Published
in Comstocks Business, January, 2000
By
Russ Steele
Of all the foothill communities established during the California gold rush,
Nevada County is unique. Like other foothill communities, Nevada County relied
on resource extraction, mining and timber harvesting, as their economic engines.
Today many of the surrounding communities look with envy at Nevada County’s
high tech cluster of business. A cluster that continues to expand and grow,
creating a more robust economy.
In 1954, Charles Litton sold Litton Industries and moved to his favorite vacation
spot in the foothills. He bought a unfinished hospital in Grass Valley, originally
intended for WWII vets. Over the past forty-five years, Litton Hill has served
as Nevada County’s informal business incubator.
With open space in his new building, Litton invited one of his Stanford engineering
school classmates, Dr Donald Hare to share Nevada County’s superior quality
of life. In 1959, Dr Hare, an avid inventor, had just sold a Connecticut company
that built amplifiers for movie theaters. A company that was bankrolled by Sherman
Fairchild, a Silicon Valley pioneer in developing integrated circuits. It was
a group of Fairchild engineers that left the company and created Intel.
When he arrived in Nevada County, Hare set up an engineering lab, which he called
Grass Valley Group. The lab’s initial projects were recorders and amplifiers,
but it was a video switcher that put the firm on the global map. After a falling
out with Litton, Dr Hare moved the company to a rural location east of Grass
Valley, building a self-contained campus in the woods, where it grew to a giant
in the broadcasting industry. Today the campus is in Nevada City.
In 1973, Dr. Hare sold the company to Tektronix. Inc., an Oregon technology
company, and watched it grow to 1,200 plus employees. While the company grew
in reputation, it was also becoming complacent. The company was slow to recognize
the digital revolution that was taking place, delaying the development of computer
based products. As Tektronix’s business declined over time, they laid off
engineers and staff. Reluctant to leave Nevada County, many former employees
started their own companies. Other sought sponsors willing to set up engineering
labs in Nevada County, including Atari’s Cyan Engineering, US Robotics
(now 3Com), and Silicon Systems (now TDK Systems).
The Groupies Prosper
Many other local companies can trace their roots to one or more of these early
arrivals in Nevada County. While some stayed in the broadcast video business,
others have branched out to embrace telecommunications, the Internet and graphic
arts. In the late 80s and early 90s, Tektronix Development Company was set up
to help create new companies which could pursue product ideas that did not fit
in their strategic markets. Some locals called these spin outs or start up companies,
“The Groupies.” See the accompanying chart of companies with video
roots going back to the 50s.
According to Larry Burkhardt, President of the Nevada County Economic Resource
Council, local video companies are having a great year. ”ADC (formerly
NVision) has increased its employee count to 110. AJA Video has almost doubled
this year, starting the year with 11 employees and growing to 19. Pinnacle Systems
has expanded its engineering staff from its original two, to a current level
of 12. Grass Valley Group has made a successful transition from its prior ownership,
has added 17 new positions, and is currently recruiting for 11 more. In the
process, the company has reported significantly increased profitability. Telestream,
an industry leader in high-speed digital media exchange, has increased its employee
count by four new positions, to a total of 42, and is recruiting for an additional
five.”
Unrelenting Change
While Nevada County has had a successful transition from an economy based on
resource extraction, gold mining and timber harvesting, to high technology,
recreation and tourism, it is still a region in transition. Some of these transitional
changes are highlighted below.
Commuting. According to a recent survey sponsored by the United Way, 25 percent
of Nevada County’s work force, about 10,000, commute out of the County.
According to a joint study by the Nevada County Transportation Commission and
Placer County Transportation Planning Agency, one third of Highway 49 commuters
are now coming into the county. These inbound commuters are primarily in lower
paying service sector jobs. However, with housing prices soaring in the past
nine months, some managers are also choosing to live in Placer County and commute
to work.
Affordable Housing. In August, Nevada County’s civic leaders, businesses,
nonprofits and government, gathered at a local meeting hall to discuss the new
economy and sustainable economic development. At the end of the day it was clear,
while many constituent groups had different visions of economic development
in Nevada County, most could all agree on the need for more affordable housing.
Early Retirees. Demographics are having an impact on Nevada County’s economy.
Hundreds of young healthy retirees are cashing out and relocating to Nevada
County, seeking it’s highly prized rural quality of life. “Nevada
County is becoming a retirement mecca for those cashing out in the Silicon Valley
and enjoying early retirement in Nevada County,” said Betty Riley, President,
Sierra Economic Development District.
Unique Retiree Impact. In addition to driving up housing prices, these retirees
could be reshaping the economy, according to figures in an SEDD Economic Indicators
Report. In 1999 income from wages and salaries were 444.81 million, up 4 percent.
Income from dividends, interest and rents was 448.87 million, up 4.5 percent
. See the Nevada County Income by Source chart for details. Dividend and interest
income are growing faster than wages and salaries. Add pensions income, and
it is clear that 45 percent of Nevada County’s income is retirement related.
“This is unique to Nevada County,” said Riley. “Other foothill
counties are not experiencing the same income growth patterns.”
Long Term Retiree Impact. With the retirement community dependent on the health
of the stock market, a cyclical set-back in the market could impact Nevada County’s
local economy, according to Riley. Dan Castles worries, that with 35 percent
of the population over 60, Nevada County could reach a point where the retirement
community could dictate the kind of services available. “These services
may not be consistent with the needs of the business community,” said Castles.
On a more positive note, these wealthy retirees are a potential a source of
capital for local start companies. This last year the Nevada County /Grass Valley
Chamber of Commerce has sponsored several programs to introduce angel investors
to local companies seeking capital investments, with some positive results.
The Economic Resource Council, has also launched a Capital Investment Task Force
to capture additional local investment sources for local entrepreneurs.
The growth of Grass Valley Group and all the spin offs are a testament to the
creative spirit that resides in Nevada County. “It is the intelligent,
creative people who make this county a great place to live,” said Michael
Fox, ERC Board Member representing the Community Neighborhood Organizations.
“We have great schools, a community college, a well educated work force
and a high tech business cluster. We have more to offer than your typical foothill
community,” said Tina Ludutsky-Taylor, Economic Resource Council Board
Chairperson and Provost of the Sierra College Nevada County Campus.