Mining Industry Keeps Nevada Vendors Afloat During Tough Times

(3BL Media) May 18, 2012 - In 2007, the year before a massive recession began ravaging the state of Nevada, Western Nevada Supply Inc. had about 400 employees. Today it has 200.

Headquartered in Sparks, just east of Reno, Western Nevada Supply provides pipes, plumbing fixtures, landscaping and underground utilities for many new homes in northern Nevada. When the recession hit, housing starts plummeted 90 percent in the northern part of the state, and remained at depressed levels for four straight years, says Rick Reviglio, President of Western Nevada Supply. “Most businesses can’t weather that kind of decline,” he says. “Our relationship with Barrick played a key role in keeping us afloat.”

The gold-mining industry has been one of the few bright spots in recession-battered Nevada, which has led the nation in unemployment, bankruptcies and home foreclosures for the past four years. With the price of gold riding high amid ongoing global economic turmoil, gold mining companies operating in Nevada are spending more on exploration, construction, equipment and maintenance. For instance, in 2010, exploration spending nearly doubled to $214 million from $111 million a year earlier, according to a survey by the Nevada Division of Minerals. While survey data for 2011 is not yet available, companies that participated in the 2010 survey projected a 38 percent increase in expenditures to $295 million. Overall, Barrick invested more than $140 million in Nevada exploration in 2011, and a significant increase is planned for 2012.

The Nevada mining industry does business with nearly 2,400 companies in the state, according to the Nevada Mining Association (NMA). And the flurry of activity in the industry is generating much-needed business for many of these vendors, such as Western Nevada Supply. “We feel very blessed and fortunate that we have a partnership with Barrick during these very tough times,” says Reviglio, whose company has been supplying Barrick with pipes, valves and fittings since 2004.

For Cashman Equipment Co., a large Caterpillar distributor that serves the Nevada market, mining helped offset a sharp decline in sales to the construction industry. “Construction almost ceased in Reno and Las Vegas during the recession, and it’s still well below pre-recession levels,” says MaryKaye Cashman, CEO of the Las Vegas-based company. “Fortunately, mining helped us maintain our equilibrium.”

As its mining-related business grows and the construction industry shows signs of life, Cashman Equipment has begun hiring again. The company’s head count stands at about 675, up from 500 at the low point of the recession. The company is looking to add 50 new jobs this year, about half of those at its state-of-the-art plant in Las Vegas and the remainder at sites in Elko and Reno. “The growth of the mining industry has helped diversify Nevada’s economy, and without a doubt, Barrick has been a big part of that,” says Mike Pack, President of Cashman Equipment.

In its 2010 economic overview, the NMA estimated mining added $7.5 billion to Nevada’s gross state product and $3 billion to household income. The industry paid an estimated $314 million in state taxes in 2010, an all-time high, and generated an estimated 12,200 direct jobs at an average salary of $83,000, including benefits. The average state salary in 2010 for all occupations in the state was $43,000, according to the NMA.

While the NMA’s 2011 economic overview won’t be available until October 2012, a recent survey of its members revealed plans to add between 1,200 and 1,500 new jobs this year. Barrick employs more than 5,000 people at its Nevada operations, and is budgeting for 330 new positions in 2012. The company attempts to hire in-state whenever possible, attending numerous job fairs around the state, including hard-hit urban areas like Reno and Las Vegas. For every direct job in the mining industry, the NMA estimates another 5.23 indirect jobs are created. In 2010, that translated into about 64,000 jobs.

“There are all kinds of geotechnical firms, environmental firms and engineering firms located here to service the mining industry,” says Gene McClelland, President of Reno-based McClelland Laboratories. “They pay their employees, and their employees spend their money in the state. If the big mining companies weren’t here, things in Reno, and across all of Nevada, would have been a whole lot worse.”

McClelland Laboratories provides metallurgical testing and research services to the mining industry. These days, its biggest challenge is keeping up with demand, McClelland says. That explains the recent expansion of the company’s laboratories to 50,000 square feet from 20,000, and the doubling of its employee base to 100 from 50. Inside its Reno headquarters, a myriad of labs teem with technicians testing samples of ore shipped from mines around Nevada and beyond. Companies from as far away as Turkey, Pakistan and Mongolia rely on McClelland Laboratories for metallurgical and environmental testing that help determine whether they have a viable mine.

“We’re here because of the Nevada mining industry, but we bring in revenues from around the world — and we’re busier than ever,” McClelland says.

It wasn’t always this way. In 1999-2000, the price of gold was hovering below $300 and global exploration was at a standstill. Business was so slow that McClelland cut head count to 13, closed the company’s foreign offices and feared for his company’s future. Throughout this period, Barrick continued to do business with the company. “I think I can say that, by continuing to work with us, Barrick kept us from going out of business,” McClelland says. “Things were that dire.”

Barrick’s growing presence in Nevada continues to help companies during rough patches, providing new opportunities to vendors that have traditionally relied on the construction and gaming industries. YESCO Inc., best known for its innovative billboards and signs that predominate on the Las Vegas and Reno strips, is one such vendor. As revenue from the gaming industry dried up during the recession, YESCO was compelled to look for new markets and it turned to the mining industry.

YESCO worked closely with Barrick to develop a new product called the Safety Medallion. The product is a six-by-seven-foot, medallion-shaped digital scoreboard that tracks time lost due to safety incidents at various operational areas of a mine. The scoreboard can be easily updated each shift, and as the amount of time without an incident increases, the Medallion becomes a source of pride for workers, says Ed Lawson, an Account Executive at YESCO’s Reno office. “When a lost-time incident occurs, word spreads quickly because the scoreboard is reset to zero,” he says. “Workers want to find out what happened and how to prevent a recurrence, so the Medallion helps drive new training opportunities.”

To date, YESCO has sold four Safety Medallions to Barrick’s Goldstrike operation and it is marketing the product to other Nevada mining companies, Lawson says. “The economy forced us to look for new markets and we found one in mining,” he says. “We think we can sell this product around the world.”