In today's global economy, the competition for jobs is fierce. It requires Arkansas' economic development team to be relentless, creative, and always looking for an advantage. The reason we are so aggressive in this arena is because ultimately it's about enhancing the livelihoods of all Arkansans through economic prosperity.
While being competitive--being in the fight--is great, my desire as governor is to win.
Winning at economic development doesn't happen overnight, and sometimes it's what we learn from the ones we didn't win that makes us that much better for the next opportunity.
Economic development is a process with many layers. It begins with building competitiveness; this is everything from improving the tax structure, lessening burdensome regulations, and building infrastructure. The process also includes building a work-force pipeline, marketing available sites and buildings, targeting sectors that will be successful in our state, selling the state across the globe, and negotiating incentives.
Unfortunately, critics like to focus on one aspect of the process--incentives. Those critics do not look at the entire picture of why and how we do economic development. If they did, they would see that incentives are important to our success. I like to think of incentives as an investment to help us overcome competitive disadvantages, which may be a needed rail spur at a location or assistance in training workers.
In Arkansas, our incentives are based on performance and contain "clawbacks." In other words, if companies do not meet certain performance thresholds, they must return a percentage of those funds to the state. That's how we protect our investment.
It's important to note that while incentives do not supplant a good tax structure and regulatory environment, they are meaningful tools in assisting with lower startup costs and associated risks. Incentives will never make a bad deal good, but they can make a good deal great.
In 2003, Mississippi County residents voted to tax themselves a half-cent over 10 years, raising approximately $2.4 million per year. That local commitment laid the groundwork to turn a dream into a reality 13 years later when Big River Steel built a $1.3 billion facility on the banks of the Mississippi River at Osceola.
In all, nearly $200 million in local and state performance-based incentives coupled with another $125 million in bonds were initially invested in Big River Steel. By the way, those loans were paid off 17 years early.
Fast forward to June 2018 when Big River Steel announced it would invest another $1.2 billion on expansion to double its steel production to 3.3 million tons annually. Approximately 500 new, good-paying jobs would be added, meaning that more than 1,000 people will work at Big River Steel in Mississippi County when the expansion is complete.
In all, the steel industry in Arkansas employs more than 7,800 people. And today, Mississippi County is one of the leading steel-producing counties in the United States.
Big River Steel is an example of what is possible when state and local entities work together for the common good.
Four years ago, on my first day as your governor, I picked up the phone and called the fine people at Sig Sauer and boldly asked them to seriously consider Arkansas for the production site of its pistol and revolver ammunition.
After much work behind the scenes, Sig Sauer opened its state-of-the-art manufacturing facility 18 months later in Jacksonville. The incentives package we offered was key. Sig Sauer received $800,000 from the Governor's Quick Action Closing Fund, a tax credit based on new-job payroll, and sales-tax refunds on building materials, some machinery and equipment. The closing fund assistance helped overcome location disadvantages.
This is a deal that benefits everyone--Arkansas taxpayers, Arkansas workers and Sig Sauer. That's what we strive for. A good deal for Arkansas has now become great!
As I begin my second term in office I remain steadfast in my commitment to economic development. I will continue to call CEOs, build relationships with site-selection consultants, and travel the globe telling the story of Arkansas.
It will take a continued partnership with the state, local communities, educators, legislators and beyond to ensure we build competitiveness throughout the state and have the right business climate in place. This includes various incentives, as we strive to make Arkansas a national leader for job creation.
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Gov. Asa Hutchinson has been governor of the state of Arkansas since January 2015. Since that time, the governor and the Arkansas Economic Development Commission have completed more than 400 projects, amounting to more than 17,000 new, highly-competitive jobs.
Editorial on 01/18/2019