How Nevada is trying to generate jobs outside of the casinos
Before the pandemic brought daily life to a standstill, Joe Kiele made a living through the industry that dominates Nevada's economy. He waited tables at a steakhouse in a Reno casino.
Four years later, the 49-year-old Mr. Kiele remains in Reno, but now spends his workday in a factory. Instead of worrying about the doneness of a customer's ribeye, he trains people in the proper handling of industrial chemicals.
His employer, Redwood Materials, is building a huge complex in a lonely stretch of desert. There, the company started recycling batteries from discarded smartphones and other electronics. It mines crucial minerals such as nickel, lithium, copper and cobalt and uses them to manufacture components for electric vehicle batteries.
It is no coincidence that the factory is only 13 kilometers away from a major customer: a Tesla car factory.
Mr. Kiele's shift from restaurant server to chemical operator parallels a transformation long championed by Nevada leaders who want to make their economy more diverse, reducing reliance on the hospitality sector for jobs. In recent years they have tried to secure investments from companies involved in the transition to green energy.
The Redwood Materials plant, which covers about 300 acres and is expected to require about $2 billion in investment over the next decade, looms as a monument to Nevada's ambitions. For workers, the factory is proof that there are other ways to pay bills besides handing out cards and delivering food.
“We are not based on consumerism,” Mr Kiele said. “We are dealing with the industry.”
This isn't the first time Nevada has wanted to broaden its economy. The state has a history of betting its fortunes on the wealth derived from a single industry.
In the years following the Civil War, the newly formed state focused on mining silver and gold. Over the decades that unfolded, Nevada's economy boomed and stumbled in accordance with the value of the ore mined from the parched earth.
The legalization of gambling in 1931 – an attempt to overcome the Depression – stimulated the construction of casinos. Conventional wisdom held that gambling was so irresistible that the business was effectively impervious to economic downturns. But that insight was undone during the Great Recession about fifteen years ago. Then the pandemic added urgency to the mission to diversify.
The most notable result of that campaign is the rise of Las Vegas as a hub in the national e-commerce distribution system.
Nearly 14 million square feet of warehouse space is now being built in the Las Vegas metropolitan area, with 40 million square feet planned over the next two to three years – an increase of nearly a quarter of existing capacity, according to John Stater, research manager at Colliers, the investment manager for commercial real estate.
“We are building warehouse space at a pace I couldn't have imagined,” he said.
The trend is driven by geography. Las Vegas is bisected by Interstate 15, which runs from Southern California north to Salt Lake City. Smaller highways connect Las Vegas to Interstate 10, which runs between Los Angeles and Phoenix. About 39 million people live within half a day's drive.
During the chaos of the pandemic, factory goods from Asia flooded the twin ports of Los Angeles and Long Beach. Warehouses in Southern California have failed – a cause of delays in the US goods delivery system. That encouraged retailers to find alternative places to store their goods.
Las Vegas beckoned with large buildable lots. Most of the new warehouses are located on the edge of the metropolitan area, in North Las Vegas, in the brush-covered desert that slopes into treeless mountains.
There, Prologis, a San Francisco real estate investment trust, is building aggressively, having recently purchased an undeveloped 900-acre tract.
Just a few years ago, Prologis executives were eager to set up warehouses spanning 200,000 square feet and lease them to major brands. On a recent afternoon, bulldozers moved ground on a soon-to-be completed 60,000-square-foot warehouse for Moen, the maker of kitchen and bathroom accessories.
“We are very optimistic about continued growth,” said Lisa Brady, vice president at Prologis.
Crocs, the shoe company, is preparing to open a distribution center in a new warehouse of over one million square meters. There, about 400 initial employees, who will earn a starting salary of $18 an hour, will begin fulfilling orders.
More than 93,000 people work in the transportation and warehousing sector in the state, a one-fifth increase from before the pandemic, according to data analyzed by David Schmidt, chief economist at the Nevada Department of Employment, Training and Rehabilitation. This compares to 364,000 jobs in the leisure and hospitality sector.
Some economists argue that warehouses are a questionable alternative to casino work, as many people burn out after just a few years, while wages tend to be lower. But the Nevada Governor's Office of Economic Development, which advocates for investments, says entry-level work can lead to supervisory positions that pay much more than typical jobs in the leisure and hospitality sector.
“I see this as a stepping stone to the future,” said Bob Potts, the agency's deputy director.
A long-term goal focuses on replicating the entrepreneurial activities of people like Martin Schiller, founder and CEO of a biotechnology company called Heligenics.
Dr.'s resume Schiller included a stint teaching at Johns Hopkins when he arrived 14 years ago to found a medical institute at the University of Nevada, Las Vegas. In a laboratory there, he pioneered a way to refine existing drugs by bombarding them with tens of thousands of genetic mutations, and thus figure out how cells develop resistance.
“We are drug hackers,” said Dr. Schiller.
On a recent afternoon, he and his team reviewed data collected from a trial of a variety of interferon used to treat multiple sclerosis as they worked toward Food and Drug Administration approval for a new therapy.
At first Las Vegas felt isolated, but then Dr. Schiller to appreciate some advantages. The university gave him time to develop his technique and launch his company, free from the publish-or-perish culture that dominates much of academia. The city rented him space in a museum to establish his first laboratory. He built his current offices and laboratory on a shoestring budget of $4 million.
“In San Francisco that would cost $20 million,” he said.
Reno has long operated in the shadow of Las Vegas, but lately the city has blossomed through reinvention. The Tahoe-Reno Industrial Center has become a showcase, anchored by the Tesla factory and a Panasonic factory that makes batteries for electric vehicles.
Redwood Materials, founded by Tesla co-founder JB Straubel, began limited production in late 2022. The company employs 661 people at its Nevada facility, with a goal of 1,600 jobs by the end of the decade.
Redwood's liaison to state and local government is Don Tatro, a former state senator whose grandfather ran the Carson City Nugget, a casino south of Reno. Many of the new employees have experience in the leisure and hospitality sector. Their new work – making parts for electric vehicles – comes with a sense of mission.
“There's a lot of security involved,” said Grace Uhart, 27, who started her career in the front office of the Venetian resort in Las Vegas and now oversees cleaning and culinary services at Redwood. “The business we're in needed to be sorted out.”