EDAWN, NNDA confident economy will bounce back despite COVID crisis
RENO, Nev. — Recession. It’s a word that has resurfaced and is being used more and more as the COVID-19 pandemic has tightened its grip on the U.S. economy.
With businesses shut down across the country and Americans shut indoors, experts are beginning to forecast which areas of the country may be hit hardest by a COVID-19 recession.
Despite its impressive rebound from the last recession, Reno-Sparks may be one of the most vulnerable regions in the U.S., according to a recent analysis.
Reno ranked as the 29th most vulnerable among nearly 400 areas in the U.S., according to analysis published March 17 by the Brookings Institution, a public policy organization based in Washington, D.C.
Meanwhile, the Las Vegas metro area, which relies heavily on gaming and tourism, ranks No. 4 on the most-vulnerable list.
According to the Brookings Institution, industries that will feel the biggest brunt of the COVID-19 pandemic include mining, transportation, employment service, travel arrangements, and leisure and hospitality.
The organization reports that 21.4% of Reno’s workforce is in high-risk industries. For Vegas metro, 33.8% of its workforce is exposed.
Northern Nevada’s economic development leaders, however, are confident the region is positioned to recover quickly from the threat of a coronavirus recession.
Mike Kazmierski, CEO of the Economic Development Authority of Western Nevada, said diversifying the region’s economy for unprecedented times like these has been EDAWN’s focus for the past decade.
Since 2015, greater Reno-Sparks has seen big tech firms such as Tesla, Switch, Google and Apple plant flags in the area, in addition to a surge of tech startups migrating in from the Bay Area.
As a result, the area has more high-skilled, high-wage jobs and is more attractive than ever for companies for expansion and relocation.
“The main reason we focused aggressively on manufacturing and technology and distribution has always been to strengthen our region. With more manufacturing and more technology, we are in a better position than we were even 5-10 years ago,” Kazmierski said. “Gaming and tourism, while important, is not as big of a percentage of our economy as it once was. So when there is a pullback, we don’t feel these huge swings that we used to feel in our economic activity.
“We’re in a much better position than Las Vegas, which has more visitor and tourism traffic that has been shut down, and will probably be slower in coming back.”
Despite the current economic uncertainty, Kazmierski said EDAWN is still looking ahead and continuing a dialogue with companies aiming to relocate that are looking out “beyond the crisis” and have Reno-Sparks on their radar.
He added that the organization is also connecting with its existing businesses and helping them deal with their challenges.
“This is one of the many hiccups we will see,” he said. “We don’t know how significant it will be, but I am confident the economy in Northern Nevada is strong and we will come out of this in some period of time and be back to something close to normal before we know it.”
Rob Hooper, CEO of the Northern Nevada Development Authority — which services Carson City and Douglas, Lyon, Mineral and Storey counties — echoed Kazmierski’s sentiments.
“It’s not good for business, but it’s not killing us,” Hooper told the NNBW. “I think we were in such good shape before we went into this that I think we’ll bounce back quickly.”
To help gauge the COVID-19 impact, NNDA recently conducted a survey of manufacturing companies in the area, showing that 30% of manufacturers were being adversely impacted. This, Hooper said, is primarily due to supply chain challenges and inabilities to obtain raw materials.
Overall, though, Hooper said “a lot” of the region’s core businesses are “moving right along.”
“Manufacturers are continuing to manufacture, builders are continuing to build, miners are mining, and (agriculture) isn’t impacted,” he continued. “We see those sectors continuing on. But, supply chains are threatening and are going to catch up the longer this goes on.”
In fact, Hooper feels one possible “positive impact” of this slowdown is the region’s companies “rethinking their supply chain” and “making them more secure.”
Hooper said perhaps the biggest challenge for companies coming out of this pandemic is their ability to reassemble their employees.
“If companies lose a lot of employees and the company disbands, it’s going to be difficult to pull everybody together fast enough to reconstitute the business,” he said.
The unanswerable question, however, is how long will the coronavirus crisis last in Northern Nevada and beyond? While President Trump says he wants the “country opened” by Easter, only time will tell when authorities signal the all-clear.
According to a New York Times report, Torsten Slok, chief economist at Deutsche Bank Securities, says even when the country reopens, consumers will continue to be cautious.
Consumer spending, the Brookings Institution says, supports 70% of the economy. “In a worse-case scenario, if it keeps dragging on and on, I see permanent damage,” Hooper said. “It will take a while to come back. Probably, the economic challenges of this crisis would probably kill more companies than the virus does people.”
Heather Ashbridge, who started with Nevada State Development Corporation in 2008, previously served in several roles with the organization, including assistant vice president and loan officer. She is based in NSDC’s Reno office.