“Manufacturing is the heart of America. Without it, we’d all be sitting on dirt waiting for the next lightning storm to light our fire.”
Michael B. Stuart, CEO of JLM Tool Supply, quoted in the May 2001 issue of Nevada Manufacturing Association Newsletter
Before September 2001, few Nevadans seemed to mind that the state’s economy was primarily driven by tourism and gaming, because the tourism cash cow kept producing, year in and year out, despite what was happening in other states or on the national scene. “Recession-proof” was a phrase heard in many discussions of the state’s economy. Nevada’s economic development agencies, charged with diversifying the state’s business community, received little financial support compared with agencies in neighboring states. Why tamper with a “recession-proof” system and spend tax dollars attracting businesses such as manufacturing that make up only a tiny percentage of the economy? The dangers of being so dependent on one industry have been made painfully obvious by the sudden drop in tourism revenues since the terrorist attacks of September 11. Perhaps it is time to take a closer look at some other industries in Nevada.
Manufacturers are playing a growing role in bringing much-needed funds into state coffers. According to Bob Shriver, executive director of the Nevada Commission on Economic Development, manufacturing accounted for 8.7 percent of state employment in September 2001, versus 4.6 percent in September 1997. A total of 93,100 Nevada residents are involved in the manufacturing industry. “Manufacturing is critical in broadening the base of the state’s economy,” said Shriver. Manufacturing pays relatively high wages, brings in employees with special educational skills, does not relocate easily and invests heavily in capital expenditures. It provides a substantial personal property tax base for counties, based on the millions of dollars in equipment necessary to run a manufacturing facility. Bringing in more manufacturing businesses may be the ideal solution to Nevada’s problems, as tourism’s cash cow is showing signs of drying up, at least temporarily.
What resources are available to manufacturing companies wanting to locate in Nevada, or to Nevada companies needing assistance to keep them going and growing? Here is a brief overview of some public and private programs designed to help manufacturers.
State Incentive Programs
The state of Nevada offers several programs to entice manufacturers (and other companies) to relocate to the state or to expand their Nevada operations. Here are a few of them:
1. Sales and Use Tax Abatement: An abatement of sales and use tax on eligible machinery and equipment is available to businesses with operations consistent with Nevada’s economic diversification plan. Qualifying criteria include a commitment to doing business in Nevada, minimum job creation and wage requirements.
2. Sales Tax Deferral: The state of Nevada offers a sales and use tax deferment program to qualified industries that purchase specific types of capital equipment in excess of $100,000. Taxes can be deferred interest-free for five years.
3. Business Tax Abatement: Partial abatement from business tax may be obtained by new and expanding businesses that meet statutory requirements, including a minimum number of jobs created, a minimum capital investment and wage and fringe benefit requirements.
4. Personal Property Tax Abatement: An abatement of personal property tax is available to businesses with operations consistent with Nevada’s economic diversification plan. Qualifying criteria include a commitment to doing business in Nevada, minimum job creation, employee health plans, minimum capital investment and wage requirements.
5. Property Tax Abatement: Real and personal property tax abatement is available to qualified recycling businesses. At least 50 percent of the material or product must be recycled on-site.
6. Job Training: Nevada offers a customized job-training program to qualified businesses that meet established criteria. This program may be used prior to a plant opening and for up to 90 days following.
7. Renewable Energy Abatements: For those companies involved in the production of energy from renewable sources such as wind and solar, a package of abatements is available, including sales/use tax and property tax.
Management Assistance Partnership (MAP)
The Nevada Management Assistance Partnership (MAP), founded in 1995, is the industrial outreach program of the University and Community College System of Nevada and its partners. Originally called Manufacturing Assistance Partnership, MAP now focuses on Nevada’s entire industrial community, with a special focus on small and medium-sized manufacturers, construction companies and the mining industry. Each business owner works with MAP to decide what will work best for his or her particular company and situation.
MAP experts provide assessments and evaluations, direct consultation, employee development, specialized training, technology development, business systems improvement and field engineers. Among other services, it can provide benchmarking — a customized analysis that compares a company to its competition; cost-effective, user-friendly Web site design; 24-hour access to interactive Internet courses; confidential and comprehensive management assessments; assistance with public relations and marketing; and Value Stream Mapping – a time and motion study that evaluates bottlenecks, improves workflow and concludes with a comprehensive description of pros, cons and methods of improvement.
MAP project managers have assisted more than 400 companies in improving their business and productivity while reducing costs. MAP project managers helped Young Electric Sign Co. (YESCO), eliminate production waste, reduce inventory and improve throughput and quality. MAP’s Value Stream Mapping showed YESCO how to combine its production lines into one flow line. By establishing a “cable cell” to manufacture cables instead of pulling workers from other jobs, YESCO was able to increase productivity by 300 percent to 500 percent.
Springs Windows Fashions recently changed the way it manufactures custom windows, thanks in part to MAP’s instructor-led 5S Lean Manufacturing workshops.
MAP agents conducted seven, eight-hour Lean Manufacturing workshops for Springs’ employees and showed its administrators and employees how to better organize and standardize their work stations. Work in progress was reduced by as much as 90 percent and the cycle time was cut by 92 percent. The work cycle from beginning to end went from 70 hours to only two hours.
MAP was officially awarded national MEP Center status with NIST MEP on July 1, 2001. MEP is the Manufacturing Extension Partnership of NIST, the National Institute of Standards and Technology. MEP centers throughout the country assist small to medium-sized manufacturers improve productivity, strengthen competitiveness and increase profits. The 70 non-profit MEP centers have assisted more than 62,000 businesses since inception.
The Nevada Commission on Economic Development and MAP have partnered to co-sponsor a program called Made in Nevada to highlight Nevada’s manufacturing companies and promote their products. Over 200 companies are profiled on its Web site, madeinNV.com. They include everything from a hydroponic tomato farm in North Las Vegas, to a winery in Pahrump, to a Carson City company that makes intricate scale-model trains and accessories. These Nevada manufacturers, and others like them, may hold the key to the state’s economic future.
