(Originally Published on the Northern Nevada Business Weekly’s Book of Lists)
Jeff Lynch, the good-natured chief executive officer of ITS Logistics, which is based in the Reno area, is the first to acknowledge that the challenges of rapid growth are hardly the worst problems he could face.
Even so, those challenges bring sleepless nights to Lynch and other executives of the logistics sector as they prepare for what appears to be a mind-boggling year of growth for their industry in northern Nevada during 2016.
While the attention of the world has been focused on Tesla’s gigafactory — expected to employ about 6,500 when it reaches full production in 2020 — a steady stream of new and expanding manufacturers are already setting up shop in the region.
One after another through 2015, the Economic Development Authority of Western Nevada rolled out the announcements:
- Quality Bicycle Products opens a distribution center that will employ 50.
- BI Nutraceuticals opens a manufacturing and distribution center in Tahoe-Reno Industrial Center and expects to hire as many as 120.
- Deceuninck North America, a maker of PVC window and door systems, breaks ground on a facility at Fernley that will employ about 80.
- Cascade Designs, a maker of outdoor adventure gear, opens a manufacturing and distribution facility that brings 100 new jobs.
- The maker of BoomChickAPop hires 160 for a natural-foods popcorn manufacturing and distribution operation.
The full impact of the new manufacturing employers was just starting to be felt in the region during 2015 as many were ramping up their operations.
About 13,000 people in the Reno-Sparks area work in the manufacturing sector. By the most-conservative estimates, manufacturing jobs account for an economic multiplier of 2.7 — which means that those 13,000 manufacturing jobs support at least 35,000 additional workers ranging from lawyers to barbers and fast-food cooks.
And all of those manufacturers require a lot of logistics support — truckers to deliver raw materials, truckers to haul finished goods, leased warehouses to store products, specialists in Internet-based distribution to handle and ship orders. About 15,000 people work in transportation, warehouse and utilities jobs in the Reno-Sparks region.
Logistics companies are gearing up as quickly as they can to meet the demand created by new manufacturers.
Lynch estimates that ITS Logistics will add somewhere between 100 and 150 employees to its current staff of more than 500 as it lands new contracts locally and expands into more markets across the nation in 2016.
Internet jobs boards in recent weeks have been filled with notices from northern Nevada employers looking to hire distribution supervisors, forklift drivers, logistics administrators and truck drivers. Always truck drivers.
“Skilled, safety-minded drivers are truly at the heart of our business,” says Lynch. “Nationally, the trucking industry has suffered a shortage of drivers for several years, and the issue is only getting worse in northern Nevada as our economy rebounds so quickly.”
ITS, a locally-owned company that seeks to preserve family-oriented values, has placed top importance on driver retention for years. As a result, it’s in far better shape than many of its competitors who are experiencing annual turnover rates that top 100 percent — more than three times the rate at ITS.
But the increasingly sophisticated logistics sector relies on more than truck drivers and forklift operators to bring value to its customers.
“We are looking for a wide variety of skills in fields ranging from information technology, to sales, to customer relations and more to support our growth,” says Lynch. “We really see logistics as a growth industry and are working with the University of Nevada, Reno, Truckee Meadows Community College and EDAWN to help meet those needs.”
The rapid expansion of manufacturing as a cornerstone of the northern Nevada economy also demands substantially greater investment in equipment and facilities from logistics suppliers.
A truck tractor with a sleeper unit can set a trucking company back more than $125,000 these days, and companies that need a new forklift out in the warehouse can figure on spending somewhere around $25,000.
To strengthen its financial capabilities and meet growing demand from existing and new customers, ITS Logistics’ founders — Lynch, Chief Operating Officer Darryl Bader and Chief Financial Officer Dan Allen — partnered in early 2015 with McNally Capital LLC and Coughlin Capital. McNally Capital, a family office private equity firm, and Coughlin Capital, a family-held private investment group, are providing financial support to enhance the growth of the company. Lynch, Bader and Allen continue in their roles as the leaders of ITS Logistics and continue to hold significant equity stakes in the company.
Moves to strengthen the region’s logistics infrastructure will be critical for continued growth of the manufacturing sector, found a 2015 study by EDAWN’s Economic Planning Indicators Committee. “Firms cannot use cutting-edge supply-chain methods in the absence of a superior transportation/distribution network,” the committee reported.
Adds Lynch, “Companies like ITS understand the critical role that the logistics industry must play in the continued success of our region’s economy. And we’re really confident that the industry will continue to strengthen and meet these new demands in 2016.”