Report gives Arkansas C’s for manufacturing, logistics

LITTLE ROCK — A new report that grades states on the economic environments they offer for manufacturing and logistics gives Arkansas a C in both categories.

The 2013 Manufacturing and Logistics National Report, released Tuesday by the Center for Business and Economic Research at Ball State University, assesses how well states handle factors that can predict success or failure.

Arkansas’ grades in the 2013 report are slightly worse than its grades in the 2012 report, which were C-plus in manufacturing and C in logistics.

The state’s grades in each of the factors considered in the 2013 report were: Human capital, F; worker benefit costs, A; tax climate, C-minus; expected liability gap, C; global reach, C; sector diversification, C-plus; productivity and innovation, F.

The grades were arrived at by aggregating data from various sources, then ranking states from 1st to 50th and assigning corresponding letter grades.

“Arkansas received an F grade in human capital due to reduced relative enrollment in adult basic education, down from last year’s D,” said CBER director Michael Hicks. “Also, the state’s relative tax climate worsened. Overall educational attainment remains the Achilles heel of Arkansas.”

Two states, Indiana — home to Ball State — and Ohio, receive A’s in the 2013 report in both manufacturing and logistics. Hawaii has the lowest grade with F’s in both categories.

Grant Tennille, director of the Arkansas Economic Development Commission, said Tuesday, “While I’m certainly not satisfied with a C grade, it appears by my count that roughly half the country got a C grade, and certainly with the exception of Tennessee all of our neighboring states got a C grade.”

The report gives Tennessee a B in manufacturing and a B-plus in logistics.

Tennille said enrollment in adult basic education has dropped as the economy has improved and people have found jobs. He acknowledged that the state is weak in degree completion but said current efforts to address that problem should bear fruit in coming years.

Some aspects of the report were puzzling, he said, including the comment that the state’s relative tax climate has worsened.

“We’ve done nothing over the last seven years but cut taxes on business,” he said.

Tennille also said the logistics grade seemed low for Arkansas, which is home to J.B. Hunt of Lowell, one of the few logistics companies in the Fortune 500, and Walmart, which owes much of its success to its innovations in logistics.

“The modern logistics industry was all but invented in Arkansas,” he said.