Dublin, Ireland, Santiago, Chile, Poland and Germany are just some of the places you can buy Nevada-made items. Nevada products aren’t just for Nevadans anymore and Nevada companies aren’t just thinking local – they’re taking their products around the world. At the same time, foreign companies are looking to operate in Nevada, bringing new jobs to the state.
“Nevada has gone through a fundamental shift in our economy in the last six years as we responded to a global financial crisis and its effect on Nevada,” said Kris Sanchez, director of international trade, Governor’s Office of Economic Development (GOED).
While Nevada lost businesses and industry clusters, the state stepped up partnerships with regional development authorities, educational institutions and the rest of the global market.
Economic booms and busts show that local economies benefit from working in a worldwide marketplace. Companies that export are better able to withstand fluctuating economic conditions. Cities, states and countries have their own economies, but overall, the world is interconnected. And, international marketing goes beyond financial concerns; the United States’ involvement in the global market is important for national security.
When it comes to participation in the worldwide marketplace, Nevada’s economy includes both inbound and outbound components. Economic development agencies from GOED to the Las Vegas Global Economic Alliance (LVGEA) and the Economic Development Agency of Western Nevada (EDAWN) all work with global companies that want to locate or operate in Nevada, as well as Nevada businesses exploring new distribution areas, customers and sources of income.
“Our goal is to position Southern Nevada as a preferred global business location,” said Jonas Peterson, president and CEO, LVGEA.
This shift to global markets isn’t new to Nevada, rather it’s a reflection that the state’s businesses and economic development authorities are upping their game. Once known for mining, tourism, conventions and gaming, Nevada is now becoming a leader in industries the world cares about, said Sanchez.
From Tesla’s battery gigafactory in the north to WaterStart’s water management technologies in the south, Nevada is creating new industry clusters and sharing them internationally.
And, it’s paying off. Benefits for Nevada companies that choose to export include new markets and income sources, depending on demand for the product. Diversifying from solely U.S. buyers gives companies the flexibility to better weather economic storms.
Jeff Sutich, international marketing coordinator, Nevada Department of Agriculture added that, “per the Small Business Administration, companies that are exporting are able to pay their employees 17 percent more than their counterpart companies that aren’t exporting.
“There’s a formula the Small Business Administration has that, for every $181,000 in exports, one job is created that pays 17 percent more than the counterpart job in a company that’s not exporting,” Sutich said.
Nevada exports add up to $2.5 billion annually in Southern Nevada and $1.9 billion annually in Northern Nevada.
“The mining industry drives a lot of Nevada statistics but there’s tremendous opportunity for Nevada companies to export,” said Sanchez. “I think the challenge is getting the word out.”
Globalization in Today’s Climate
International trade doesn’t exist in a vacuum. It’s tied into government policies and national security. Embassies do more than visas and passports and most of the larger embassies have an economic mission as well, said former Senator Richard Bryan, co-chair, U.S. Global Leadership Coalition. Bryan, who’s also a former Nevada governor, practices law at Fennemore Craig.
“I had a client who had a problem with a particular country – not Russia or China – and by contacting the State Department and working through the diplomatic mission and that country’s capital, we were able to resolve some of those problems,” said Bryan.
However, globalization can be a double-edged sword. “It is fair to say globalization has expanded the world of commerce and has led to increased prosperity nationally and internationally, but there are people who have been displaced [during the process],” Bryan added.
One example of that displacement came up during the last election in the form of outsourcing American jobs.
While Bryan indicated that is certainly something to consider he added that it’s important not to, “ignore the significance and importance of growing international markets. That’s particularly important for those of us in Nevada,” said Bryan.
As the world economy grows, there’s an expanding middle class in developing countries who want to come and see the U.S. Tourism can be considered an export as well as an economic driver with 40 million visitors heading to Southern Nevada annually.
A developing world, with its developing economy, has a correlation to national security. When participation in the global economy means U.S. companies take jobs offshore, public perception often turns negative. However, locating jobs in developing countries can help stabilize those countries.
“I think you can argue persuasively, by and large our national interests is to make sure that countries that are unstable are stable and that’s what we’re trying to do; whether or not we’re making progress in certain parts of the world,” said Bryan. “Instability leads to the crises that leads to the Al Qaeda and other radical groups in Libya that create chaos. That is not in our best political and national security interests.”
“The instability in such regions stems in part from frustration of a very young population that sees little or no opportunity, that are recruited to these radical organizations,” Bryan continued. “It’s thoroughly in our national interests to do what we can to help stabilize those countries.”
Sending jobs oversees to help stabilize economies doesn’t mean we should sacrifice American jobs, Bryan points out. He added that many of the jobs lost in America are lost because of changes in our economy.
But, when manufacturing moves offshore, people in states that have seen declines in manufacturing have legitimate concerns. There is, however, significant opportunity in the international marketplace for businesses to grow.
“Nevada is rapidly growing again, our economy is increasingly diversified, businesses who have export as part of their market have real opportunities because, frankly, we have a favorable business climate in Nevada,” said Bryan.
Right Place, Right Time
As the LVGEA works to position Southern Nevada in the global marketplace, Peterson recognizes the importance of showcasing the state to its best advantage.
“We do that through a variety of ways,” said Peterson. “Our business development team organizes recruitment trips around the globe to bring in companies we believe would be a good fit in Southern Nevada and help them get up and running.”
Sometimes that means hosting global leaders who come into the market looking for information about setting up businesses or foreign direct investment.
“In the last year we’ve worked with 22 prime ministers, ambassadors, consuls and generals from various countries to promote Southern Nevada as a global business location,” said Peterson.
Regional economic development authorities work with companies attracted by Nevada’s business climate.
“We show them what’s available here in the market and work with them. If they do come to the region, we help them get through the processes here locally and ramp up their workforce,” said Mike Kazmierski, president and CEO, EDAWN.
When foreign businesses are looking to the U.S., there are two parts to the equation, said Kazmierski. The first may be a foreign business that has operations in its own country but wants a U.S. location for distribution or manufacturing.
“Those are the ones we’re most responsive to, because we’re talking about bringing jobs into the region. We’re talking about a fairly significant investment,” said Kazmierski.
In fact, some 46,000 jobs can be attributed to foreign companies in Nevada, which represents nearly 4.5 percent of our workforce, according to Sanchez.
The other side of the coin are companies that want to do business with the U.S. but may want to buy products and ship them overseas. EDAWN is much less aggressive in pursuit of those companies, because sometimes they’re looking to draw companies from the U.S. into their regions to be part of their overall production.
Economic development agencies assist incoming businesses with access to state incentive programs, in-depth marketing information and research, market comparisons, workforce issues, real estate site selection, coordinated relocation assistance and access to government programs.
LVGEA works to improve the operating environment – looking at target industries that should be successful here, judging workforce, infrastructure and policy needs, and what it would take to create an environment where those companies can create jobs and add capital investment into our market.
“When we do that well and get partners to come along with that and there’s one regional strategy moving forward, great things happen,” said Peterson.
Sometimes matchmaking foreign buyers with Nevada producers means leaving home and heading for Ireland and England, Chile or China, on trade missions put together by GOED.
Trade missions, like the one Nevada Governor Sandoval recently headed to Santiago, Chile, introduce Nevada exporters to specified buyers in other countries. Exporters meet one-on-one, business-to-business with buyers specifically interested in their category – like speed dating for businesses, said Sutich.
Once a business has identified which international markets are importing its products and which might have a U.S. brand preference, owners need to find their Harmonized System code, an internationally accepted product classification code. And once they’ve decided to go on a trade mission, there are grants available to offset costs, such as the Western United States Agricultural Trade Association grant and Small Business Administration STEP grants – State Trade Expansion Program – which offset costs for business owners going on trade missions and to trade shows.
Many of the companies involved in trade missions and international marketing are small- to medium-sized companies taking advantage of the opportunity to expand their reach.
Feeding the World
“There are 97 different product categories that are exported out of Nevada, and 36 of those represent the food and agriculture sector,” said Sutich. “That makes Nevada food and agriculture the seventh largest export industry from Nevada as of 2016.”
It’s also the only industry to have year over year increases in export sales since 2005. The Buy Nevada Program, managed by the Department of Agriculture, was established through a state marketing initiative by Governor Sandoval in 2013 to support continued economic growth in this industry.
Nevada’s agricultural exports include products from a broad range of categories, including manufactured products for human and animal consumption, confectionaries, dairy products, tea and coffee products, spices and onions.
Companies new to exporting their food products can consult with the Department of Agriculture to get an understanding of the process and benefits of diversifying into different markets. Companies with experience might benefit from going on a trade mission. For companies in the food and agriculture industry, Sutich has information on trade missions, trade shows and buyer trade leads.
Foreign Trade Zones
For Americans traveling abroad, stepping into an embassy is the same as stepping onto U.S. soil. In the global market, stepping into a Foreign Trade Zone (FTZ) is like stepping off U.S. soil.
“A Foreign Trade Zone is a secure area under the supervision of U.S. Customs and Border Protection that companies can use for storage, distribution and production activities,” said Peterson. “Essentially when a company is in a Foreign Trade Zone, it’s treated like it’s located outside the U.S. and can bring in foreign goods and complete manufacturing in the zone. And, while it’s in the zone, they don’t have to pay any formal customs or duties. That’s really a way for companies to save money.”
Eventually goods produced in an FTZ have to leave the zone in order to be sold and create profit, but those products that are exported after component parts come in from other countries and are assembled in the zone may never end up paying customs duties or excise taxes in the U.S.
In Clark County, LVGEA manages the local FTZ and all of Clark County is considered an FTZ service area. In Northern Nevada, the FTZ extends all the way to Douglas, Washoe, Lyon, Storey and Churchill counties. EDAWN is responsible for the FTZ, which Legacy Solutions manages.
“Mostly, in the past, it’s been logistics distribution as the major users, but we’re seeing more and more interest from manufacturing,” said Kazmierski. Over the last five years, Northern Nevada has seen a surge in manufacturing companies in the region. As they grow, they’re working with EDAWN to take advantage of the FTZ.
“The impact for the region as part of the FTZ is at about 1,300 jobs with an import value of about $1.3 billion and an export value of $2 billion, so there’s clearly activity up here,” said Kazmierski.
Southern Nevada is seeing a wave of incoming demand for manufacturing and logistics companies as well. “Of the pipeline companies that we work with, approximately half now are related to manufacturing and logistics,” said Peterson.
“That demand is greater than any I have ever seen in my time in the market, so we’re trying to position Southern Nevada to capture as much of it as possible by diving deep into the needs of that industry: workforce, policy, regulation, land use, you name it, so we can get ahead of it and have the chance to ride that wave of demand when it comes,” said Peterson.
Whether in Foreign Trade Zones, exports or in other aspects, Nevada is well positioned to thrive in a global market.
“[Nevada is] still relatively small so there’s not a huge bureaucracy. Legitimate companies that have issues have access to our political leaders to sit down and talk with them and try to work through those,” added Bryan. “That’s an enormous benefit. Nevada is openly courting new businesses, many of which have a large export component. Other parts of the world are growing more rapidly, their economies are expanding to include this growing middle class and that provides a tremendous opportunity.”
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