INCENTIVES THAT GET THE JOB DONE

July 24, 2022

In Henderson, Nevada, the three C’s of incentivization lead to greater job creation.

Since the fall of 2021, the Nevada Governor’s Office of Economic Development has announced tax abatements for a number of Henderson businesses, abatements that might be described as two-sided coins. On the one side are the benefits for business. The other side of the tax abatement coin? Business attraction and expansion, which mean jobs—good jobs in Henderson paying $22 an hour and above.

Henderson’s recent abatements have helped recruit new industry including:

• Lithion Battery. Focused on sustainability and green initiatives, Lithion is constructing a design, manufacturing and distribution facility for products including premium battery cells and battery systems. The operation will create 22 jobs (42 within five years) paying $30.41 per hour, with a capital expenditure of $5,179,049.
• ENTEK. Manufacturing innovative products for energy storage companies, ENTEK’s office and plant will create 53 jobs paying $29.44 per hour, with a capital expenditure of $10,862,117. Economic impact over 10 years is forecast to include 128 supported jobs, $63,566,166 in total supported payroll and $269,526,549 in total economic value.
• Rapid Response Monitoring Services. Rapid Response’s state-of-the-art electronic security and data monitoring center will create 118 jobs paying $22.75 per hour with a capital expenditure of $1,006.170. The economic impact over 10 years is forecast to include a total of 202 supported jobs, a total supported payroll of $86,930,665 and total economic value of $205,039,704.
• Accurate Manufacturing Products, a leading manufacturer of custom and architectural fasteners, will create 22 jobs with its new Henderson distribution center.
• Safe Life Defense. In its new headquarters, manufacturing and R&D facility, Safe Life will design and manufacture body armor and duty gear, creating 50 jobs paying $24.59 per hour, with a capital expenditure of $2,319,000. The total jobs supported will be 377, with a total supported payroll of $144,952,412 and a total economic value of $526,300,998.

Continuing with construction of its new manufacturing complex, Haas Automation was also awarded a new tax abatement. The world’s largest maker of machine tools is expected to be one of Nevada’s largest job creators: 1,400 jobs in its first 5 years of operations, with $100 million in capital investment in the first two years.

Business expansions supported by abatements include those to existing Henderson operations as well:

• Flowers Baking Company is creating an additional 66 jobs at an estimated wage of $24.85 per hour, and with an additional capital investment of $30,347,452.
• Wells Enterprises. The second largest manufacturer of ice cream and frozen dairy desserts in the U.S., Wells is creating an additional 87 new jobs at an average wage of $22.82 per hour to produce its Blue Bunny ice cream treats. The company is investing over $64 million in equipment and infrastructure.

Altogether, nearly 1800 jobs will be created, while the companies creating those jobs will have more room in their budgets thanks to reduced or exempted taxes. And that can be a deciding factor in location decisions.

In an interview with Nevada Business in April 2022, Peter Zierhut, vice president of outside operations for Haas, noted that Henderson’s location near the company’s California headquarters was key, as was Henderson’s pro-business climate, but also added, “Then, finally, the tax situation makes it [Henderson] very attractive, especially to a manufacturer. The majority of our competitors are overseas, so we have to compete against offshore products. To do that, we need to be in a location that’s conducive to building and it looks like Nevada is a good choice.”

The three “C’s” of strategic incentivization

While Haas received a tax abatement earlier in the company’s relocation process, the newest $10.5 million abatement was offered through Nevada’s Economic Development Rate Rider Program, which provides for reduced electricity rates for a specified period. Offered in partnership with NV Energy, the abatement exemplifies two of Henderson’s three “C’s” of incentivization: Customization and collaboration. The third “C,” creativity, has also come into play with Henderson’s new workforce training solution.

State funding for workforce training was in place when Haas began talks with Henderson. Nevada’s Silver State Works incentive program provides employers up to $2,000 per job through options including employer-based training, on-the-job training or incentive-based employment. However, producing a talent pipeline robust enough to satisfy Haas’ skill needs meant Henderson had to create a completely new solution and to create it rapidly. That solution was the Center for Excellence, a state-of-the-art workforce training center which Henderson officials spearheaded, putting together funding and collaborative partnerships with local industry and the College of Southern Nevada.

This was the first time in the state that a local jurisdiction had brought this level of effort, initiative and expertise to an educational challenge. The Henderson team showed that they were listening and are going to be responsive to business needs.

A holistic approach to industrial recruitment

In the end, that responsiveness in creating and maintaining all the components essential to business success is just as important as particular incentives packages. Such components include the robust demographics that Henderson provides as the second fastest growing city in Nevada, with a growth rate of 23.2% over the past decade.

While ENTEK received a $1 million tax abatement, company president Kim Medford noted to Area Development Magazine in March 2022 that it was the area’s “strong labor market” and the “availability of skilled labor such as machinists and engineers” that were deciding factors. The company plans to invest nearly $11 million in its manufacturing operation.