The proposed Republican tax plan, if passed, could have a huge impact on future industrial development in Arkansas, Mike Preston, executive director of the Arkansas Economic Development Commission, told The Sentinel-Record Wednesday.
"If the corporate income tax is lowered, look out! We're going to have a lot of interest from companies that have been sitting on the sidelines for awhile and resting and residing in other countries. They are going to suddenly have an interest in the U.S.," he said.
"They want to be in our market and have access to our people and our economy, but they don't want to pay our high taxes. If we can get our taxes in line more with other countries we'll have our hands full with companies wanting to come in."
He said he and his economic development counterparts in other states "will have to get even more competitive because we're all going to want a piece of that. It's going to be a good problem to have."
Arkansas has already succeeded in landing international investments with the Chinese Sun Paper Co.'s pulp mill in development near Arkadelphia. While the operation is "still in the process," Preston noted three of the four permits needed are complete, with only the air quality permit still pending.
"That's one of the toughest ones to get through but they are working with consultants out of Europe. It's kind of a multi-language barrier we're dealing with. We're here in Arkansas speaking English with a Chinese company working with a European company out of Finland. We're trying to cross all our 'T's and dot all our 'I's," he said.
He said within the next week the company should have all its paperwork to submit to the Arkansas Department of Environmental Quality and then they go through a public comment process. "They should be able to start turning dirt sometime in 2018. This is a large $1.3 billion plant and it's going to take awhile to get it off the ground."
Preston said there will be "a lot of construction jobs in the meantime to get the plant up and running" and once operational it will offer a minimum of 250 jobs paying an average of $52,000 a year and indirect jobs supporting the timber and trucking industries.
"We have an overabundance of timber supply which is a renewable natural resource we need to utilize."
With construction of the plant estimated to take 18 to 24 months, it will likely be 2020 or early 2021 "before they open their doors." He noted the company plans to add some lines to support China's rapidly growing packaging and shipping industry. The Chinese company, Ali Baba, is equivalent to Amazon here, he said.
"E-commerce has taken off there just like here, but they don't have the raw materials to support it. So we struck at just the right time because we can support that industry. We're talking cardboard and packaging of all kinds coming out of there which is very good for long-term sustainability."
Preston stressed that Sun Paper will have "the most state-of-the-art paper mill ever seen in this country." He said he toured a new paper mill in China and "it amazed us it didn't have the smell. I'm sure on certain days you're able to get a twinge of it, but the days we were there we didn't see it. It won't have the smell and negativity normally surrounding a paper mill."
The AEDC's work with Sun Paper lead to the acquisition of another Chinese company to be located in Forrest City, Preston said, noting both companies are based in the Shandong province and the chairmen of the companies "are good friends." The Sun Paper chairman actively encouraged the company, a textile plant, to move to Arkansas.
The plant will be located in the former Sanyo plant so they won't have to build a new facility, just "retrofit" the existing one, he said. "It's a 1.4 million-square foot building that has been vacant for the last 12 years. They will employ 800 people with a $410 million investment, spinning Arkansas cotton into yarn for textile they are going to ship all over the world."
He said they should start production in mid-June 2018 with "the full scale ramp up" to being fully staffed still about two years away. "They will be able to start spinning in about eight months or so."
Preston said Arkansas is in good shape statewide with a 3.6 percent employment rate, but "there is always room for growth. We see a lot of folks employed right now, but in my opinion many are underemployed. They have a skill set they could translate into a better job. We had the 14th fastest-growing GDP (gross domestic product) last quarter so we are moving in the right direction."
He said there are 70,000 more Arkansans with jobs than there were in January 2015 when Gov. Asa Hutchinson took office. Preston was appointed as AEDC director by Hutchinson in March 2015.
"A key campaign platform of his was economic development and job creation. He wanted to make it a center piece of his administration," he said, noting Hutchinson did a nationwide search for a director and "I was fortunate to be on the short list." Preston had previously worked for more than eight years in economic development in Florida.
He said there is a lot of interest in Arkansas right now with industries "looking to move in. Our problem is finding available work force. That's why we want to find those workers who are underemployed we can move into a better job."
Preston praised The Greater Hot Springs Chamber of Commerce and the Hot Springs Metro Partnership, and noted industries "look for communities with strong chambers and economic development teams and really rely on them to push the ball across the finish line. The product lies in the local community."
He said Hot Springs "has done a great job. Tourism will continue to be the driver in Hot Springs. We want to support that and make sure it grows and make sure industry we bring in supports that."
Local on 11/30/2017