High Tech : Las Vegas: a Bid for New Action

Twenty men faced each other in the dimly lit back room of a coffee shop not far from the world’s largest hotel-casino complex, the Las Vegas Hilton.

There was Jon (The Nerd) Barth, grinning good-naturedly with his polished agate bola tie pulled tight around the collar of his short-sleeved shirt. There was lean Joe Arana, who surveyed his competitors from behind aviator-style glasses.

There was suave Bill Quain, who looked as though he stepped off the cover of Gentleman’s Quarterly, and pudgy George Sanders, gleeful at having brought the men together for the first time.

These men were gamblers of sorts, but the stakes in their game represent the economic future of southern Nevada.

High-Tech Promotion

Owners of small high-technology firms headquartered in southern Nevada, the men were gathered to develop a strategy to find sorely needed financial and technical support in an economy that has been dominated by the gaming and tourism industry.

The meeting is part of a broad push here to create a new economic climate for job opportunities in addition to dealing cards, making beds, washing dishes or mixing drinks.

“Would you want your son or daughter working in the gaming industry?” asked Kenneth C. Guinn, president of Nevada Savings & Loan and a member of the Nevada Development Authority. “Maybe not. People should have a choice.”

Nevadans believe high technology and light industry can provide that extra dimension. For inspiration, they look to Arizona, which quickly became a major competitor in the field by improving its three engineering schools and promoting Phoenix and Tucson as ideal sites for corporate expansion.

More Serious

It is not the first time that a call for economic diversification has been heard here. But there are signs that elected officials and business leaders are far more serious about the topic than ever before.

During the recession of the early 1980s, the growth rate of casino revenues fell 10%, which hurt the state’s tax base and dashed a widely held belief here that Las Vegas was “recession proof.” At the same time, the advent of gambling in Atlantic City stole away high rollers from the East Coast.

The population of Clark County, which includes Las Vegas, North Las Vegas, Boulder City, Henderson and Mesquite, has grown tenfold since 1950. By the year 2000, the population is expected to reach 900,000, compared with the 1980 figure of 463,000, which represents roughly half of the population of Nevada.

The gaming and tourism industry, which provides employment for more than 60% of the available work force in southern Nevada, will not be able to offer enough jobs to go around in the years ahead, state officials said.

As a result, from the antique-laden office of Nevada Gov. Richard Bryan in Carson City to the plush casinos of “Glitter Gulch” in downtown Las Vegas a main topic of conversation these days is high tech and how to get it.

High technology and light industry, they believe, are compatible with the gambling/tourism industry, have potential for growth and can provide jobs in areas ranging from research and development and computer programming to printed circuit board manufacturing and material assembly.

But southern Nevada faces a host of tough problems in the race to broaden its economic base, according to state officials, business leaders and industry analysts. Even Gov. Bryan concedes “the jury is still out” on whether Las Vegas can lure high tech.

Venture capital for projects unrelated to gambling or hotels is all but non-existent. The engineering and computer science school at the University of Nevada, Las Vegas--jokingly referred to as “Tumbleweed Tech”--is unaccredited and unable to turn out the top-notch talent that larger companies desire.

Las Vegas is years behind cities such as Austin, San Antonio, Phoenix, Tucson, Denver and San Jose, which long ago stampeded into the engineering and computer fields and now have established reputations as high-technology centers.

Most formidable among the area’s problems, however, is its “sin city” image.

This is a city, after all, that counts among its founding fathers gangster Benjamin (Bugsy) Siegel, who launched the modern era in Las Vegas by building the original Flamingo Hotel and Casino in 1946. And, aside from gambling, Nevada is probably most famous for quickie marriages and divorces, nude entertainment and prostitution, which is not illegal in many counties. Dime stores everywhere offer “maps to the brothels” along with the usual knickknacks.

The population is so transient that the telephone book is printed twice a year.

Knowing that these are unsettling facts for corporate executives and engineers who are asked to move their families to Las Vegas, local officials are trying hard to promote the area’s pluses--and win a little respect in the bargain.

“We haven’t told our story as well as we could have,” said Robert Culp, the new director of the Nevada Development Authority, southern Nevada’s lead agency in the push for diversification.

Former director of public affairs for the Dallas Chamber of Commerce, Culp actively participated in that city’s struggle to restore its reputation after the assassination of President John F. Kennedy in 1963. Culp figures that if they did it in Dallas, they can do it here.

Culp tells prospective companies that because of heavy gaming and entertainment taxes, Nevada has no corporate, personal or inheritance taxes; that the nearby Nellis Air Force Base and Nevada nuclear test site are expected to grow under projected increases in defense spending; that along with the plentiful sunshine, Las Vegas has more churches per capita than any city in the nation, with one church for every 1,800 families.

“We’ve been trying to show these companies we have more than hookers, bars, gangsters and such,” said Lt. Gov. Robert Cashell, owner of Boomtown, a large gambling house near Reno. “But there’s so far to go it is unbelievable.”

High-tech and computer-industry analysts agreed. Typically, they said, a high-tech center requires a quality engineering school, an infrastructure for industry, affordable housing and amenities such as art and cultural centers.

Not His Ideal

“There’s a culture there but not the one I have in mind,” said Richard Matlock, president of Info Corp., a computer market research firm in Monte Vista, Calif. “Las Vegas is high glitter, high pizazz and gamble your brains out.” Then he said, “It seems a little bleak, doesn’t it?”

State officials would prefer not to talk about companies that sniffed at Las Vegas and then went elsewhere. One such company was Advanced Micro Devices of Sunnyvale, the fifth-largest manufacturer of integrated circuits in the nation.

“We look for communications, supply and transportation infrastructure, an abundant supply of well-educated labor and an abundant supply of engineering talent,” said Advanced Micro Devices spokesman Andy Rothman. Against those standards, he said, Austin, San Antonio and Ireland--not Las Vegas--seemed ideal prospects.

Citicorp is a recent convert. Before constructing a 120,000-square-foot plant here for processing of credit card bills, however, it obtained permission from the Postal Service to use The Lakes, Nev., as a mailing address, apparently to allay customers’ fears of sending their bills to Las Vegas.

“We knew they were concerned with having a Las Vegas postmark,” said an obviously miffed Gov. Bryan. In the end, he added, the issue was not worth quibbling over since the plant will create up to 1,500 new jobs.

Some of the smaller companies that have settled here in recent years are less concerned about the image of the place than with the difficulty in finding seed money, materials and support to get their businesses off the ground.

Sharing Information

It was problems such as these that prompted George S. Sanders, owner of Agrinautics, an aircraft parts manufacturing firm, to organize the group of entrepreneurs he dubbed HITEC of Las Vegas, which met for the first time in the coffee shop near the Las Vegas Hilton to form a miniature trade association to share information on common problems.

“I wish we’d get more support from NDA (Nevada Development Authority), county commissioners, Las Vegas, surrounding cities and the governor’s office,” Sanders said. “But their policy is to entice mature businesses to come here.”

With HITEC of Las Vegas, Sanders said, “We can do it ourselves.”

Undeterred by such complaints, Nevada officials are not only courting companies, but upgrading academic programs at the University of Nevada, Las Vegas, which is best known for its basketball team. Notably, the Legislature this year earmarked $14.5 million for construction of a 101,000-square-foot School of Engineering and Computer Science at the university.

“The winds of change have come to Las Vegas--and it won’t hurt the hotels,” said the university’s president, Robert Maxson, 40, former chief of academic affairs at the University of Houston.

He took the Las Vegas job a year ago on a promise of having free reign in academic affairs and a salary-plus-benefits package of about $140,000 a year, which makes him the highest-paid official in the state. By comparison, Joseph Crowley, president of the University of Nevada, Reno, makes about $59,000 a year. The governor makes about $65,000 a year.

Brain Drain

High on Maxson’s list of priorities is plugging the brain drain that causes an estimated 48% of Nevada’s college-bound high school graduates to leave the state to attend universities. Many of those who earn engineering and science degrees elsewhere, he said, find job opportunities in Nevada limited and, therefore, don’t come back.

Three months into the job, Maxson audaciously offered a $10,000 scholarship to the top graduate from each of Nevada’s 53 high schools to attend the Las Vegas campus of the university. At the time, he said, “I didn’t have a dime to do it.”

At a speaking engagement, a woman offered to help defray the costs of the scholarship program. “I slipped my arm around her waist and said, ‘Ma’am, we’re talking about $1 million,’ ” he recalled. The woman was Margaret Elardi, owner of a successful gambling house in Laughlin, Nev., who stunned Maxson by donating the full amount.

Other casino owners and managers, once suspect of competitive industries that could siphon off workers by offering higher wages, are jumping on the high-tech bandwagon.

Charles Ruthe, senior vice president at Sam’s Town casino, said he would like to see “a number of nationally recognized companies and small companies too” settle in Las Vegas. These companies, he said, would take some of the burden off casinos, which “can’t support all of the qualities of life we want in southern Nevada.”

Nonetheless, pockets of resistance are found in some of the few casinos that have not been bought out by major corporations. Take, for example, the Horseshoe in downtown Las Vegas.

Calls It Stupidity

“These people are stupid. We’ve got a good, clean, non-polluting industry here now,” said Ted Binion, the Horseshoe’s co-owner and casino manager, who frequently paused to “comp” dinner bills of well-wishers who passed his table.

Diversifying the local economy, he said, will pollute the air, put more cars on already crowded streets and “run the tourists to Laughlin.”

“Who’s going to want to go to an industrial city on vacation?” he asked. “You want to make Las Vegas a nice tourist place for Los Angeles--that’s what it is supposed to be.”

Many Las Vegas business leaders take a dim view of such sentiments.

“Anybody who does not want a Citicorp in Las Vegas can go straight to hell,” said Nevada Savings & Loan President Guinn. “I look at Citicorp and see 1,500 people working and like what I see.”

Yet, no one in Las Vegas suggested that gambling should take a back seat to high technology.

“We won’t turn our back on the hotel-casino industry,” said Las Vegas City Manager Ashley Hall, who keeps a large portrait of Wayne Newton in his office. “We just want to spread our wings a little bit to include high tech.”