by Caleb Talley
Mike Preston is the executive director of the Arkansas Economic Development Commission, the state agency tasked with creating economic opportunity for the state.
The Florida native joined the AEDC in 2015, shortly after Gov. Asa Hutchinson’s election to office. Together, they have traveled the globe, promoting the state and attracting industry. “It’s been a wild ride, but I’m loving every minute of it,” Preston says.
On their overseas trade missions, the pair have focused primarily on economic development for the Natural State. Their goal, he says, is to put the countries of the world on notice, showcasing all that Arkansas has to offer.
“We’ve been all over the world,” says Preston. “When the governor and I first met, we talked about how to bolster economic development in the state of Arkansas. Really, we have to look outside the borders of the U.S. We’re a global state… We want to let other countries around the globe know how great of a business climate we have. Our goal is to take that message all over the world, and we’ve been fairly successful in doing so.”
Much of Preston’s time abroad, he says, has been spent in Asia. Their efforts in the region have resulted in significant investments in the Arkansas economy by Chinese companies. Preston and the governor have also spent time in Europe, opening an office in Germany, as well as visits to Israel.
“We continue to bring in foreign direct investments from Europe,” says Preston. “We actually just opened a European office, with representation in Berlin. Germany and France, in particular, have strong economic ties to Arkansas.
“And we’ve started to venture into a couple of new markets, including Israel,” he continues. “With some of the stuff involving the governor’s computer coding initiative and cyber security, Israel is really on the forefront of that, so we wanted to be on their radar.”
The state also maintains strong trade relationships south of the border, with partnerships in Mexico, while continuing to monitor trade opportunities in Cuba, as well. “A new opportunity began to open with Cuba, when relations were beginning to normalize,” he says. “We were the first state to have a governor lead a delegation to Cuba, post restoration of democratic ties.
“Things have changed,” he adds. “There have been some political shifts at the federal level, as well as some issues down in Cuba, making it a little more difficult in the last 12 to 18 months. But when things get to a point with Cuba where we can, we want to be first in line.”
According to Preston, trade opportunities in Cuba could be huge for Arkansas’ rice and poultry industry. The island nation was also considering opening an office in Little Rock, prior to a deterioration in diplomacy at the federal level.
“We’ve taken our scope, in Arkansas, and broadened it,” Preston says. “We want to make sure the world knows what’s going on with us.”
Growing Chinese investments
And what’s going on with Arkansas is a significant increase in Chinese investments in nearly every corner of the state.
The Sun Paper company recently increased their planned investment in a mill in Southwest Arkansas, with plans to spend upwards of $1.8 billion, creating hundreds of new jobs. Preston expects dirt to turn on that project by the end of the year.
In East Arkansas, the Shandong Ruyi textile company is working on plans to turn a former Sanyo factory into a cotton processing plant, with a $400 million investment, creating upwards to 800 new jobs. Preston said the project to retrofit the factory will begin this summer.
“They’re just as pleased as they can possibly be with where things are,” Preston said of Ruyi, having recently visited China to meet with the company’s CEO. “They have a few people on the ground, and we’ll see people coming over from Asia in the next couple of months for training… They continue to be on course.”
Another Chinese-based garment company is already in operation in Little Rock, and a Chinese-based industrial machinery company is underway in Jonesboro. Preston says the state will likely begin exporting rice to China in the future, as well.
“Every time we’ve gone over there, that’s been a discussion,” Preston says of Arkansas rice. “We met with some officials in the government to talk about some of the sanitary agreements. There are still a few T’s left to cross, with them coming to inspect our facilities here. But our farmers are ready to begin exporting to China. It’s going to be a market for high end rice, and we look for that market to continue to be strong for Arkansas farmers.”
Globalism isn’t a bad word
Preston recognizes that the perception of a global economy has changed in recent years. Populist political figures like Steve Bannon, President Donald Trump’s former advisor, have railed against globalization on any scale, claiming it hurts American workers. Preston says globalization has been instrumental in growing the state’s economy, adding jobs for Arkansans.
“I think that’s a result of a real misunderstanding or a misconception,” says Preston of the negative characterization of globalization. “Most people don’t realize that any product you touch is to result of a global economy. If you were to buy a car, it may have been assembled in the U.S., but there’s a good chance the bumper came from Mexico and passed through Canada to have a coating put on it before it got here.
“We really are in a global economy,” he continues. “What happens in China affects our economy. What happens in Europe affects our economy. What happens here in the U.S. affects everyone’s economy. This is a global marketplace. We’re starting to see governors do what Gov. Hutchinson has done to build international relationships as a state. We’re fortunate to have a governor who sees that, sees the global impact a state can have.”
Foreign investments, according to Preston, have accounted for nearly half of Arkansas’ economic growth in recent years, accounting for a significant portion of the state’s job growth.
“Globalization, through foreign direct investment, is having a significant impact on our state’s economy,” says Preston. “More than 41 percent of our job growth in the past five years is the result of foreign direct investments. Without that, we’d be so far behind. Because of the hard work of everyone here in Arkansas, we continue to be a leader.”
Promoting our own
In addition to recruiting foreign industry heavyweights, Preston and the AEDC have been working diligently to nurture new industries within the state, through a number of accelerator programs targeted at promoting entrepreneurship.
“We partnered, previously, with [Fidelity Information Services] to do an accelerator program in the financial technology industry,” Preston says. “It was very successful, went over very well. We were able to get a couple of companies that grew out of that program to locate in Arkansas.
“We thought, let’s broaden that scope,” he adds. “Let’s open it up. We were able to get the legislature to appropriate funds so that the AEDC could partner with companies to do more accelerator programs.”
Last month, the AEDC announced a partnership with Conductor, Metova, the University of Central Arkansas and Startup Junkie to launch the 10x Cyber Accelerator, a 20-week accelerator designed to scale Arkansas’ high-growth tech ventures. The AEDC awarded a $250,000 match grant for the project.
“It’s going to be focused on cyber security, looking for startup companies and ideas in that industry,” Preston says. “They’ll nurture, give access to capital and do all the things an accelerator does.”
Preston is working to help promote ideas within the healthcare industry, as well.
“We also did an accelerator with Winrock and Baptist Health in the healthcare industry,” says Preston. “It’s kind of a new, outside of the box thinking for economic development. This is a new component to make sure we’re looking for the jobs of the future, looking for the opportunities that millennials are after. We’re nurturing that world.”
With the perception of a sleepy, southern state by many outside of its borders, Arkansas can be challenging to market, Preston says. His goal has been to change those misguided perceptions.
“I think changing the perception for people outside of our state has been a challenge,” says Preston. “Once you come here, you love this state. You see the beauty of it, and all the great things we have and the companies that are here. But when you’re outside of the state or the country, people don’t necessarily know.
“People recognize Walmart and Bill Clinton,” he adds. “We’ll build on what they know, but we have so much more to offer. We have the perception of a sleepy southern state, and we’re so much more than that.”
Another challenge in marketing the Natural State is funding. Arkansas’ “shoe-string” budget for marketing as a business destination is tiny compared to some of its competitors.
“We have just over $1 million for marketing the state as a business destination,” says Preston. “Compare that to other states like New York that has a $100 million budget or Michigan that has a $75 million budget.
“But we found a way to be impactful,” he continues. “With the governor at the table, we’ve gotten a lot of earned media all over the world. Getting over that perception issue with limited funds and resources has been a challenge, but kudos to this team here at AEDC, I think they’re doing a great job.”
When given the opportunity, though, Arkansas will sell itself. The state has a lot to offer, as long someone is willing to look, Preston says.
“People see the beauty of our natural state,” he says. “The vibrant downtown in Central Arkansas, the booming growth of Northwest Arkansas and the agriculture and raw materials of the Delta. It’s easy for us to sell. Our natural resources are something we can’t take for granted. We’re a natural fit for so many companies.”
What lies ahead
In preparing for the future, Preston says the AEDC is working to ensure industries looking to move into the state have a nice place to land. That includes securing sites ready for business.
“I want to make sure we have a product,” he says. “I want to make sure we have sites developed for the next big prospect to come along, shovel ready. That’s something that’s kind of a challenge. We have plenty of land in our state, but we don’t have a lot of good sites that are ready to start producing.”
Another major undertaking is the development of a quality workforce. The state is short on workers. And in order to bring in new jobs, there must be people ready to fill them.
“For me, the biggest thing we need to address is the shortage in workforce,” says Preston. “We’re down to 3.7 percent unemployment. We need to make sure we have workers to fill the jobs we’re bringing in. The states that can get workforce right, train the workforce right, they’ll be the leaders in economic development. I want to make sure Arkansas is well positioned for that.”
Regardless of what lies ahead, Preston and the AEDC are ready to take it head on. The economy is doing well, and the jobless rate in Arkansas is among the lowest in state history. But he isn’t ready to rest on his laurels just yet.
“Times are good right now,” says Preston. “The economy is moving along. But now is not the time to sit back and enjoy. Now’s the time to figure out what’s next.”