Tag Archives: Nevada economic diversification

3% and 5 Questions: Manufacturing in NV?

Nevada Economy by SectorsThe graphic above is a snapshot of current employment in Nevada by sector.  If this looks like more of the same old same old pattern, that is because it is.   Leisure and hospitality (aka gambling, resorts, and food service) is still THE major employer in the state.   Nor do the projections from DETR indicate this graphic is going to change significantly by 2015.

Nevada Job Projection 2015And, here we go again — the  increases in employment are predicted to be in construction (although not enough to make up ground lost in the collapse of the Housing Bubble), retail sales, and …. hospitality and food service.

There’s been something of a mantra from Nevada politicians of all stripes repeated ad nauseam that we need “diversification.”  So, each campaign season we tip our hats and raise our hands for “economic diversification,” and then watch the numbers from DETR continue to demonstrate the hotel and resort industry is Number One, retail sales are Number Two, and construction comes in at Number Three.  And, the charts look remarkably predictable:

Nevada Job Growth by sector

Thus Governor Sandoval offers his version of the Next Great New Effort in Economic Diversification — with some underlying assumptions.  (pdf) Those assumptions are that (1) pro-business is defined as low tax, and low regulation levels, premises associated with Trickle Down political theory; and (2) marketing is crucial to any effort to attract more industries to the Silver State.

The major problem, of course, is that we have to have something to market.  There are few more obvious references than the often repeated notion that Nevada (and the rest of this country for that matter) needs to improve the profile of manufacturing, usually expressed as “good well paying jobs.”

A large manufacturer needs transportation.  Transportation of materials and supplies are crucial. The larger the manufacturer, the more important the need to identify suppliers and to have transportation in place to meet the needs of the manufacturer.  [IGCSE]  Nevada’s McCarran Airport is the 7th “busiest,” and we do have about 1200 miles of rail track. [pdf]

Most of the improvements at McCarran have focused, for obvious reasons, on passenger traffic,  [ATC] with new funding for projects related to taxiways and aircraft parking to facilitate that  passenger traffic. [Reid] And, yes, McCarran is busy — just not with cargo traffic, it’s not on the top twenty global airports in terms of cargo [ACI] [ACI in metric tonnes]  McCarran’s figures from 2003 show the following cargo operations:

McCarran cargoThese are nice numbers, but nowhere near Memphis (UPS) which handles 3,916,811; or Anchorage at 2,646,695; Louisville at 2,166,565; Los Angeles – 1,747,075; Chicago – 1,376,552; NY/JFK – 1,344,126; Indianapolis – 1,012,589; and Newark – 885,574.  [ATR]  In short, it’s nice to refer to the “7th busiest airport” but a bit disingenuous to infer that McCarran is one of the major airports in terms of shipping supplies and products as items of cargo.

In short, before we start touting the transportation available for manufacturing,  more consideration ought to be given to enhancing the air cargo/freight facilities and infrastructure at Nevada’s two major airports.

Rail lines are a prime mover of freight and cargo.  That said, the question needs to be asked — Where are those 1200 miles of track going?   Rail freight tends to haul bulk commodities, specifically coal (44% of the total tonnage), industrial chemicals, plastic resins, fertilizers, grain and agricultural products, steel and primary products, lumber, automobiles, and scrap metal. [Gatlas]

However, the vision set forth in the Nevada economic development plans seems to center on manufacturing “gaming equipment, renewable components, composite materials, food processing, and aerospace products.” [Exec Sum pdf]  While the rail lines would be a positive element in the transportation of raw materials to a manufacturer, the lack of freight infrastructure for shipping finished products constricts the benefit of rail availability.

One manufacturing factor not mentioned in any significant way in the Executive Summary is WATER.  As Nevada seeks to improve its position in gaming technology, composite materials, and aerospace products we might want to consider what has been going on in another state in our region — New Mexico:

“Moreover, a typical facility producing semiconductors on six-inch wafers reportedly uses not only 240,000 kilowatt hours of electricity but also over 2 million gallons of water every day [9]. Newer facilities that produce eight-inch and twelve-inch wafers consume even more, with some estimates going as high as five million gallons of water daily. While recycling and reusing of water does occur, extensive chemical treatment is required for remediation, and in dry or desert areas such as Albuquerque, New Mexico, home to plants for Motorola, Philips Semiconductor, Allied Signal and Signetics, Intel, and other high-tech firms, the high consumption of water necessary for the manufacturing of semiconductors can pose an especially significant drain on an already scarce natural resource [10]. The existence of economic mainstays including the mining industry and the established presences of Sandia National Laboratories and the Los Alamos National Laboratory make New Mexico an attractive location for high-tech tenants. However, the opening of fabrication facilities in the state leaves its farmers and ranchers in constant competition with the corporations for rights to water consumption. On average, the manufacturing of just 1/8-inch of a silicon wafer requires about 3,787 gallons of wastewater, not to mention 27 pounds of chemicals and 29 cubic feet of hazardous gases [11].” [CNX]

Even if Nevada is not looking specifically at semi-conductor manufacturing, the composites mentioned are also water intensive, and messy.  The following advice comes from SCAPCA:

“Try to eliminate, reduce, and/or recycle waste whenever possible. Never put hazardous waste into the dumpster or down the drain. Put all the hazardous wastes in one area, be sure to separate your waste storage area from your product storage area, and label each of your containers. Make sure you dispose of your waste according to the applicable hazardous waste laws.”  [InfoH] (emphasis added)

The hazards involved for air and water contamination depend on the type of composite material being manufactured, and the list of those composites is fairly extensive.  One can only hope that the Executive Summary of the economic diversification plan’s mention of such elements as: “Identify and remove obstacles to business growth and expansion; Establish regulatory and business environment working group,” doesn’t translate to weakening protections for Nevada’s rather sparse water supply.


“Employment in manufacturing peaked in September of 2006 at 50,900. Currently, there are 37,600 employees in the sector, a decline of 26.1% from the peak. Manufacturing employment is currently at levels last seen in 1996. Within the manufacturing sector, the biggest losses have been in the non-metallic mineral product manufacturing subsector. Employment in the food manufacturing and computer and electronics products manufacturing sectors has experienced substantial growth since 2010, however no sub-sectors have recovered to pre-recession levels.” [DETR]

There are currently some 1,239,891 individuals employed in the state of Nevada. If there are now approximately 37,600 employed in manufacturing, then that amounts to just a hair more than 3% of our total employment.

#1.  While we tout our “busy” airports, what policies and plans are in place to improve this element of our infrastructure for freight and cargo operations?

#2.  While we speak lovingly of our “pro-business” (aka low tax) environment, how does this relate to our weaknesses, i.e. an “underperforming” (and underfunded) educational system, and an “under capacity health care system?”

#3. While we periodically lament our dependence on the consumer driven hospitality and food service sector, have we articulated a definite manufacturing policy?

#4. While we want to expand our manufacturing sector, what consideration has been given to the competing interests of agricultural and manufacturing interests in terms of natural resources, specifically water?

#5.  While we are fond of telling anyone within range about our Free Market Spirit, how do we reconcile this with the necessity of preserving our scarce drinking water resources?

Food for thought as we prepare for the next session of the Nevada Legislature?


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