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Little Rock: Economy

Major Industries and Commercial Activity

As the largest city in a primarily rural and agricultural state, Little Rock is the center of economic activity in Arkansas. For decades, cotton and then rice, soybeans, and other crops were the area's main source of income. Their cultivation and distribution monopolized the labor pool and available capital and made it virtually impossible for industry to gain a foothold, even in Little Rock. During the 1950s and 1960s, however, the Arkansas Industrial Development Corp., headed by Winthrop Rockefeller, who later served as governor, began an aggressive campaign to attract manufacturers to the state. Although few firms established large operations, hundreds of companies moved in and set up small factories employing fewer than 1,000 people.

Local, state, and federal government have been Little Rock's major employers for many years. Medical facilities, banks, and other service industries are also important to the economy, and their presence has in turn attracted to the area other companies that offer a variety of support services, especially those that are computer-related.

Revitalization of downtown Little Rock has fueled its attraction to major corporations in a variety of industries, particularly manufacturing, transportation, and service. The city manager's office reports that Little Rock was one of the nation's 15 most aggressive development markets in the early part of the new century; it has doubled in the past 20 years and is expected to double again over the next 20 years.

Aviation is among the most dynamic industries in Little Rock. Aircraft and spacecraft are Arkansas' largest export, the revenue of which has grown from $35 million in 2000 to $441 million in 2002, according to the Arkansas Department of Economic Development. In Little Rock itself, several aircraft companies bolster the local economy. Central Flying Service Inc. is one of the nation's largest fixed-base operations, and Dassault Aviation SA's primary service and completion center for its Falcon jets is located in Little Rock. Additionally, Raytheon Aircraft announced in 2002 an expansion of its Little Rock plant, which will add 350 new jobs over five years.

Biotechnology is an emerging industry in Little Rock. The University of Arkansas for Medical Sciences is the cornerstone for medical biotechnology research in Arkansas. The facility not only conducts research and development, it offers a business incubator program to support start-up biotechnology companies. Moreover, the stock of Cytomedix Inc., which manufactures wound-healing therapy in Little Rock, more than doubled in the year 2004 to $2.55 per share.

Agriculture maintains a firm hold on the economy of Little Rock and Arkansas as a whole. About one-fourth of all jobs in the state involve agriculture to some degree. Soybeans, rice, timber, and poultry continue to be the primary agricultural enterprises in the state.

Because of its strategic location, Little Rock has long served as a center for trade. The Little Rock Port Industrial Park offers some of the finest facilities on the Arkansas River, enabling the city to promote itself not only as a distribution center for the state's agricultural products, but also for its increasing number of manufactured goods.

Items and goods produced: Metals, soybeans, rice, chemicals, textiles, paper products, timber, and aircraft

Incentive Programs—New and Existing Companies

Local programs

The basic method of financing new and expanding industry in the region is through the use of Act 9 Industrial Revenue Bonds issued at the municipal and county levels. Up to $6 million of an Act 9 issue can be guaranteed under state insurance guarantee programs.

State programs

The Arkansas Science and Technology Authority, located in Little Rock, was established in 1983 to promote scientific research, technology development, and business innovation in the state. To this end, it provides financial support for the transfer and development of innovative technology to an enterprise based in Arkansas. The Authority currently offers three programs: the Applied Research Grant Program, the Seed Capital Investment Program, and the Technology Development Program.

The Small Business Loan Program was founded in 1999 to stimulate economic growth by providing up to 50 percent of a small business loan to qualified applicants. This financing, administered by the Arkansas Department of Economic Development, can be used as working capital, to purchase machinery and equipment, and to construct or renovate commercial real estate.

There are several special industrial location incentives offered by the State of Arkansas. Two of the major programs are the Arkansas Enterprise Zone Program and Arkansas Workers' Compensation, legislation passed in 1993 that makes workers' compensation insurance more affordable for employers. The Chamber of Commerce has information about the many other incentives offered by the state of Arkansas, which include corporate income tax credits, sales and use tax refunds, and the payment in lieu of taxes program.

Job training programs

The Business and Industry Training Program sponsored by the Arkansas Department of Economic Development designs customized training programs to meet the specific needs of particular industries. Its emphasis is three-fold: recruiting workers, pre-employment training, and on-the-job training.

Development Projects

Eleven counties, including Pulaski, united in 2003 to form the Central Arkansas Economic Development Alliance (CAEDA) to promote the region as an attractive location to new businesses. Funded by both private-sector companies and individual economic development agencies, CAEDA markets the region's workforce, low cost of doing business, central U.S. location, and transportation infrastructure.

Commercial development was also boosted by the passage of Arkansas' Tax Increment Financing (TIF) law in 2004. This tax incentive tool enables local governments to develop and improve infrastructure using future tax dollars instead of relying solely on funding by private developers. Intended to bolster the redevelopment of blighted areas, TIF has been embraced by even the most economically vibrant cities throughout the state.

In early 2002 Pulaski County received the long-sought designation as an Urban Empowerment Zone by the U.S. Department of Housing and Urban Development. In a program that extends through 2009, this designation will entitle Pulaski County to a portion of the $17- to $22-billion national package to foster growth and revitalization in distressed communities.

The efforts have already produced results in Little Rock, as evidenced by the establishment or expansion of large-scale business in the early 2000s. In late 2003 ground was broken in the River Market District for a new International Center for Heifer International, an organization that assists small-scale farmers worldwide in an effort to combat hunger, alleviate poverty, and restore the environment. The $23 million First Security Center is a 14-story building occupied by First Security Bank, a 120-room hotel by Marriott Courtyard, as well as luxury condominiums. Raytheon Aircraft announced in 2002 the expansion of its plant in Little Rock, adding 350 jobs to the area. In a $6 billion deal that will add 4,000 new employees and make it the nation's fifth-largest wireless company, ALLTEL Corp. announced its acquisition of Western Wireless Corp. in January 2005.

Economic Development Information: Little Rock Regional Chamber of Commerce, 1 Chamber Plaza, Little Rock, AR 72201; telephone (501)374-2001; email chamber@littlerock chamber. Arkansas Department of Economic Development, One Capitol Mall, Little Rock, AR 72201; telephone (501)682-1121; toll-free 1-800-ARKANSAS; fax (501)682-7394; email info@1800arkansas.com

Commercial Shipping

With its central location and accessibility to the Arkansas River, Little Rock is one of the major transportation centers of the South. The city's main asset is its port. The development of the Arkansas River into a year-round barge navigation route has meant that a city as far west as Tulsa, Oklahoma has access to the Mississippi River, which in turn provides access to global markets through the international port at New Orleans, Louisiana. Consequently, a variety of products pass through the port, including forest products, bagged goods, steel coils and pipes, aluminum products, and such bulk products as rice, clay, bauxite, rock, fertilizer, and cement. Little Rock Port Terminal has a cargo lift capacity of 50 tons and bulk handling capacity of 200 tons/hour inbound and 350 tons/hour outbound. It also offers 157,000 square feet of warehouse space and 45,000 square feet of outside storage area.

The Little Rock Port Authority Railroad, operating on 12.2 miles of track, connects with the Union Pacific Railroad and the Burlington Northern Santa Fe Railway. Each year it switches approximately 5,500 railroad cars, and services 60 percent of all cargo handled through the river terminal.

Little Rock Port Industrial Park is designated as a Foreign Trade Zone, enabling goods to be stored or processed without payment of customs duty until they are moved out of the zone and into normal domestic channels. Services in the Foreign Trade Zone are offered through 14 contract carrier barge lines, and include barge, rail, and truck terminals, as well as warehouse space and material handling equipment. Little Rock is also a U.S. Customs Port of Entry for both freight and passengers.

More than 60 franchised motor carriers in the metropolitan area provide regular service to points in each of the 48 contiguous states; ten major cities are within a day's drive. Air freight service, ranging from small package expediting to international freight forwarding, is readily available at Little Rock National Airport, where airlines and air cargo carriers processed more than 19 million pounds of freight and 14 million pounds of mail in 2001.

Labor Force and Employment Outlook

The civilian labor force in the Little Rock area is drawn from four counties. Arkansas has been a right-to-work state since 1944, and state law makes violence in connection with a labor dispute a felony. According to The New York Times, state and local economic development efforts, including tax incentives promoting international trade and improved job training, have helped the area to outpace neighboring states in terms of growth in employment, growth in manufacturing jobs, and income growth in recent years.

Two of the fastest growing industries for employment in Arkansas are agriculture and trucking. About one-fourth of all jobs in the state revolve around agriculture or agriculture-related processing, and the Arkansas Department of Economic Development predicts a future shortage of qualified work force in that area. Likewise, trucking—the state's fifth-largest industry—is expected to experience an increase of available jobs through 2010. Some of the nation's largest trucking companies are headquartered in Arkansas and operate throughout the state. In addition, corporations that own and operate private fleets expect to be seeking truck drivers and related personnel. Little Rock is home to two such companies, Entergy Inc. and Quality Foods Inc.

The following is a summary of data regarding the Little Rock-North Little Rock metropolitan area labor force, 2003 annual averages.

Size of nonagricultural labor force: 317,100

Number of workers employed in . . .

construction and mining: 17,100

manufacturing: 24,700

trade, transportation, and utilities: 67,000

information: 9,400

financial activities: 19,400

professional and business services: 39,600

educational and health services: 40,700

leisure and hospitality: 24,600

other services: 12,000

government: 62,700

Average hourly earnings of production workers employed in manufacturing: $13.81

Unemployment rate: 4.3% (November 2004)

Little Rock: Economy

Major employers Number of employees
State of Arkansas 28,100
Federal Government 9,400
Pulaski County Public School Districts 8,868
Baptist Health 7,000
Little Rock Air Force Base 5,445
University of Arkansas for Medical Sciences 5,392
Ryerson-Tull AFCO Metals 5,051
St. Vincent Infirmary Medical Center 4,200
ALLTEL Corp. 4,000
Timex Corp. 3,873

Cost of Living

The following is a summary of data regarding several key cost of living factors for the Little Rock area.

2004 (3rd Quarter) ACCRA Cost of Living Index: 92.1 (U.S. average = 100.0)

2004 (3rd Quarter) ACCRA Average House Price: $204,003

State income tax rate: Ranges from 1.0% on the first $2,999 of net taxable income to 7.0% on amounts over $25,000

State sales tax rate: 6%

County sales tax rate: 0.0051%

Local income tax rate: None

Local sales tax rate: 0.005%

Property tax rate: $69 per $1000 of assessed valuation (2001) (assessed valuation = 20% of market value)

Economic Information: Little Rock Regional Chamber of Commerce, 1 Chamber Plaza, Little Rock, AR 72201; telephone (501)374-2001; email chamber@littlerockchamber. Arkansas Department of Economic Development, One Capitol Mall, Little Rock, AR 72201; telephone (501)682-1121; toll-free 1-800-ARKANSAS; fax (501)682-7394; email info@1800arkansas.com