Gov’t policies take a toll on Little Rock

John Dimsdale Apr 20, 2010

Gov’t policies take a toll on Little Rock

John Dimsdale Apr 20, 2010


Kai Ryssdal: As the economic policy story has played out over the past couple of years with bailouts and stimulus and health care and financial reform, it’s easy to think that what happens in Washington D.C. is what’s happening out in the actual economy. Because the politics of economics does get a lot of headlines, after all. What we don’t often hear much about, though, is how what happens in Washington plays out in the rest of the country.

Little Rock, Ark., is faring better than most. An unemployment rate of 7.3 percent looks pretty good right about now. So it’s worth asking the question, how has Washington affected the place? We sent John Dimsdale from Washington to find out.

JOHN DIMSDALE: In a sprawling set of hangers alongside Little Rock’s airport, the French corporate jet maker Dassault Falcon outfits the private jets used by executives of Fortune 100 companies all over the world. There are leather seats, flat-panel TV screens in laminated wood appointments of hickory, cherry or oak. My factory tour guide was Rick Cart.

RICK CART: The customer has handpicked everything from the silver and crystal that will go into these cabinets, to the espresso, microwave machines, the shades of gold, the laminate.

Dassault Falcon is one of Little Rock’s largest employers: wood-workers, painters, carpet layers. Last year the factory outfitted a record 77 jets using 2,000 workers. But contracts for new corporate jets have plummeted. Dassault Falcon had to lay off nearly a quarter of its workforce. And not just because of the recession.

Vice President Robert Smith says Congress heaped insult on injury when it grilled auto executives for flying in their private jets to ask for a taxpayer bailout. That hurt sales and cost jobs.

ROBERT SMITH: You go back and remember the famous Citibank airplane. I think they got pressured, since it is Citibank, into canceling that jet. That was an airplane we were building here in Little Rock, and the day that airplane was canceled we were actually moving it across the tarmac over to the flight line to get ready for delivery.

Smith says Congress should be more sensitive to how even off-handed remarks can affect business.

SMITH: You know, every time an airplane is canceled that affects an awful lot of workers here.

Not far away from Dassault Falcon is a newer factory. A year ago the Indian company Welspun opened a giant warehouse to make oil and gas pipes. It’s the company’s first facility outside India. Little Rock attracted Welspun, with generous tax breaks, hospitality, and a location near a major river. But the timing was not good. Recession ate away at the expected orders for pipes.

And Vice President Rajesh Chokhani says the economy caused some second thoughts about the expansion into Little Rock.

RAJESH CHOKHANI: There were times. There were a lot of thoughts. Not second, there were third fourth and fifth thoughts gone into the mind.

So far Chokhani hasn’t laid off any of the 400 workers, but he’s counting on Washington’s endorsement of expanded off-shore oil drilling.

CHOKHANI: Because if any drilling happens, the medium for transportation of oil or gas is pipes. So that is directly affecting our business. And it’s very positive. It’s good.

Washington can give; it can also take away. Little Rock’s banking community is upset with Congress’s vote for a government takeover of student loans.

Bill Scholl, the president of Arkansas’ second-largest bank, First Security, says his bank has about $40 million in outstanding student loans. The bank likes helping Arkansas families it’s done business with for years.

BILL SCHOLL: We’d like to stay in that business. It’s not a very profitable business, but it’s a good business from the total customer-relationship side. So we’re frustrated with that.

And Scholl says Little Rock’s business community doesn’t give Washington’s efforts to soften the recession much credit. He says the Federal Reserve and the Treasury Department did the right thing saving the big banks and keeping credit flowing. But he’s not impressed with federal incentives to create jobs.

SCHOLL: We’ve seen a little bit of an effect from the stimulus on, say, government-type jobs, but we haven’t seen a real fallout into the industrial world of any great significance at this point.

And Little Rock Chamber of Commerce President Jay Chesshir says local businesses worry about a regulatory crack down on things like credit cards or carbon emissions.

JAY CHESSHIR: Making regulation so burdensome to where businesses can’t be nimble in this global environment is going to be detrimental to our future economy, much less in getting us out of this existing negative economy.

Little Rock business leaders say their area avoided an economic bust because it didn’t have an economic boom. Slow, steady growth, helped along by their central location and diverse economy are the reasons for their success. And all that’s in spite of government policies, not because of them.

In Little Rock, I’m John Dimsdale for Marketplace.

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