Las Vegas manufacturing: Some assembly still required

When it comes to Southern Nevada's manufacturing sector, some assembly is still required.

The Las Vegas industrial base is one of the nation's smallest and least diversified, a new report from a national think tank says. Still, the market has strengths, and one manufacturer that's moving here said the city has what it takes to expand its industrial economy.

"Las Vegas is far from a manufacturing powerhouse overall, but it has some very important niche specializations that the region could build on," said Howard Wial, an economist and fellow with the Brookings Institution, whose Metropolitan Policy Program released the report on manufacturing.

The study ranked Las Vegas well below national average on several manufacturing indicators.

The city placed 97th out of the nation's 100 biggest cities for share of manufacturing jobs. Just 2.4 percent of local jobs are in manufacturing, compared with 8.5 percent nationwide. For average number of employees per plant, the city ranked 79th at 36.3, compared with 39.9 nationally. Total local industrial jobs fell 0.1 percent from 2010 to 2011, compared with 2.7 percent growth nationwide.

Las Vegas also lagged in average manufacturing wages and share of factory jobs classified as high-tech.

Those indicators are a problem because manufacturing is still important to the U.S. economy as a source of growth and good pay, Wial said. Manufacturing jobs pay an annual average of nearly $49,000 in Las Vegas, compared with a median of about $45,000 for all jobs. Industry is also critical to economic innovation, and it's an export sector that attracts outside money.

"You already have a major export in your hotels and casinos ," Wial said. "But if you want to diversify your export industry and not be as completely dependent on hotels and casinos as you've been historically, manufacturing is a good place to start."

City officials should begin with the region's strong points, Wial said.

More than a quarter of the valley's manufacturing base is in the miscellaneous category, which includes higher-tech medical-device factories. Food is the city's second-biggest manufacturing sub-sector, at 14.1 percent. Food is the second-largest manufacturing category nationwide, with 12.6 percent of the total output. Focusing on food processing is important because edibles are often perishable and heavy, which makes shipping pricey and impractical. That means food is harder to move to offshore factories.

Printing, Las Vegas' third-biggest manufacturing sector, makes up 10 percent of industrial jobs. Local economic-development officials should look at how those industries are evolving and consider how to help them expand, Wial said.

They should also look at things manufacturers say they need. At the top of the list: skilled workers, research and development and help with ideas to improve productivity and performance. Generous subsidies and low wages are far less important to manufacturers, Wial said.

An abundant labor force recently helped Las Vegas lure Spreadshirt.com, a Boston-based maker of custom T-shirts and sweatshirts. The company, whose sales have grown more than 100 percent a quarter in recent quarters, is scheduled to open a 36,000-square-foot plant in Henderson in July. The factory will launch with 60 or 70 workers, with plans to ramp up to 100 by the fourth quarter, said Mark Venezia, Spreadshirt.com's vice president of global sales and marketing. That would nearly double the company's existing workforce of 150.

Venezia said the Brookings report's results surprised him because Las Vegas should have little trouble attracting industry. He reeled off the attributes that drew Spreadshirt.com here over markets in California and New Mexico.

In addition to a deep labor pool, Spreadshirt.com found tons of affordable real estate, good weather, low taxes, and help with training and recruiting. Spreadshirt.com's local plant is minutes from McCarran International Airport and its global flight service.

Brookings' numbers are from 2010, and with all the empty real estate Spreadshirt.com executives saw here while looking for a plant, Venezia speculated that the city's industrial sector might look smaller because many businesses closed during the downturn.

He said officials should play to the area's strengths to lure new factories.

"I'm not sure what percentage below market value we're signing for, but rents are very favorable," Venezia said. "Everyone we've worked with in Las Vegas has been great. Las Vegas has a huge labor force for everything from production to supervisors to customer service, and the cost of living is very favorable."

Contact reporter Jennifer Robison at jrobison@reviewjournal.com or 702-380-4512. Follow @J_Robison1 on Twitter.