Business leaders still skeptical of LV

Business executives nationwide continue to think of Las Vegas for its casinos, showgirls and Elvis impersonators -- not its strong nongaming business climate, a new survey found.

Of 85 executives responding to a survey conducted by Development Counsellors International of New York, 78 percent said Nevada is more a tourist than a business location and 58 percent said the majority of its industries are "low-tech."

"What is even more revealing is that only 29 percent of those surveyed correctly identified Nevada's gaming and hotel employment base as 25 percent of the (Nevada base)," noted Julie Curtin, director of the Development Counsellors' Denver office.

Initial results of the survey, which is still under way, were released this week at the Governor's Conference on Economic Development.

The $15,000 study was commissioned by the Nevada Development Authority, Nevada Commission on Economic Development and the Economic Development Authority of western Nevada.

"Las Vegas has a stigma of being perceived throughout the world as a resort image industry 24 hours a day, seven days a week," said Somer Hollingsworth, president and chief executive of the Nevada Development Authority. "Most businesses feel that there's nothing else here but hotels, and nothing else beyond the Strip."

"But what people don't know is that 22,000 new homes are sold each year and the prices they are sold for are very low compared with what you would pay in California," he said.

Most repondents listed limited hi-tech infrastructure and lack of skilled technical labor as the state's major weaknesses.

The study contained some good news. Nevada is rated favorably for its low taxes, easy access to government leaders, good logistics and infrastructure and abundant renewable energy resources.

And Nevada's business climate was rated more favorably than that in California, New Mexico and Oregon.

"Most of us inside the state have broken through the myths about Nevada, but it's important for us to find out what people outside the state think so we can be effective in giving them information they need to change their minds about Nevada," said Kay Scherer, Nevada Commission of Economic Development's director of marketing.

"We may have a great tax structure, but the business community could be worried about other issues like myths relating to the gaming industry, the 'Wild West' nature of our state." she said. "This information is important in our marketing attempts. We are well known for our hospitality industry, but that's just one slice of the pie."

Of the 85 respondents, some 60 percent are presidents, CEOs, VPs and CFOs, and 41 percent of the companies have gross revenues exceeding $250 million. About 51 percent of the companies are in manufacturing and the remaining 49 percent in non-manufacturing.

While Nevada is a healthy state with a robust economy, Lt. Gov. Lorraine Hunt cautioned the state has, for decades, been relying on tourism to sustain its economy. A downturn in this sector would adversely affect the state's tax revenues.

"We no longer have that luxury. We must bring in industries that will complement tourism and help diversify the economy," Hunt said.

Diversification of the state economy will require creation of a skilled hi-tech workforce and an entrepreneurial class that would generate growth of new industries other than gaming, Hollingsworth said.

Ted Levine, Development Counsellors' chairman, said such efforts are already under way, but hi-tech businesses must become more active in seeking improved schools, partnering with academia and making their needs and requirements known through partnerships, externships and internships.

One company doing just that is Reno-based iGoCorp.com, a Silicon Valley transplant.

In addition to teaching an e-commerce class at the University of Nevada Reno, it's trying to create partnerships to improve the technical components of the university and Community College of Southern Nevada.

Two years ago, Ken Hawk, iGoCorp.com's founder, disregarded Nevada's gaming image and moved his Silicon Valley operations, 24 employees and their families to Reno to accomodate his rapidly expanding company.

Today, iGoCorp.com directly employs 100 workers and provides 125 ancilliary jobs. Among the reasons he cited for relocating his company to Reno are lower-cost housing, shorter commuting time, lower turnover rates and its proximity to Silicon Valley.

"Not many people know that Microsoft, Altus Mortgage and Amazon.com are also here in Nevada," he said.

Other hi-tech industries in the making in Nevada include film, automotive, communications and biomedical.

Plans are also under way to create a school of aeronautical engineering at UNLV, said Troy Wade, chairman of the Nevada Alliance for Defense, Energy and Business.

"If Kistler Aerospace and Venturestar decide to launch their communication satellites and reusable space vehicles from the Nevada Test Site, the whole aeronautical industry will sit up and look at Nevada," he said. This industry could bring in billions of dollars to the state and spur more innovation in science and technology research.

To improve Nevada's business image, Development Counsellors' Levine suggested advertising the testimonials of private businesses that have succeeded here and getting recommendations from site selection consultants including Arthur Anderson and Ernst and Young.

"In 30 percent of decisions to expand and relocate companies, advice was given by site selection consultants, and a strong skilled labor force is named as the most important criteria by consultants," Levine said.

While $500,000 of the state budget was allocated to promoting the science and technology industries in the last legislative session, Gov. Kenny Guinn stressed the need to develop a specific plan to diversify the economy and locate new industries here.

"The real foundation for expansion is education. If we don't fortify our school system to produce a hi-tech workforce, we won't get people and new industries to come here," he said.

"The growth is not just in the casino industry, it is also in science and technology, which will play a bigger role than we've ever imagined in the development of Nevada and individual companies here," he said.

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