Friday, Oct. 4, 2002 | 10:56 a.m.
Some Nevada importers and exporters are securing storage containers on contingency and considering transporting product via air or rail freight through Gulf and East Coast ports because of the West Coast port shutdown.
State officials say the ports' closure hasn't yet critically hurt Nevada exporters, which ship slot machines, minerals and other products worth more than $1.4 billion a year overseas and employ about 22,000 people.
But Nevada export promoters are warning that a protracted shutdown could damage export-oriented businesses and manufacturers that rely on imported raw materials and parts and potentially lead to layoffs.
Al DiStefano, director of global trade and investment with the Nevada Commission on Economic Development in Carson City, said the ports' closures will likely hurt Northern Nevada more than Southern Nevada because 74 percent of all exporters in Nevada are within a 90-minute drive of Reno.
High-tech electronics and electrical equipment are among Nevada's largest exports -- amounting to 38 percent of the total -- followed by commodities, machinery, fabricated metal products and chemicals, DiStefano said. Nevada's key export markets include Canada, Japan, Belgium and Mexico.
The effect on Nevada's economy would depend on the length of the shutdown, level of inventories and the availability of substitute transportation, said Keith Schwer, director of UNLV's Center for Business and Economic Research.
"If you can't import a car, does that mean there won't be cars for people to buy? No. People will find substitutes," he said. "If it's a short strike, it may just be a question of adjusting inventory. But if it gets to critical levels and if there are no goods to sell and no available substitutes, then we have problems."
Bob Shriver, executive director of the state Commission on Economic Development, said the ports' closures could result in shortages of consumer goods including audio/video equipment, consumer electronics, auto parts, clothing, toys and holiday commodities.
"We're now nearing the end of our growing season here. So a lot of fresh fruit and vegetables will be coming in from warmer climate markets like South and Central America and Mexico. These will probably be routed through Gulf Coast ports like Galveston in Houston and then shipped into Vegas by rail. So food costs could go up," he said.
DiStefano said some exporters in Nevada -- including Eagle-Picher Minerals Inc. -- hope that state and federal elected officials will pressure President Bush to end the shutdown.
Eagle-Picher, a Reno-based mining company of diatomaceous materials -- fossilized materials mined in Nevada and Oregon and used to filter beverages including wine and beer -- said it ships several thousand containers of the material a year and has $75 million in annual sales.
Brett Arnold, Eagle-Picher's director of logistics, said its international clients are nervous about the prospect of a protracted strike and it's seeking presidential action on the issue.
"We also took some proactive measures by speaking to our shipping freight companies and they are trying to help us by making alternative delivery arrangements by rail either through Houston or the East Coast ports. But we've not decided to take that step yet," he said. "We've also brought in about 100 empty containers at our production facilities in Nevada that will last us a few weeks in terms of storage."
Slot machine giant International Game Technology of Reno said the port closures were disruptive but didn't affect shipments from many of its parts vendors, the majority of whom are in the United States.
"IGT does import machine parts from offshore suppliers, some of which comes through the West Coast ports. Although the port closures are disruptive for us, the closures do not involve many of our vendors. We are currently deploying material through other ports in New York, Baltimore, Houston and others," said Rick Sorensen, IGT's manager of public relations.
"So what it really comes down to is more planning and logistical adjusting on our part. If the closures should last, we could look to second-sourcing for materials if necessary," he said.
DiStefano said IGT is the state's largest exporter. Sorensen said IGT's slot machine exports haven't been affected by the dock strike and that the company is continuing to export through other ports.
Uncertainty over the length of the strike is wearing on the auto industry, especially on Japanese auto dealers like Nissan.
Donald Forman, general manager of United Nissan in Las Vegas, said some 253 Nissan cars -- that were to have been delivered to the West Coast ports for distribution to some 80 dealerships in Las Vegas, Phoenix and California -- are being held offshore on a ship.
"The 253 cars are of the models Nissan Maxima, Pathfinder and Nissan 350Z. These are manufactured out of Japan. The 350Z is a new sports car that came out in the last 60 days and is a very hot seller in Las Vegas," he said. "But the closures aren't a big enough dilemma yet to affect consumer prices of Nissan cars."
Mitigating the impact on the company is the fact that a majority of Nissan's best sellers, including the Nissan Altima, Frontier and Sentra, are built in Tennessee, Forman said.
And Nissan dealerships on the West Coast, which import the majority of their parts from Japan, are now considering whether to use more expensive air freight.
"On a daily basis, our dealership alone does around $18,000 to $20,000 in retail and wholesale parts sales. Since we have 80 franchises, that's a lot of business," Forman said. "Is it a critical problem now? No. But could it be a potential problem in costing Nissan dealers and manufacturers revenues in the future? Yes."
"If this strike lasts a full month, and just the deliveries of Nissan 350Zs are held up, it could cost my dealership about $600,000-$700,000 a month in total revenues," he predicted.
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