By David J. Sanders
Only the strong survive economic downturns like the one we’re in now. And sometimes, seemingly clairvoyant individuals – entrepreneurial, inventive and resourceful – demonstrate vision and know-how by starting up enterprises that succeed during difficult times.
While many companies file for bankruptcy or vanish altogether during recessions, others can trace their beginnings back to depressed economic periods. At least six Arkansas-based companies fit that criterion:
- Murphy Oil
- Deltic Timber
- Baldor Electric
- Tyson Foods
- Dillard’s
- Wal-Mart
The one-time start-ups turned publicly traded companies are the focus of a new policy memo from the Arkansas Policy Foundation entitled, “The Darkest Hour is Before Dawn,” in which the group’s executive director, Greg Kaza, captures those companies’ humble beginnings.
C.H. Murphy, Sr.’s Murphy Oil and Deltic Timber, both headquartered in El Dorado, were founded during the tumultuous Panic of 1907 — a recession that started in May of that year and continued until June 1908. Muurphy Oil started when the first oil production was established in Northern Louisiana’s Caddo Field. And, Murphy’s initial investing in timberland and a South Arkansas sawmill set roots for Deltic Timber.
Baldor Electric, now headquartered in Fort Smith, started in St. Louis, Mo., in March 1920, at the beginning of the recession that followed World War I (January 1920 to July 1921).
The inspiration for Springdale’s Tyson Foods started during the Great Depression (August 1929 to March 1933) in 1931 when John Tyson moved his wife and infant son (Don) to Northwest Arkansas, where he “made his living hauling hay, fruit and chickens for local growers.”
The Dillard family, which still has family members in the top leadership positions of Little Rock’s Dillard’s Department Stores, opened its first store in Nashville, near the end of the recession that stretched from May 1937 to June 1938.
Sam Walton opened a Ben Franklin store in Newport on Sept. 1, 1945, late into the recession that followed World War II (February to October 1945). And though Wal-Mart incorporated in 1962 during economic expansion, Walton didn’t let a recession (December 1969 to November 1970) keep him from taking his discount retailer public in October 1970.
But are these Arkansas companies, spawned by some of state’s most celebrated businessmen during turbulent economic environments, the exception or the rule?
According to Gary Beach, publisher emeritus of CIO magazine, several exceptional companies set roots during recessions.
His analysis, published in CIO last month, revealed that 35 percent of the Fortune 500 incorporated during recession. But as he narrowed his list by focusing on larger companies, his findings were all the more impressive.
46 percent of the Fortune 100 incorporated during an economic downturn. 52 percent of the Fortune 50, 64 percent of the Fortune 25 and seven of the Fortune 10 “all opened their doors while economic pain was all around them.”
(Beach relied on Wikipedia’s list of U.S. recessions, not the National Bureau of Economic Research’s comparable list. According to the NBER data, eight of the Fortune 10 incorporated during recessions. The NBER makes the definitive ruling on a recession’s beginning and end.)
What’s the lesson?
The news media (present company included) usually focus on a recession’s negative effects – unemployment, stagnant wages and raging government deficits – and what, if anything, elected leaders are doing to alleviate the pain.
Perhaps we’re missing the other half of the story.
Right now, there’s probably a kid in a basement inventing the next big thing, or a savvy, risk-taking entrepreneur capitalizing on the cheaper cost of doing business.
While others fret, there are innovative companies pioneering emerging markets. And somewhere there is a laid-off executive finally starting that business she’d always dreamed of owning. All are looking ahead so that when the bust is over and the economic recovery begins, they’ll be positioned to prosper.
Some see it; others don’t. The darkest hour is before dawn.
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David J. Sanders writes twice weekly for the Arkansas News Bureau in Little Rock and is the host of Arkansas Education Television Network’s “Unconventional Wisdom.” His e-mail address is DavidJSanders@aol.com.
