Researchers: Manufacturing, logistics in Nevada both troubled

Manufacturing in Nevada isn't healthy, and the logistics industry isn't doing much better, finds a national study by researchers at Ball State University.

The researchers at the Indiana school's Center for Business and Economic Research give a grade of "F" to the manufacturing environment in Nevada and give the logistics environment a "D."

Nevada officials say, however, Gov. Brian Sandoval's economic development plan addresses in depth the problems spotlighted by the Ball State study.

Manufacturing accounts for 2.6 percent of the Nevada economy.

A major stumbling block for both sectors in Nevada is the quality of its workforce, the new study found.

"No factor matters more to businesses than the quality and availability of labor, the Ball State researchers wrote. "Workers represent the largest single cost of doing business, but, more importantly, they are the source of most innovation and process improvements that distinguish successful firms from those that are not successful."

In comparing Nevada to other states, the researchers looked at high school and college graduation rates, the number of students who complete their first year of training in technical programs at community college and the number of residents who are enrolled in adult-education programs.

Nevada got a "D-" grade.

Dave Berns, communications director for the Governor's Office of Economic Development, says state officials are completing in-depth studies of the makeup and quality of Nevada's workforce.

They are working, too, with higher education leaders to align the education system with the needs of employers and working to create more job-creating companies based on university research, Berns says.

Another problem area for Nevada is the lack of diversification in its manufacturing sector.

Using a complex analytical system that looks at the share of the state's manufacturing income that's generated by each of the 22 major types of manufacturing companies, the researchers gave Nevada a "D+" grade.

Relatively low diversification, the researchers noted, puts Nevada at risk if one of its major industrial sector is hard-hit by temporary blips or long-term changes in the economy.

Berns says the state is aggressively recruiting a diverse group of California manufacturers to relocate to northern Nevada, where they can take advantage of the region's strong transportation infrastructure and remain close to California markets.

The state gets "C" grades from the Indiana researchers for its workers benefits costs as well as the productivity and innovation of its work force.

As recently as 2009 Nevada was getting "B+" grades on benefits costs from the Ball State study.

The benefits costs that are included in the study include healthcare, workers compensation and other fringe benefits.

The most-trumpeted business tax climate in Nevada, meanwhile, gets only a "B-" grade in the new study.

Along with corporate and personal income tax rates Nevada has neither the study look at sales and use taxes, property taxes and unemployment insurance tax rates.

One area of improvement for the state has come from its growing export trade. The Ball State team gave Nevada a mark of "C" for the global reach of its manufacturers, up from grades of "D" and "D-" in previous years.

Last year, the Ball State Center for Business and Economic Research found that Nevada has most adaptable exporting companies in the nation companies that can shift quickly to meet changing demand from international markets.

That research became a highly publicized keystone in an effort by state officials to build visibility for the importance of exports to Nevada's economic future.