Capitol Ties: Gov. Hutchinson and Commerce Department Chief linked to Arkansas’ job growth, globe-trotting business deals

March 28 - April 3, 2022

By Wesley Brown

Only three months after he took office in 2015, Gov. Asa Hutchinson made what he considers one of his most important early administration hires when he convinced a young Floridian to be his chief job recruiter.

At the time, 31-year-old Mike Preston was one of the nation’s youngest state economic development directors in the U.S. when he took the reins at the Arkansas Economic Development Commission (AEDC). Looking back, Preston’s youthful energy would be necessary for the pace that Hutchinson set for him for the first few years on the job, which started only a few days after the end of the legislative session in 2015.

In a two-on-one interview with The Daily Record, Hutchinson mentioned his close relationship with his Secretary of Commerce and state Economic Development Commission (AEDC) director. That close bond includes a now famous weekly basketball scrimmage where the Arkansas governor battles with Preston and other ballers half his age.

Shortly after his inauguration in January 2015, Episcopal Collegiate’s athletic director and basketball coach Micah Marsh opened the gym only blocks from the State Capitol for Hutchinson and others. Those basketball sessions have become almost legendary, even leading Hutchinson and Preston to take their game on the road where a rare visit to Cuba ended with the two Arkansas trade ambassadors suiting up with the island nation’s national basketball team.

That trade mission in October 2015, one of the rare U.S. visits to Havana after the decades-long U.S. trade embargo was temporality lifted under former President Barack Obama, came on the back end of a whirlwind, globetrotting job recruiting tour that typified Hutchinson’s first term as the state’s business-focused governor. In looking back on the first year in office that included trips to Silicon Valley, Las Vegas, Paris, France, Cuba and a 10-day Far East business excursion to Japan and China, Hutchinson said he was glad to have Preston at his side.

“First, there is not anyone better in terms of managing economic development than Mike Preston. That is the reason I brought him here and we had great success in the first term,” Hutchinson said. “Whether you are looking at Sig Sauer or whether you are looking at Big River Steel, each of those [deals] took the combination of my engagement at the highest level of those companies, along with Mike and his team doing the hard work of competing with those other states in terms of our incentives and matching these companies with the right locations.”

As noted by Hutchinson, New Hampshire-based firearms maker Sig Sauer announced at the end of the Republican governor’s first year that it would locate a gun ammunition facility in Jacksonville. That announcement was made in January 2016 after Hutchinson and Preston attended the Shooting, Hunting and Outdoor Trade Show (SHOT Show) in Las Vegas.

Capital dealmakers

Hutchinson’s Vegas deal-making also included a companion pact to expand Remington Outdoor Company’s ammo plant in Lonoke. Those original economic development wins with Remington and Sig Sauer, which has since expanded from 50 to more than 200 workers, have also allowed Hutchinson and Preston to strike other similar deals with firearms manufacturers in the gun-friendly Natural State.

Since then, according to Hutchinson spokeswoman Chelsea O’Kelley, Hutchinson and Preston have inked 557 agreements for project expansion or new companies coming to Arkansas. Those projects have produced over 25,000 new jobs, while 81,000 more people are employed now than when the Republican governor took office in 2015. Arkansas has also rebounded from a pandemic-induced recession and set a record low jobless rate of 3.1% in January, the lowest level since the U.S. Bureau of Labor Statistics began compiling such data in 1976.

“Without the effort that we put into it; we wouldn’t have the kind of growth that we experienced in Arkansas. We wouldn’t have the momentum, and we wouldn’t have been able to do the tax cuts we’ve done because that has [also] led to more job creation and growth,” added Hutchinson. “So, in every way, ([our partnership] has been essential to all the other objectives that I have had from being able to transform our state,” said Hutchinson, who calls himself Arkansas’ chief job recruiter.

On the other end of the scale, Hutchinson and Preston have also developed other key niche industries across the state. For example, the sprawling Highland Industrial Park in Camden is home to several of the nation’s largest defense contractors in Lockheed Martin, Aerojet Rocketdyne and Raytheon Technologies. In fact, Lockheed, the nation’s largest defense giant, recently called off its $5 billion acquisition of Aerojet Rocketdyne in late February due to a Federal Trade Commission lawsuit to block the deal over antitrust concerns.

Despite shelving that blockbuster merger, Lockheed Martin and Aerojet Rocketdyne have continued to grow their respective south Arkansas operations where highly skilled manufacturing workers are rewarded with some of the state’s highest-paying blue-collar jobs. Following an annual trip to the Paris Air Show in July 2019, Hutchinson and Preston came back to Arkansas with a new deal to expand Lockheed Martin’s operations in Ouachita County.

Four months later, Lockheed Martin broke ground on a new $142 million Long Range Fires Production Facility in East Camden that is estimated to add 326 jobs by 2024, boosting the site’s payroll to nearly 1,000 employees. After construction on the facility was completed more than a year ago, the Bethesda, Maryland-based defense giant’s new Long Range missile facility added more than 70,000-square-feet of production and office space to the company’s current space in the Highland Industrial Park.

Today, the site’s inventory of military products is sold to the U.S. Department of Defense and foreign allies such as Saudi Arabia, South Korea and Qatar. That military stock includes the Tactical Missile System (TACMS), High Mobility Artillery Rocket System (HIMARS) launcher, Guided MLRS rockets, the Precision Strike Missile (PrSM), Patriot Missiles and parts of the Terminal High Altitude Area Defense (THAAD) Weapon System, which is capable of defending against nuclear and other ballistic weapons.

Other defense contractors that have offices at the East Camden industrial park include Stafford, Va.-based American Rheinmetall Munition Inc. (ARM) and Waltham, Mass.-based Raytheon. ARM, part of Germany-based Rheinmetall Waffe Munition, manufactures high-velocity practice grenade holders for the U.S. Marines at the East Camden plant. Raytheon manufactures missile defense systems in south Arkansas that are deployed on Aegis battle cruisers and destroyers to support U.S. Navy fleet operations.

On March 14, Hutchinson and Preston traveled to south Arkansas to thank the thousands of workers who make weapon systems that are being deployed across the globe to defend U.S. soldiers and allies, including $800 million in recent purchases by the Biden administration sent to Ukraine to defend against the recent Russian invasion.

“Your daily commitment to producing state-of-the-art and highly technical components and propulsion systems has made the difference for Ukraine,” Hutchinson said during the recent visit. “Because of your work, Ukraine has surprised its invaders by a strong defense against the onslaught of a cruel invasion. Camden is in a critical front-line position to support the Ukrainians who are stopping the Russian army from overrunning their nation.”

During the same event, Preston also noted that the aerospace and defense sector is Arkansas’ top export. The Camden area defense industry workforce, which is 2,700 strong, has been producing weapons since 1944, he said.

“Over the decades, Camden-area workers and their companies have supported the front lines wherein the defense of freedom, first in Europe and the Pacific, and now in Ukraine and NATO countries,” said Preston.

During the hour-long March 7 interview with the Daily Record at Hutchinson’s corner office on the east side of the State Capitol, Hutchinson and Preston also talked about Arkansas’ 20-year quest to land an automobile manufacturer. In economic development circles, a car company is considered the “holy grail” of business deals that can bring in hundreds of high-paying new and indirect jobs, and billions of dollars in new economic growth and activity. 

At a press briefing with local reporters in late December, Hutchinson said an auto manufacturer would potentially locate anywhere in Arkansas today because of steel production, markets in Texas and both coasts, and access to a super project industrial site of more than 1,000 acres. Hutchinson reiterated that Preston and AEDC are still seeking to land an automotive plant, which would remove Arkansas’ stigma as the only southern state not to broker such a deal.

“The answer is we are still in the hunt, and I would love to have that as a capstone to our job creation efforts,” said Hutchinson. “We have been successful in bringing the first electric manufacturing headquarters to Arkansas …, but none of them are in production yet. We want ground broken but there are others that we are looking at.”

Preston also noted that Pittsburgh-based steel conglomerate U.S. Steel Corp.’s recent announcement in January to build a $3 million, 6.3-million-ton mega mill positions Arkansas better to be able to compete for an original auto manufacturer facility. Both Preston and Hutchinson attended the grand opening of the new next-generation facility that is engineered to bring together one of the most sustainable and technology-advanced steel mills in the world, featuring two electric arc furnaces with 3 million tons per year of steelmaking capability.

When completed, the new steel mill will be the largest economic development project in Arkansas history, making Mississippi County “steel corridor” the top steel-producing county in the country.  Besides U.S. Steel, current steel producers in Northeast Arkansas county include North Carolina industrial giant Nucor Corp., Nucor Yamato, Nucor Hickman, Majestic Steel USA and Koch Metallics.

“The announcement with U.S. Steel, that just positions us that much better to compete,” Preston said. “And where we’ve come from when the governor’s administration took over, had a car company come knocking on the door that day, we wouldn’t have been ready for it. We wouldn’t have had a site; we wouldn’t have had the infrastructure in place. 

“The difference today is that we have multiple sites we can now show with the infrastructure already in place. So, when a car company or that next project comes along – we’re ready, we’re on the radar screen more so because we are right in the supply chain,” said Preston. “So, if it happens in the next nine months, fantastic, but we want it to happen tomorrow if we can. What we’ve done is prepare for the future and whatever comes next.”

Legacy on the line

The nine months that Preston mentioned, of course, is the countdown before Hutchinson is term-limited out of office after eight years as one of Arkansas’ most popular governors. After spending most of Hutchinson’s first term traveling across the globe in search of more and better jobs for Arkansas, Preston’s role has changed as one of the 15 department secretaries who report directly to the governor.

After pushing a massive 2,047-page state government restructuring bill through the legislature during the 92nd General Assembly in 2019, Hutchinson downsized the number of cabinet-level agencies from 42 to 15 and assigned more than 200 state commissions and boards to those larger umbrella departments.

Three years after the first major state government reorganization since former Gov. Dale Bumpers in 1972, the administration reported savings of nearly $58 billion in February. Hutchinson said he was pleased with the savings and overall benefits of smaller government, especially during the pandemic when most state government workers began working remotely after Arkansas’ emergency health declaration.

“The transformation has exceeded my expectations. Both in terms of the benefit it brings to me in improved management but also in the way it has been publicly accepted. I just think that it emphasizes the need for that kind of transformation and streamlining of state government. “During the pandemic, it freed up my time and it gave my 15 cabinet secretaries that I immensely trust the ability to manage their departments with a clear chain of command all with the same mission,” said Hutchinson adding, “It has accomplished its objective.”

During the reorganization, Hutchinson also asked the former Florida native to keep his dual role as director of AEDC, which is now housed in the state Department of Commerce. 

“The position of Secretary of Commerce, we discussed it and he had an option there. But the Secretary of Commerce is consistent with economic development, and some states utilize it in that capacity exclusively,” said Hutchinson.

“For that reason, whenever you look at the economic development issues in Commerce but also workforce training, they are integrally linked. The economic work that we are doing, they go hand in hand, and it makes sense that Mike would lead that work that we are doing,” Hutchinson continued. “My engagement in job creation and my partnership with Mike and his efforts with his (AEDC) team has made all the difference for Arkansas.”

Meanwhile, the state’s two top job recruiters don’t intend to rest on their laurels as Hutchinson winds down his final year in office. Besides continuing the hunt for a legacy-capping car deal, Hutchinson said he intends to keep building on his job recruiting, economic development and business dealing bona fides until he leaves the Governor’s Mansion on Dec. 31.

“I don’t believe we have finished the job on workforce training. We want to be able to invest greater funds, accelerate those programs and improve the quality of instruction. Secondly, in taking advantage of this unique moment in history with over a half billion dollars in infrastructure funding coming to our state. We want to work hard to make sure that they go to projects that will benefit the state from irrigation systems to workforce training to water projects that help our cities,” Hutchinson said of the state’s portion of the $1.2 billion in funding from the Infrastructure and Investment Jobs Act signed by President Joe Biden on Nov. 15.

Hutchinson said he also wants to make sure that his jobs legacy includes preparing Arkansas for the advent of advanced manufacturing and the next-generation mobility and transportation industry, which includes the emerging electric vehicle (EV) and autonomous car market, drones and other futuristic jobs. Noting recent announcements by Walmart, Canoo and Gatik to use driverless trucks, cars and drones to deliver groceries and other consumer goods nationwide, Hutchinson said Arkansas is positioned to be a leader in this emerging business sector.

“It is going to be very exciting. When you look at the potential autonomous and electric vehicles in this state, that’s a very full agenda for the next nine months,” Hutchinson said as Preston nodded his head in agreement.

Presidential potential

But Hutchinson doesn’t plan to exit the public stage once he is no longer Arkansas’ governor. Now a staple on national Sunday political news shows, Hutchinson has emerged as one of the few Republicans to openly disagree on key national issues with former President Donald Trump. He has also stated that he doesn’t believe Trump is the candidate to lead the party and the country again as president in 2024.

When asked about his future next steps, Hutchinson said he was concerned about the direction of the country. “From my experience not just in Arkansas but at the national level, I have a message to deliver and leadership to offer, so we will see where that leads,” said Hutchinson, whose past service in Arkansas includes a stint as one of the nation’s youngest U.S. district attorneys and the Arkansas Third District Congressman from 1997 to 2001.

On the national level, Hutchinson also formerly served as the director of the Drug Enforcement Administration (DEA). Hutchinson left the DEA to become the Undersecretary for Border and Transportation Security at the Department of Homeland under former President George W. Bush.

“I will have continued opportunities to make a difference and advance what I call a commonsense conservative agenda across America,” Hutchinson said about his future political aspirations. 

When asked directly if he is interested in higher public office, including a possible bid for president on the Republican ticket in 2024, Hutchinson said, “Yes, I would consider that under the right circumstances and the right circumstances are when I could deliver a message nationally that people will respond to it and say, ‘that’s makes sense to us.’”

“But it is still early and before the 2022 [election], so you don’t want to get ahead of the game. So, first you want to influence this election cycle, but I am not saying no to it and there are circumstances that could work very well,” said the 71-year-old Hutchinson.

If Hutchinson chooses to take that next step, it is highly likely Preston could be by his side.

Photo Captions:

1. Gov. Asa Hutchinson takes care of state government business in his second-floor office at the east wing of the State Capitol. (Inset) Arkansas Secretary of State speaks to Gov. Hutchinson during a meeting at the Governor's Office. (Photos by Joseph Crew.)

2. Gov. Asa Hutchinson (left) and Arkansas Secretary of Commerce Mike Preston speak with reporters from their Tokyo hotel via a video conference call in November 2019. The virtual call at the Governor's Conference Room at the State Capitol occurred during Hutchinson and Preston's fourth Far East trade mission in the first term.