Survey finds most company execs expect improved sales, local recovery
At last, local businesses say they have high hopes for Southern Nevada’s recession-battered economy.
A recent online survey from the Review-Journal found that a majority of company owners and managers expect improved sales and a broader economic resurgence in the Las Vegas Valley in 2011.
Though a third of participants said they expect sales to stay flat or drop in 2011, another 58.2 percent said they anticipate revenue gains in the year. And most respondents — 58.5 percent — said they expect the Las Vegas economy to rebound in the next 12 months.
Those sentiments are important because companies’ economic expectations help determine whether they invest in hiring or expanding. Business confidence also directs decisions on spending in areas such as travel and marketing. It can even affect employee morale, noted Craig Wiseman, vice president and general manager of North Las Vegas manufacturer Spacecraft Components Corp.
If that’s the case, then workers at Spacecraft Components should soon feel better about their prospects.
Sales at the company will likely surge 20 percent in 2011, as new products come on line and new marketing initiatives ramp up, Wiseman said.
Spacecraft Components sells electrical connectors, plugs, accessories and tools for aerospace and military uses. Most of its sales go directly to the military; the company used the business lull that accompanied slower times to invest substantial resources in obtaining military qualifications for a passel of goods its executives wanted to develop and sell. The strategy will finally pay off in brisk business in 2011, Wiseman said.
Spacecraft Components also hired a graphic designer to develop new catalogs and brochures to help boost sales, and it plans to bolster its trade-show attendance and take a more active role in managing its outside-sales representatives.
But Wiseman sounded less sanguine about the near-term fate of the broader local economy.
"I think Las Vegas will maybe have some very mild improvements in 2011, but I think most of the stronger recovery will be in 2012," he said. "It goes back to the housing boom. They keep saying thousands of homes are being foreclosed on, and the number of foreclosures this year will surpass last year’s, so that will keep dragging the economy down."
Housing won’t be 2011’s only economic weight, said Cindy Pierre-Morton, owner of Aries Moon Productions in Las Vegas.
Pierre-Morton left her day job as an entertainment auditor for two downtown hotels in 2010 to establish her three-worker production company, which offers services including photography, music and copywriting. Finding a small-business loan that would enable her to open a studio has proven a Herculean task.
That sort of issue makes a 2011 rebound for Las Vegas "kind of iffy," Pierre-Morton said.
"I don’t see that small businesses are getting a lot of big breaks," she said. "I see people talking about it, but I don’t see actual results. It doesn’t look like the little guy is getting a whole lot of help, and really, the little guys make the big guys. I don’t see a rebound this year. Maybe in a couple of years."
Though she said she doesn’t forecast strong sales for her business in 2011, she does expect bright spots: Her pet-photography business should flourish, because people increasingly consider their animals a part of their family, she said, and she predicted strong interest in her photo sessions inside area nursing homes, where families can gather for a session that includes grandparents.
Pierre-Morton said she’s also seeing a slight uptick in marketing contracts calling for Internet research and copywriting.
"I still believe things will be sluggish overall, though," she said.
Also stagnant will be revenue at Crout & Sida Criminal Justice Consultants, said managing partner James Sida.
Municipalities and counties make up many of the Mesquite firm’s clients, and with budgets slashed as a result of the downturn, there’s little money for outside consulting contracts.
"Our deals with cities and counties have stopped completely. That business has dried up," Sida said.
Sida added that he expects overall revenue in 2011 to be roughly even with 2010’s level, because the company is developing new services for local agencies.
Respondents agreed that big gains in the city’s tourism sector and housing market would bolster local economic fortunes even more.
"The foreclosure crisis really needs to turn around," Pierre-Morton said. "We need people living here for the local economy to come back."
But participants disagreed on how quickly — or even whether — improvements in housing and hospitality would happen.
The vast majority, or 75.8 percent, said it will take at least five years for the housing market to improve. And 69.5 percent said it will take several years for tourism and gaming numbers to come back fully.
Sida said he doesn’t believe Southern Nevada’s housing climate will repeat its boom-era performance in his lifetime (he’s 61).
"It will never come back the way it was, not unless a gigantic fraud is perpetrated again," Sida said. "It was based on funny money. And we should hope it doesn’t go back to where it was. That wasn’t good for us."
Still, the market for residential real estate will look up at least a little bit in coming years, Sida said. He already sees improvements in his Mesquite neighborhood, which went dormant, with no new construction in the depths of the recession, but has brought on or started building about 12 homes in recent months. But prices there remain well below their peak levels despite the increased activity, Sida said.
Wiseman, who’s investing in local real estate, said he expects a strong, albeit distant, revival. It might take a couple of years for home prices to begin rising, perhaps with an assist from a recovering job market that would enable people to afford new homes, Wiseman said. And in about a decade, prices might have reached something near their peak levels. Home prices these days don’t even cover the cost of new construction, and that means they’ve overcorrected, he added.
"If you get appraisals done on houses, they come in at 50 percent of what the land and the house would cost today. Something’s wrong with that picture," Wiseman said. "It has to correct, and come back at least part way. Real estate has always returned. After an earthquake or some other disaster, housing markets go down, and they always come back. The question is how long it will take."
The city’s leisure and hospitality sector should bounce back as well, Wiseman said.
As long as the dollar remains weak compared to other countries’ currencies, it’ll be tough to bring back the sheer revenue numbers the resort sector posted during the boom, but visitation figures should easily return to their pre-recession levels.
"I travel around the world, and Vegas is still Vegas," Wiseman said. "Everyone has their dream of Vegas."
Plus, a sort of recession fatigue is likely to build in coming months and years, and that could translate into better business for the city as consumers begin spending more discretionary dollars.
"My personal view is that the American public gets tired of being conservative," he said. "They’ll only stay home so long."
Contact reporter Jennifer Robison at jrobison @reviewjournal.com or 702-380-4512.
Las Vegas Business Press, Jan. 24: SURVEY: Diversity key to reviving state economy
