Hog wild: Springfield businesses tap into northwest Arkansas market

by Eric Olson

SBJ Reporter

eolson@sbj.net

Northwest Arkansas is the nation's leading economic engine, and Springfield businesses are taking notice.

According to Milken Institute, a Santa Monica, Calif.-based economic think tank, the Fayetteville-Springdale-Rogers Metropolitan Statistical Area ranks No. 1 on its list of Best Performing Cities Where America's Jobs are Created, ahead of Las Vegas and up from No. 23 last year. The report was released in June.

Since then, a handful of Springfield-based businesses have opened satellite offices across the state line.

It's not the Milken accolade alone that's attracting new business; it's the potential for big dollars that's luring Springfield business owners.

"It doesn't hurt that you've got three Fortune 500 companies sitting right in your backyard," said Tom Ginn, vice president of business development for the Rogers-Lowell Area Chamber of Commerce.

The headquarters of Wal-Mart in Bentonville, J.B. Hunt Transport Inc. in Lowell and Tyson Foods in Springdale are drawing other national names, such as Kellogg's, Kraft, Walt Disney Co., Hallmark, Hershey, Coors and Levi Straus & Co. that do business with northwest Arkansas' big three. The area, historically known for its agriculture, hog farms and the University of Arkansas, is rapidly changing.

Vendor migration has spawned Pinnacle Hills a billion-dollar, 400-acre development in Rogers, home to regional offices of Kraft, Kellogg's, Johnson & Johnson and Walt Disney, among others.

National developer John Q. Hammons and contractor William F. Killian, both principals of Springfield companies, have jumped headfirst into the Pinnacle Hills project.

Hammons teamed up with Killian Construction Company to build a $40 million Embassy Suites that opened in May within Pinnacle Hills, a development of partners J.B. Hunt and northwest Arkansas entrepreneurs Bill W. Schwyhart and Tim Graham. The trio makes up Pinnacle Group.

"Hammons has raised the bar with his Embassy Suites right in the center of our development," Schwyhart said. "We've almost adopted him down here."

Hammons has since announced he's building a $25 million, 100,000-square-foot convention center and a $30 million Marriott Hotel there.

The Embassy Suites and Marriott hotels will bookend the convention center at Pinnacle Hills, located alongside Interstate 540, the north-south highway through Rogers that connects Bentonville, Springdale and Fayetteville.

According to Pinnacle Group's Schwyhart, Pinnacle Hills, which sits seven minutes from Wal-Mart, four minutes from J.B. Hunt and 14 minutes from Tyson, is one-third complete. More than 1 million square feet of office space is planned.

Great Southern Bank wants a piece of that pie. The Springfield-based bank opened a commercial loan production office in Rogers in September.

"We were playing in that sandbox long before we opened an office there," said Gary Lewis, vice president of lending. "But we felt we needed to be on the ground in a bigger presence there."

Killian Construction Co., brought to the area by Hammons' project, is growing on its own northwest Arkansas presence. The construction firm opened a satellite office in June at Pinnacle Hills in the J.B. Hunt Parkway Tower.

"We're making relationships down here," Killian said during a stopover in Rogers en route to a meeting in Oklahoma. "It is going to be a steady market."

The company's first permanent expansion is paying dividends as Killian Construction won the construction management contract of Pinnacle Promenade and Pinnacle Towers, a combined $150 million project of 875,000 square feet of office and retail space at Pinnacle Hills.

"We're actively marketing another $200 million (in projects)," Killian added.

Developing in northwest Arkansas is nothing new to Hammons, who refers to the area as the 51st state.

"I started playing that (card) 20 years ago," Hammons said of the northwest Arkansas area.

Hammons said construction of the Holiday Inn and Northwest Arkansas Convention Center in Springdale in the late 1980s resulted from his friendship with Sam Walton, Wal-Mart's founder. The two visionaries decided the market needed a hotel.

"He kept calling me and said, Now am I going to build this hotel or are you?' I said, Sam, where are we going to get the money?'"

Walton's start-up Arvest Bank lent Hammons $6 million the most the bank could lend at the time. When Hammons hit the market there were fewer than 800 rooms there, he said. Now there are 5,000 rooms.

According to the Rogers-Lowell Area Chamber of Commerce, job growth in the MSA was 9.2 percent last year. Ginn said it is largely fueled by the service industry.

"We have a lot of business travelers here," Ginn said. "They come and do business with our companies, spend three or four days here and then go back home."

As a result, sales tax revenue is up 10 percent this year, Ginn added. The residential market also is booming with some new, million-dollar homes, something never before seen in the area, Ginn said.

"When you bring in jobs, you get a lot of housing starts, a lot of high-dollar homes," he said.

Killian is among those asserting his presence in the community. He makes weekly visits to Rogers only a 17-minute flight on the Beechjet 400 he owns with Hammons and serves on the local chamber advisory board and is a member of the new Pinnacle Country Club. "(Killian Construction is) assimilating into the community," Killian said. "We're going to go to church here, and work and play and raise kids here. That's our intent."

He ultimately hopes to grow the Rogers office to 50 employees, the same number employed in Springfield.

Ginn expects continued migration of Wal-Mart's more than 20,000 vendors.

"Some of them have a lot of eggs into that basket. We will see continued growth, anywhere from 500 to 1,000 or more different companies locating here in the next several years."

Although it doesn't do business with Wal-Mart, J.D. Dickinson Compressor Co. is another Springfield company investing in office space in northwest Arkansas. Though the manufacturer has long served customers in the area, it opened a branch office in Mountain Home last month.

"We expect to increase our sales because of it," said Don Dickinson, president and owner. The goal is by 10 percent. Already, about 15 new service contracts have been added, he said, including Ranger Boats in Clifton.

Dickinson said about half of the company's 500 customers are based in northwest Arkansas or southeast Missouri, which also is served by the new office.