Companies find advantages to moving businesses to Las Vegas

Las Vegas Review Journal
June 20, 2010

Last month, the owner of a company that has been operating in California for more than 40 years called the Nevada Development Authority to inquire about the advantages of moving his manufacturing business to Las Vegas. It was a Friday and he wanted to meet with someone right away.

He was told that Somer Hollingsworth, president and chief executive officer of the NDA which assists companies considering a move to Southern Nevada, would be in Salt Lake City the following week and could probably work him in. For the eager caller, it was not soon enough. "No," he said, "I want someone here on Monday." The NDA complied and, in fact, a week after the Monday meeting took place the man was scheduled to take a tour of the Las Vegas area, everything from the manufacturing space to the local neighborhoods.

For Hollingsworth, who spends much of his waking hours thinking about ways to bring new businesses to town, it was like a gift that fell out of the sky and landed at his feet. Normally they work with a company at least a year before the proverbial shingle is finally hung outside the door.

But these are not ordinary times. Last year, for example, the outlook was appearing dismal at the NDA with business inquiries slowing to a trickle due to the recession. In January, however, it started to pick up again and has been at a steady pace ever since. And most of the interest is coming by way of California and Canada. Yes, Canada. "It’s exciting because we’re seeing a crack in the armor. We’re seeing things start to move," Hollingsworth said.

By the end of this fiscal year, 18 companies will have opened in Las Vegas with assistance from the NDA and that number could go as high as 25, Hol-lingsworth said. It is still about half the amount of companies the agency has assisted in boom years such as 2007 but it is a step — a giant step, in fact — in the right direction compared to 2009.

One reason for the interest is an aggressive NDA campaign aimed at luring California businesses across the border. Almost one-third of the agency’s new clients are from The Golden State.

They include a communications company known as CallTower which moved its headquarters to Henderson from San Francisco, and Barbour Well, Inc., an oil and geothermal drilling service that transferred its main office to Henderson from Camarillo last December. Another California company, Amonix Inc., is leasing 200,000 square feet for a manufacturing plant where it will make solar cells used by electric utilities and large commercial operations.

Many of the companies that are emigrating from California, or at least opening portions of their operations in Southern Nevada, are tired of the high price of doing business in the state due to everything from the cost of leasing office space to corporate tax rates, Hol-lingsworth notes.

Nevada, on the other hand, has no corporate or individual income tax and its overall tax burden on businesses is ranked among the lowest in the nation. This is a huge advantage not just when looking at California but considering the highly competitive world of attracting businesses to your state so its residents can flourish. Among the toughest competitors are Texas, New Mexico, North Carolina, South Carolina and Arizona, Hollingsworth said.

New Mexico, for example, recently lured Hewlett-Packard by offering $73 million worth of incentives including tax breaks and $12,500 per employee for training. "So that’s what we’re faced with ... all we do is what we can do," Holling-sworth said.

For some companies it is enough. When Louis Castle agreed to take the job of chief executive officer for an In-ternet game software company called InstantAction last year, one of the conditions was that Las Vegas be considered as a site for the company’s headquarters.

As a native Las Vegan and co-founder of Westwood Studios, a former computer and video games designer that had offices in the northwest part of the valley, he pointed to the lower cost of living compared to high-tech industry hubs such as the Silicon Valley in Northern California and portions of Los Angeles. In other words, a game designer making between $65,000 to $80,000 a year will be able to make it go much further in Las Vegas including the ability to purchase a house. "At the end of the day, the lifestyle for the dollar mixed with a great cosmopolitan city is a great reason to be here," he said. So far there are about 50 employees, most of them designers, working out of the main office which opened in Summerlin six months ago. It houses IntstantAction’s financial operations, and both the games and tools divisions. Castle hopes to eventually hire about 100 employees for the Las Vegas office.

Canadian businesses are seeing the advantages as well. Robert Pek, the president of Big Rig Collision, or BRC, which repairs heavy-duty transport vehicles, said the business climate in Southern Nevada made the decision to move here a very attractive one.

"Nevada as a whole, and especially Las Vegas, is just a friendlier business environment, just the ease of working in Nevada compared to other states. And Las Vegas has a very friendly, open-door policy. It’s not just a casino town." His company will be opening a 53,000-square-foot repair center for servicing damaged vehicles such as tractor-trailers and motor coaches. Once fully operational, technicians will be able to service at least 75 vehicles at one time or between 500 to 600 per year which, Pek believes, will make it the largest repair shop of its kind in North America.

The company is currently hiring and expects to have a minimum of 75 employees within the next 18 months, although Pek said the number could rise to as high as 120. Pek noted that Las Vegas is a transportation hub because of the large number of distribution centers here and the amount of tour buses that flow in and out of town. The agency that is leasing BRC its commercial space has also been flexible and is allowing the company to alter the structure of the warehouse by adding large ramps and additional doors. "If we had to build a building it would have cost $10 million," he said.

Another carrot for BRC has been the $1,000 per employee training grant that the NDA helped it obtain. InstantAction, too, received incentives for the move to Summerlin which probably amount to more than $200,000, according to Castle.

Other companies, such as Allegiant Air and Expedia Inc., which came to Las Vegas in 2001 and 2000, respectively, see other practical advantages to moving into a community with a strong tourism base. Las Vegas was actually the focus destination for Allegiant when the airline transferred its headquarters from Fresno, Calif.

For Expedia, the online travel company, Las Vegas is the most popular destination among its customers so being here, in many ways, makes sense. Many of the company’s clients, for example, are local hotels, notes Cathy Rankin, senior human resources manager. While its headquarters are in Bellevue, Wash., Expedia’s Summerlin operations are significant enough to employ 450 and include a contact center, financial operations, travel cruise division and a new contact center for corporate travel.

Indeed, for a Canadian company called Solotech the move here was not about incentives but the very nature of the city itself. Solotech, which provides high-tech entertainment equipment and expertise, opened its first U.S. facility in a light industrial complex off South Dean Martin Drive about a year ago. The 30,000-square-foot space includes a warehouse, offices, a rehearsal room and retail store. There are currently about 14 employees but that number is expected to steadily increase as business grows, including the addition of business development staff and audio, lighting and video technicians, noted Pierre Leduc, vice president and general manager of Solotech USA Corp.

The company has been partnering with Cirque du Soleil on technical elements of its shows since 2003 and has had a long-standing relationship with Ce-line Dion, including work on her former show, "A New Day," at Caesars Palace, Leduc said.

It only seemed logical, based on the relationships the company has been building here, to move some of Solotech’s operations to Las Vegas and use the new facility as a kind of launching pad for expanding business throughout the Western United States, Leduc said.

When asked about the recent influx of Canadian companies into Southern Nevada, Leduc explained that it made sense for those businesses wanting to expand into the international market. He called the United States "the natural first step" because the two countries are geographically close and have cultural similarities.

Even though Las Vegas has been dealing with the harsh realities of the recession, including high unemployment and a struggling real estate market, there is a plus side, he added. Businesses with the necessary resources are actually able to expand here because of salaries and leasing options that are more reasonable than a city such as Los Angeles.

"In a thriving market, it is much more difficult to penetrate the market," he said. "In this market, with the changes we see, it creates great opportunities." Those opportunities have long benefited the three corporations that comprise Yellow-Checker-Star Transportation, Nevada’s largest cab business. Yellow Cab acquired Checker in 1984 and then acquired Star in 1986. The three companies still operate separately yet under the umbrella name of Yellow-Checker-Star.

Now the company is in a position to give back to its corporate home. Since becoming a truly "green" company, Yellow-Checker-Star has been at the forefront of improving air quality and educating the public about the benefits of alternative fuel. The three cab corporations all use propane for their combined 550-plus taxis. The entire propane fleet logs more than 50 million miles per year and saves the Las Vegas Valley from 800 tons of carbon monoxide and 800 tons of particulate matter per year.

Bill Shranko, chief operating officer, says Yellow-Checker-Star has more than 23 shifts available with 800 cabs — 567 in regular rotation and others for special events. Shranko believes diversity enriches employment, and the employee base is very diverse in national origins, including Asians, Ethiopians and Hispanics.

The company has chosen to incorporate languages in training sessions, which means it is always seeking bilingual candidates. Yellow-Checker-Star needs to fill about 900 positions each year; drivers must be at least 25 years old for insurance purposes.