Contradictions abound in region's manufacturing sector

With the gloomy economy, you might guess northern Nevada manufacturers are struggling to weather the storm.

But painting the manufacturing landscape with a broad-brush stroke is impossible these days the picture contains too many contradictions.

"It's just nutso," Nevada Manufacturers Association executive director Ray Bacon says. "Some companies are doing fine, and others are bleeding."

Take construction. Everybody knows the industry is hurting, yet Bacon points to two notable exceptions - building systems maker MagWall LLC in Sparks and insulation products maker RMax Inc. in Fernley, both holding steady or doing well.

Electronics are off, but Server Technology Inc. in Reno, which makes data center power management products, is going gangbusters, he says.

And venture capital for new companies has been nonexistent, yet startup ElectraTherm in Carson City is well funded, hiring and poised to take off.

Undoubtedly manufacturing has taken a hit, like everything else. Statewide, the sector employed 45,300 in June, down 7.5 percent from 49,000 in June 2008, according to the Nevada Department of Employment Training and Rehabilitation. In the last year, Bacon says, about 10 manufacturing outfits in the state closed or moved away.

In Reno, slot machine maker International Game Technology has cut more than 500 local workers since November.

Most companies say they're doing everything they can to maintain current staff, says Gail Conkey, the Economic Development Authority Western Nevada's director of retention and expansion. Bright spots, she says, are in advanced manufacturing, one of the region's targeted growth industries. Companies on the cutting edge with presence in international markets are faring relatively well.

Bacon says companies that make products that boost efficiency are doing well, too. MagWall's insulated, mold- and fire-resistant walls, roof and floor panels, for instance, help companies save up to 60 percent on utility bills. RMax, headquartered in Dallas with a manufacturing plant in Fernley, makes building insulation products that save energy and money.

ElectraTherm in Carson City makes a system that converts waste heat in a building, such as a manufacturing plant, into electricity. The company, in research and development the last six years, landed $2.2 million in venture capital in April and will start shipping products this fall. It grew to 28 from just three employees in the last 18 months, and President and Chief Financial Officer Steve Olson projects ElectraTherm will employ 40 by January and 60 to 80 people in one year.

"We've fought against the head winds of a bad economy," he says. "We see a very large market opportunity and some fast growth potential ahead of us."

Aviation is another industry that's struggled. Yet Blast Deflectors Inc. in Reno, which makes jet blast deflectors and ground run-up enclosures for airports, has never been busier. Last year was a record year for revenues, and technical sales director Don Bergin says 2009 is on pace to break it.

Although Blast Deflectors, which employs 17 out of its Reno headquarters, is focused solely on the aviation industry, it is diversified geographically, doing a lot of business overseas a key to its strength in the last few years. The company also benefited from U.S. airport projects moving forward prompted by federal stimulus funds.

Bergin says at some point the company will feel the economic downturn, but in the meantime it's focusing on finding new overseas markets and keeping up with current demand. The company does all the engineering and research and development out of its Reno headquarters and contracts with structural steel companies to manufacture the components. Employees then assemble them at the airport sites.

"We are experiencing significant growth and trying to expand our workforce and facility while being mindful that some degree of a downturn will inevitably effect our market at some point," Bergin says. "This means we need to be lean and mean in the good times so we can weather the slow times."

While some companies have managed to beat the economy, others, such as Kimmie Candy Co. in Reno, have struggled, then turned around. The company hit a rough patch last year when clients facing credit crunches cut orders, stalling placement until the last minute, which created cash flow problems for the candy maker. The timing was bad because Kimmie had just closed its South Korea plant and invested in training and equipment to manufacture in Reno.

"We were in survival mode toward the end of last year," President and CEO Joe Dutra says.

Then this year, things started looking up, particularly after the company's products created buzz at the All Candy Expo in Chicago in May.

"Our business has just been booming," Dutra says. "Our sales are the highest they've ever been."

The future looks sweet, too. The company recently was certified kosher, and it's going through an audit process to be an ingredient in major food brands. It also will introduce a new product, Kimmie corn candy-coated, chocolate-covered corn nuts. This fall the company will hire a few more workers and start a third manufacturing shift at its Reno plant.

The outlook for new manufacturing jobs is brighter than it was six months ago. Both Northern Nevada Development Authority and Economic Development Authority Western Nevada have seen a recent uptick in inquiries from companies interested in moving here.

NNDA Executive Director Rob Hooper says companies figure they better start planning moves now, so they're prepared when the economy improves. If all the companies that have inquired recently with NNDA moved here, they'd add 2,500 jobs, Hooper says.

Company inquiries about relocation to EDAWN, meanwhile, were up 15 percent in June over the previous year. Of the 200 companies the authority is working with, 70 have a 50 percent chance of relocating here, EDAWN Business Development Director Tina Iftiger says.

Meanwhile, the down economy has had an upside for the region, Hooper says. The tough times have brought the business community, state agencies and local government and economic development officials together to address challenges.

"We're better positioned now to take advantage of the next boom," he says.