'California effects' benefit manufacturing in Nevada

One word "California" keeps coming up in discussions about the outlook for the manufacturing sector in northern Nevada.

There's the well-documented exodus of manufacturing companies out of California into the Silver State, of course.At the same time, however, the economic recovery of manufacturers who remain in California also is felt throughout northern Nevada.

"A good portion of our companies are in some way linked to California," says Ray Bacon, executive director of the Nevada Manufacturers Association."And California is such a huge monster it doesn't need to turn very much to have a large effect in Nevada."

At the same time, northern Nevada continues to draw an increasing number of manufacturers from California and elsewhere.

An aggressive marketing campaign by economic development agencies in Nevada continues to target manufacturers in California,warning that they're in danger of being driven out of business by workers compensation and regulatory costs unless they move.

The effects of that marketing weren't hard to find.

The Economic Development Authority ofWestern Nevada said that it worked with a dozen relocating manufacturing companies in its fiscal year which ended June 30, and California accounted for seven of them.

The trend has continued and may have accelerated during the past six months.

The Carson City and Mound House areas, the biggest concentration of manufacturing companies in the state, have seen a similar influx.

That's been reflected in sales of industrially zoned land, traditionally dominated by distribution companies in the Reno-Sparks area.

A rush to buy industrial properties in the area during 2004, however, included a growing number of manufacturers, says Paul Perkins, senior vice president in the industrial properties of group of Colliers International in Reno.

"EDAWN's been telling us for some time that more manufacturing companies are looking at our area, and these sales confirm that," Perkins says.

Bacon tempers the excitement, however, by noting that the quality of companies that choose to relocate varies widely.

Some are strong and have bright futures in Nevada; others that are struggling in California will continue to struggle in Nevada.

"They may or may not last over here," he says.

While the manufacturing sector nationally has seen jobs moving offshore,Alvey says northern Nevada hasn't been hit particularly hard by the trend.

Many manufacturers here, he says, are smaller companies say, 20 to 100 employees who don't have the size to move manufacturing offshore.

And others,Alvey says, provide a level of manufacturing expertise that can't be easily moved elsewhere.

The expertise of manufacturing workers, however, is both a short-term and long-term worry for the industry.

With unemployment rates in the area running at about 3 percent, Bacon says, "Companies are having a heck of a time finding people who can do the job."

And that's exacerbated, he says, by the need for a manufacturing workforce that's better educated than years past.

Even as 2004 dawned,manufacturers surveyed by EDAWN listed the lack of a qualified workforce as one of their worries and they said they're going to need plenty of skilled new employees.

The 61 manufacturing companies surveyed by EDAWN said they plan to add 1,851 new jobs, 487,000 square feet of facilities and $55 million in capital investment by 2006.

And those figures don't include the labor requirements of companies that start up or move to northern Nevada.

By 2012, manufacturing employment in Washoe County is expected to stand at 16,534, a 24.4 percent increase during the decade that began in 2001, says the state Department of Employment, Training and Rehabilitation.

Manufacturing today accounts for about 6.3 percent of the employment in Washoe County, state researchers say.