Manufacturers ready to expand, but await more confidence

Manufacturing employment will likely hold steady in 2013, but many northern Nevada manufacturers are ready to expand once they see growing demand.

"We are probably one to two people understaffed, but unless we see the production of last couple months continue we're not going to hire anybody," says Marc Giovannoni, general manager of Custom Stamping Inc. in Carson City. "The uncertainty is overwhelming."

The uncertainty Giovannoni and others see includes the outcome of budget talks country's capital, the strength of the recovery in the economy as a whole and in their customer demand specifically.

"We do a lot of what we call mil-aero, military and aerospace, although we do other stuff," says Harvey Hornug, general manager of Nevada Heat Treating, a 10-year-old manufacturer in Carson City that has one open position it is holding off on filling. "We had our second-best year ever this year. It's slowed down in the last several months, which is not untypical, but we're waiting to see what happens with government and defense spending and the economy as a whole."

Ray Bacon, executive director of the Nevada Manufacturers Association in Carson City, says people are working amazing amounts of overtime.

But Bacon notes that many manufacturers are reluctant to staff up to meet surging demand until they are certain of an enduring recovery in order to avoid cuts in the future.

"Laying off people is one of the most painful things you do," says Bacon.

Manufacturing employment in the Reno-Sparks area dipped about 1.5 percent to 13,600 from 13,800 in the same month a year earlier. In Carson City, it fell 8 percent, from 2,500 to 2,300, according to the Nevada Department of Employment, Training and Rehabilitation.

Manufacturing employment statewide should hold steady for the next several years, Bill Anderson, chief economist, DETR's research and analysis division, told the Economic Forum in November.

Area economic developers are courting and counting on manufacturers to increase employment. Manufacturing jobs now outpace gaming employment in the area and recently recruited manufacturers are expected to add about 400 jobs over the next several years, says Mike Kazmierski, president and CEO of the Economic Development Authority of Western Nevada.

Thermo-Stone USA, Pacific Cheese Co., and Torchmate Inc., all in Reno, and NOW Foods and Lambertson Industries, both in Sparks, are among the new or expanding manufacturers EDAWN assisted in 2012.

Especially good news, says Kazmierski, is that more and more manufacturers are relocating headquarters here, not just assembly or other manufacturing operations, which brings higher-paying jobs and corporate and executive involvement in the community.

Driving that is a new push by EDAWN as well as tax hikes in California, in particular, that make the cost of doing business and living there higher than ever, says Kazmierski.

A case in point is Thermo-Stone, a manufacturer of thin film heaters that moved from the mid-coast area of California to Reno in July.

"Everyone talks about taxes in California, but that wasn't the driving force for us," says Kerry Goodsel, president, Thermo-Stone. "Price per square footage is a huge thing."

Goodsel says the company was looking at warehouse space in California that cost, with triple net, about $1.20 per square foot. Plus, space there needed upgrading, costing in the hundreds of thousands of dollars. Here, Thermo-Stone immediately moved into finished space costing between 60 and 70 cents a square foot.

The 14-year-old manufacturer, which grew sales 40 percent this year and expects to grow another 40-60 percent in 2013, hired eight people here and plans to hire another four to six employees in the next six to eight months, says Goodsel.

Thermo-Stone has hired engineers, production workers and office staff and is pleased with everyone, but Goodsel says it would be difficult to find the right people if the company was looking to hire 200 employees.

Workforce availability is an enduring problem for manufacturers and the number one concern of companies looking to locate here, say economic developers and industry people alike.

"Training has always been a concern," says Hornung of Nevada Heat Treating. "If you attend any of our forum meetings, you'd know we've been talking about it forever."

The forum, a group of Carson City-area manufacturers who get together to address issues common to all them, talk often about workforce readiness and training.

The group, along with Nevada Industry Excellence, was instrumental in putting together a certificate program that teaches basic skills such as blueprint reading and shop mathematics. The program was developed and is available through existing curriculum at Western Nevada College.

WNC is also planning to add in the fall of 2013 a new associate of applied science in technology degree. And both WNC and Truckee Meadows Community College offer the Right Skills Now program, which teaches a given skill and sets up students with employers for internships. Its first class, for machinists, led to jobs for all 18 students. A class for welding starts in January.

Many well-established manufacturers do their own training, including 42-year-old Custom Stamping, which has a four-year tool-and-die maker apprenticeship program.

Another company that invests heavily in training is Tripp Plastics in Sparks.

"Training is something we constantly do all the time, every single month," says Warren Tripp, president. "We do it religiously."

Tripp, like many manufacturers, is looking for ways to expand its markets. The 60-year-old plastics maker is considering buying a couple companies one local, a second located elsewhere that will help broaden its base.

"We're reaching outside gaming to stabilize our market," says Tripp. "There will be no hiring until we get possible acquisitions settled, but we may expand after that."

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What to watch in 2013

Northern Nevada may continue to benefit from an influx of manufacturers who relocate from California next year to escape higher taxes and higher business costs. The question: Once they load the moving trucks, will they land in Nevada, or head elsewhere?