Worries of manufacturers: Foreign competition, politics
December 31, 2007
The slowdown in the national economy isn’t good news for manufacturers in northern Nevada, but the sector is so diversified that the effects of a downturn may be muted.
About 15,000 people 6 percent of the workforce of the Reno-Sparks metropolitan area works in manufacturing jobs. The figure is close to 10 percent in Carson City.
But those relatively small numbers belie the importance of manufacturing to the region’s economy. It’s one of the sectors that sells most of its output elsewhere in the world, bringing fresh dollars into the northern Nevada economy.
Need more convincing? Think of the region’s economy without the 2,734 jobs at International Game Technology, the biggest manufacturer in the state.
Nevada has been one of the few states to consistently post growth in manufacturing employment during this decade, and the industry has plenty of worries as 2008 dawns.
Fierce competition from low-cost producers around the world remains a big issue. And it’s not just China anymore.
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“People are re-thinking China,” says Ray Bacon of the Nevada Manufacturers Association. “China has done itself some damage with its latest fiascos with quality control.”
The upshot? Nevada manufacturers now face growing competition from other low-cost environments such as Eastern Europe.
The U.S. political climate also remains a worry, Bacon says, especially as election-year politics may spill over into the value of the dollar one of the key factors as the state’s manufacturers compete worldwide.
“The trust in government is getting very, very thin,” Bacon says.
But Nevada’s manufacturing sector continues to benefit from its proximity to California and the willingness of California companies to relocate in search of a lower-cost business environment.
Ken Pierson, director of business development for the Economic Development Authority of Western Nevada, says the agency continues to field inquiries from California companies that want to move to Nevada.
While much of the relocation activity in the middle years of this decade was driven by high workers compensation costs in California, workers comp reforms in the Golden State haven’t halted the exodus, Pierson says.
The biggest challenge faced by growing manufacturing companies as well as newcomers is finding the skilled workers they need.
Steve Conine, who owns AccuStaff in Reno, says his firm fields numerous calls from manufacturing companies searching for skilled personnel.
Says Bacon: “The labor issue is still huge.”
A survey of manufacturers by EDAWN early this year found that press-brake operators, engineers, truck drivers and manufacturing managers have been especially difficult to recruit.
Even so, the manufacturers who were surveyed by EDAWN said they planned to add more than 1,300 jobs through 2009.
There’s some question, however, whether the manufacturing sector in the region grew by much at all in the past year.
The Nevada Department of Employment, Training and Rehabilitation estimated in October that manufacturing employment in the Reno-Sparks area had risen by 300 jobs in the previous 12 months. That translates into a growth rate of about 2 percent.
On the other hand, a trade publication, Manufacturers’ News, found that manufacturing employment in Washoe County fell by 1 percent.
That survey found 528 manufacturers in Washoe County, including 277 in Reno and 224 in Sparks. Washoe County, the publication said, is home to 26 percent of the manufacturing companies in Nevada.
The number of manufacturers throughout the region is likely to grow.
Ron Weisinger, executive director of the Northern Nevada Development Authority in Carson City, notes that recruitment of manufacturing firms in industries ranging from alternative energy to bioagriculture is a priority for economic developers in the region.
“With the economy a little bit slower, it gives us a chance to put into place those things that we need to do,” Weisinger says.