U.S. official bullish on small business prospects

Grace Leong

Wednesday, Oct. 23, 2002 | 11:11 a.m.

Despite the stock market slump and continued weakness in the airline and tourism sectors in the aftermath of the 2001 terrorist attacks, U.S. Commerce Secretary Don Evans said Tuesday he remained positive about the sustainability of the current recovery because of strong growth in small businesses like Wheeler's Las Vegas RV.

At a tour of Wheeler's RV, Evans said strong sales by small businesses -- which generate 75 percent of new jobs in the nation -- are good indicators of the health of the economy and the availability of disposable income.

Wheeler's RV grew from a 1-acre gravel lot on West Spring Mountain Road to a 20-acre operation on South Las Vegas Boulevard. It grosses $50 million-plus in sales a year and saw a 42 percent jump in sales following a change in travel patterns after the 9-11 attacks.

Wheeler's RVs and motorhomes cost up to $400,000.

"The basic fundamentals are in place for a continued recovery in the economy," Evans said. "We have low inflation, low interest rates, high productivity. Housing starts, auto sales and yes, RV sales, are all at record levels. ... I'm hearing an upbeat optimistic message from small businesses in my travels, although some sectors like airline and tourism are still suffering."

Evans said the national economy is expected to grow between 3 percent and 3.5 percent in the fourth-quarter.

"Because of (Nevada's) low taxes, there are more small businesses starting in Nevada than any other state in the nation," he said. "Taxes and government regulations are some of the challenges faced by small businesses today. We have to keep tax rates low and help small business owners so they don't have to deal with unnecessary regulations."

Elizabeth Gregory, associate undersecretary for communications for the U.S. Department of Commerce, said Nevada saw the highest rate of growth -- at 6.9 percent -- in non-employer or "mom-and-pop" businesses in 2000 compared with nationwide growth of 2.3 percent.

Evans stressed the underlying economic fundamentals remain strong even though the stock market slump has eroded millions of Americans' retirement funds and investment portfolios.

"Household wealth hasn't dropped because most Americans' wealth is tied up in their homes and real estate rather than the stock market. And real estate values are up, so household wealth hasn't depreciated as much," he said.

But Wheeler's RV, which grew in 1982 from a six-worker dealership of used RVs to a 120-worker dealership showcasing more than 300 new RVs, said it still faces challenges including escalating health care costs.

Marlene Wheeler, president and chief operating officer of Wheeler's RV, said a 38 percent jump in health care costs is causing the company to evaluate whether to postpone plans this year to match its employees' 401(K)s -- stock market-linked company pension plans.

"Health care is a big issue. We want to be able to provide health care coverage. But control of medical malpractice litigation, tort caps, and keeping our doctors and insurers in the state are key issues that have to be addressed," she said.

"A 38 percent increase in health care costs translates to an additional cost of $13,000 a month in health care premiums for us. Our total monthly premiums are now at about $40,000," Wheeler said.

"This has to come out of something. Since we don't want to pass this on to our customers, we are considering whether to take it out of the plan to match the 401(K)s or postpone plans to expand or build new buildings. But business is strong, so we do have other options," she said.

"We also need more state-level sponsored training for RV repair technicians. These are highly specialized positions and there's a good living to be made here. A master-certified technician can make between $35-$50 an hour plus bonuses," she said.

Evans toured the business with Congressman Jim Gibbons.