Editorial: High-tech companies take a pass

Thursday, July 15, 1999 | 9:47 a.m.

Two decades ago Western cities were practically high-tech laggards, with just one city -- San Jose, Calif. -- ranked among the top five metropolitan areas with high-tech companies. Fast forward to 1999 and you'll find the situation reversed, according to a study released Tuesday by the Milken Institute, a nonprofit economic think tank. Of the top five high-tech metropolitan areas, four are from the West, and leading the way is San Jose.

While others have benefited from this westward migration of high-tech companies, Las Vegas has been left behind, not making the top 50 of the Milken Institute's listing. This doesn't mean Las Vegas is hurting economically. After all, this metropolitan area consistently has been a national leader in job growth. The problem is that most of this growth is tied directly or indirectly to tourism. While gambling has been a godsend for our economy, a reliance on one industry is perilous if the economy takes a downturn.

Nevada's low tax base and business-friendly regulatory agencies should be tempting for businesses seeking to relocate. Southern Nevada has long tried to diversify its economy, and while there have been a few successes, for the most part the area has struggled to attract large nongaming companies, let alone those from the high-tech industry. Part of the reason for the difficulty can be attributed to a resistance to move to Las Vegas for image reasons, especially the legalization of high-stakes gambling. Another issue that has hindered diversification is a lack of top-notch university programs that meet the needs of high-tech firms.

It's important to find ways to lure companies here, but a story in Tuesday's Sun by reporter David Strow also indicates it's just as critical to ensure they stay in the Las Vegas Valley. CAM Data, a high-tech firm that located in a Henderson industrial park two years ago, is threatening to leave, alleging that the city has failed to attract similar tenants to the Wagonwheel Industrial Park. Henderson officials respond that currently their hands are tied, citing litigation involving the entire industrial park. It's difficult to assess who -- if anyone -- is at fault, but this situation does suggest a need for all local governments to implement long-range plans that address the concerns of high-tech companies.

The Milken Institute's study notes that those who don't foster a climate to draw high-tech companies do so at their own peril. "Because of the growing role of high-tech industries in the national economy, metros that do not achieve some level of attainment in these critical industries will likely experience substandard economic growth in the future," the study concluded.

Las Vegas' new mayor, Oscar Goodman, wants to bring more high-tech companies to the valley. Goodman would do well to read the Milken Institute's report. In addition, he should work with other elected officials, economic diversification agencies, business leaders and education officials to rejuvenate efforts to bring high-tech companies here and keep them satisfied once they arrive. Silicon Valley can't be replicated here, but an aggressive and coordinated approach could help diversify our economy, making it more than a tourist destination.