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Las Vegas Revs Up for a Comeback A snapshot of market conditions in the host city of the AED Summit next month: With the Great Recession fresh in their memory, local dealers adjust to a new economy. BY JOANNE COSTIN Demolition work on the I-15 West Mesquite Interchange project in Mequite, Nev. about 30 minutes northeast of Las Vegas. With accelerated bridge construction the project was completed in 56 hours. The bigger they are, the harder they fall. This proved true for the modern boom town of Las Vegas, Nev. Once the fastest growing metro area in the country, the Great Recession hit Vegas with hurricane force, taking tourism, construction, and housing down, along with many other businesses. Seemingly overnight, the city went from leading the nation in population growth and construction spending, to leading in unemployment and foreclosures. Attracted by good weather, low taxes, inexpensive housing and a growing economy, Nevada's population grew by more than 36 percent from 2000-2011, during which time the state added more than a million new residents. At its peak, construction spending in Las Vegas was $16 billion, fueled by the huge casino construction projects and residential construction. The state has lost nearly 100,000 construction jobs since 2006, with only 48,200 construction jobs remaining as of September 2012, according to the Associated General Contractors of America (AGC). With the state in a budget crunch, public construction spending has also slowed and planned projects such as a new airport have been postponed. According to a 2011 report, Nevada Industry and Competitiveness Analysis – Identification of Industry Opportunities, by SRI International, while Nevada's dependence on consumption-based industries (primarily tourism/ gaming, construction, and retail) served the state well 30 | www.cedmag.com | Construction Equipment Distribution | December 2012 during an economic boom, it also contributed to excessive volatility and devastating job losses. Gaming taxes account for 34 percent of general fund tax revenues and the service sector employs about half of Nevada's workers. Visitor traffic bottomed in 2009 at 36 million, off a peak of 39.2 million in 2007. While the total number of visitors bounced back to near the peak numbers in 2011, gaming revenues are still far down off their high. And the convention business has struggled to come back – in 2011, the number of convention delegates was still down more by more than 1.4 million off of its peak. Meanwhile, hotel room capacity has continued to expand, keeping hotel room occupancy levels well below the peak levels of 2007. Diversity Helps Dealers Weather the Recession Fortunately for many Las Vegas construction equipment dealers, activity in the mining sector has helped offset the decline in general construction activity. Nevada is the nation's leading producer of gold, barite, and lithium. Copper, diatomite, dolomite, and other minerals are also extracted. According to Mike Pack, president and COO of Cashman Equipment, Nevada's Caterpillar dealer, the base of their business has completely shifted since the recession began. "If you wind back the clock to 2006, about 50 (continued on page 32) Photo Credit: Julie Duewel, NDOT photographer Markets