Don Cunningham: Lehigh Valley and “A Tale a Two Economies”

By Don Cunningham on March 22, 2021

Below are a portion of the remarks delivered by Don Cunningham, President & CEO of the Lehigh Valley Economic Development Corporation, during the LVEDC 2021 virtual Annual Meeting program on March 16. The video broadcast of the program can also be found below.

Socrates taught that true wisdom comes from knowing what you don’t know and acknowledging it.

It’s good he’s not around today in our Age of Certainty.

In the online and media world of pundits, prognosticators and bloviators there’s no currency in uncertainty.

In the world of Twitter, being certain matters more than being correct. “We don’t know yet” doesn’t make the best tweet.

The reality is that the pandemic that engulfed our lives last March created economic change we don’t yet fully understand. As saving lives and reducing the spread of a deadly virus took precedent, it altered the way we work, who worked, how and when.

The whirlwind of economic head winds and tail winds has lifted some, deflated others and held many in place. The dust has yet to settle.

If there’s any certainty, it’s that economic life will forever be changed.

As with world wars, and industrial and technological revolutions, a pandemic that kills more than a half a million Americans – and 2.5 million people in the world – bends the arc of economic history.

International supply chains will be rethought. Remote work and office space reimagined. The value of public investment in medical research and development realized.

Will this mean more corporate offices and professional jobs in less crowded cities that don’t rely on public transportation? Or will more professional workers live in smaller markets and work from home while the office remains in the large city?

Will more pharmaceuticals be made and developed in the U.S. now? Will supply chain lines shorten and reliance on global networks be reduced? Will manufacturing grow in the U.S.?

Will people return to brick and mortar retail stores or will more and more products be delivered direct to the doorstep?

Will total restaurant spending return to a pre-pandemic level or will more people cook at home?

Whatever the answers, it will be a new normal. The arc is bent. We don’t go back to February 2020.

Last year in the Lehigh Valley was a tale of two economies.

Much of the service economy of restaurants, hotels, arts centers, and hospitality venues closed or operated at reduced capacity, while online retailers, manufacturers, food and beverage producers, grocery stores, health care and other parts of the nation’s supply chain based here boomed, some with sales growth of 25-30 percent.

Unemployment grew in restaurants and hospitality while industrial employers struggled to find workers even with jobs advertised at $20-plus per hour for low-skilled, new hires.

The growth of the Lehigh Valley continued during the pandemic while our downtowns, hotels and arts and sports venues were hobbled. There were 41 major expansion or new development projects in 2020, resulting in the creation or retention of more than 6,000 jobs last year.

Once again, for the fifth consecutive year, Site Selection magazine, a leading real estate industry publication, lists the Lehigh Valley as one of top ten growing metropolitan areas in the United States of regions with population size between 200,000 and 1 million people. In the Northeast U.S., Lehigh Valley was again in the Top Five markets for economic development projects completed. The rankings are part of Site Selection’s prestigious annual Governor’s Cup Awards that each March lists economic growth by state and metro area.

The Lehigh Valley being the top tier has become a regular thing.

Pandemic or not, the growth continued. Economic development activity, particularly in the industrial and manufacturing arena, has not stopped. We remain a leading attractive market competitive on a national level against much larger metropolitan areas.

In 2020, developers delivered 3.3 million square feet of industrial space in Lehigh Valley. There is another 9 million currently under construction, 6 percent of the region’s total inventory, making Lehigh Valley among the busiest industrial markets for construction in the nation, only ranking behind Nashville and Austin.

Some of the last year’s major projects include OraSure Technologies expanding its medical diagnostics manufacturing operation in Bethlehem, U.S. Specialty Formulations developing a new pharmaceutical production facility in Allentown, and Sharp Packaging adding a new pharmaceutical packaging facility in Lower Macungie Township.

Once again, several manufacturers either expanded operations or planted new roots in Lehigh Valley last year. A.P. Deauville relocated to Northampton County from New Jersey to produce deodorant and other personal care products, while Silgan Containers came to Lehigh County to make metal cans. Fluortek has added to the region’s growing medical device manufacturing with a range of medical products.

Bowery Farming is developing a vertical farming operation to produce various foods on former Bethlehem Steel land in Bethlehem. Suncup Juice is opening a juice production facility, while Flexicon and Follett are both expanding their large manufacturing operations in Northampton County.

The Lehigh Valley’s GDP was a record $43.3 billion in 2019. That’s more GDP than the states of Vermont, Wyoming and Alaska. Lehigh Valley is now the 65th largest economy in the U.S., and its 52nd largest manufacturing center with about 700 companies producing a wide range of products with about 34,000 workers.

Manufacturing is our second largest sector – behind only the finance, insurance and real estate – making up 16.5 percent of Lehigh Valley’s economic output. By comparison, manufacturing is about 12 percent of the U.S. economy.

As new opportunities emerge, we remain concerned about our restaurants, downtowns and quality of life assets. It’s imperative that we work for their return.

The solid and diverse base of the Lehigh Valley economy, built over the past decades, is getting us through. It’s limited the effect of the quarantine, as cornerstones of the economy — health care, manufacturing and production, and supply chain — grew in value and importance.

The economic renaissance of the Lehigh Valley continues. The first draft of a post-pandemic history with new challenges and opportunities is just being written.

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