New arrivals may spur area’s manufacturing recovery

The manufacturing sector in northern Nevada is no longer in triage, but it’s still recovering from wounds sustained during the economic downturn.

Some strong medicine may be on the way, as the Economic Development Authority of Western Nevada says numerous manufacturers are among prospects to bring new jobs to the region.

The state lost more than 10,000 manufacturing jobs during the Great Recession. Although it’s slowly clawing back there’s a long way to go, says Ray Bacon, executive director of the Nevada Manufacturers Association.

The sector has regained between 1,400 and 1,500 manufacturing jobs that were lost during the downturn, Bacon says. The overwhelming majority of job losses were at factories that made building materials or anything related to construction.

In November, the state’s manufacturing workforce numbered 39,600, up 100 jobs from a year earlier, the Department of Employment, Training and Rehabilitation reports.

In the Reno-Sparks region, there were 11,300 people employed in the manufacturing sector in November, while Carson City had 2,600 workers. In the past two years, the Reno-Sparks area has regained about 900 manufacturing jobs while Carson City has regained 200.

EDAWN says the recovery could pick up steam in 2014. Northern Nevada is on the short list for at least eight manufacturing companies that could bring several thousand jobs.

Much of the strength of the regional manufacturing sector depends on the economic health of California, Bacon says. In the past, manufacturing firms that relocated to Nevada moved their entire operations. In recent years companies are taking longer to ramp up operations and start with small staffs.

“It is coming back, but it is coming back slowly,” Bacon says. “We are starting to see some level of migration from California, but not like what we have seen in the past. Companies will start operations here with a few people and build it over time.”

Many manufacturing firms in northern Nevada either supply directly to California businesses or count them among their largest customers. As California’s economy continues to improve, the Nevada manufacturing sector will follow, Bacon says.

“We are still dependent on their economy to some degree. Their recovery is getting strong enough that it is helping us.”

Building materials manufacturing isn’t the only sector that suffered during the downturn. Bacon says gaming manufacturers — long a mainstay of the Nevada manufacturing industry — also have been pressured as casino operators delayed investment in new gaming machines. Companies such as Bally Technologies and International Game Technologies weren’t immune to the effects of reduced spending and drops in gaming revenues.

“We kind of always assumed gaming equipment was pretty much untouchable, and that has turned out not to be true,” Bacon says. “For years we got used to people needing new gaming machines every 18 months to a year, but that has gone away. It affects a huge amount of suppliers to gaming machines.”

IGT manufactures gaming machines from its facility in South Meadows and in Las Vegas. Bally has manufacturing operations in Las Vegas and houses much of its development and technical staff in Reno.

Sonny Newman, president of EE Technologies, a South Meadows contract manufacturer of electronic circuit boards and electromechanical assemblies for the automotive and gaming industries, says the automotive side of his business held up well over the past year and is expected to continue, although gaming lagged. EE Technologies invested several million dollars to improve automation at its facilities in south Reno and Empalme in Sonora, Mexico.

“Companies that have a global presence seem to be doing fine, but companies that rely on their state or a geographical region such as gaming companies, that industry is a little flat,” Newman says. “Nevada is very flat. There are not going to be a lot of opportunities for our customers to grow, and some will do less business than they did in 2013. We will feel that.”

A bright spot for northern Nevada manufacturers in 2014: Many of the unknowns about the Affordable Care Act have been uncovered.

“Employers have been very hesitant to hire,” Bacon says. “Not knowing about the Affordable Care Act for some companies has put a damper on hiring, but people know enough about what it is.”