Column: diverse economy

Although no state's economy is immune to downturns, a diverse economy would help protect Nevada from the kind of boom-and-bust cycles experienced by regions dependent upon the varying fortunes of a small number of industries.

As most of us know, Nevada's economy is one of the least diversified in the nation. The Nevada State Commission on Economic Development, local/regional economic development authorities and the Northern Nevada Development Authority, continue to work hard to promote and encourage businesses to relocate, expand and invest in our communities. Even with a small limited budget, these efforts are beginning to pay off.

Northern Nevada is becoming home to a variety of major manufacturers of industrial, automotive, medical and consumer products including Sherwin Williams, Amway, Kaiser Aluminum, United Gilsonite, Bently Nevada, Chromalloy Nevada, Durabond Bearing Company, United Engine & Machine, Snap-On Tools, Harley Credit Corporation and TRW Automotive.

Strong manufacturing capabilities and high-wage service activities are complements rather than, as generally perceived, substitute or successor activities. Lose the strength of manufacturing and you will lose - not make room for - the high-value-added services on which Nevada's future must be based.

In Nevada, service-related and government employees are ranked number two and make an average of $657 per week. In manufacturing, which is ranked number four, the average weekly pay is $614. Construction is ranked number one at $664 per week, and gaming is ranked last, $338 per week.

The NNDA has been blessed with outstanding opportunities for new and expanding businesses and their capital investments in the counties of Carson, Douglas, Lyon and Storey. Growth - and we strive for limited, quality growth - is opportunity.

NNDA targets industries with 20 to 80 employees in electronics, aerospace, plastics, medical instrumentation, machine shops and back office industries. We know California is our target market. Along with you, we also want high wages, non-polluters and low water users. We try to be selective.

These small- to medium-sized, family-oriented manufacturing firms contribute greatly to our local economy. (Remember, the existing low-wage payers - "users" - are the ones who protest the loudest about growth.)

New companies recruited by NNDA pay an average hourly wage of $12.40. This figure is based on the 20 new firms which committed to the area during 1996. The new companies' wages and benefit packages are usually competitive and most often drive existing compensation programs to a higher level. The result is a better quality of life for the community.

When a manufacturer expands or relocates, it invests in property, purchases supplies and support services. New companies and expansions buy houses, cars, order pizzas, have a payroll and inventory and create overall demand through multiplier effects. This is not a trivial relationship. These individuals are "strivers," owners or managers who will or already have made it. They invest in education, the arts and youth sports. They vote and are concerned citizens who live near their facilities.

Gaming has been and continues to be the engine that drives Nevada's economy. It is the industry that brings tourism dollars. It has helped develop cultural and art activities. It has built the great Reno-Tahoe International Airport, and it spotlights our state throughout the world regarding entertainment, recreation and gambling.

However, the proliferation of gaming throughout the world, the gaming wages and benefits associated with the cost of living in Nevada, and declining northern Nevada gaming revenues require economic support of other industries and the community. There should not be a line between gaming versus diversification. We need to work together to enhance the industry that pays our tax bills and play off our tourism strengths.

Experience has demonstrated that our successes have resulted from the existing industry clusters in our communities. Combine our targeted industries for recruitment with the geographic areas that we have already effectively penetrated (California, Illinois, Minnesota, Texas and Arizona), and we will continue to create the jobs and community investment that will take our region to the next level and dimension of economic progress and vitality.

Kris Holt is the executive director of the Northern Nevada Development Authority.


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