Magazine Manufacturing November 2019

Manufacturers Leading Job Growth in Arkansas


by Mark Carter

Arkansas manufacturing seems to be finding its footing following a rough patch to open the 21st century.

Manufacturing jobs in the Natural State are up 8 percent since 2014 and outpacing the national average of 6.4 percent, according to Michael Pakko, chief economist and state economic forecaster for the Arkansas Economic Development Institute at UA Little Rock.

“For more than two years now, year-over-year growth of Arkansas manufacturing employment has consistently exceeded the growth of all Arkansas non-manufacturing employment combined – the first time this has happened for any extended period in the 21st century,”— Michael Pakko

 This growth comes on the heels of a 34 percent decline in manufacturing jobs over the decade of the 2000s. Pakko sees further good signs.

 “For more than two years now, year-over-year growth of Arkansas manufacturing employment has consistently exceeded the growth of all Arkansas non-manufacturing employment combined — the first time this has happened for any extended period in the 21st century,” he says.

 Arkansas’ manufacturing output topped $18.8 billion in 2017, according to the latest figures from the U.S. Bureau of Economic Analysis. The Arkansas Economic Development Commission says manufacturing accounts for 18 percent of the state’s gross domestic product and 12.7 percent of the state’s total workforce, placing it at No. 8 in the country for percentage of workforce devoted to manufacturing.

 The industry employs 160,597 Arkansans, but there are an estimated 11,500 unfilled manufacturing jobs in the state right now, according to Clint O’Neal, executive vice president of global business for AEDC.

Big River Steel has energy savings of 18 percent compared to other compact strip production processes.

 Arkansas is home to 2,928 manufacturers that make products in a variety of sectors including aerospace and defense, paper and timber products, food production and metals.

 “This advanced manufacturing is fundamental to the state’s economic diversity and success,” he says.

 Arkansas workers currently employed in the manufacturing sector earn an average annual compensation of $48,006 ($23.08 an hour) compared to $40,791 ($20.45 an hour) for everyone else, according to AEDC data. And the National Association of Manufacturers estimates that Arkansas manufacturers exported more than $5.8 billion worth of goods in 2018.

 Since 2015, $7.6 billion has been invested in new and expanded manufacturing operations in the state and more than 15,000 jobs added. That includes the construction of Big River Steel’s $1.3 billion mill in Mississippi County, $470 million in new and expanded facilities for neighboring Nucor Steel, a $300 million Simmons Foods plant in Siloam Springs, a planned $142 million expansion at Lockheed Martin’s facility in East Camden, and Caterpillar’s $40 million expansion in North Little Rock.

Lockheed Martin will expand its Camden facility to include two new production buildings which will support manufacturing long range fires and PAC-3 missile defense capabilities, plus expanding current facilities, and hire more than 300 new people (artist rendering).

But this manufacturing bounce back hasn’t reached all four corners of the state. Though Mississippi County in extreme northeast Arkansas has become known for its steel mills, just 33 of 75 counties have seen positive job growth since 2010 because there aren’t as many manufacturing jobs in those areas, Pakko says.

 “Arkansas employment was, and still is, more dependent on manufacturing than many other states, so the decline in manufacturing has hit many parts of the state pretty hard,” he says. “During the first years of the national economic expansion, U.S. manufacturing employment recovered somewhat, rising by 5 percent. Meanwhile, Arkansas experienced an additional 4 percent decline.” 

 Windsor Door in Little Rock manufactures roughly 80,000 residential and commercial garage doors and custom wood doors each year. It employs 70 workers at its 265,000 square foot facility.

 Founded in Little Rock in 1961, Windsor has seven distribution centers and eight installation locations in seven states through its sister company, Garage Door Services of Houston, Texas. Hans Wright, vice president of sales, said Little Rock remains an optimal location for Windsor.

“Being on the I-40 corridor and centrally located allows us to ship products from coast to coast in a relatively cost-effective manner,” he says. “The close proximity to two steel mills in Arkansas also has its advantages.”

Windsor sources roughly 90 percent of its pre-painted material from Arkansas mills. It services the entire southern half of the U.S. with limited sales to Mexico.

Wright says 2018 began a tough stretch with tariffs aimed at China heavily focused on metals initially. The first time Section 232 of the Trade Expansion Act was mentioned, he says, the price of steel went up 30 percent overnight. It was under Section 232 that President Donald Trump authorized tariffs of 25 percent on imported steel and 10 percent on imported aluminum.

“It was a record year for the steel mills, but every steel processor operating in a competitive environment had a tough year,” Wright says. “2019 has leveled off and the cost of domestic raw materials have gone back down to historical norms. Imported parts have seen a substantial increase due to tariffs, but overall represent a very low percentage of our product.”

Arkansas manufacturers, like all others, watch the news with keen interest. “Geopolitical instability has created a challenging environment,” Wright says. He forecasts modest top-line gains in 2020 with a focus on improving quality and productivity to drive bottom-line improvement.

O’Neal says opportunities await in the manufacturing sector. He cites a 2018 study by Deloitte Insights and the Manufacturing Institute that showed double-digit growth in U.S. manufacturing jobs since mid-2017. The Manufacturing Institute also estimates that 2.7 million baby boomers will retire by 2025, leaving two million manufacturing jobs unfilled.

“Manufacturing jobs typically are some of the most stable and secure in the U.S.,” O’Neal says, armed with data from the federal Bureau of Labor Statistics. “The average tenure of workers in manufacturing jobs is the highest among all private-sector industries at 9.1 years, and the turnover rate is also one of the lowest at 2.3 percent.”

Since a brief downturn in 2012 and 2013, the state has seen steady job growth and manufacturing continues to set the pace with 1.8 percent growth in August.

“Unless the national economy experiences a downturn that pulls Arkansas down with it, I foresee a general continuation of the trends we’ve seen over the past five years,” Pakko says. 

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