Don Cunningham Discusses the ‘Continued Economic Renaissance of the Lehigh Valley’

By Colin McEvoy on March 15, 2018

LVEDC President and CEO Don Cunningham speaking at the organization's 2018 Annual Meeting at the ArtsQuest Center at SteelStacks in Bethlehem.

LVEDC President and CEO Don Cunningham speaking at the organization’s 2018 Annual Meeting at the ArtsQuest Center at SteelStacks in Bethlehem.

Don Cunningham, President and CEO of the Lehigh Valley Economic Development Corporation (LVEDC), delivered a speech about “The Continued Economic Renaissance of the Lehigh Valley” during the LVEDC 2018 Annual Meeting, held March 14 at the ArtsQuest Center in Bethlehem. Below are his remarks.

It’s quite fitting that we meet on this site. It was 20 years ago this month – March 1998 – when the Bethlehem Steel plant here closed. The blast furnaces out this window had gone silent three years earlier.  Death came slowly to the whole plant, followed by a corporate bankruptcy and a City left wondering what, if anything, would come next.

I was then a 32-year-old mayor in office all of three months. I remember walking in front of those silent blast furnaces for the first time, a bit in awe. It was difficult at that time to envision this place, as it has become, the social, artistic and business-meeting center of the Lehigh Valley.

Twenty years ago only a fraction of time, quite frankly yet it now seems distant. With all the change of two decades, it’s hard to remember that economy. Some in this room came of age after it was gone. For them, it’s always been history.

National politicians and national media often seem to pine for a bygone economic era, wishing it back in words, empty actions or odes to nostalgia. Those of us here, realize the reality. We’re better off today.

Our air is cleaner, as is the river, jobs are safer, our economy is more diverse, our downtowns are vibrant again, technology has improved and expanded health care, our manufacturing base and the economy. The economy and population are growing as new businesses and people come here or start here.

A New York Times headline back around 2001 called us a phoenix rising from the ashes. The rising part was right, not the ashes. What today’s economy is built upon isn’t ash. It’s a solid rock foundation built by the values of those who came before and the visionary leaders who looked to a life and economy beyond steel.

The key was not to fear the future – or fight it – but to build it. Change is life’s only constant. The Lehigh Valley understood that then, and we must remember it today. Humans often cling to a past that wasn’t exactly as we remember it while complaining about today and lamenting tomorrow. Yesterday is only more comfortable because it’s over, the future only scary because it’s not yet known.

The Lehigh Valley’s economy has never been better. Yes, never.

Last year, our region produced $39 billion in Gross Domestic Product, or GDP, the measure of total economic output. It’s the largest in our history, surpassing those good ole days of Steel.

Those aren’t LVEDC numbers. They come from the U.S. Department of Commerce, from its breakdown of America’s economic output and where it comes from by sector and geography. You can find them on Commerce’s website.

The Lehigh Valley is the 65th largest economy in the United States, jumping up eight spots from the year before. More economic output is generated here than in the entire states of Vermont and Wyoming. If the Lehigh Valley were a country we would be the 87th largest in the world.

Every year, Site Selection magazine issues a report of new development in every major region and state in the U.S. It’s a report based only on number of projects, investment and jobs, nothing subjective. For the second straight year, the Lehigh Valley is in the top five in the Northeastern United States, only surpassed by New York, Boston, Philadelphia and Pittsburgh.

Of course, size alone is not a measure that something is better – unless, of course, you come from Texas. What makes a solid economy is balance and opportunity for people of all incomes and skill levels.

Economic growth is meaningless if it doesn’t enhance, not harm, a region’s quality of life and strive to create opportunity for all people, not just the educated or highly skilled. The best pathway for people to realize the fullness of life is the opportunity for meaningful work that pays a life-sustaining wage. To me, that is the aim of economic development.

At LVEDC, we have adopted a vision statement. Our vision is for a diverse Lehigh Valley economy that provides economic growth and opportunity for people of all skills and education and strengthens all our cities, boroughs and townships. Vision statements are easier to write than achieve but without one is to stumble through the darkness feeling your way step-by-step.

You’ll see our vision statement printed proudly on the back of our 2017 Annual Report. A copy of that report is on each of your seats. Accompanying that vision statement are LVEDC’s mission and priorities. They appear on all our major documents and the walls of our offices.

If you take one thing home from this meeting, please have it be the annual report. All the information in today’s meeting is in there. It tells a smart and comprehensive story of the Lehigh Valley economy. And to brag for a moment, it was produced in-house by a very small but extremely talented staff led by Colin McEvoy, our director of communications – who thankfully we don’t pay per word because he wrote nearly every one in there – George Lewis, our director of research and analysis, Mike Keller, our director of marketing – who also has the small task of organizing this entire meeting – and the talented Michelle Chrin, our contract graphic designer. It was printed here in the Lehigh Valley.

The information and data we present is for all of you to use and to share on your websites and in communications. And for those of you who don’t want to put your drinks down and take notes, you’re in luck. The Annual Report and today’s presentations are available on the LVEDC website, which has a micro-site just for the annual report and meeting. It’s our aim to have all 665,441 of us Lehigh Valley residents understand and share the story of our economic renaissance. Use the information to inform your customers, your employees or stakeholders and to attract new customers and employees – or just to impress your uncle at the Memorial Day picnic. If he doesn’t believe you have him call me. I’ll transfer him over to Colin.

The importance of our $39 billion economy is not just its size but its balance.  The Lehigh Valley economy is like a sturdy table standing on four legs. Our top four economic sectors are within $2 billion of each other.

Our largest economic sector is finance, insurance and real estate at $7.9 billion. Manufacturing is second with $6.9 billion. We’re the rare community in the United States with a growing manufacturing base helping to lead our economy. Third and fourth are professional and business services & education and health care. They each generate about 5.3 billion in output.

The next tier of economic output is again very evenly balanced among four sectors all ranging from $1.6 to $2.3 billion in output. That tier includes in rank order: retail, information, transportation and warehousing and arts, accommodation and food service.

When we look at jobs not economic output the list changes. Health care and social assistance is 17 percent of our jobs, a total of 55,830. Much to the surprise, I’m sure, of a lot of national business writers, retail remains second with 34,380 workers and manufacturing third with 32,388. Our fourth biggest employment sector was our fastest-growing last year, transportation and warehousing, which now has nearly 28,000 employees, about 10,000 more than five years ago.

Median income in the Lehigh Valley has grown 4.1 percent over the last five years and median household income has reached $60,000. The unemployment rate is 4.8 percent and there are 345,000 people in our labor force.

We have become a jobs center for a large area with 92,000 workers a day travelling into the Lehigh Valley from Berks, Schuylkill, Carbon, Monroe, Bucks and Montgomery counties. One of our biggest challenges is keeping pace with demand for land, labor, skills and new infrastructure. The market has added 20 million square feet of industrial space in the last five years for an inventory of 116 million. There is an additional 5 million under construction today. With a vacancy rate under 5 percent, the Lehigh Valley is now 2nd in the world in industrial rent growth above 10 percent a year.

Along with developers and the governments who receive property taxes, the biggest winners during the last five years are lower-skilled workers with high school educations, nationally, a struggling employment demographic. The explosion of online retail and the rise of fulfillment centers to serve direct to consumer shopping has created a market minimum wage of $15 per hour and full employment in this category. Frankly, this is a feat that social scientists dream of when fighting for higher government minimum wages, the reduction of poverty, crime and social services. If you’re willing to pick and pack, drive a forklift and work a demanding job at a fast pace – just like was required back in the day of steel mills and slate quarries – you’re going to make more than in other jobs here, including traditional retail. Yet, it remains the part of the Lehigh Valley economy that we love to hate.

There will always be land use and road issues created by new industries and rapid growth. They are all solvable through smart planning, farmland preservation investments and increased funding to widen and improve roads and intersections, along with increasing the use of rail to move freight. It will just take a little time – as it did with the resurgence of our cities.

Today, the downtowns across the Lehigh Valley are in a renaissance. They are driving the birth of a New Lehigh Valley. A Lehigh Valley that can grow as the home of corporate offices, knowledge workers, technology-based industries and entrepreneurship. Bethlehem has led the way and now has two thriving downtowns on each side of the river. Easton is the center of a hip arts, entertainment and restaurant culture that is attracting people of all ages. And, Allentown – the Lehigh Valley’s largest city and Pennsylvania’s third biggest – has turned a corner and has a downtown thriving with new offices and workers, entertainment, cultural arts and restaurants all inter-connected. Each of the cities are quickly adding new apartments and people, rents are climbing as both professionals and retires are find their way to downtowns.

In total, 25 companies have moved into the urban centers during the last five years bringing with them 2,315 jobs. The Lehigh Valley’s largest employers, recognizing the need to attract top young talent and their desire to live, work and play in America’s cities, have driven growth in our downtowns: Lehigh University and St. Luke’s University Health Network here in Bethlehem — Lafayette College in Easton — and Lehigh Valley Health Network, BB&T, Air Products, Cross America Partners, Morgan Stanley, Merrill Lynch, Avantor and many professional service offices in Allentown.

This New Lehigh Valley is being fueled by our abundance and wide-range of colleges and universities, which conferred nearly 10,000 degrees during the last academic year, including about 2,500 from community colleges. Fifteen percent of the total community college degrees in Pennsylvania came from the Lehigh Valley. We are a center of innovation. More than 5,000 technology patents have been issued to Lehigh Valley companies and workers since the year 2000.

Economic growth is about balance: the balance of jobs in cities and suburbs, in manufacturing and offices, and for workers of both low and high skills. It’s also about the balance of jobs created by companies staying and growing at home and companies from other states and countries entering the market.

We are fortunate to have a balanced and growing economy in the Lehigh Valley.

With us today – and travelling the farthest to attend – are the CEO and Board Chair of Fuling Global, Mr. Hu and Ms. Jiang. Fuling is Pennsylvania’s only Chinese manufacture making products here with American workers to serve its American customers. Fuling chose the Lehigh Valley as its American home several years ago after a multi-state search and posted record growth last year.

The past year saw many of our largest and long-standing companies double down on the Lehigh Valley, embarking on expansions projects and recommitments to the region, many of them manufacturers, including Air Products, Mack Trucks, Victaulic, Nestle Waters, Sharp Packaging Solution, Uline and Avantor. To all of them – and many others – we say thank you. Thank you for being here, for believing in us and for showing that commitment.

In total, last year we worked on 31 major economic development projects in our targeted sectors that accounted for 2,224 new jobs and 1,357 retained jobs. Most are listed in the centerfold of the annual report. In total, during the last five years, 24,246 jobs have been added in the Lehigh Valley.

Our economy is growing. Our renaissance is well under way — but far from finished. While we suffer some of the growing pains, let us remember that what’s happening here is the envy of many communities and regions across America who’ve yet to find their way back from economic change. We have looked forward together –and because of that — our todays and tomorrows are even brighter than our storied past.

LVEDC 2017 Annual Report Now Available in Print, Digital Formats The Lehigh Valley saw another year of historic economic growth in 2[...]

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