Industry FocusEconomic Development

The importance of a diversified economy has never been clearer than in the aftermath of the COVID pandemic. Economic development agencies have an important role to play in bringing companies to Nevada and helping create that diversification. Recently, executives representing this industry met in a virtual roundtable, sponsored by City National Bank, to discuss these vital issues.

Connie Brennan, publisher and CEO of Nevada Business Magazine, served as moderator for the event. These monthly roundtables bring together industry leaders to discuss relevant issues and solutions.

What is the Outlook for Nevada?

Michael Brown: I think the period from 2021 to 2025 is going to be a period of great transformation in American industry manufacturing. The biggest challenge I see right now is moving with the urgency and agility we need to take advantage of companies that are interested in Nevada. The state needs to move with great speed because this is a once in a century opportunity to attract that investment. We are so well positioned for the future. People will look back and refer to 2021 as the pivot point between the pre-pandemic economy and the post pandemic economy. It’s a very bright future for Nevada in a post pandemic economy.

Jonas Peterson: I do think 2021 is going to be a good year. We’re going to benefit from pent-up demand from companies looking to expand and pent-up demand from tourists looking to travel again. We recently launched a new effort to update our comprehensive economic development strategy to help guide our future for the next five years. There’s still a lot of opportunity out there, but we also have a lot of work to do. If we’re going to be successful, we need to continue supporting incentive programs, investing in infrastructure and doing even more to train our workforce. I know those are some common elements. I do think there is a good path forward for us.

Martin Knauss: Looking forward the state is going to require us to have more renewal energy. We need more solar. We have lots of land down here potentially available. We also have four miles of existing frontage along the Colorado River. It’s going to take some time to develop everything to get there. In two years, I would hope that’s well along its way and we’re looking forward to developing that out.

Sheldon Mudd: If we can get out of the legislative session unscathed, I am very optimistic. We’ve had more interest in this area in the last year or so than we’ve ever seen. The consultant that did our state rail plan referred to this area as the silk road of the western United States. We’ve got great relationships with the state and so forth. We’re talking about a lot of infrastructure plans. The future looks really good here in northeastern Nevada.

Brian Bonnenfant: With all of the stimulus funds and pent-up demand and savings, we’re definitely going to see the “Twerking 20s” for the next few years. We have to leverage these next couple years as a state to do some asset mapping. We need to expand [studies] across the state to see what we need, the gaps and the sensitive areas to protect. Where is the need for broadband right now? Where’s the I-11 going to go? We really need to leverage [these issues] and move on the next two years while the going is good.

Alan Ragsdale: I would agree with most of what everyone has said. I think it ties back into developable land. We met with a developer last week on a project. It is 100 percent leased as soon as the walls go up. The leasing activity starts, and it’s committed in less than a year. As long as we get the land availability opened up, we’re going to be extremely well positioned for the short term.

Aric Jensen: If I had a million dollars, I would invest it in Reno. That’s the bottom line because as the old [basketball] saying goes, “You can’t teach height.” “Height” in economic development is location and Reno has it. Reno is a crossroads; it has everything. I would invest here personally.

Mike Kazmierski: It’s exciting times ahead. Thanks to Michael Brown and his team moving the Legislature and the state in a direction where we will be more diversified, augmented by gaming and tourism, but not solely dependent on it. Certainly, we have mining growth potential as well. As we look ahead, we see a lot of positives. Our proximity, our strategic location is something that is pretty. Our investment in infrastructure is going to be critical. Our investment in education is our challenge to take on. Ultimately, [we need] more housing especially here in the north; we see an amazing growth going forward. Opportunity is out there and everything is in alignment to say, “We’re going to have pretty good times ahead.”

How Has Economic Development Responded to COVID?

Peterson: No doubt last year was devastating for our economy, but there are many reasons to be optimistic about 2021. Unemployment was at record levels but is falling. The pipeline of companies across the state is rising. The stock market is predicting a fairly robust recovery. And, most importantly, the vaccine rollout is advancing really well. The outlook for 2021 is that we’re going to have a strong year. We’ve got a lot of economic development groups that work really well together. During the pandemic we saw unprecedented collaboration.

Kazmierski: It’s almost like two different states here [in Nevada], the north and the south are very different. Southern Nevada has a very heavy dependence on gaming, tourism and international travel. [In northern Nevada] we have reduced our demand for a tourism economy and have grown significantly in manufacturing, e-commerce and technology. All those people are at work in those industries whereas tourism and gaming has suffered significantly. If you look at the two economies now, our unemployment rate is below five percent and well below the national average. Our sales tax revenue is actually up 20 percent year-over-year if you could believe that. There are a lot of good things happening in the north because of diversification or our ability to continue to work in all these other industries. The south still has a heavy reliance on international travel and that’s been [gone] for over a year.

Brown: LVGEA (Las Vegas Global Economic Authority) helped us build a business information network across the state [in response to the pandemic]. Then, with the Las Vegas Chamber implemented a weekly call with all the leaders in the state so we can provide real time information on the pandemic. During a phase of the pandemic the regional development authorities (RDAs) were also deployed to help with the public health response. We also realized in the summer that our small and micro businesses, restaurants and minority-owned businesses were extremely challenged in the PPP (Paycheck Protection Program). PPP had missed the target for those kinds of businesses. We ended up putting $110 million worth of Cares Act money to help thousands of small businesses across the state. We’ve seen some research come from the Urban Institute that said it was the state and local programs that were the necessary bridge for minority and small businesses. I suspect that [we’ve seen] upwards of $130 million going directly to small and minority businesses between October and right now. We’re still putting money on the street today.

Where are you Looking to Create Jobs?

Kazmierski: Our target is advance manufacturing and has been for the last ten years. That’s been a key focus with data centers. Ten years ago, we had no data centers and we had very little advance manufacturing. Now we have plenty of both. E-commerce is a growth industry. We’ve continued to attract e-commerce, logistics, distribution and technology [companies]. Technology is ultimately where the jobs will be by 2030. Many of these other jobs will be replaced by automation. Technology companies are really important, and we’ve been very successful in bringing smaller and mid-size technology companies including biotech and fintech [to Nevada].

Peterson: We see new opportunities for southern Nevada in a post-COVID economy. We recently completed a study specifically focused on those targeted industries. It showed that we should continue to push advance manufacturing, logistics and healthcare. [It also showed] some significant emerging opportunities for us to become a global leader in information and communications technology.

Knauss: We’re focusing on about nine thousand acres that is in trust for the Laughlin township and managed by Clark County. Over four thousand of that is now leased out for solar development. We believe there’s a huge solar potential up the western valley here in the Laughlin area. We’re also [looking to] develop our four-mile-long frontage of Colorado River for residential development. There is a huge potential there because of the stream of people leaving other states and coming to this area. We’re starting to see more interest in the biotech area, medical devices and fintech associated with block chain technology and that is an area of growth for us. Those are all S.T.E.A.M or S.T.E.M, related skills which are the key. Fifty percent of the jobs that will be here in 2030 don’t exist right now. Skill sets that will allow for a fairly easily move to the jobs of the future [are important].

How Important is Workforce Development?

Kazmierski: Workforce development is key. We talk about the fourth Industrial Revolution transition of jobs, automation and all the other things that are causing people to lose their jobs. You see that everywhere, even in a casino where they have automated dealers. All of that equals job loss and opportunity. If we invest in retraining and upscaling workers, we can take them from a $15 an hour job to a $40 an hour job. By investing in Nevadans and upscaling them, we get that money back many times over once they get engaged with the companies that are coming here. That upscaling is key. We have community colleges, but we really don’t have a focused program across the state to lift up a lot of people that are in jobs now that will be gone. We wait until they are unemployed then we find things for them. We really need to find a way to get people upscaled. We’re smaller here so our workforce is not as available. With our unemployment down already, in the middle of the pandemic, you can imagine what it will be as we come out of this. We need to be prepared to tell companies our unemployment rate is low, but we have these programs that will link to your needs and upscale the workforce to meet your future long term. We have more people working on workforce development then we do job attraction. That’s how important we think it is. Our focus is not just the upscaling piece, which is very important, but we have a liaison with our K-12 system. I interact with the superintendent and the board on a regular basis, trying to promote, push and find ways to help them do things they’re not used to doing such as partnering with business. It is really an important part of what we do.

Peterson: It is an important part of our overall effort. Our board has identified workforce development and education as a high priority. In southern Nevada, we have a very large opportunity to identify new career paths for thousands of dislocated workers. Economic development is all about meaningful job creation. One of our big tasks now is alignment, taking those workers upscaling, investing in them and identifying and transitioning to those new career paths. Over the next five years where do we think we are positioned for success. After we’ve identified new targeted industries for southern Nevada that complement the state’s direction, we can work backwards and identify the demand needed to be a leader in those industries. We work to align our efforts and get our workforce excited about those opportunities.

Jensen: I completely concur. The other issue that we are having is, the students who are coming to our schools are leaving and going to jobs in other states. Capturing those students that we have is an important thing. Making sure we have jobs for the students when they graduate is absolutely there, hand-in-hand. We have to have both.

What Legislation is on the Horizon for this Industry?

Mudd: One of the big ones we’re concerned about is Assembly Bill 380 in regard to clean energy, natural gas and so forth. We’re afraid it could stifle future developments. The fact is, we don’t have a very robust natural gas network in northeastern Nevada. We have several businesses and industries who are looking to transition to natural gas in order to offset some CO2 admissions. We’re afraid that could potentially halt that progress. Further, we have some companies on the hook right now who have said they have to have natural gas to in order to operate their facilities. If we can’t guarantee that we can get that, they’re going to go elsewhere. Obviously, they have other options on the table.

Brown: On a federal level, we’re going to be watching the infrastructure bill. Obviously, you’ve heard about infrastructure gaps we have here. When the infrastructure bill comes forward, we’ll be ready to engage on that matter.

Bonnenfant: Within the shadows of that infrastructure bill, President Biden demanded a 100-day study of the supply chains. In June we should see that report and it specifically addresses raw earth minerals. Nevada has 18 of those. Advance battery manufacturing was part of that executive order. We’re lined up for that also. The June report will tell a lot on how the infrastructure bill is going to align with that study.

What Advantages does Nevada Have?

Peterson: There are so many advantages. Speaking of southern Nevada there is high workforce availability right now, competitive cost positioning and a pro-business climate. We’ve got the economy back on the rise again. That is expected to bounce back from the pandemic. [There are] lots of good selling points. We were doing really well pre-pandemic. Nevada, for much of the last decade, was a leader in job creation. Southern Nevada definitely took a hit last year and I think we can climb back out of that. It’s going to take a lot of work, but that bright future is still there if we work for it.

Brown: I would say one overlooked advantage we have is geography. For global companies [the Pacific area] is of great interest. We border California, one of the largest economies in the world; there are nations that would like to have that kind of a border. Nevada’s economy stretches all across the west coast, over to Denver and down to Arizona. Our geography is very well positioned. We have a standard package of abatements of modified business tax, sale taxes and real estate taxes that are offered. As a state we have a fairly conservative regime of tax abatements compared to other states. It is regulated by the GOED (Governor’s Office of Economic Development) board which has three constitutional officers on it. The companies then have to enter into a contract and that contract is audited by the Department of Taxation. Then we produce reports to the Legislature and governor. The Nevada system is a standard system of abatements and incentives. It’s fairly conservative, highly regulated and very transparent.

Are you Working on Retaining Companies Already in Nevada?

Peterson: Very much so; I view it as a foundation for economic development. We have a business retention expansion program with many partners, cities, some chambers and others in southern Nevada. We meet with hundreds of companies, gather information and identify obstacles they have. [We also] identify opportunities for growth to help them be successful. Starting with your existing firms is foundational to economic development.

Kazmierski: I would echo that. The retention of our existing companies is more important than bringing new companies in. Companies here oftentimes feel like they are forgotten. In the media there’s a new company [featured] that’s getting money and incentives and they are working hard every day helping the community. We’ve got to take care of the existing companies and make sure they’re successful or their liable to get courted away to another region who would offer them incentives or treat them better than we’re treating them. We have a team focused on that [as well] we go out and connect. We do things to help the companies here succeed.

How Collaborative are the Agencies?

Brown: We have started a weekly call with the regional development authorities. We had our first meeting all together before the pandemic; the first one to occur in five or six years. I also now have monthly meetings with four big jurisdictions in the south and am available to other [jurisdictions] as needed. Coming from the private sector, the silos of government were more extreme than I thought. I’ve done everything I can to break those down in the economic development community and inside state government. There is more cross cabinet collaboration than has ever occurred before.

Kazmierski: If [a company] doesn’t fit [in our region], we want to keep it in the state, and we’ll refer it down to Vegas or to the rural areas around us. We do that often and we’ve gotten referrals from [southern Nevada] as well. All of our RDAs are nonprofits. [For companies in Nevada, I advise them to] join, support and engage in economic development, our activities and events so you can network and get to know us better. If you have someone looking at one of your buildings, you should give us a call because that building may not fit them. There may be a building down the street fits them and if they don’t know about it, they may go to another state. Connect with us, be involved with us and help us work together to grow the economy.

Mudd: We have our major industries in rural Nevada and the leaders of those industries are part of our board. We get regular updates. I am probably on the phone with some of those folks at least weekly, if not more than that. There’s a lot of feedback going back and forth. We tend to stay out of the small business space for the most part and leave that up to the chambers in the local communities. We always keep good contact with the chambers so we can get feedback and see what we can do in regard to small businesses as well. One of the benefits to rural Nevada is that we are a small community by and large. It’s easy to have that feedback back and forth because we see each other on a regular basis. For us it’s probably a little bit easier I would venture to say then some of my colleagues to get that real time feedback from businesses. It’s one of the beauties of rural Nevada.

Peterson: Economic development is a team sport, and your RDAs are public/private partnerships. There are a million different ways to engage and move forward together. Please reach out and become a part of the team.