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Don Cunningham: Lehigh Valley’s Growing Pains the Result of Record Growth

By Colin McEvoy on March 29, 2017

This column, written by LVEDC President and CEO Don Cunningham, originally appeared in The Morning Call and on the newspaper’s website on March 20, 2017. (Click here to read Cunningham’s previous columns.)

Don Cunningham

Don Cunningham

Remember growing pains, those awful aches that hit when you were a kid. Usually, one of your parents would rub it and tell you it would go away, that it was because your body was growing.

The Lehigh Valley is having some growing pains today.

The region has been the state’s fastest growing area for five years. This month, Site Selection magazine listed the Lehigh Valley as the fastest growing region of its size in the Northeastern United States. Regardless of size, the region is fifth in the Northeast, only behind New York, Philadelphia, Boston, and Pittsburgh in total number of new projects.

New jobs have come with it. For the third straight year, the Lehigh Valley had the best post-Great Recession job growth of any major metropolitan area in Pennsylvania. The region has 3.5 percent more jobs today that it had prior to the start of the Great Recession in 2008. The statewide average is 1.1 percent.

The growth has been balanced across sectors. Health care still leads the way on jobs, but manufacturing has returned as the largest part of our economic output. All three cities are growing with redeveloping downtowns and brownfield sites, adding restaurants, offices, arts and culture destinations and residential units.

It’s the industrial and manufacturing growth in the first-ring suburban townships that has caused most of the growing pains. That market grew by nearly 7 percent in 2016 for a total inventory of 113.6 million square-feet.

E-commerce — direct to consumer retail — is the driver of most of that growth. Each time you or someone else in the Northeast clicks to buy, it sends a ripple into the Lehigh Valley. We have become the back economy of much of the East Coast market because of our location, our workforce, and primary road, rail and port access.

The first-ring suburban townships of Lower and Upper Macungie, Lower Nazareth, Allen and both Hanover townships have been a focal point. The leading location for this development is actually the former Bethlehem Steel Corp. land in south Bethlehem, a massive swath of 1,800 acres, now home to dozens of new e-commerce, distribution and manufacturing operations.

But, it’s the mix of new growth, residential neighborhoods and trucks in suburban townships making for growing pains. The Lehigh Valley Planning Commission has done a good job of getting more infrastructure money and expediting projects. The need for road, intersection, and interchange improvements comes with a growing economy and population. Much of our residential and economic growth during the last decade has shifted to the first-ring suburbs. Lower Macungie has more people than the city of Easton.

This is logical. The planning commission’s development zone for the Lehigh Valley runs through the core of the region bordering Route 22 and Interstate 78. Basically, the area three miles north of Route 22 and three miles below I-78 and in between is the development band of the Lehigh Valley. South and north of that band is where you’ll find farmland preservation done by both Lehigh and Northampton counties. The northern and southern regions have dozens of rural townships and agricultural zones. While the region grows, it’s critical to maintain open space and rural and recreational areas in the Lehigh Valley. The Lehigh Valley master plan does a good job of striking that balance.

It’s equally important not to overreact to the growth in the development corridor, just because it has expanded outside of the cities. Bethlehem Iron Co. was built on a Moravian farm on the south bank of the Lehigh River in the 1860s. During the next century, it grew into Bethlehem Steel Corp. It gobbled up more farmland and in later years even swallowed neighborhoods, creating the need for new roads, intersections, highways and one-way streets to handle 30,000 workers and trucks carrying steel beams in and out of a developed city.

Bethlehem rubbed out the growing pains, and allowed for the growth of jobs and opportunity. It doesn’t happen immediately, but in time, problems get solved.

The same dynamic is at play now in the suburban belt as there are no large swaths of land left in the cities. And, it’s critical to remember that a lot of those rectangular buildings you see in industrial parks and commercial centers are manufacturers. That’s what manufacturing looks like today. About 40 percent of the property leased by Liberty Property Trust is for manufacturing.

We are in the very enviable position in the Lehigh Valley of having 15 percent of our GDP in manufacturing, with 680 manufacturers and 32,00 manufacturing workers. It’s only 10 percent of the U.S. economy. In the industrial, e-commerce sector, we are at full employment with about 26,000 more workers, which is good because 40 percent of our workforce has only a high school diploma or less. Today, a non-skilled worker here has the opportunity to earn upwards of $15 to $16 per hour, not exactly a family-sustaining wage but much higher than what is commonplace in fast food, retail or building and grounds works.

It’s the presence of the distribution center that has helped to grow manufacturing here, along with our skilled workforce. If it makes economic sense to move goods from here ,it makes even more sense to make it here. That strategy is working.

There will no doubt continue to be growing pains. We need to keep rubbing those muscles and making adjustments but it’s all part of growing a healthy body.

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