Workforce training, recruitment and retention will be job one for northern Nevada’s logistics businesses in 2015.
Logistics providers won’t be alone, of course as unemployment is down and competition for workers is heating up acros the economy.
In the category of trade, transportation and utilities, the state added 7,500 jobs in the first 10 months of 2014, according to Department of Employment, Training and Rehabilitation.
That’s good news for workers and for the economy, but it’s going to be a challenge for employers.
“The last few years we’ve basically been applicant processors. Everyone was looking for work,” says Brad Stewart, area director in the Reno office of ProLogistix, a national staffing firm for the logistics industry. “But now the number of applicants is going down and as the next year or two progresses, we’re going to have to be true recruiters.”
Stewart says the shrinking labor pool is pushing wages up.
“We’ve seen a significant increase in wages. The average wage in 2013 was $10, now it’s $11.15,” says Stewart. “We’ve got almost 600 employees working for us. The minimum wage is $10. A year and a half ago the lowest pay rate was $8.50. Wages are absolutely going up in 2015.”
That means employers need to do more to retain employees, says Stewart, including paying a competitive wage, providing a path for advancement and offering intangibles such as treating employees with dignity and respect.
“It’s an easy decision to go up the street for another buck an hour or if you have a manager who isn’t treating employees well,” says Stewart. “And the cost of turnover is real.”
Turnover is even costlier if the company has invested time and money in training, which is now routine.
“It’s hard to find good people. You have to go with less experienced people and train them yourself,” says Andrew Kirst, president and chief executive officer of AVA Logistics LLC, a non-asset-based, third-party-logistics company in Reno. “For us, that’s the biggest negative. If we’re lucky to continue to grow, will we be able to find good people?”
Kirst says he has been working with the Economic Development Authority of Western Nevada, Truckee Meadows Community College and the University of Nevada, Reno, both as a resource for finding students ready to work and to develop some supply chain curriculum to train them first.
Kirst is worried about other issues, including recent trucker strikes at the Port of Oakland, the primary port for northern Nevada, and a general shortage in drivers.
ITS Logistics, for example, a third-party logistics company in Sparks, is offering $5,000 signing bonuses to new drivers and $750 bonuses to “anyone in the community,” who refers a driver, according to its web site.
“Drivers are very, very tough to find. Capacity is extremely tight,” says Jeff Lynch, president and chief executive officer of ITS.
Lynch says ITS grew 50 percent in 2014 and is projecting 35 percent growth in 2015 and adding as many as 100 new employees to its current 400-member ranks.
“We’re overall very bullish on the economy and on the industry specifically,” says Lynch.
The company, which added non-asset based brokerage service to its business offerings and grew that from 25 employees to 75 this year, was just moving into an additional 100,000-square-foot facility near the Reno-Tahoe International Airport at the end of the year.
Lynch says, like drivers, available industrial space can be hard to find.
The industrial real estate vacancy rate in the Reno area is down to about 8 percent, half what it was at its high about five years ago, says Dan Oster, senior vice president and a principal with commercial real estate broker NAI Alliance.
Oster says that and other leading indicators such as lease rates and speculative building point to a big year ahead.
“I think the analogy I’ve been using is standing on the shore and the water is receding. But it’s receding because a tidal wave is coming,” says Oster.
