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Commerce secretary emphasizes efficiency, workforce development at Economic Outlook Luncheon

by Caitlan Butler | September 18, 2023 at 12:00 a.m.
Arkansas Secretary of Commerce Hugh McDonald, left, accepts a gift of El Dorado-made goodies from El Dorado-Union County Chamber of Commerce Ambassador Mark Day, public relations and land manager at LANXESS, during the fall Economic Outlook Luncheon on Wednesday at the El Dorado Conference Center. (Caitlan Butler/News-Times)

Arkansas Secretary of Commerce Hugh McDonald covered a wide breadth of topics during the El Dorado-Union County Chamber of Commerce's fall Economic Outlook Luncheon, where he was the keynote speaker Wednesday.

"I think it comes as no surprise to you if I say the economy seems to be hitting all cylinders," he said. "We've got pockets all over the state that are really hitting on all cylinders. They're stronger than they were six months ago, and I think certainly stronger than they were a year ago."

However, the future of the economy is still up in the air, judging by current economic indicators, McDonald said.

"Are we in the soft landing? Who knows?" he said. "This is a little bit different this time, because so many people are working. So we'll see."

Arkansas's economy

But economic development officials in Arkansas are working diligently to protect the state from a recession, the secretary said.

"Our economic development pipeline in the state is very strong," McDonald said. "People who have worked there much longer than I have, for decades, say it's the strongest they've ever seen."

McDonald was appointed secretary of the Arkansas Department of Commerce in January, following Gov. Sarah Huckabee Sanders's inauguration. Since then, he said, he's been working to make the agency more efficient, provide more support to small businesses and entrepreneurs and update outdated policies.

"Small businesses represents 99% of all businesses... The state can do more, I think, in terms of supporting entrepreneurship, development all across the state," he said. "The state needs to do a better job in terms of coordinating, sort of, a central, repository for an asset map of 'if you're an entrepreneur, if you're a small business, where do I go.'"

He said the department also wants to update the economic incentives to help Arkansas compete with other states.

"Those have been in place for 20 years. We put together a statewide team of economic developers, in coordination with us at AEDC (Arkansas Economic Development Commission). It's time to update those to get us more competitive with those states that we're competing against, all over the country," McDonald said.

The state is also putting its money where its mouth is, he said, by investing $45 million given to the state by the federal government into venture capital firms "that will invest in actual kind of early stage" businesses based in Arkansas.

"We're doing things like that to try to focus more attention on our entrepreneurship and grow that sector of our economy," he said.

The biggest challenge facing Arkansas's economy are workforce demands, McDonald said. He said 70% of Arkansan students won't earn a four-year degree, and that's why the state is emphasizing the benefits of trade schools and programs.

"We're going to make sure that they have the best training and that we're aligned with our two-year colleges and our high schools are aligned with employers' needs," McDonald said. "As a whole, holding kids to the demand, getting their workforce opportunities, their workforce experiences, instead of pushing them through the education system, pulling them through the education system; the workforce system is aligned with, number one, the wants and desires, but also the needs of business and industry."

He pointed to South Arkansas College's Career Accelerator campus, where high school students and adults are able to study trades ranging from welding to automotive technology to forestry and more, as an example of a good workforce development program. The college also partners with local industries in order to develop and offer classes that fit their workforce needs.

'Inside baseball'

McDonald also gave a peek into the inner-workings of the Dept. of Commerce, giving attendees of the luncheon a look at the "inside baseball" of state government, he said, and highlighting some of the changes he's overseen since he was sworn in.

When the Dept. of Commerce was formed in 2019, it had 10 subdivisions, McDonald said; once he took office, he consolidated some of those, so now there are only nine.

"We consolidated banking and securities together, so we now have one commissioner instead of two, one CFO (chief financial officer) instead of two, so things that you do in business, we look for opportunities to do that as well in state government," he said.

He is also worked to revamp the department's performance evaluations to take employees' progress on annual goals into account.

"There's no place on the state's performance evaluation system, when you're evaluating your direct reports, of specific goals and objectives they were supposed to accomplish the previous year," McDonald said. "So the state is now embarking on – we're looking at – we've got to change our performance evaluation system so we can actually, you know, rate these performances based on objectives."

He also noticed that some state employees' pay is equivalent to that of fast food workers', and he hopes to be able to increase their salaries.

"There's lot of different pay ranges in the state – frankly too many. The bottom four general pay ranges are lower than what you can make at Starbucks, so we're re-evaluating – the governor's getting a team to re-evaluate that."

Other regions

Economic development initiatives across the state are picking up steam, McDonald said, from a major steel fabrication investment in northeast Arkansas to entrepreneurship in northwest Arkansas to financial and information technology in central Arkansas. Down south, the growing lithium industry can give residents something to look forward to, he said.

"Very exciting on the next steps, where that industry is going. That could be a game changer for all of Arkansas," he said.

Federal legislation, like the CHIPS and Science Act passed into law last year, could also bring investment to Arkansas. McDonald said that while the state is unlikely to attract a chip manufacturing facility, it could be involved in packaging the products, which are also utilized by the defense industry, which also has a large presence in south Arkansas.

Overall, the state's economy is doing well, more Arkansans are currently working than ever before, and there's plenty more to come, McDonald said.

"There's just a lot of good things happening in the state. I'm very positive, and you know, what we do best is that we're big enough to attract the big projects, but we're small enough where we can pick up the phone and get a group of people together with subject matter experts to solve a problem," he said. "We do best when we work together; friendly competition is great, but friendly cooperation is even better."

photo Arkansas Secretary of Commerce Hugh McDonald was the keynote speaker at the El Dorado-Union County Chamber of Commerce's fall Economic Outlook Luncheon on Wednesday. He covered a variety of topics related to the state's economy and Dept. of Commerce during his talk at the event, which was held at the El Dorado Conference Center. (Caitlan Butler/News-Times)

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