The Northern Nevada Business Weekly recently caught up with some of the region’s economic leaders to talk about the state of the economy and what residents and business leaders can expect in 2022 and beyond.
Bob Potts has worked for the Nevada Governor’s Office of Economic Development since February 2012, after the agency launched following approval in the 2011 Nevada Legislature. Potts was promoted to the role of Deputy Director in April 2019, having worked the previous seven years as Research Director.
The NNBW spoke in mid-January with Potts about the state of — and future potential for — the economy in Northern Nevada. The following Q-and-A has been edited for length and clarity.
NNBW: GOED was created roughly 10 years ago — what’s changed in 2012 versus now when it comes to outreach to businesses in other markets to seek out attractive relocation opportunities?
Potts: Well, it’s been a really interesting ride. The Great Recession was very different than this current COVID recession. The response and how it was dealt with, the reasons that caused it — all very, very different, but very disruptive. This one has been incredibly acute and (with) a lot of whiplash, where the previous one was much more long term and sustained, and it just took a long time to crawl out for a whole host of different reasons.
So, back in 2011, we had eight different sectors, and right now, we're really focused on four, and in large part that four goes back to what we see as being truly successful over the decade: advanced manufacturing, logistics operations, technology and healthcare. Those are the ones that work, and if you think about why they work, it has to do with our proximity to the fifth largest economy in (the world, California).
You’ve got the Port of Oakland and what it's done for us up here. And quite frankly, at the state level, that's why we're putting so much focus right now on Southern Nevada because of the opportunity with the Port of Long Beach and the Port of Los Angeles, the Inland Empire, all of that.
Over the past 10 years, you can't point your finger at any one person is why we've been successful in the north. Former Gov. Sandoval always brought up, “will Reno become the next Detroit of the West?” That's what came out in the Oct. 10, 2010, RGJ, front page. And here, all of a sudden, we're dealing with kind of the opposite. We've pulled out of that Great Recession. We've pulled through and were scathed less in Northwestern Nevada than even the national average from the COVID pandemic downturn.
And now we're facing growing pains. What do we do? I mean, we just don't have room for companies. It isn't a matter of attracting them — it's a matter of finding a place for (them) to land. So, I think what's huge for us, an amazing opportunity especially in this part of the state, is thinking about the ripple effect. If you can't find housing, if you can't find commercial space in the Reno/Sparks/TRIC area, then it’s going to ripple out Fallon, it's going to ripple out to Lovelock, it's going to ripple out to Carson and Douglas. And, how we as communities think about that opportunity and how we're going to think about growth and economic wellbeing and how we're going to grow our economies is going to dictate how we welcome those companies.
NNBW: Would you describe 2021 as a successful year for GOED, a challenging year or maybe of somewhere in the middle?
Potts: Well, I would say our state plan title sums it up — “Recovery and resilience.” In 2020 and into the first part of 2021, we were tied up in recovery and in building in the resilience side as they dovetail together. We had to think about how we're going to keep people safe. We are part of the Governor's Office and keeping folks safe was first paramount and critical.
So, we played a huge role. The CARES dollars that came out, that was all on the recovery side of things. Then the PETS grants, the CRAG program, those kinds of things were to keep businesses viable and help families. Now we're moving into the stage of the ARPA dollars and the next round of stimulus dollars, thinking about how we're going to create resiliency and have forward-thinking investment kind of ideas for the future of the state has a runway to it.
So, I think 2021 was absolutely successful. I was so amazed with the economic development team, and not just at the state level here, but all the RDAs as well. You think about extended staff, and how it was all hands on deck … it's pretty, pretty challenging thinking about how we're going to handle all this and still get our day jobs done at the same time. It's pretty good.
NNBW: How do you foresee Northern Nevada adapting to this one-two punch we're feeling right now when it comes to both supply chain issues and a labor shortage amid the so-called “Great Resignation?”
Potts: Obviously, the inflation and the supply chain issues and everything that's tied to that have to do with the disruption that was caused by the pandemic, and closures and, you know, all the things that we dealt with that, and there's a lot of lessons learned as we went through that process. It was moving from “just in time” inventory styles to “just in case” inventory.
With the Fed pushing all the dollars into the economy like they did — I looked at it the other day, and not counting Infrastructure and Jobs Act, we're right at $40 billion in one shape, form or other that's come into the state. That's a huge support system that shouldn't go unrecognized, and the value add that came along with that, quite frankly, is a large reason why we're in the good place that we are.
But, it does cause people to spend money. You never want to underestimate the propensity of the American consumer to consume. They're happy to spend your money, my money and anybody else's money and leverage it any way they can. That's what we do. If you look at our top growing sectors in the state, retail sales is one of them. It's huge, especially when you start looking at the change with online sales, so, inflation is bound to happen.
I think we’ve got a huge underlying issue on the demographic side of things, and all the pandemic did was accelerate it. We got way more boomers retiring than (Generation) Z's coming in, and these boomers are leaving positions with a lot of experience, and you just can't put somebody green into that. So, how are we going to get in front of the situation where there's going to be more work than workers? It's just the nature of this demographic drought I think we're headed toward as folks retire out and you got less people coming in. How do we think about automation? How does that fit in? And how does that help support the productivity that we need to keep things moving forward?
I think there's going to be a core shift. We've had wage suppression ever since the late ‘90s, and I think that people are waking up to that and they're saying, “we're not going to do that anymore.”
There's a lot of confidence in the market right now when you see so many new hires and just the churn that's going on in the workforce base, which ties back to this inflationary thought that ties back to cost of living. So, it's all part of the tectonics that we're dealing with right now and that we’re going to have work through.
NNBW: When it comes to the housing market, median prices are rising and the middle class is being pushed out as more cash-heavy buyers flock to this region. Unlike the Great Recession, there's really no bubble that's going to burst. So, as agencies continue to attract more companies and workers, what can be done to address the housing challenges in this region?
Potts: We don't have to attract, as much as we have to attract the right companies. It's not as much about just sheer job creation, like we had, during the Great Recession of just getting jobs. And it's kind of a nice place to be at some level where you can be choosy and picky about who you're going to work with to come in the door, because you just have a limited supply of housing, you have a limited supply of space, and you can be kind of strategic what industries and how you want to work that going forward.
I think more than anything, and you never want to say no to anybody, I don't want to go down that road, but what you want to be able to do is be pretty strategic and thoughtful about the specific companies and how you're going to work with things, how you're going to work with state and local government, how you're going to think about planning and zoning and working with our congressional delegation about land availability and those kinds of things. Because those are the kinds of constraints that we're dealing with right now. We have companies knocking at our doors, we have people that want to move here, they just can't afford it or there's just no space or whatever. So that gives us an opportunity for with what we do have, we would be really smart about.
NNBW: It’s often said Northern Nevada is set up better than Southern Nevada to rebound from the pandemic and future recessions due to an economic shift the past 10-15 years from gaming and hospitality to embracing industries like advanced manufacturing and technology. How do you see this region's favorable position evolving in 2022 and beyond?
Potts: I see just amazing opportunity here. This is your chance to retool yourself, really think about what the future is and take advantage of the confidence that's in the labor market right now. Look at the direction where things are going and the cool way things are kind of headed. The pandemic, if it did anything, it made a huge play on the importance of technology. Well, how are you fitting into that? How are you thinking about that? For us, in the workforce development space, in the education space, it’s to be very, very sensitive to the future of work and the opportunities that we have here. We're in a sweet spot right now, and the sky's the limit.
NNBW: Are there any industries or startup sectors that you feel have the biggest opportunity for growth in Northern Nevada over the next few years?
Potts: This is the day and the age for innovation and entrepreneurship. It's huge. I think with the mix of choice entrepreneurship and innovation, compared to necessary innovation and entrepreneurship, it’s very much shifting toward a position of choice — this is what I want to do, this is my dream, that's where I've always wanted to go, and whether it's a retiring baby boomer, or whatever it might be, I think there's huge opportunity to do that, and there's resources to get it done in ways that didn't exist before.
So, we're definitely taking a bent at the agency to help support those efforts on innovation and entrepreneurship, and I think having those kinds of homegrown opportunities, once they take off, that sets you up for some pretty cool stuff coming down the road.
NNBW: Lastly, if you could go back two years before the pandemic and give business owners and community leaders a piece of advice, knowing what was to come, what would that be?
Potts: At the end of the day, I think leadership in the state did absolutely the best they could with everything they had to work with. I think they were proactive; I think they were thoughtful and I think it's all driven by deep care of the constituency.
I grew up in agriculture and ranching — you knew that a storm was going to come through and you're going to lose a bunch of calves during calving season. You did the best you can to provide and protect, not knowing how severe it was going to be. I think that we have done that. And my encouragement is for everybody to have an appreciation for how people tried to do the right things — not for the things they may have made make mistakes on.
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