Northwest Arkansas continues to find ways to diversify its economy as it grows.
Data collection firms, manufacturers and health care related companies are among the employers adding jobs and helping grow the region and its 500,000-plus residents.
Still, the big three companies in Northwest Arkansas remain the "Big Three."
Wal-Mart Stores, Tyson Foods and J.B. Hunt Transport Services continued their global growth in 2014 and appear poised for a strong 2015. All three are considered among the leaders in their respective fields of retail, protein and transportation, and the trio remain the foundation of business in Northwest Arkansas.
Combined they generated more than a half-trillion dollars in revenue for the previous fiscal year.
"It is very, very difficult to overstate how important they are," said Kathy Deck, director of the Center for Business and Economic Research at the University of Arkansas. "Having a region with more than just one big name is really critical."
WAL-MART
Doug McMillon continues to focus the company on improving conditions for employees, creating a better in-store experience for customers and expanding reach online as he enters his second year as Wal-Mart president and CEO.
All of the retailer's 1.3 million associates in the U.S. will earn at least $9 per hour beginning next month. Part of Wal-Mart's $1 billion employee initiatives calls for employees to make at least $10 per hour in 2016, and the company is implementing changes to its scheduling and training programs.
McMillon has said he believes a better customer experience will result from the efforts aimed at improving employee morale. Wal-Mart reported $485.7 billion in revenue last year and improved same-store sales by 1.5 percent in the fourth quarter of its previous fiscal year, the first increase there in more than two years.
"It's clear to me that one of our highest priorities must be to invest more in our people this year," McMillon said in announcing the initiatives. "Wal-Mart has represented a ladder of opportunity since Sam Walton started the business, and we want to make sure that's the case going forward everywhere, including here in the United States."
Wal-Mart also continues to invest in its online business. The company is projected to spend up to $1.5 billion this year for e-commerce and technology improvements. Budgeted expenses include the continued roll out of Wal-Mart's global technology platform, Pangaea, and the implementation of additional dedicated online fulfillment centers.
Its online sales improved 22 percent worldwide during the most recent fiscal year, accounting for about $12 billion in revenue. Online sales are projected to increase between 30 and 40 percent over the next three years.
Wal-Mart remains committed to its brick and mortar stores. It will build another 250 stores in the U.S. this year. Wal-Mart's growth strategy involves what company executives refer to as blending its digital and physical assets.
"We are delivering Wal-Mart where you are, whether you shop online, through mobile or in stores," Neil Ashe, global e-commerce CEO, recently told investors.
TYSON FOODS
Donnie Smith, chief executive of Tyson Foods, likes to say his company went from being a branded house to a house of brands in 2014.
Tyson bought Hillshire Brands and inherited the company's iconic brand names: Ball Park, Sara Lee, Hillshire Farm, Jimmy Dean and State Fair. The acquisition was the largest in Tyson's history at $8.55 billion, including debt.
The purchase marked a change in Tyson's strategy. In addition to selling uncooked, minimally processed meat, Tyson has a new focus on uniquely branded, cooked, flavored and packaged foods, which command higher prices.
"Brands like Hillshire and Jimmy Dean and Ball Park, you know, they don't become available very often," Smith said during a conference call announcing the deal. "We're purchasing these assets not for what they are today, but for their potential to create additional value over time."
Tyson expects yearly sales to increase to about $42 billion in 2015 from $37.6 billion.
After the addition of Hillshire to Tyson's portfolio, the company's prepared foods segment grew from $907 million in sales in the first quarter of 2014 to $2.1 billion in 2015. The segment had a profit of $71 million during the quarter, the first with Hillshire fully integrated into Tyson.
Outside branded foods, Tyson earned a record profit margin in its chicken segment, netting $351 million in the first quarter of 2015, and the pork segment made $122 million as increased demand drove higher prices and more sales.
Tyson lost $6 million in its beef segment because of a tight supply of beef and the high prices that followed. The company also lost $14 million in its international segment and is in a "holding pattern" in China due to food scares.
Though Hillshire was headquartered in Chicago, Tyson's headquarters remains in Northwest Arkansas.
"A small number" of employees were laid off in Springdale because they served duplicate functions. Tyson also moved marketing contracts out of Arkansas and into Illinois, a move that could hurt advertising and marketing companies in the state.
Analysts don't expect additional employment shifts.
J.B. HUNT
J.B. Hunt landed on the Fortune 500 list for the first time two years ago, prompting John Roberts, chief executive officer, to say it was a distinction the company intended to extend.
"It's a place we like to be, and we're going north from there," Roberts told shareholders.
J.B. Hunt accomplished both last year, continuing to cement its place as one of the leaders in the transportation industry. The Lowell-based company, which was No. 486 in its first appearance on the Forbes list, climbed to 454 last year after revenue topped $5.5 billion in 2013.
It could take another step after reporting $6.16 billion in revenue in 2014 to go along with $632 million in operating income. Both were a 10 percent increase from the year before. The company's earnings per share also climbed from $3.16 to $2.87.
Much of the company's success has been tied to intermodal transportation, which accounted for $3.7 billion in the fourth quarter of 2014. But ongoing success doesn't come without challenges.
Roberts and David Mee, chief financial officer, spoke about some of the issues during the Barclays Industrial Select Conference in Miami. Most of the challenges revolve around ongoing capacity and congestion issues on the rails, leaving Roberts to say J.B. Hunt is "nowhere near where we need to be or where we've been in the past."
Roberts also was optimistic there were signs of improvement in both rail velocity and reliability that will pay off as J.B. Hunt grows a sector it began in 1989.
"Intermodal for railroad is new business," Roberts said. "It's incremental business, and there is more to be had out there."
Northwest Arkansas
As J.B. Hunt, Tyson and Wal-Mart continue to grow, look for Northwest Arkansas to grow right along with its Big Three.
The region is home to seven times the national average for white collar workers and the three companies help drive innovation in the region, according to the Northwest Arkansas Council.
Northwest Arkansas' economy is expected to grow 4.2 percent annually until 2020, a figure the council said puts it among the top metropolitan areas in the nation. Forbes' 2014 list of Best Places For Business and Careers ranked the region No. 37 in the nation.
"When we come to talk about Northwest Arkansas as a place that has core competencies and a place where you do have talent, having a world-class logistics company in a place that also has world-class retailer and a world-class protein provider, it's a great match," Deck said.
NW News on 03/29/2015