With 400,000 of their patented Oxygenics showerheads shipped annually to customers around the world, owners of ETL (originally named Energy Technology Laboratories) say their business is thriving despite the economic recession. For 20 years the small technology company has identified niche markets and produced products to enhance personal lifestyles. However, when faced with having to negotiate a new lease along with needing to acquire increased space for their Modesto-based company, business founder and CEO, Ray Engel and his grandson, Travis Hawkins, who is president of ETL, considered relocation outside of California.
Through Facebook, Hawkins connected with a high school friend who convinced him to look at Reno. Although he hated the idea of leaving Modesto, it didn’t take him long to realize that Nevada had a lot more to offer his business, his employees and his family. “In Reno I couldn’t find anybody with a negative thing to say. They wanted to convince us to move there because they liked it so much,” he says. After hammering out the details with the Economic Development Authority of Western Nevada (EDAWN), ETL was poised to move in a matter of weeks. Comfortably situated in 79,000 square feet of production and warehouse space in Sparks, Hawkins and Engel are happily saving $100,000 a year in rent as well as enjoying other reduced costs and benefits that come from doing business and living in Nevada.
Hawkins was initially reticent about the move because of the effect it might have on his workforce. “We have a lot of valuable employees so we wanted the move to be close (to Modesto). Our success is in our employees,” he explains. Only six of their 32 workers decided not to move with the company. Considering its immediate expansion plans, ETL expects to hire 20 additional employees within the next six months. In addition to the higher qualify of life and financial benefits, company employees have been able to take advantage of a housing market that’s favorable to buyers although Hawkins acknowledges the company gave cash incentives to help workers find new places to live.
With its new facility and reduced costs, ETL is positioned to enjoy greater profits even during hard times. In addition, its products and services seem especially well suited to today’s needs. “We tend to do better in an economic downturn,” Hawkins says. Its flagship showerhead product pumps oxygen-enriched water through 16 intake ports and can significantly reduce water usage. Other products include a wall vault that uses biometric fingerprinting to open a drop down door system, a secure mail vault that doesn’t require keys and a road/pavement marking system that employs solar technology. Showcasing the company’s commitment to water and energy conservation, ETL’s Resource Action Programs division offers programs to government agencies and schools along with kits that can be used to install conservation mechanisms at home.
The Changing Game
Although the Nevada relocation stampede of several years ago has slowed significantly, the recent arrival of ETL and other companies illustrates that the Silver State has not lost its allure as a business-friendly home to companies. The state still beckons to newcomers with its low or non-existent taxes, its entrepreneurial spirit, its wide open spaces and its high quality of life. Since the economic recession, the large inventory of homes with lower prices, the increased number of available workers and the high amount of vacant commercial real estate has made the state even more attractive.
For economic developers around the state, the name of the game is still to attract new business to the area and to support and enhance existing businesses. In today’s highly competitive market, however, developers are finding that they need to play the game differently if they are to achieve success. With fewer businesses pounding on their doors, developers have had to reach out with assertive marketing programs to make contacts. “You couldn’t get out of the way of businesses five years ago. We didn’t have to do out-of-market attraction,” says Chuck Alvey, president and CEO of EDAWN. “It’s vastly different now. We’re doing a lot of national PR work.”
Bob Cooper, economic development manager for the City of Henderson, says his office now uses e-mail and direct marketing companies along with site visits to increase their number of contacts. “We’ve been more aggressive with business recruitment. We have to create marketing excitement,” he says.
Rob Hooper, executive director of Northern Nevada Development Authority (NNDA), agrees that the job of attracting new businesses has become far more challenging in the past couple of years. “From economic development’s point of view, it’s no longer like it was. Prior to the crash, there was a steady stream of companies coming over the hill,” he says.
Unfortunately that steady stream slowed to more of a trickle the past several years as shown by the number of companies EDAWN assisted in relocation during that time. From 30 in 2007 it dropped to 15 for both 2008 and 2009. With around 200 prospects currently in the pipeline and inbound contacts averaging several each day, Alvey hopes that their overall numbers will start to increase again this year. Hooper says NNDA is currently in conversations with around 80 companies, most of which are located in the West.
While economic developers have a history of putting themselves in the middle of the client and the community, Hooper says a higher level of success can be achieved by using open source development which involves community action committees throughout the process. “We’re bringing the whole community together,” he explains. Open source facilitates a fast track approach, brings more talent to the table, increases community acceptance and impresses clients. “I believe in Tom Sawyerism. If you want to paint the fence, you have to get everybody to help you,” Hooper says.
In addition to casting a wide net throughout individual communities, successful collaboration also involves cooperative efforts among counties and between public and private entities as well as businesses that can develop symbiotic relationships that would benefit each other.
Plans to stimulate medical research in Clark County involve collaborative efforts between UNLV and the Veterans Administration, for example. “We have to work together. Government can’t do it by itself. We need collaboration at all levels,” says Mike Majewski, director of economic development for the City of North Las Vegas. In Elko County, collaboration is seen at a variety of levels as the mining companies and Great Basin College work with Elko County Economic Development Authority (ECEDA) to promote the community. “As a community we’re really fortunate to have a great public/private combination with ECEDA,” says Pam Borda, the authority’s executive director.
While developers realize the value of casting a wide net to collaborate, they also understand the need to cast that same net in order to diversify the state’s economic base. “What I’m seeing is everybody is getting serious about diversifying,” says Somer Hollingsworth, president and CEO of Nevada Development Authority (NDA).
“We can’t put all our hopes and aspirations in just one or two parts of the economy,” says Mike Skaggs, executive director of the Nevada Commission on Economic Development (NCED). Those one or two parts have been mining and gaming over the years. “We have to have a third leg on the stool,” Skaggs says. As gaming revenues have shrunk during the economic recession, it has become obvious to many that gaming may not be able to carry its same share of the load in the future. “Gaming can’t keep up with growth,” Hollingsworth explains. While Nevada grew by leaps and bounds in recent years, the share of the economic pie attributed directly to gaming decreased from about 25 percent in 1998 to around 18 percent in 2008, according to Hollingsworth.
In reaching out to an ever increasingly diverse market of businesses, developers are courting an eclectic variety of potential legs to be added to Nevada’s economic stool. Candidates come from broad categories that include clean manufacturing plants, distribution centers, medical research facilities, IT entities, bioscience companies, aerospace development and the entire range of alternative energy. “Now we’re starting to be proactive in reaching out into the market to specific industry types. It’s taking more of a Marketing 101 approach,” Hooper says. “We see Northern Nevada as the tech center of Nevada.”
Ironically enough, the sinking economy has given a boost to entrepreneurship, according to economic developers. “Entrepreneurship has been viewed as risky for cities, but because the economy has been so brutal a lot of people are forced to go out and be entrepreneurs,” Cooper explains. In order to give these start-up businesses the very best chance of success, the City of Henderson collaborated with other public and private entities to create the Henderson Business Resource Center. Located in the Wells Fargo building in downtown Henderson, the city’s first business incubator provides hands-on counseling and seminars as well as short-term office space for fledgling companies. The tenant space is fully occupied, according to Cooper. “We’ve been very aggressive assisting these new start-ups,” he says.
Capitalize on Uniqueness
From a macro point of view, long-term economic development will have the best chance of success if it capitalizes on resources that are readily available in the state, according to Skaggs. “You have to build an economy based on something that’s unique to you. It has to be indigenous,” he emphasizes. “Our first uniqueness was mining and the second was legalized gambling.” Alvey agrees. “We have to find our strengths and play to those,” he says.
Perhaps the essence of uniqueness is ice age fossils located in the Upper Las Vegas Wash which local governments are working to have preserved through the National Park Service, according to Majewski. The environmentally protected area could be an asset to tourism plus enhance a proposed planned community nearby. Designed to attract research facilities along with highly skilled people, Majewski says it will be a great place to live. “It will be a city of the future,” he says. “It will create this environment in our community that will attract some of the most learned people in the world.”
Taking advantage of Northern Nevada’s clean air and water along with the absence of mold, humidity, yeast and high temperature spikes, NNDA has focused on attracting clean room and controlled environment manufacturers to Carson City, Douglas, Lyon and Storey counties. In addition to beneficial environmental conditions, the region also offers lower costs than in neighboring California locations. With legislation already in place to control the specific conditions, NNDA believes its region has a bright future in attracting this type of business enterprise.
With abundant sun, wind, geothermal resources and lots of open land, Nevada has been touted for some years as a potential leader in exporting alternative energy. Environmental and security concerns have recently ramped up the interest in continuing to explore all the opportunities associated with this. “Our biggest surge has been in renewable energy,” Alvey says. The first wave of development has been in the actual generation of power with wind farms, geothermal parks and solar generation plants springing up. Although there’s not much argument about the capacity or ability of Nevada to generate alternative energy, the difficulties lie in being able to produce and deliver the power to a grid in a cost effective manner. “The big deal with solar is to improve the efficiency,” Skaggs says. To be competitive the cost needs to drop from 12 cents per KW hour to 9 cents. Some people believe that the key to success will be government participation. “The early stage technology needs federal money; then the private money will come in,” Skaggs says.
Nevada does not have to be a major player in power generation to benefit economically from the alternative energy boom, however. The second wave is manufacturing equipment and developing technology for the actual generation. From a long-range jobs standpoint, the second wave development creates significantly more permanent jobs than the first wave. Generators require large workforces during their construction, but when they are up and running, can usually be maintained with just a small group of employees. On the other hand, manufacturing facilities need large numbers of workers as long as they are in production. A solar panel fabricator and assembly business recently attracted to Las Vegas needs 760 employees in its 135,000 square feet of space.
Uniqueness of Elko County
Calling themselves the town that missed the recession, Elko is enjoying its own boom in the middle of busts for most other areas of the state. “Elko County is in a unique position compared to the rest of the state because of the gold mines. We haven’t suffered the impact of the recession that everyone else has,” Borda says. Although ranching and tourism are economically important, about 40 percent of Elko’s economy is related to mining. With an unemployment rate of around 6 percent, compared to the state average of about 13.5 percent, Elko is indeed a bright spot of prosperity. “We’ve had a lot of people coming here looking for work,” Borda explains. While most communities across the state have a surplus of residential and commercial real estate, Borda says Elko is the opposite. “Our biggest problem is the lack of vacant store fronts,” she says.
However, having survived the cycle of booms and busts inherent in a mining dependent economy, like other counties in Nevada, Elko is putting a premium on economic diversity. Although times are good now, the community realizes that things will undoubtedly change. “If we have a downturn in mining we want to be diversified,” Borda says. For the past five years the focus has been on the construction of the $7.4 million Northeastern Nevada Regional Railport, a transloader facility that recently opened to service a 250-mile radius around Elko. Although the major benefactor will initially be the mining industry, the facility is equipped to handle the needs of a variety of businesses. “This project is huge for this county,” Borda explains. Elko is also positioned to expand the use of its geothermal resources which have been providing hot water to municipal, residential and commercial establishments in downtown since 1982.
Uniqueness of Las Vegas
In the midst of economic diversification, some developers see lucrative opportunities to repackage and remarket the Las Vegas gaming and tourism experience. “Las Vegas is in a unique position. We are able to continue to promote and expand our presence internationally,” says Barry Shier, managing principal of The Partner House. The marketing focus should be increasingly more global, reaching out to Asia, India, Canada and Mexico, according to Shier. Although the economic recession is worldwide, people in those areas of the world are still traveling to the United States. The goal should be to direct them nonstop to Las Vegas. “We have to capture people from other port-of-entry cities,” he says. The addition in 2012 of 14 gates at Terminal 3 at McCarran International Airport will go a long way toward facilitating that goal. The recent addition of nonstop flights from London to Las Vegas on British Airways is another significant step in the right direction.
The Capital Weighs In
Spurred by the donation of 8 acres of parking owned by the Carson City Nugget, city officials and casino execs are collaborating to transform the area into a high tech center that would also include a knowledge center and discovery library, a digital media lab and an IMAX theater along with residential and office space. City officials say the focus is on economic development for long-term job growth rather than on tourism. Downtown Carson City has also been recently revitalized by the opening of the freeway bypass which eliminated the need for thousands of cars to drive through downtown everyday.
It’s Our Move
Despite a recession that has hit Nevada especially hard (the Pew Center ranked it in the top ten states whose budgets were most at risk), economic movers and shakers in the Silver State have gotten more strategic in attracting a wide variety of opportunities with amazing enthusiasm and surprising results.