Don Cunningham: We Now Live in the ‘Age of Certainty’
By Colin McEvoy on August 31, 2017
This column, written by LVEDC President and CEO Don Cunningham, originally appeared in The Morning Call and on the newspaper’s website on August 14, 2017. (Click here to read Cunningham’s previous columns.)
We now live in the Age of Certainty.
I’ve only known one guy who ever won big on the lottery, but just about everyone I come upon anymore has been fortunate enough to have found the key that unlocked the answers to all the mysteries of the universe. To experience this, turn on cable television, go on social media or visit any diner or coffee shop where more than two people are gathered.
If you see or hear the words, “I don’t know,” “I’m not really sure,” or “I haven’t figured it out yet,” go buy a lottery ticket because today is your lucky day. You have stumbled upon the human equivalent of the Ila Pika, one of the rarest — and cutest — mammals in nature. Google it. You won’t be disappointed.
I’m not sure from where all this certainty came.
With a few viewings of cable television “news” or the reading of an internet blog, truck drivers are turned into scientists and the guy who empties the trash bin at your office is now an expert in international monetary policy.
Years of study are no longer needed. A Facebook account will do. There was a time that only teenagers held this wisdom without training, and that was just with their parents.
On the positive side, this should be good news for regions that suffer a shortage of doctors. No need to waste 10 years on a degree. WebMD.com will do in the Age of Certainty, where the pursuit of knowledge has been replaced by just knowing it all.
It was Joseph Kennedy, the patriarch of the Kennedy clan, who allegedly preserved his millions and avoided the stock market crash of 1929 after getting unsolicited advice during a shoeshine. “When even shoeshine boys are giving you stock tips, it’s time to sell,” the father of President Kennedy is purported to have said.
We all could use a little less certainty. Opinions are fine. That’s our right in a democracy. But belief in our own infallibility assures our fallibility.
The economy is a great teacher in this regard. Every year I sit through a series of annual presentations by economists. They are all learned students of a subject whose only certainty is its uncertainty. The best among them hedge their bets and load their predictions and forecasts with enough caveats and conditions to make a meteorologist blush. The worst among them insist that a prescribed set of actions will have a direct casual effect and disregard the results generated by those same actions in the past.
Five years ago it was a common belief that American manufacturing was dead; that we no longer make things here. Today, here in the Lehigh Valley, manufacturing is the largest part of our economy and our two primary challenges to growth are availability of skilled labor and affordable space.
Things are not always as they seem. During the last two years, the majority of active business prospects looking to locate in the Lehigh Valley have been manufacturers. We have landed many of them. The primary reason for those we’ve lost has been a lack of available space.
Most manufacturers today operate out of anywhere from 10,000 to 100,000 square feet of space. On average they employ about 20 to 75 workers due to automation and technology. In the Lehigh Valley, buildings of that size are full and new ones are few and far between.
As online retail and e-commerce exploded and the Lehigh Valley became a sweet spot in the Mid-Atlantic region because of our access to market, along with available land and workers, developers reacted. Million-plus-square-foot buildings could be built on speculation with tenants nearly guaranteed. The result drove up both developer profits and land prices, reaching upwards of $300,000 per acre.
This industrial boom has been tremendous for job creation, wage growth for low-skilled workers and new tax base for school districts, municipalities and counties. It has created nearly 10,000 jobs in seven years and driven unemployment below 4 percent in the non-skilled sectors, nearly full employment with wages in the $14 to $15 range.
It has resulted, however, in a glut of what’s called industrial flex space of 100,000 square feet or less, which is precisely the space that manufacturers typically occupy. Those buildings are costlier. There is less economy of scale, tenant margins are tighter, financing is hard to come by on speculation and its difficult to absorb the new land prices.
And just like in the residential market when someone goes looking for a house and nothing is available for 12 or 18 months, they move on. There are numerous efforts underway to stimulate development of new manufacturing space, and developers are taking note. We don’t want to miss out while the window of opportunity is open. We have a challenge most other regions of the country long for.
The industrial e-commerce boom has elevated manufacturing growth in the Lehigh Valley and at the same time created a new price market, making its development more challenging.
I am uncertain as to how this will end. The Lehigh Valley is clearly established as an industrial and manufacturing center but only available workers with the right skills and available buildings at market-competitive prices will allow the market to continue to grow and to create jobs in manufacturing.
We need to seek answers and understanding, which requires asking questions, and working together toward a desired outcome. As with most issues, the willingness to put certainty aside is imperative to finding a solution.
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