Legislative executive summary of steel mill analysis disclosed


A legislative report on the Big River Steel mill project offered a second opinion on the state’s $1.1 billion superproject questioning an initial report from the Arkansas Economic Development Commission.

The executive summary for Big River Steel reviewed steel market conditions and a financial cost-benefit analysis. The report said that the potential market size for Big River’s products is roughly 9 million short tons over the next 10 years, but the report warns that decreasing margins could affect profits and corporate income taxes. IHS also reviewed two cost-benefit analyses conducted by the AEDC. IHS said AEDC “has, to some extent, overestimated the long-term, net economic benefits of the incentives” being considered.

“We don’t see our cost benefit analysis as inconsistent with that provided by IHS,” said Grant Tennille, director of AEDC. “We’ve said from the outset of this project that there are risks involved in this, and every other, business venture. We have worked for more than a year to understand those risks and mitigate them.”

Deltic Timber CEO Ray Dillon sees spec home rebound

The intertwined timber and real estate industries have been embattled since the depths of the recession. Deltic Timber Corp. CEO Ray Dillon is bullish on the future. Dillon sees spec home construction making a comeback, and he says that’s significant.

“We see builders today are beginning to venture into the spec home building market again,” Dillon said. “They have a belief that they’ll be able to move the one that they’re building or they want to build two or three simultaneously to take advantage of the economies of scale that they can get with their various subs that they work with.”

A plateful of hospitality with Montine McNulty

The head of a $5.7 billion industry in Arkansas, Montine McNulty, director for the Arkansas Hospitality Association, says her group is coping with a variety of factors in a slowly recovering economy, most notably consumer spending and health care.

“Everybody’s sorting through it and trying to determine the impact on their business,” McNulty says. She added that the new federal health care will help some of her members and hurt others. “I think for awhile most people had their heads buried in the sand about it. Once they realized it is the law and its going to be carried out, they seem to be a little more interested in how its going to affect them.”

Freight reports suggest soft, uncertain economy

Reports from Arkansas-based trucking companies and numbers from two closely watched national freight reports paint the picture of a national economy that is soft and uncertain.

The Cass Freight Index reported a 5.6 percent increase in shipments in February, which helped counter a January decrease of 4.8 percent. The February increase also ended four consecutive months of Index declines. Cass uses data from $22 billion in annual freight transactions processed by its information processing division to create the Index. The data comes from a Cass client base of 350 large shippers.

The American Trucking Association’s February Truck Tonnage Index rose 0.6 percent, down slightly from a revised 1 percent gain in January. Counter to the Cass Index, the February ATA report marked four straight months of increases – a streak not seen since late 2011.

Steel processor bringing 40 jobs to Fort Smith

Atlanta-based Phoenix Metals Company plans to invest $12 million in a new 65,000-square-foot metal processing and service operation at Chaffee Crossing that could employ up to 40 with an average wage of $15 per hour. The deal was finalized Thursday with a vote by the Fort Chaffee Redevelopment Authority to approve the land transaction. Phoenix Metals has 12 operations, including a processing site in Russellville. Phoenix uses advanced laser and other cutting machines to provide cut-to-length orders, precision blanking, slitting, polishing, plasma cutting, shearing, and sawing.

State lawmakers form Aerospace and Aviation Caucus

Over 25 House and Senate members met Monday at the state Capitol to form the Legislature’s first Aerospace and Aviation Caucus. The industry accounts for more than $1.8 billion in U.S. exports and 9,000 jobs in Arkansas.

The caucus said it will aim to educate legislators and highlight the aerospace, aviation and defense industries and their economic impact on Arkansas. The group also wants lawmakers to better understand the burdens and obstacles companies confront and how to make flying safer and more accessible.

Bipartisan group touts new jobs bill

Rep. Darrin Williams, D-Little Rock, and Sen. Jonathan Dismang, (R-Searcy, touted HB 1832, the Arkansas New Markets Job Act, a bill both men say could lead to significant investments in Arkansas. The bill encourages private sector investment in small businesses, particularly in low-income regions, by providing tax credits tied to private capital investments in new and existing business.

The bill would authorize Community Development Entities (CDEs) that would coordinate private investment and funding for qualified businesses. Under provisions of HB 1832, an Arkansas corporation, limited liability company, association, partnership, or other business entity that agreed to retain or create jobs that pay an average wage of 115 percent of the federal poverty level would qualify for premium tax credits for up to 7 years.

Businesses that derive revenue from retails sales or at least 15 percent of annual revenue from the rental or sale of real estate would not be qualified for the credits.

Arkansas Medicaid private option plan could result in ‘no additional costs’

Arkansas Medicaid officials say that a state plan to move Medicaid-eligible low-income citizens into a “private option” that would include subsidized plans in forthcoming health insurance exchanges could add less than 15 percent to costs, but it could also result in negligible additional expenses when combined with other factors.

A Department of Human Services report, which included legal research, actuarial consulting and input from the Arkansas Insurance Department, was released late Monday.

It said, “These estimates find that the private option can be fully funded with existing resources at the state level and would add less than 15 percent to federal health-care costs in Arkansas. In some realistic scenarios, there could be no additional federal costs at all.”

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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 email address is robytalkbusiness.net; his website address is www.talkbusiness.