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COLUMN: Don Cunningham Looks Ahead to Lehigh Valley Economy in 2017

By Colin McEvoy on January 3, 2017

This column, written by LVEDC President and CEO Don Cunningham, originally appeared in The Morning Call on January 2, 2017. (Click here to read Cunningham’s previous columns.)

Don Cunningham

Don Cunningham

Coaches know that the only thing tougher than winning a championship is repeating it the next year.

2016 was a championship year for economic development in the Lehigh Valley. Our GDP topped out near $37 billion, the largest in our history. Manufacturing, once again, became the biggest part of our economic output, which hasn’t been the case since the bygone days of Bethlehem Steel Corp.

The region ranked the highest in Pennsylvania again for post-recession job growth and in the top 17 percent of the U.S. for patents awarded. More than 10 million square feet of new industrial space has been delivered to the market in the last four years, making it one of the fastest growing industrial markets in the country, and there is another five million under development right now.

Mack Trucks announced a $70 million plant improvement, Guardian completed and occupied a new headquarters building for 1,500 workers, and Amazon opened its second facility of more than 1 million square feet, adding another 700 or more jobs.

Any one of those projects and a dozen others would have represented a good year. Taken together, it was a championship season.

So, where do we go from here?

Fortunately, the annual flip of the calendar doesn’t mean much to the engine of economic growth. Most development projects are at least three years in the making.

2017 will see movement of several big developments with significant job growth, the biggest being the construction of the largest FedEx Ground center in the U.S. in Allen Township. Ground was broken last summer but with a two-year construction process the facility will not be operational until August, 2018.

With the industrial market so strong and vacancy rates low, much of the new space under construction is speculative, meaning tenants have yet to be locked down or announced. We can expect several big announcements in 2017.

While large industrial buildings have grabbed the headlines and put up bigger job numbers, the underlying growth story in the Lehigh Valley has been the development of a wide-range of small to medium-sized manufacturing. In 2016, manufacturers like Michelman Steel Enterprises, SunOpta, and Reeb Millwork Corp. embarked on expansions. Plastic container manufacturer DevTech opened in Hanover Township while Tyber Medical brought its medical device operation into the Lehigh Valley from New Jersey.

Based on the level of prospect interest, it looks like the manufacturing trend will continue. The typical manufacturer today uses a smaller workforce relying much more on automation and technology to create products and increase output. In the aggregate, however, total manufacturing employment in the Lehigh Valley has increased from its low-point following the recession.

The area has more than 36,000 manufacturing employees, nearly 10,000 more workers than the number employed in warehouses and e-commerce and logistics centers. Total manufacturing output is now $5.6 billion, about 15 percent of our total economy. This makes the Lehigh Valley one of the country’s top 30 markets for the impact of its manufacturing base.

The key to continued success will be a skilled and trained workforce. Area vocational technical schools and community colleges have become very engaged in working with manufacturers and adding skills training to meet current needs. Many of the programs at the area schools are filled and more capacity is needed.

The old Field of Dreams adage is that if you build it they will come. In this case, it’s more like if you train them and have the workforce, they will come. The key to winning championships is always about the players.

The Lehigh Valley will continue to have championship seasons if we have the talent to put on the shop floor and in the offices. There’s a good possibility of a dynasty in the making.

LVEDC 2016 Year in Review: A Banner Year for Economic Development

The year 2016 has been an eventful one for the Lehigh Valley economy. The region saw record-breaking numbers in terms of economic output, celebrated expansion projects [...]

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Lehigh ValleyQuick Facts

  • Industry Spotlight

    14.2% of Labor Force
    Employed in Professional & Business Services
    Q4 2016

  • By the Numbers
    $37 Billion

    Gross Domestic Product

  • Investor Spotlight
    City Center Lehigh Valley
  • Industry Spotlight

    10.2% of Labor Force
    Employed in Manufacturing
    Q4 2016

  • By the Numbers
    $4.3 Billion

    Exports (2015)

  • Investor Spotlight
    Air Products
  • Industry Spotlight

    1325 Total Office Buildings

  • By the Numbers
    $58,134

    Median Household Income

  • Investor Spotlight
    PPL Electric Utilities
  • Industry Spotlight

    1707 Total Industrial Buildings

  • By the Numbers
    24,400

    New Jobs Created Over Past 5 Years

  • Investor Spotlight
    National Penn
  • Industry Spotlight

    4.8% Industrial
    Vacancy Rate

  • By the Numbers
    658,477

    Population

  • Investor Spotlight
    Olympus
  • Industry Spotlight

    8.8% Office
    Vacancy Rate

  • By the Numbers
    336,100

    Labor Force

  • Investor Spotlight
    Lutron Electronics
  • Industry Spotlight

    10% of Labor Force
    Employed in Leisure & Hospitality
    Q4 2016

  • By the Numbers
    4,359

    Technology Patents from 2000-2013

  • Investor Spotlight
    Mack Trucks
  • Industry Spotlight

    1.6% of Labor Force
    Employed in Food & Beverage Manufacturing
    Q4 2016

  • By the Numbers
    25 Million

    Office Inventory (Square Feet)

  • Investor Spotlight
    UGI
  • By the Numbers
    108 Million

    Industrial Inventory (Square Feet)

  • Investor Spotlight
    NFI