As the state of Nevada continues to realize that diversification should have been started long ago, more of those in the know are now suggesting that the process has been slowed by a number of reasons.

 No longer can the Silver State count on gaming and construction to carry the load. When the economy tanked in 2008 after a sharp two-year rally, Nevada suddenly found itself hurting like never before.

All of a sudden, Nevada was at the top of all the bad lists ranging from unemployment to foreclosures. The decline happened quickly and left many of the most respected leaders shaking their heads.

This sort of thing was not supposed to happen in Nevada, a state that for many years has been known as one of second-chance.  For years, hundreds of thousands moved to the Silver State looking for opportunities in everything from mom-and-pop businesses to gaming.

Housing prices were spiraling upward and those purchasing their homes were certain that they could eventually sell their homes for giant profits. Retirement was perfect for those relocating to Silver State considering the affordable prices, the entertainment and the weather.

Throw in non-stop entertainment and recreation such as incredible golf courses and Southern Nevada was the place to be.

Midwesterners bailed out of places like Milwaukee and Chicago and the cold winters several years after Californians packed up their belongings to escape the earthquakes. The growth of Nevada – and especially Southern Nevada – made headlines all over the United States.

The ripple effect was felt from one end of Nevada to the other. When City Centre was completed on the Las Vegas Strip, construction workers started packing up their belongings and moving on.

Reno’s construction industry was hit even worse. At the same time, people started leaving their homes and pets behind retreating to other areas of the country with more jobs.

Texas became a great state for construction and Wyoming was a good relocation thanks to the growth in natural resources and the mining industries. Some of Nevada’s top construction and development companies cut back their staffs and headed out of town to make a living.

However, some of the state’s leaders are wondering if Nevada has done its fair share to attract new business. In particular, the automobile business and its lack of manufacturing plants have state leaders scratching their heads.

While some are saying major automobile companies such as Honda and Toyota will never open plants in Nevada, state leaders are wondering why.

“Won’t happen,” said the owner of one major automotive chain while adding that Nevada cannot match what other states are now offering. “Nevada cannot compete with states like Texas and Mississippi.”

States that also include like Georgia, Ohio and Indiana are outbidding Nevada with a long list of incentives, the executive said. Toyota just opened a plant in Mississippi after opening another in Texas; and Hyundai announced plans to open another plant in Indiana.

 All of the job growth in other states thanks to the automobile industry, but none of the same in Nevada. That’s the case even though Nevada ranks as one of the top-selling states in the country when talking about auto sales.

 That also remains the case even when general managers of car dealerships in Southern Nevada complain they can’t get enough cars to sell. In just about every case, executives from several dealerships complain that they’re losing deals every day of the week simply because they cannot meet the demands of buyers.

And those demands could be met if only Nevada was able to land automobile manufacturing plants closer go the hotbed of sales. Even with Las Vegas Motor Speedway sitting on 1,200 acres complete with an industrial park and several National Hot Rod Association and NASCAR events, there is no major automobile manufacturer in the area even though every possible element is included.

 From ideal testing venues such as Death Valley to Las Vegas Motor Speedway – not to mention an ideal tax structure and now affordable housing prices in a foreclosure-dominated real estate market – the automobile industry seems like a natural in Southern Nevada.

Nevada State Sen. Mike Schneider says there is reason why Nevada has failed to attract automobile manufacturing. He shares the opinion that the big boys of the industry won’t expand to Nevada.

“It’s because this state simply has no incentives to offer,” said Schneider, who for the past 20 years has served in the Nevada Legislature and will soon be termed out of his position. “We do not have corporate taxes that other states have. These corporations are looking for help from the state in the form of investment dollars up front that Nevada does not have. Because other states have the taxes, they also have development dollars to offer up front with both corporate and income taxes.

“As long as taxes are reasonable, businesses will come here. They need good schools, good roads and parks or they cannot get good employees. They are willing to pay taxes for those items. If that wasn’t the case, they would not go to states like Texas, California, Ohio and Michigan who have all those taxes. We really need help with development dollars up front. The companies will pay taxes down the road, but they need help up front.

“Our tax base is very fragile and it’s all based on the tourist economy. It’s hard to compete against other states right now. They’re looking for up front development dollars to put in infrastructure. Because of that, we don’t have that money to put in the developments.”

“Nevada cannot compete with states like Texas, Ohio, Georgia and Tennessee.”

Nevada needs to diversify quickly and in fact, it should have been doing so much sooner especially as it relates to the automobile industry.

John Donnelly - January 12, 2012

Mike, Excellent post. I can't believe the offhand comment that "we can't compete". We have a locale and infrastructure that supports these manufacturers with air cargo, rail, good location for trucking, proximity to the LA port etc. The NDA should be selling the benefits of the Vegas Valley to close the deal before the bidding wars start. If we have what manufacturers need we should aggressively sell it. We should not give up before starting because we can't afford incentives.