Apple’s plans to invest $1 billion over the next decade in a new data center in Reno could be the foundation of a major tech cluster in Nevada. That’s what the state’s economic development officials are hoping after granting state and local incentives of $89 million.

Steve Hill, executive director of the Nevada Governor’s Office of Economic Development

"Historically, Nevada has not offered tax incentives that are competitive for data centers," says Steve Hill, executive director of the Governor’s Office of Economic Development. "We did an economic and competitive analysis and stepped up and made it work. Apple was terrific to work with, and they liked working with Nevada. We were able to move quickly. That’s one of the benefits people find in Nevada."

Apple knows Nevada’s benefits well: Reno is also where the company has parked its Braeburn Capital subsidiary, through which it processes much of the parent firm’s profits due to the lack of a state corporate income tax in Nevada.

Hill says Apple’s presence in Nevada will likely spur further data center growth and will put the spotlight on the state’s infrastructure assets. He expects a cluster will develop in the Reno area. In Las Vegas, Switch Communications has had multiple data center expansions. Switch, which specializes in energy-efficient data centers, has more than 2.2 million sq. ft. (204,380 sq. m.) of space in the Las Vegas area.

"When a company with Apple’s stature makes a decision like that, a lot of other companies pay attention," says Hill. "We’ve had quite a few inquiries. Nevada had some technology assets that few folks outside the state — and maybe many inside the state — aren’t aware of. There is a very strong digital infrastructure in Nevada and a fair amount of redundancy. It’s a safe environment and the one state in the country rated a zero for natural disasters. The ability to know your data center will stay online 100 percent of the time is important."

Nevada Gov. Brian Sandoval (center) and Toys“R”Us Chairman and CEO Jerry Storch tour the company’s new fulfillment center in McCarran. At left is James Reid, the company’s director of e-commerce fulfillment.

Photo courtesy of Toys“R”Us

Nevada is navigating a major course change in its economy, Hill says, calling the shift the state’s biggest challenge. The restructuring of the state’s economic development agency is largely complete, and it’s moving forward with a broader effort that includes emphasis on education and work-force development, he says. That includes the creation of the GOEDC last year.

"We have to shift," Hill says. "I moved here 25 years ago from Dayton, Ohio, and started a concrete company. For the first 20 years, it was the best place in the country to be, and it was that way for most everyone who was here. Nevada certainly participated in the housing bubble, and when that bubble burst the economy in Nevada changed significantly. It’s really a permanent situation. We are not going to see the growth in the gaming industry as far as bricks and mortar and we won’t see the same housing growth."

Hill notes that Nevada is expanding its global reach, something he says the state had not done in the past. He cites a trade mission to the Far East in September to be led by Gov. Brian Sandoval.

E-Commerce Evolution

Spreadshirt, a global clothing-commerce platform for creating, buying and selling personalized apparel, has opened its second U.S. facility in Henderson, just outside of Las Vegas. Spreadshirt’s corporate headquarters is in Leipzig, Germany, and its U.S. headquarters is in Boston. The company also has a manufacturing facility in Greensburg, Pa.

Spreadshirt, a custom printer of T-shirts through online orders, has opened its second U.S. manufacturing site in Henderson.

Photo courtesy of Spreadshirt

"We found the need for more capacity at the end of 2011, having seen 100-percent growth in the U.S. market," says Mark Venezia, Spreadshirt’s vice president of sales and global marketing. "We started looking for a new production facility, and we wanted to be west of the Mississippi in order to get packages to our West Coast customers quicker. Nevada, with its tax incentives for opening up a production facility, was the most attractive state among those we looked at."

Venezia says Spreadshirt looked at about 20 sites in the Las Vegas and Reno areas before picking Henderson, primarily due to the availability of more international flights out of Las Vegas. The new facility shipped its first packages in early August. The operation started with 25 employees and will grow to between 75 and 100 by the fourth quarter.

Spreadshirt prints custom designs on T-shirts and other apparel. The company buys blank shirts from a variety of manufacturers, then takes designs over the Internet and prints items individually or in bulk. Venezia says the company prints millions of shirts annually. The company bills itself as promoting creativity by "serving the growing need for personal branding."

Toys"R"Us has opened a 300,000-sq.-ft. (27,870-sq.-m.) e-commerce distribution center in the Tahoe-Reno Industrial Center in McCarran, about 10 miles (16 km.) east of Reno, to support the company’s booming online business. The company says the McCarran site was chosen after a search of potential sites in the western U.S. because of its proximity to strong transportation networks.

"As more consumers enjoy the simplicity and ease of online shopping, Toys"R"Us continues to invest in e-commerce enhancements to advance customer service and satisfaction across all shopping channels," said Jerry Storch, chairman and CEO of Toys"R"Us, Inc.

"We believe the McCarran facility will play an important role in further accelerating our company’s online business growth and order fulfillment," he said.

2010 has been anything but ordinary for Arizona Gov. Jan Brewer. She has gained international attention with the state’s controversial immigration law. While that has stirred ongoing controversy, she also shook up Arizona’s economic development structure by creating the quasi-public Arizona Commerce Authority to replace the state’s Department of Commerce.

Brewer previously served as Arizona’s secretary of state. By state law, she succeeded former governor Janet Napolitano when Napolitano was named U.S. Secretary of Homeland Security. Brewer is currently running for a full four-year term as governor.

When Brewer signed the executive order in June that established the Arizona Commerce Authority, she said it would send a message to the world that Arizona is a premier location for expansion and that the state will become more aggressive in attracting new industry. Gov. Brewer recently took time to discuss the Commerce Authority, immigration and other issues with Site Selection.

Site Selection: How did the concept of the Arizona Commerce Authority come about and what is its current status?

Gov. Brewer: I’m very excited about it. I knew immediately when I became governor that I had a difficult path ahead of me. I was determined after being there a couple of months that we had to change the way Arizona did business. I appointed several leading C-level executives to help us work through this, and decided to establish the Arizona Commerce Authority. We are now in transition from the Department of Commerce. We need a couple of pieces of legislation in January and then we will be ready to go. We’ve got our nose down and we are working hard. They are meeting right now. The key thing is they will be able to reach out to our surrounding competitors and business people throughout the global economy and work with them on a hands-on basis. What I have tried to do all along is to make Arizona open and friendly and have a good working relationship with the private sector. The first thing I did as governor was put a moratorium on rules and regulations until we got a handle on things.

SS: You appointed longtime Arizona sports figure Jerry Colangelo to head the Commerce Authority. What does he bring to the table?

Brewer: He brings years of experience and success to the Authority. He is a total pillar of Arizona and probably America. To look at Jerry and see what he has accomplished for the state, not only with his sports franchises, but with his personal businesses, it is amazing. He is very congenial and knows how to get the job done. For him to come forward and lead the effort, we are very fortunate. He is a proven leader and I admire him so much.

SS: Arizona is strong in the solar energy sector. How are you promoting this and what are the other strong sectors in the state?

Brewer: We are reviewing what we need to focus on exactly and what it is we want to encourage. Arizona’s economy has been based so much on the construction industry. When it goes down, the state goes down. We want to specifically look toward aerospace and defense, solar energy, electronics and semiconductors, certainly science and healthcare and biotech, small business and entrepreneurship. You can’t beat 320 days of sunshine and it certainly makes a lot of sense to develop the solar industry here. We are very proud of two world class photovoltaic testing labs here, operated by the University of Arizona in Phoenix.

SS: Does Arizona have all the tools it needs, such as incentives, to compete with other states?

Brewer: We know we can always improve. Certainly, I have been constantly focused on ensuring that Arizona has a tool chest big enough to attract companies. We are number one in the nation for solar manufacturing. I signed a renewable energy tax incentive targeting solar manufacturers with a new incentive focus on solar generation projects. We are going to continue to compete, not only nationally, but globally, for solar companies to come here. We have a competitive operating environment. Our enterprise zones are wonderful … and make certain people eligible for property tax reduction. We have military re-use zones and foreign trade zones and companies locating there are eligible for 77-percent reductions in property taxes. Our individual income tax rate is 3.55 percent, which is lower than other markets in the Southwest.

SS: Which states do you view as your primary competitors for investment?

Brewer: We look toward California because of their high regulations and high taxes. Certainly that’s the same with Nevada and Texas companies. They should give us a look over. When you look at Arizona, which has no corporate franchise tax, no dividend tax, and no sales tax on manufacturing equipment, we have a lot to offer. Now that we have restructured, we are on the move and we are sending a strong message that we are open for business. The Arizona comeback will happen. I’ve been hands-on working with the private sector. That has been something I have prided myself on. We’ve been very fortunate to bring in 2,500 high-value jobs and $1.2 billion in investment.

SS: When you meet with corporate executives who are looking at Arizona, what types of questions do they ask you?

Brewer:  They are interested in education. They want to be sure of availability of a skilled work force. We are very proud of our state universities and we are also home to the Thunderbird International School of Management. Companies are always interested in stability. It falls back to my Commerce Authority where members are appointed for five years. That gives stability when governors go in and out, so companies know they are dealing with a stable environment. We try to make them aware that we are a very pro-business state and we have a very pro-business legislature. The bottom line is that companies want to be sure the state’s business policy direction meshes with their long-term commitment. Stability is so important to them.

SS: Arizona’s new immigration law has put the national spotlight on you and the state. How has that affected the state’s economic development efforts?

Brewer: I have been told by my Commerce Authority and by the business community that not one company has looked at that as a deterrent to choosing Arizona. When you offer what Arizona has to offer — such as a stable, competitive taxing forum, a skilled work force, job training funds and successful CEOs willing to reach out, 320 days of sunshine, a great education system, both public and private — we will be a state to be competing with in a couple of years. The number one issue is for us to do what it takes to compete. If companies are looking at Arizona, they will find a pro-business environment, a quality work force, combined with targeted incentives, world-class education system. We are ready to work with them … Stay tuned because there is much more to come.

Helping Catch the Sun

Arizona, with its abundant sunshine, has become a hot spot for solar development. More than 100 solar companies operate in the state, including globally known names such as First Solar, Kyocera and Abengoa Solar. Recently, two firms primarily known for their automotive parts manufacturing have announced solar-related projects in the state.

Linamar Solar Systems, a division of Linamar Corp., a Guelph, Ont.-based manufacturer serving the automotive and industrial equipment markets, chose Glendale for its new power conversion unit manufacturing facility, signing a five-year lease for a 76,000-sq.-ft. (7,060-sq.-m.) building in Glendale’s Airpark. Linamar, which will manufacture and assemble the PCUs for Stirling Energy Systems’ utility scale solar SunCatcher systems, plans to initially hire 52 and expand to 75 employees by its third year of operation.

Stirling and its partner Tessera Solar have contracts to place more than 65,000 SunCatchers at power plants in Arizona, Texas and California. Linamar Corp. is Canada’s second largest auto parts manufacturer.

Another supplier for the SunCatcher systems, Tower Automotive, has leased a former Rubbermaid facility in Goodyear, Ariz. Tower, which is diversifying its product line to produce components for Stirling, plans to employ 200 when it begins operations later this year.

“Tower Automotive is excited to bring our technology and expertise to the Southwestern United States through the establishment of manufacturing operations in the metro Phoenix area,” said Bill Pumphrey, Tower Automotive’s president of the Americas, when the announcement was made earlier this year. “Through the support of our customer, Stirling Energy Systems, and the State of Arizona, both of which made this possible, we are confident that this is the start of exciting growth opportunities for our company, our colleagues and the communities we support.”

Tower Automotive is one of the largest independent global suppliers of automotive metal structural components and assemblies. It operates roughly 40 manufacturing and product development facilities in 13 countries in North and South America, Europe and Asia.

In January, China-based Suntech Power Holdings Co., the world’s largest crystalline silicon photovoltaic (PV) module manufacturer, announced it will also locate in Goodyear. The Suntech Goodyear factory will initially employ more than 70 and is designed as a showcase for the company’s latest-generation solar electricity manufacturing technologies and equipment. It will begin with a production capacity of 30 MW and has the potential to expand to over 120 MW, giving Suntech the ability to respond to the rapidly growing demand for solar throughout the U.S.