Federal Reserve District, 8th ; Manufactures ; Arkansas

Susan C. Thomson

English

Research Papers in Economics

Osceola/Mississippi County, Ark. 
by the numbers
Osceola Population ............................................. 7,894
Mississippi County Population .......................... 46,605
County Labor Force  ........................................... 20,949
County Unemployment Rate  ....................10.8 percent
County Per Capita Personal Income ............... $30,437
 
    *   U.S. Bureau of the Census, estimate July 1, 2009
  **   HAVER (BLS), July 2010, seasonally adjusted
***   BEA/HAVER 2008 
TOp EMplOyErs in OsCEOlA
American Greetings  ........................................... 1,250
DENSO Mfg.  ........................................................... 419
Kagome/Creative Foods Inc.  ................................. 241 
Viskase ................................................................... 230 
Osceola School District .......................................... 146
    †  ReferenceUSAGov, Infogroup Inc.
† † Self-reported
I
n Mayor Dickie Kennemore’s telling, 
Osceola, Ark., had already been through a 
half century of economic peaks and valleys. 
Plants opened; plants closed.  Good times 
followed bad, and vice versa. 
Then came the big plunge in 2000 and 
2001.  In less than two years, textile maker 
Fruit of the Loom and furniture manu-
facturer EckAdams left town, Southwire 
shuttered one of its two Osceola wire-making 
plants and the Siegel-Robert Inc. auto parts 
factory in tiny nearby Wilson shut down.  
Kennemore calculates the four closings 
together cost at least 2,000 jobs for his town, 
located on the Mississippi River in the state’s 
northeastern corner. 
The losses shocked the city into action.  It 
began to pursue industrial development, using 
cash generated by the city-owned electrical 
distribution system to help make it happen.  
Meanwhile, another big setback occurred 
in 2002, this time in Blytheville, 20 miles 
north of Osceola.  Both of the towns are Mis-
sissippi County seats, with Blytheville having 
about twice the residents.  Blytheville’s set-
back occurred when it lost out to Murray, Ky., 
in the bidding for a Pella plant that makes 
windows and doors.  
The towns’ misfortunes were a wakeup call 
for the countywide Great River Economic 
Development Foundation, which had been 
trying unsuccessfully to attract new industry. 
“We were responding to companies’ requests 
for information, praying to God that some-
body would visit, and getting absolutely noth-
ing,” says Executive Director Clif Chitwood.
Unlike the city of Osceola, the foundation 
was approaching prospects empty-handed 
because it had no spare funds for induce-
ments.  As a means to a nest egg, it proposed 
a half-cent, county sales tax for economic 
development.  In a countywide election in 
2003, the proposal squeaked by, 60 votes  
to spare.
c o m m u n i t y   p r o f i l e
Factory closings 
shock community into opening Wallets  
for Economic Development 
© Denso InternatIonal amerIca
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At the DENSO factory, air conditioning, ventilating and heating systems are made for cars.  the city of 
osceola lured the Japanese company with a $3 million package, which included an improved site for the 
plant and a break on electric rates.  seven years later, the company is one of the city’s major employers.
the regional Economist  |  www.stlouisfed.org   23
By Susan C. ThomsonThat same year, Osceola’s own efforts began 
to pay off.  The city landed DENSO Mfg., a 
Japanese maker of automotive heating, venti-
lating and air-conditioning systems.  A $3 mil-
lion package of sweeteners, including land, site 
improvements and five years of below-market 
electric rates, bested all bids for the plant.  In 
a smaller side deal, Systex Products, which 
supplies injection moldings to DENSO, tagged 
along to set up shop next door.
Chitwood gives Osceola “a lot of credit” 
for DENSO and its other big solo win, the 
Plum Point Energy Station.  The city began 
pursuing the $1.2 billion coal-fired power 
plant in 2003 when Dynegy Inc. and LS 
Power announced it as a joint project.  An 
offer of a 1,000-acre site with infrastructure 
improvements and 20 years of real estate tax 
abatement proved persuasive.  The incentives 
totaled $3.5 million.
Work on the power plant began in 2006.  
By Kennemore’s estimate, activity during  
the four years of construction peaked at  
1,200 workers, 90 percent of them from out 
of town.  The plant went into service this past 
summer.  The site was designed and is ready 
to accommodate a second plant of the same 
size. Construction awaits only a state clean 
air permit.  The new plant will also qualify  
for 20 years’ abatement of real estate taxes.
As the first power plant was completed, 
work began on Osceola’s latest industrial 
coup, this one by way of the tax-bankrolled 
foundation.  The foundation put up $3 mil-
lion to buy and start work on a 40-acre site 
where a German company will build a  
$10 million, 65,000-square-foot plant for 
making components for wind turbines.  It’s 
the first U.S. plant for the company, Beck-
mann Volmer.  When the plant opens next 
spring, about 300 will work there.  Already, 
there are plans for a $7.5 million addition, 
which will require 200 more workers. 
Alexandra Altvater, the company’s director 
of business development, says it was attracted 
to Osceola by “the best package” among  
those offered by three Midwestern states.  
Arkansas, eager for green industry, offered  
$4 million toward the building; this will kick 
in after the foundation’s $3 million runs out. 
That $3 million is a big chunk of the $17 
million in tax proceeds that the Economic 
Development Foundation had committed to 
two dozen development projects by mid-2010.  
Chitwood calculates that the money has 
secured for Mississippi County 3,000 jobs with 
a total annual payroll of $90 million.  In dol-
lars and jobs, Osceola and Blytheville have by 
chance benefited in rough proportion to their 
populations, he says. 
The foundation divides its attention and 
resources between recruiting new employ-
ers and helping existing ones expand and, 
thereby, keep or add jobs.  “If a company isn’t 
making a serious capital investment about 
every 10 years, you can wave them goodbye,” 
Chitwood believes.
With jobs to be gained as a result, the 
foundation contributed $91,000 toward sewer 
upgrades at Gilster Mary Lee Corp., a private 
label foodmaker in Osceola, and $1.2 million 
in a new water treatment plant at Kagome/
The $1.2 billion Plum Point power plant went into service this summer.  the city provided $3.5 million in incentives for the 
project.  a second power plant is planned for the same site.  It will qualify for 20 years’ abatement of real estate taxes. 
At the Plum Point Energy Station, employees monitor 
operations of the coal-fired power plant via a bank of 
computer screens.  
At Kagome/Creative Foods Inc., Dominique Jefferson 
packages products for shipment as larry Jacobs looks on.  
the company received more than $1 million in taxpayer 
money for a new water treatment plant. 
photo by susan c. thomson photo courtesy of naes corp., plum poInt energy statIon
photo by susan c. thomson
24   the regional Economist  |  October 2010Creative Foods Inc., which makes tomato-
based sauces, margarine and other oil-based 
spreads.  American Greetings Corp. got 
$550,000 for electrical upgrades when the 
growing company was hiring. 
Based in Cleveland, Ohio, the greeting card 
company has a long history and deep stake in 
Osceola—and vice versa.  A presence in town 
since 1961, it has grown into a 2.5-million-
square-foot manufacturing and distribution 
complex.  In physical size and numbers of 
employees, it’s the company’s as well as the 
city’s largest plant.  The city prizes the com-
pany not only as a reliable, mainstay employer 
but also as an exemplary corporate citizen. 
“Their staff lives here,” says Eric Golde, 
executive director of the Osceola-South 
Mississippi County Chamber of Commerce.  
“They participate in the Chamber of Com-
merce.  They participate in all the civic activi-
ties.  The corporation is a major supporter  
of events.”
For employers old and new, the foundation 
prefers to invest in tangibles like land, build-
ings, access roads and utilities while allowing 
for an occasional grant for training employees.  
One of these training grants, for $281,000, 
went to Osceola’s Viskase Corp., a maker of 
casings for sausage and other food.  Another 
recipient of foundation money was structural 
steelmaker Telling Industries, which received 
$425,000 to buy and repair the vacant South-
wire plant.  About 50 people work at the plant, 
which opened two years ago. 
For all the money spent and jobs created so 
far, Mississippi County’s jobless rate is stuck 
above the national average—where it’s been 
historically, observes Greg Reece, a senior 
vice president of the First National Bank of 
Eastern Arkansas and head of its Osceola 
branch.  That’s because “a lot of our work 
force isn’t mobile,” he says. 
Despite high unemployment, it is “very, 
very hard to find people to work,” says the 
human resources manager at Kagome/Cre-
ative Foods, Nita Reams.  In Chitwood’s view, 
this is partly a case of too many underedu-
cated, unemployable youth—“a systemic 
multigenerational” problem that he says 10 to 
20 years of above-average job growth will fix.  
Osceola’s recent growth has been on the 
outskirts, amid fields of corn, soybeans, rice 
and cotton, all evidence of the strong role  
that agriculture has traditionally played in 
the community and still does.  Grain ship-
ments help make Osceola’s port Arkansas’ 
busiest, with annual shipments topping 200 
million tons.  The city is spending $3 million 
on improvements, which will double the 
port’s capacity by the end of the year.
Kennemore says it’s time now for the city 
“to take a breather on industrial development 
and let the new industries and new jobs come 
to fruition.”
For the immediate future, the city is 
concentrating on commercial development, 
he says.  One focus is downtown, where half 
of the storefronts stand empty.  He says the 
12-square-block area began emptying out 
in the 1970s as the mom-and-pop retailers 
retired.  The city has recently begun asking 
absentee downtown landlords to deed their 
properties back to the city, which could then 
fix them up and lease them to new operators. 
Kennemore imagines “a sports bar, a little 
coffee shop, a sandwich shop, an old-fash-
ioned soda bar. ...” 
Over the years, Osceola’s commercial 
center has shifted from downtown to the 
four-mile stretch of Highway 140 between 
there and Interstate 55 to the west.  Kenne-
more says that a strip mall developer and 
chain stores have shown interest and that a 
tire store has bought a site there.  It’s across 
the highway from 15 acres Wal-Mart recently 
bought for one of its “supercenters.”  No 
incentives were required, and construction is 
to begin in January 2011, Kennemore says.
Still, the sales tax is seen as key to contin-
ued growth.
The sales tax “has exceeded what we 
thought it would do,” says Steve McGuire, the 
county’s “judge,” or elected chief executive. 
Voters passed the tax on trust and with  
a 10-year time limit.  In August, with seven 
years of results to show for it, backers con- 
fidently returned to the electorate with 
a proposal to extend the tax for 10 more 
years—to 2023. 
The measure sailed through with a 77-per-
cent favorable vote, heartening Chitwood.  
“It lets us continue without having to worry 
about losing momentum,” he says. 
Susan C. Thomson is a freelancer.
A truck delivers grain from nearby farm fields to osceola’s port, already the busiest in arkansas and being 
expanded to twice its current capacity.  the city is spending $3 million on the improvements. 
A vacant plumbing supply store downtown was donated by the landlord to 
the city, which hopes to renovate it for re-use.  the city is asking other  
absentee landlords of empty buildings to do the same.   photo by susan c. thomson photo by susan c. thomson
the regional Economist  |  www.stlouisfed.org   25

Factory closings shock community into opening wallets for economic development

http://stlouisfed.org/publications/pub_assets/pdf/re/2010/d/Osceola_ark.pdf

Factory closings shock community into opening wallets for economic development

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Research Papers in Economics