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Don Cunningham: Metamorphosis of Lehigh Valley Will Continue in 2016

By Don Cunningham on January 5, 2016

This column, written by LVEDC President and CEO Don Cunningham, originally appeared in Lehigh Valley Business on January 4, 2016. (Click here to read Cunningham’s previous columns.)

Don Cunningham

Don Cunningham

It’s with the perspective of looking back over the last two decades that we get a clearer idea of where 2016 is taking us in the Lehigh Valley. It’s been in the slow ticks of the days and weeks and months of the last 20 years that a new region has emerged.

The metamorphosis of the Lehigh Valley began, as all do, with a death. The death of Bethlehem Steel in 1998 marked the end of the post-World War II industrial manufacturing economy, an economic base that remained longer here than in most places in the U.S.

As it was ending, the seeds of a new economy were being planted. But, as with all deaths, we initially only experienced the loss, the pain and angst over what would, if anything, come next. Our garment mills were closing. Textile production, and seemingly most everything else, was chasing cheaper wages and lesser environmental and occupational and health standards in Asia and Mexico. It then seemed like America would never make anything again. The only upside being the cheaper prices for consumer goods being peddled by the big box retailers such as Walmart, Target, and Old Navy.

As the great Y2K lurked and the new millennium awaited, the cities of the Lehigh Valley were declining, suffering the effects of retail’s suburban migration and urban renewal projects that didn’t renew, such as the Broad Street Pedestrian Mall in Bethlehem and the Hamilton Street canopies in Allentown. Easton’s “circle” was better known for its vagrants and characters than restaurants and wine bars.

We couldn’t see it clearly at the time but it was all about to change; a metamorphosis that should realize several more phases in 2016.

The age of technology, the development of the Internet, the desire for authentic downtowns, abundant land and reusable property, an available quality workforce, a transformation of health care, good schools, safe neighborhoods and location, location, location gave birth to a new Lehigh Valley economy.

In 2015, the Lehigh Valley surpassed $35 billion in GDP for the first time in its history. That’s more economic output from the two-county region of 658,000 people than the entire state of Vermont and 94 countries in the world. Even more important is the balance and diverse nature of that economic base.

Manufacturing is back. It constitutes about $5 billion of that GDP, a larger share of our economy here than in most other regions. Today’s manufacturing is different. While we still produce all of the world’s Mack Trucks, about 115 per day in Macungie, manufacturing now is much more diverse, including medical devices, national food and beverage products, and small specialty part machine shops and technology components.

The advent of e-commerce — the ordering of goods on the Internet instead of purchasing them in a store — has forever changed the economic base of the Lehigh Valley. Located right in the center of the East Coast with quick access to major ports and the New York and Philadelphia markets, along with abundant road, rail and air infrastructure, the Lehigh Valley and Berks County have become a major hub to move and produce products. More than 1/3 of U.S. consumers live within an eight-hour truck drive from the Lehigh Valley.

More than 22,000 workers are now employed in logistics, fulfillment and warehousing, three times as many employees that worked at Bethlehem Steel through most of the 1980s and 1990s. That number will continue to grow. FedEx is reaching the final stages of its development plans for its East Coast mega-hub that will move 75,000 packages per hour at a location near the ABE Airport. C&S Wholesale Grocers will add 600 employees to its wholesale foods operation in the Lehigh Valley. Amazon and Walmart continue to quietly do battle for e-commerce market share from perches in the Lehigh Valley, most recently with Walmart developing 2.4 million square feet for that purpose on former Bethlehem Steel land. Amazon is eyeing its next move.

The biggest transformation, however, has taken place in the Lehigh Valley’s cities. Fueled by downsizing baby boomers and millennials with a penchant for urban living that was not mainstream in past generations, Allentown, Bethlehem and Easton have all seen downtown rebirths. A food culture has emerged that was unknown during the working class heydays of the past. Hip new restaurant and bars emerge seemingly weekly in Allentown, Easton and Bethlehem. The advent of big city style arts and culture amenities such as Coca-Cola Park, the PPL Center, the Sands Casino and Event Center, the Crayola Factory, and an ever-improving State Theatre have forever changed the culture of the Lehigh Valley.

It’s not my grandfather’s Lehigh Valley. And there’s more to come. While there will always be economic fluctuations, some job losses and new opportunities, the new Lehigh Valley economy is diverse and solid. 2016 will only add to that trend. The metamorphosis continues.

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