Fiscal year 2006-2007 was not the rosiest for Nevada’s economic development agencies, with statistics showing mixed success in attracting new companies and their jobs to the Silver State. However, officials at state, regional and local levels are optimistic that Nevada will continue to entice companies seeking a business-friendly climate, low taxes, convenient location and superior quality of life.
During the fiscal year ending June 30, 2007, the Nevada Commission on Economic Development (NCED) approved incentives for 41 new and expanding businesses. Collectively, these companies invested more than $572 million in the state a 57 percent increase over the previous year and created 1,486 new jobs, with an average hourly wage of $19.86. This good news was balanced by the bad news that the new job creation decreased by 21 percent over the previous year. NCED estimates these companies will infuse more than $61.4 million in new wages into the economy each year for at least five years, a figure down 24 percent from 2005-2006.
Similar mixed results were reported by local economic agencies. The Nevada Development Authority (NDA), charged with economic development in Clark County, brought in fewer companies this fiscal year (43 compared to 61). The number of jobs increased from 1,961 to 2,725, but the estimated economic impact fell from $400 million to $352 million. In Washoe County, the Economic Development Authority of Western Nevada (EDAWN) also assisted fewer businesses during fiscal year 2006-2007 (37 compared to 46). Due to high average wages, however, the economic impact actually increased from $330 million for 2005-2006 to $402 million.
Tim Rubald, executive director of NCED, said Nevada numbers are in line with the national economic slowdown. “It’s all cyclical,” he stated. “Job growth has slowed down both nationally and statewide. The housing slump has also undermined other industries, because companies that manufacture products used in construction are less willing right now to expand in this market.” Nevada’s inflated land prices and the resulting spike in housing costs have also hurt recruiting efforts, since industrial and distribution companies need large parcels of land to accommodate their facilities, and all types of businesses considering relocation have to factor in the cost of housing for their employees.
NCED Aids Nevada Businesses
NCED has several divisions, including the Nevada Film Office, which provides assistance to production companies shooting feature films, television shows and commercials in Nevada. More than 600 projects film in Nevada each year, infusing more than $100 million into the state’s economy. NCED’s Global Trade and Investment Program helps Nevada companies begin or expand activities in the international marketplace, while also attracting foreign investment to the state. Exports from Nevada reached a record $5.49 billion in 2006, a 39.5 percent increase over the previous year, and the fifth consecutive year of record export growth for the Silver State. Precious metals, primarily gold, comprise the leading category of export products, followed by electric machinery, toys, games and sporting equipment, industrial machinery and ores. “Nevada is the second-fastest-growing state in the U.S. for exports. It’s exciting – globalization is where the economy is going,” said Rubald.
Other NCED programs include the Procurement Technical Assistance Center, which helps Nevada companies obtain government contracts, the Made in Nevada Program, to raise consumer awareness of goods manufactured in the Silver State, and the Community Development Block Grant Program, which administers federal funds to build infrastructure in Nevada’s rural counties.
Economic development agencies are primarily funded via corporate member dues, and through the Nevada Legislature. The 2007 legislative session dealt NCED a large budget cut that will hurt significantly, according to Rubald. “I don’t think the Legislature was trying to send a message or target us in particular. It was just a matter of shortages, and not enough money to go around,” he said.
The portion of NCED’s budget that passes through to Washoe and Clark County agencies totaled around $9 million in 2005, but in this legislative session, it was cut to $4.5 million. Rubald said the sections of the budget for overhead, advertising, the Nevada Film Office, Rural Community Development and the Procurement Outreach Program remained about the same, except for cost-of-living adjustments.
Although Nevada taxpayers fund part of the expenses for the state’s economic development agencies, as well as foregoing tax revenues when businesses receive incentives, Rubald and the heads of other agencies said economic development pays for itself. “Because of the way we do economic development, it absolutely pays for itself,” Rubald said. “Some states aim for retail or low-paying jobs, but it’s hard to make that kind of program pay. We only consider primary jobs that pay hourly wages above the state average, which is currently $18.72. Last year, incentivized jobs [those at companies receiving funds from NCED] averaged more than $22 per hour.” In order to attract high-paying jobs, economic development agencies have concentrated in the last several years on industries such as biotechnology, high-tech and manufacturing. Rubald pointed out that Nevada is the only state in the Union to post gains in manufacturing jobs over the last two years.
Economic diversification of Nevada is one of the major goals of the state’s economic developers. Urban areas of the state are dependent on gaming and tourism, while many rural areas depend heavily on mining. “NCED’s charge is to diversify from gaming and mining,” said Rubald. “Although the percentage of people employed in the casino industry has gone down, it still employs tens of thousands. Because businesses are always cyclical, it’s good to have variety. When one industry is up, another will be down and balance things out.”
Western Nevada Takes a Two-Pronged Approach
In 2005, EDAWN sponsored a comprehensive economic development plan called Target2010, Northern Nevada’s New Economy. The $250,000 project started with assessing the area’s needs and assets by gathering research from focus groups and surveys, and moved on to a planned approach to future economic growth. The study concluded that the region would be best served by targeting six specific industries: business and financial services, software, clean energy, advanced manufacturing, advanced logistics and life sciences. All these industries would provide the high-wage, highly skilled jobs EDAWN wants to attract.
As a result of the study, the agency developed an action plan with a two-pronged approach, aiming not only to bring new companies to the Reno-Tahoe-Sparks area, but also to attract the workers those companies need. According to Chuck Alvey, president and CEO of EDAWN, workforce development is an important component of the agency’s plan. In addition to helping local companies recruit employees from other states, the plan will take advantage of the numerous visitors who come to Northern Nevada. Billboards at Reno-Tahoe International Airport encourage visitors to consider working in a place where they already come to play, and EDAWN has set up a Web site, MyNevadaDreamJob.com, to provide information aimed at members of a young demographic who might want to work near areas where they can enjoy mountain biking, skiing and other outdoor activities. Alvey said EDAWN is also investigating ways to provide employment opportunities for the large baby boomer population who already live in Northern Nevada. “Some of these people may have taken early retirement or are working as consultants. They could be a valuable resource for companies who need experienced help on a part-time basis,” he explained.
NNDA Helps Both Urban and Rural Areas
Northern Nevada Development Authority (NNDA) includes not only the Carson City area, but also Douglas, Lyon and Storey counties, which contain rural towns with substantially different needs than their urban neighbors. In 2006, NNDA sponsored NorthernNVision, a strategic planning initiative for Northern Nevada aimed at getting rural areas to work together as a region for economic development. The initiative included surveys of individuals and businesses in the four counties within NNDA’s service area, as well as Churchill, Mineral and Pershing counties.
The industries targeted in the project’s report are similar to those detailed by EDAWN: light advanced manufacturing, clean energy and bioagriculture, business and technology services, logisitics and distribution, as well as regional health services. Unlike EDAWN, however, it also aims to attract tourism and hospitality to rural areas. As Ron Weisinger, executive director of NNDA, pointed out, tourism plays an important part in economic development in rural counties. Rather than diversifying away from tourism into other industries, rural Nevada is diversifying away from mining or farming and into tourism.
NNDA joined EDAWN and other local partners in developing a new brand that will be used to promote the entire region. “Greater Reno-Tahoe: Welcome to Can Do,” announced in April 2007, will advertise in key metropolitan cities to inspire businesses, as well as skilled professionals, to consider relocating to the Reno-Tahoe-Carson area. This represents just one way economic development agencies cooperate to share resources. Another is the Chamber of Commerce Coordinating Council, which NNDA and others formed to bring together chambers in seven rural counties to share success stories and exchange ideas. The group proved so successful that it has since been joined by local development agencies, and even by the chambers of commerce from Reno and Sparks.
Economic Gold Rush Planned for Elko County
Elko County, like many rural parts of Nevada, is trying to expand beyond its historical dependence on the mining industry. Elaine Barkdull Spencer, executive director of the Elko County Economic Diversification Authority (ECEDA), said her agency recently began a two-year marketing program to attract businesses and workers. The “New Economic Gold Rush” campaign builds on the area’s past as a center of gold mining, but points out the advantages in Elko County today for developers of retail, residential and industrial projects. It also touts investment opportunities and promotes workforce development.
Barkdull Spencer reported that several sites within Elko County are being developed as industrial parks, since the county is located at the crossroads of major east-west and north-south highways, has good rail access, available geothermal power and inexpensive land – an increasingly rare commodity in the urban areas of the West. “We’re starting to get serious inquiries from builders, developers and manufacturers from Southern Nevada,” she said. “They’re just priced out of the market down there.”
Construction will begin this month on the 60-acre Northeastern Nevada Regional Railport Industrial Park, a county-owned facility located just 4.5 miles from the city of Elko. Completion is scheduled for March 2008. Smaller industrial sites within the city limits are attractive to industrial developers because workers will have a shorter commute, said Barkdull Spencer. Also within Elko city limits is abandoned railroad land; currently, plans are being drafted to transfer this land to the city so it can be developed, as well. The small towns of Carlin, Wells and West Wendover also have acreage set aside for industrial parks.
Nevada Development Authority Targets Specific Industries
NDA is charged with attracting new businesses and helping existing businesses in Clark County. Somer Hollingsworth, NDA’s president and CEO, said Southern Nevada has realized an economic impact of $5.2 billion from more than 22,000 jobs created through NDA’s efforts in the last five years. Even though last year’s numbers indicate a slowdown in activity, Hollingsworth said it was still a healthy year, and he pointed to the diverse types of companies moving to Southern Nevada as an indicator of the area’s overall attractiveness. Seventeen of the new companies brought in during the last fiscal year were involved in manufacturing, seven were corporate headquarters and four were back-office operations, with the remainder divided among other categories.
NDA’s annual budget ranges from $1.3 million to $1.6 million, chiefly from membership dues and fundraising. The 2005 Legislature granted NDA a windfall of $5.5 million, but the 2007 session cut that in half, with NDA due to receive only $2.75 million this biennium. “We’re elated that we received what we did,” said Hollingsworth. “The previous session was the first time we’d ever received that kind of funding.”
Some of the state funding will undoubtedly be used for a new public relations campaign, but the theme has been kept secret pending its rollout. One of NDA’s recent efforts targeted life science and biotech companies on the East Coast. Promotional materials included information about Southern Nevada’s healthcare and technology institutions, including the Nevada Cancer Institute, Lou Ruvo Brain Institute, Sunrise Health System, Harry Reid Research Park and UNLV’s supercomputing facility. “Research and development companies find Nevada’s business-friendly atmosphere especially appealing,” Hollingsworth said. Other campaigns were aimed at attracting California companies to move to Southern Nevada. According to Hollingsworth, 25 percent of the companies relocating here last year came from the Golden State.
Henderson Assists Local Businesses
Nevada’s second-largest city promotes itself as “The Las Vegas Valley address for business success.” Bob Cooper, manager of Henderson’s Economic Development Division, said his team has been working on attracting new businesses in the following fields: colleges, medical, financial and back-office, traditional manufacturing and high-tech. Toward this goal, the city has already achieved significant accomplishments; it is now home to 12 private colleges, more than any other city in the state. The Southern Nevada Medical Industry Coalition, put together by Henderson officials, has united stakeholders who not only exchange information about their industry, but also help Cooper’s team understand its unique needs, which in turn assists efforts to recruit other medical businesses to the city.
“We not only attract businesses from outside, but also help existing companies grow and succeed,” said Cooper. The city’s BusinessStar program was developed last year to provide free professional coaching services to local businesses with growth potential. In the small-business incubator program operated by the Henderson Chamber of Commerce, small businesses pay nominal fees to lease office space, and also receive access to financial counseling and advice from business professionals. The city’s One-on-One Visitation Program was developed to open the lines of communication between Henderson businesses and city representatives. “Every week for more than seven years, we’ve gone out to visit local businesses and discuss their challenges and their plans for the future,” said Cooper. “We ask if they need help or training. When we’re done, they know they have a new friend, and they can us for help or advice. The foundation of our success is communication.”
North Las Vegas Maintaining Relationships
North Las Vegas has a similar program to visit existing businesses, called the Business Retention and Expansion Program. Mike Majewski, director of economic development for the city, said, “Companies considering a move will almost always contact local businesses in their industry to get feedback. So, maintaining a good relationship with local companies not only benefits them, it also helps our economic development efforts.”
Because it offers available land at reasonable prices, North Las Vegas has a history of success in attracting industrial and distribution companies. However, Majewski said in recent years, the city has been branching out into other fields. Its Cheyenne Technology Corridor project has been so successful that land along the corridor has been almost totally absorbed by companies taking advantage of fiber access, proximity to government installations and access to major north-south freeways. Other projects underway in the city include a technology campus for UNLV and an acute-care hospital for the Veterans Administration, slated to open in 2011.
North Las Vegas also has an aggressive retail program aimed at keeping up with the city’s rapid population growth. “North Las Vegas’ growth rate is No. 1 in the U.S. for cities with populations above 100,000,” Majewski said. “Through our retail program, we get the word out that there’s a lot of potential here.” One retail center, slated to open in the first quarter of 2008, a Hispanic-themed marketplace located in the older part of the city, is expected to attract customers from throughout the Las Vegas Valley.
Optimistic Outlook Prevails Across The State
Economic development agencies looking to recruit companies from other regions are naturally affected by the economies in those regions, as well as by national conditions. However, Nevada has traditionally weathered economic downturns better than most states, and its remarkably high growth rate provides a buffer against slowdowns. Economic development agencies across the state are planning new recruiting programs tailored to constantly changing circumstances, and will continue to assist local companies wanting to expand. As Hollingsworth of NDA recently insisted, “I refuse to use the national economy as an excuse. Great things are happening here.”