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CNN LIVE EVENT/SPECIAL
Building Up America: Nevada
Aired March 5, 2011 - 15:30 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
TOM FOREMAN, HOST: The cards are still rippling. The dice still rolling and the slots are still clinging away. In other words, Vegas is still a hot spot.
But the overall economy in Nevada has cooled off considerably. Call it bad luck. Recession pushed unemployment toward 15 percent, sent countless homeowners into foreclosure and businesses into bankruptcy. So, what better time, what better place to build up America?
Welcome aboard the CNN Express rolling through the silver state. I'm Tom Foreman and if you have ever been on a losing streak, you have some idea what it's been like for a lot of folks here over the past couple of years.
It's really been rough, but if you look hard enough, even now you can find folks who are building up again and beating the odds.
FOREMAN (voice-over): Maverick Aviation offers tours by air of the strip and other nearby attractions.
UNIDENTIFIED MALE: Just got a bunch of helicopters coming in from the Grand Canyon.
FOREMAN: Their hallmark is top-level pilots, individualized service and a deep knowledge of the area.
UNIDENTIFIED MALE: It is amazing how fast this place has grown for the longest time. It was the fastest-growing city in North America.
FOREMAN: And yet, the recession brought the business down along with everyone else's, Bryan Kroten is the director of marketing.
BRYAN KROTEN, MAVERICK AVIATION GROUP: We had to adjust a little bit in the weaker economy. We had to adjust some of our markets.
FOREMAN: So rather than worry about their diminishing share of traditional tourists, the company refocused on new arrivals, marketing aggressively to foreign visitors like the Dannock family from Australia.
STEVE DANNOCK, MELBOURNE, AUSTRALIA: I never left Australia for 47 years. Last year I came to Vegas and I've made a -- I've come straight back again 12 months later and I'll probably come again.
FOREMAN: The result?
KROTEN: We have felt the effects a little in 2009. Fortunately, we bounced back dramatically in 2010 to the amount of international visitors to Las Vegas.
FOREMAN: But that's the exception. Over the past five years, tourists spending in the state dropped more than $8 billion, that's meant fewer people in the casinos, fewer people in the hotels, fewer in the restaurants, fewer in Lance Olivea's cab.
LANCE OLIVEA, DELUXE TAXICAB: We have the highest unemployment. We have the highest foreclosures and the highest bankruptcy and it's been running like that for almost two years now.
FOREMAN: We'll get back to Lance later in the show because like a lot of taxi drivers. He has a lot to say, but I stopped in to see Senate Majority Leader Harry Reid and he agrees with Lance, times have been tough in his state.
SENATOR HARRY REID, (D) MAJORITY LEADER: The thing we're missing is the construction jobs because right now we don't have on the Las Vegas strip any major construction projects and that's the first time in decades that's been the case.
FOREMAN (on camera): Can you make up for that with these new industries?
REID: We can really do a lot toward making up for it.
FOREMAN (voice-over): He's talking about the hottest new game in town, economic diversity. It's something you hear about everywhere these days.
Earlier this year at the University Of Nevada-Las Vegas this conference brought politicians, business leaders and educators together to consider ideas that have helped other troubled states.
Film and video production, internet start-ups, Nevada is already recruiting more high-tech firms and green energy companies through aggressive tax breaks. Rob Lang is with the think tank Brookings Mountain West.
ROB LANG, BROOKINGS MOUNTAIN WEST: The future is mostly about economic diversity. There's a core industry in tourism that can continue to expand, but it won't grow at the rate it did over the last several decades. So it won't produce the economic development potential it did in the past.
FOREMAN: So what is producing that potential? A quick ride to nearby suburb of Henderson takes us to a dynamic company that's taken Vegas and the nation by storm.
Twenty-four/seven, two by two Zappos.com is moving shoes, more than a billion dollars annually in internet sales fueled by a wide selection, free shipping and money back guarantees.
UNIDENTIFIED FEMALE: Thank you for calling Zappos.com.
FOREMAN: Not bad for a company that started with a radical concept. Success is about service.
UNIDENTIFIED FEMALE: OK. No problem.
FOREMAN: Not selling. CEO Tony Hsieh.
TONY HSIEH, CEO, ZAPPOS.COM, INC: And for us culture is just important. It's actually the number one priority of the company. Let's take most of the money that we would have spent on paid advertiser and paid marketing instead invest it into customer service and the customer experience.
FOREMAN: The culture is raucous, infectious and everywhere. Employees decorate as they choose enjoying an unbelievable array of company services including free lunch, ice cream, massages. We asked our guide Ray Andre about the business environment.
(on camera): This is a business meeting?
UNIDENTIFIED MALE: Business meeting.
FOREMAN: There's giggling going on in there.
UNIDENTIFIED MALE: There is.
FOREMAN (voice-over): Getting in for a tour is easy. The place draws crowds of visitors.
RAY ANDRE, ZAPPOS.COM, INC: Small as five people up to 200 people. Running four times a day.
FOREMAN: If you want to work here, that is a different story. Zappos takes three to six months to screen applicants. They like to say it's easier getting into Harvard than a job here and even in training new hires are offered $4,000 to quit. That's right. Just to weed out anyone who does not really want to be part of this phenomenon and help it grow.
ANDRE: We figure we could train most people to do their jobs, but we can't train somebody to fit into our culture.
FOREMAN (on camera): You guys are crazy, you know.
(voice-over): Then again, maybe not. Despite the fact that Zappos steadily increased the amount offered for quitting.
HSIEH: Keep upping the offer because we feel like not enough people are taking it.
FOREMAN: Very few of the new hires take the money and run.
(on camera): Even in this economy you put $4,000 on the table and almost nobody takes it?
ANDRE: Almost nobody takes it.
FOREMAN (voice-over): And their turnover remains low, as well. Both here in the main office, chosen in part for Nevada's strong internet connections and 24-hour work culture, and at their warehouse in Kentucky chosen for its proximity to major shipping hubs.
(on camera): What is your key philosophy of running this business?
HSIEH: We are a service company that just happens to sell shoes.
FOREMAN (voice-over): To that end, when a call comes in, the Zappos team will chat away about almost anything, family, friends, and hobbies. The company insists one call went on for eight hours and yet that fit the Zappos goal. Give customers a good experience, let them know they're appreciated and they'll come back.
HSIEH: Over the past two years even though the economy was bad, our customers continue to be loyal to us on any given day probably about 75 percent of our orders from repeat customers.
FOREMAN (on camera): You realize nobody in America who sees this is going to want to go to work tomorrow.
(voice-over): And that allows them to laugh at comments like that because everyone here seems eager to come to work every day building up this runaway success.
Zappos is just one winning business, but against a backdrop of so many losses it is greatly appreciated as a step in the right direction.
(on camera): Are you focused on when your state will be entirely back or find yourself saying, you know what? Let's focus on next week and move in that direction?
REID: I'm seriously focusing on next week and next month. Let's try to get the little baby steps to get us so we can get the big strides later on.
FOREMAN (voice-over): All in the hope that little gains over time can offset even the biggest losses. When we return, power to the people. Hope for a struggling town when history and a hot spot collide.
UNIDENTIFIED MALE: This facility powers about 14,000 average homes on an annual basis.
FOREMAN: Anything but average. A little idea, big money from an oasis in the desert.
(on camera): Do you think that will sell?
UNIDENTIFIED MALE: Absolutely. FOREMAN: You scare me.
UNIDENTIFIED MALE: Exactly. I'm counting on it big time.
FOREMAN (voice-over): When "Building Up America" rolls on.
FOREMAN (voice-over): Europeans first ventured into the territory that would become Nevada in the late 1700s drawn by traffic and trade. Water resources near one area earned it the nickname the Meadows or in Spanish, Las Vegas.
REID: This is Rafael Rivera. He was the first non-Indian to see Las Vegas. He was there not on purpose. He got lost. He was part of a Spanish expedition and right around the turn of the 19th Century and so this -- for those of us who know Las Vegas this is -- this is Las Vegas minus 2.2 million people.
FOREMAN: Out in the Nevada desert the future is growing wild amid a sea of solar cells in the hopes of folks like Scott Crider with Sempra Energy.
SCOTT CRIDER, SEMPRA ENERGY: Well, right now, we have about a million panels.
FOREMAN: Who says he would not want this massive solar field anywhere else.
(on camera): Why is this location so good?
CRIDER: Well, there are really three reasons. First, there's a heck of a lot of sun. You know in this region gets about 330 days of sunshine per year. Second, there's a lot of flat, available land. Third, there are existing transmission lines that provide access to energy markets throughout the western United States.
FOREMAN: It's not just enough to have a solar field.
CRIDER: Exactly. You need to get that power to market. This really makes this region a competitive advantage over areas in the U.S.
FOREMAN (voice-over): Those lines are near little boulder city because it was settled at another time when the energy and the economy collided, when thousands came in the great depression for another grand power generating project.
UNIDENTIFIED MALE: This town is here because it was a federal reservation to build Hoover dam.
FOREMAN: That city council member Duncan McCoy, he's a historian. The dam which sits just east of town was originally called Boulder Dam and it seemed an impossible idea at the time. Damming up the Colorado River with a wall of concrete bigger than anything anyone here had ever seen before.
And yet, unemployed men from all over the country converged on Nevada, scrambling for the coveted jobs no matter how dangerous or hard they might be. And one chip of rock, one bucket of cement, one straining back at a time they got the job done and almost immediately the dam started catching more than just water. Tourists began flooding in to see the wonder of the west.
PETRA GOMEZ, BOULDER CITY, NEVADA: It's something that one of the "Seven Wonders of the World" so, you know, people come from all over.
FOREMAN: But now like everywhere in this state, tourism is down here. A new road sign directing people around town to reach the dam is not helping, at least according to Petra Gomez.
GOMEZ: We are not that great. I mean, the economy's bad and then, you know, like I told you about the sign, it went -- business went probably almost 90 percent down for us.
DUNCAN MCCOY, COUNCIL MEMBER: Our local sales tax revenue is down. That's a major portion of our budget. Our property tax revenue is down and that's related to the real estate crash that we and other areas have experienced within the last couple of years.
FOREMAN: The solar facility has become a rare bright spot. It brought hundreds of temporary construction jobs and the current operation along with anticipated expansions could create dozens of permanent positions.
Just as importantly, however, is the land itself. Some years back the town bought up all of this property as a buffer against expansion by neighboring Las Vegas. So, the solar companies are now leasing it from the town.
MCCOY: This year we'll get about -- current budget about $2.5 million. That's about 11 percent of our city's general fund.
FOREMAN (on camera): That's pretty important money for a town this size.
MCCOY: Pretty important money and we can count on it.
FOREMAN (voice-over): Much more is needed, of course, and the town would be delighted for a single large employer to show up, but in this economy many are pleased just to have the hope of steady, if modest, growth.
MCCOY: It will help us create a stable base for our local government operation.
FOREMAN: It helps that Nevada's next door neighbor super state California has ordered utilities there to start relying more and more on green energy sources. That should provide a ready market for what Boulder City has to offer.
CRIDER: There is strong demand for cleaner sources of energy and we're going to help fill that niche and I think over time you'll see, you know, greater penetration from the renewable energy market and I think over time that you will be able to offset some of the use of fossil fuels and ultimately we'll have a cleaner environment.
FOREMAN: And that could mean more sunny days in the town that built the dam, the town the dam built. When we come back, Vegas loves shrimp. Can't get enough of them. So, what's the big idea with that white building in the desert north of town?
UNIDENTIFIED MALE: The size of this building is a 36,000 square foot fabricated structure.
FOREMAN: And making it on to the wine list and doing a little myth busting in the process.
UNIDENTIFIED MALE: It's a myth that a winery does not belong in the desert because when you really look at California as a desert, and so grapes will do quite well in the desert as long as the soil is right and you have plenty of water and we have both of those.
FOREMAN: A family finds the right formula for building up America.
FOREMAN: Nevada has given the nation some big names, tennis star Andre Agassi was born here. So is former first lady Pat Nixon and Dawn Wells, Maryann on "Gilly Began's Island."
Mark Twain was a reporter for a Nevada newspaper in his early days and of course, for decades showbiz stars from Liberace to Wayne Newton have called Nevada home.
In Las Vegas, tourists love big spectacles and little shrimp. Eating 22 million pounds a year. The problem is in this landlocked state, shrimp are often frozen and from far away, but this year that could change.
UNIDENTIFIED MALE: The size of this building is a 36,000 square foot fabricated structure.
FOREMAN: A half hour north of Vegas, Blue Oasis is building a plant to grow shrimp in the desert and take on the foreign companies, which dominate the American market. Scott McManus is the CEO.
SCOTT MCMANUS, GANIX BIO TECHNOLOGIES, INC.: I mean, it's 1.4 billion pounds brought into the U.S. last year approximately and 90 percent of that comes from overseas. FOREMAN: Countries such as Thailand, China and Vietnam are huge players in the shrimp farming business. So is Indonesia and some south American nations too.
The bottom line is if you eat shrimp here, odds are they came from somewhere over there. But this place hopes to take a tiny sliver of that business back. Each of these tanks can hold 100,000 shrimp, and they hope to harvest a half million pounds a year.
(on camera): Why hasn't this been done before?
MCMANUS: Well, the big issue is, is how do you deal with the affluent within the system?
FOREMAN: The waste?
MCMANUS: The waste, exactly.
FOREMAN (voice-over): The waste is one of the biggest complaints about shrimp farming. Leftover feed, fertilizer and other chemicals in some places have been released into the environment, causing pollution for years.
And while other indoor shrimp farming operations have found other ways to address that issue, here each tank is an eco-system unto itself. Wastewater is naturally recycled in what they say is a chemical-free process and it's never dumped.
MCMANUS: It's all about controlling - we control all aspects of the environment. You know, the lighting, the temperature, feed, the light spectrum, so we create the perfect day every day for our shrimp, except the last, of course.
FOREMAN: They won't say much more about how the system works. That's their secret developed at a remote lab in North Dakota over the past eight years.
(on camera): So where are we now?
MCMANUS: Right now, we're in what we call our sort and ship facility. All the walls, ceilings, and the floors will be coated to meet the standards and we'll be harvesting at least three times a week, possibly four to five, depending on the market.
FOREMAN (voice-over): They will say they hope to take the idea far beyond Vegas, putting these fresh shrimp farms and new jobs near every major city.
(on camera): Do you think that will sell?
FOREMAN: You're counting on it?
MCMANUS: Yes, exactly. I'm counting on it big time.
FOREMAN: The shrimp folks aren't alone in trying to build up jobs in dry Nevada country side. One of the priorities of the state government here is promoting more business and tourism in the rural areas.
Right now, we're going to meet a family that is helping them one glass at a time.
UNIDENTIFIED MALE: Well, a lot of people are just drawn here by the novelty of it. They're intrigued by there's a winery outside of Las Vegas, how could this be?
FOREMAN (voice-over): A few years ago, there was little reason for anyone to visit the small winery in the town of Pahrump.
UNIDENTIFIED MALE: The vines were not being used. The building was in disarray.
FOREMAN: But then Bill Loken, a real estate agent, and his wife, Gretchen, a teacher and both from Arizona showed up and took over. They had never made wine before, but they had a simple philosophy about how to build up business.
BILL LOKEN, PAHRUMP WINERY: I'd say our biggest success by far and away is hands on. My wife is a tireless worker. She's very smart. She's our wine maker so she gets all the credit and - but we are hands on every aspect of the business every day, top to bottom.
So we don't -- there's nothing that happens here that we're not involved in. Especially with the small business, I think that's very critical.
FOREMAN: That approach has resulted in strong growth. In 2005, they produced only 100 cases of wine from Nevada-grown grapes. This year it will be closer to 2,000 cases.
LOKEN: It's a myth that a winery does not belong in the desert because when you really look at most of California is a desert. So grapes will do quite well in the desert as long as the soil is right and you have plenty of water. And we have both of those.
FOREMAN: Along with the grapes they buy from outside the state, their total output is impressive. Eight to 10,000 cases a year, enough to employ 30 people even through all the bad times.
LOKEN: We kind of hung on for dear life, frankly. The last couple of years have been very difficult. There were times when we wondered if we were able to make it, but we were fortunate enough to tighten our belt, watch how we spent our money and we made it through without laying off one person. We're real happy that we're able to do that. It was tough, but we didn't lay anybody off.
FOREMAN: They're still small in wine country terms. LOKEN: I think California has approximately 2,500 wineries and the state of Nevada has three. So California is not worried too much about Nevada taking the market share just yet.
FOREMAN: But whether it is the novelty or the quality or the personal touch with which they tend to their place --
GRETCHEN LOKEN, PAHRUMP WINERY: You've got to take all your barrels back in the cellar and do a little testing on them and do a little tasting on them to kind of see how the wine is aging and coming along.
FOREMAN: Today, the Lokens proudly say business has never been better.
LOKEN: We saw a marked improvement, business is up to levels that we haven't seen since before the recession hit and we're back growing again and so we think the future is bright.
FOREMAN: In a moment, the word on the street when "Building Up America" continues.
FOREMAN (voice-over): Gambling or gaming remains a linchpin of Nevada's success and likely will for some time to come as the state crawls out of its economic troubles. That is fitting. The idea of this being the gambling Mecca of America came from the great depression when many states thought of legalized gambling as a way to spur the economy, but none other with the enthusiasm of Nevada.
World War II slowed down growth here, but after the war Americans flush with cash started seeing Vegas vacations as a sure bet for good times once again. And now, remember that cab driver we talked with at the start? We went for a ride with Lance Olivea to get a view from the street of all the challenges his state faces.
OLIVEA: Started seeing it going down I would say like in 2008, 2009 it was a lot worse, 2010 has been the worst year yet. Not as many rides. The tips aren't as good as they used to be.
You know, three years ago, you know, I barely had time to go to the bathroom or stop and get something to eat. Now I come out with a DVD player and I watch movies in between rides.
FOREMAN (on camera): That's how few people you have?
OLIVEA: Yes. Just imagine sitting in a cab line, there's five cabs in front of you. It takes you an hour to get up to the front. Now a local comes out, where are we going? 700 Carnegie.
You just sat for an hour and now you're getting a $7.90 ride. Now you've got to come back and get back in the end of the line again. It's a tough process.
FOREMAN: What about the people you know around here? Is everybody seeing the same thing, do you think?
OLIVEA: Yes, I think so.
FOREMAN: Talk to me about other things, like house values out here. Housing values are terrible out here.
OLIVEA: It's in the toilet. That's about the best way I can put it. I myself, I bought a two-bedroom townhouse. I paid $198,000 for it and now from what I understand it's worth $77,000. So if I wanted to move, I can't.
FOREMAN: The state is talking a lot about trying to diversify, get more high tech, more green energy, that sort of thing. Do you have any hope for that?
OLIVEA: Definitely, one that will bring in jobs. Two, it's going to help the country in general as far as relying on oil and so forth.
FOREMAN: You have to do something. You can't sit around and say let's keep doing the same thing when it's not working.
OLIVEA: No and believe me, it's not working.
FOREMAN (voice-over): And yet Lance and everyone else here know that even a losing streak doesn't last forever. Though gambling revenues have been down, there is this. Industry analysts are predicting a strong comeback by year's end.
FOREMAN: Well, that's it for this trip. We hope, as always, you've seen some ideas that might help you build up your part of America. For all of us on board the CNN Express, I'm Tom Foreman. We'll see you down the road.