Foods' secured debt less than a month after a downgrade signaled troubles for the protein giant. S&P raised its rating on Tyson Foods' senior secured notes to investment grade "BBB-" - up from the junk realm rating of "BB" - citing additional collateral and guarantees the company pledged from its operating subsidiaries. Not all of the company's debt was raised from junk status. According to S&P, the company still has $2.84 billion in unsecured bonds carrying a speculative rating of "BB." Upgrades to investment grade quality usually lower a company's borrowing costs. While under credit watch by S&P, Tyson Foods recently renegotiated its credit agreements with lenders and was asked to pledge extra collateral in order to restore its investment grade rating. Sales taxes slow down in September While September state revenues showed strength, there was a downward trend in gross receipts collections - a sign of a slowdown in consumer spending. The Arkansas Department of Finance and Administration monthly revenue report showed that net available general revenues totaled $481.4 million, 6.3 percent above last year and 5.3 percent above forecast. Gross receipts - which include sales and use taxes - totaled $183.4 million in September, a decrease of $1.3 million, or 0.7 percent below last year. Collections were also below monthly forecast levels by $4.1 million, or 2.2 percent. Individual income tax collections topped $266.2 million for the month, a 5.2 percent increase from a year ago and 5.7 percent above forecast. Corporate income taxes equaled $64 million, a decrease of 2.2 percent from the previous September, but still 3.4 percent above forecast. For the full fiscal year, which just completed its first quarter, year-to-date net available general revenues exceeded $1.2 billion, 5.6 percent above last year and 5.5 percent above forecast. Bentonville plant to close, cut 120 jobs Latrobe, Pa.-based Kennametal Inc. said Tuesday the company will close its Bentonville plant on Dec. 31, resulting in the loss of 120 local jobs. The plant has been operational for more than 50 years. The Rogers location - which employs more than 500 workers - will not be affected by the company's recent decision to restructure. Maumelle warehouse shuts down eliminating 125 positions Scholastic Corp. notified employees that it will sell and close its Maumelle distribution facility resulting in the loss of 125 Arkansas jobs. In a letter sent to Maumelle Mayor Michael Watson, a Scholastic official said that the termination dates range from November 5, 2008 to February 28, 2009. "This sale is permanent and the company does not expect to recall or rehire any of the employees," the letter noted. Wal-Mart to close stores, cut jobs in Japan Seiyu Ltd., Wal-Mart's Japanese retail division, will cut 350 jobs and close 20 stores at its 390 outlets in an effort to boost profitability. The Tokyo-based subsidiary will also renovate 100 stores over a two-year period, it said in a statement. Wal-Mart took full ownership of Seiyu after its five-year investment failed to return the Japanese chain to profit. While the company closes stores, it remains "committed to look for opportunities to grow," according to a Seiyu spokesman. The company may expand its store network through acquisitions, he added, declining to provide further details. Rogers bank sanctioned by FDIC Rogers-based Parkway Bank's real estate loan troubles garnered the financial institution a "cease and desist" order from the Federal Deposit Insurance Corp. last month. Parkway officials accepted the order Aug. 5, without admitting to or denying any of the alleged charges contained within the order. The 26-page order cited the bank for "unsafe and unsound business practices" with regard to lending, capital shortfalls and questionable management practices. UAMS raises $1.5 million for NWA campus The proposed northwest campus of the University of Arkansas for Medical Sciences received a $500,000 gift from the Care Foundation, bringing total donations to the project to about $1.5 million so far, planners said. The goal for the university and its supporters is to raise $3 million in private, local donations to the project, said UAMS chancellor Dodd Wilson. That way, the university would not have to ask state lawmakers for any money for renovations, he said. The state would still have to approve an annual operating budget for the school. What that figure would be is very tentative at this time, Wilson said. He estimates about $3.5 million a year, but said the final figure is still undecided. Baptist Health to manage Stuttgart hospital Baptist Health will begin management of Stuttgart Regional Medical Center on October 1. Formal plans are for the management agreement to become a long-term lease beginning January 1, 2009. At that time, the Stuttgart hospital's name would become Baptist Health Medical Center-Stuttgart. Stuttgart Regional Medical Center is a 49-bed hospital with 290 employees. Baptist Health operates six hospitals with over 7,500 employees throughout Arkansas. Baldor sells newly acquired distribution center Baldor Electric Co. announced that it has recently completed the sale of a distribution center in Tennessee, a transaction valued at $30 million. This sale follows the August acquisition of Poulies Maska, Inc., a power transmission component business with annual revenues of approximately $33 million. A portion of the proceeds from the building sale were used to reduce Baldor's debt balance. McFarland also warned on third quarter earnings for Baldor, noting rising raw material prices. "Our largest raw material purchase, electrical steel, has increased in cost by more than 50 percent in the past six months. As a result, we expect diluted earnings per share in third quarter 2008 to be similar to that of third quarter 2007," he said. Tyson adds independent director to board A senior executive with the 3M Company has been named to the board of directors of Tyson Foods, Inc. Brad T. Sauer, executive vice president, 3M Health Care Business, is now one of 10 Tyson directors and one of six independent members of the board. Sauer, 49, has been part of 3M, a diversified technology company, since 1981. ------- Roby Brock, a freelance journalist based in Little Rock, writes weekly for the Arkansas News Bureau. His weekly television program airs at 10 p.m. Sundays in Central and Northwest Arkansas. His e-mail address is roby@talkbusiness.net; his Web site address is www.talkbusiness.net. |
