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Don Cunningham: “The Lehigh Valley is Being Reborn”

By Colin McEvoy on March 28, 2022

LVEDC President & CEO Don Cunningham speaking during the organization’s 2022 virtual annual meeting program.

Below are the remarks delivered by Don Cunningham, President & CEO of the Lehigh Valley Economic Development Corporation (LVEDC), during the organization’s 2022 Annual Meeting virtual program on March 22. The video broadcast of the program can also be found below.

Thank you for joining this video overview of the past year in economic development in the Lehigh Valley.

Every year at this time LVEDC looks back at the last year. We take note of what occurred in our economy and our community. How we fared and where we’re headed.

We typically do it as part of a public Annual Meeting. This year, we’ve delayed the public event until fall with the hope that it will be safer then to gather in large numbers – to celebrate – and network – and explore more aspects of the Lehigh Valley’s ongoing economic renaissance.

Until then, we offer this video and a companion 2021 Annual Report, available on the LVEDC website and in print.

For us, every March is a time of reflection – made more profound this year due to the changes and challenges wrought by the pandemic of the last two.

In change and challenge, comes an even deeper need for reflection and perspective. This is true of us as people – and as communities, and regions.

Life comes to us day by day, which suddenly becomes months and years and decades. One day you look in the mirror – or maybe at a photo – and you see your parent or grandparent looking back.  And you wonder when it happened.

It’s important to keep perspective.

After decades in its location, LVEDC is moving its offices from near the Airport on Avenue C in Bethlehem to the former Bethlehem Club Building downtown.

Packing for the move, I recently came upon our first Annual Report in 1996. It was only eight pages. It didn’t focus much on what happened the year before but on the possibilities of the future. It was fitting of that economic time.

While flipping through that report, I was struck by the difference between a city or a region getting older in comparison to a person, or any living thing.

Organic life has an end date, usually following a natural period of decline. We’ve yet to develop a way to turn back the clock and restore youth to the old.

Communities, cities, regions are the opposite. They are constantly reborn. They have no expiration date.

From the ashes can rise a phoenix. From decline and decay can spring life. The screen refreshes itself with new people, new generations, and new uses for old places.

That’s the magic, mystery, and allure of economic development and building communities.

A new canvas always awaits, limited only by creativity, ambition, and resources.

I’m older than I was in 1996. My hair is greying and thinner.

But, today, the Lehigh Valley is younger. It’s more vibrant, more diverse, growing in population and economic output. It’s home to new business, new arts, and culture, growing downtowns, and increasing family income.

Population

Since 2010, Lehigh Valley’s population rose by 6.2% to 687,508, making it one of Pennsylvania’s fastest growing regions and one of the top 25% fastest growing regions in the nation.

More importantly, the population between the ages 18 to 34 years old grew by 10.7% during that time – making the Lehigh Valley the fastest growing region in the state for young people, who now are the largest generation in our workforce.

This is evident in the development of new, modern apartment buildings, particularly in the downtowns of Easton, Allentown, and the south side of Bethlehem, which are being leased as quickly as they are being built.

The region is also becoming more diverse.

While white people are 70% of the population, every minority race grew by double digit percentages the last decade, accompanied by a decrease of about 10% in white population. Hispanic population fueled the overall population growth, increasing by nearly 46%.

Migration

The region’s population growth is primarily because of people moving here. The Lehigh Valley had a net population gain of 24,478 from international migration the last decade with Lehigh County being ranked by the U.S. Department of Commerce’s SelectUSA program as in the top 1% of all U.S. counties for international migration.

The Lehigh Valley was among the top five regions in the Northeast for net population growth due to in-migration from other metro regions between 2015 and 2019.

This heightened during the pandemic. A CBRE analysis of U.S. Postal Service data showed that migration from the New York metro to the Lehigh Valley increased by 13.7% in 2020.

It is the population growth, particularly of young workers, that is driving the region’s economic growth, which continued during the pandemic.

In 2021, we once again ranked a top U.S. Region for economic development. LVEDC tracked more than 50 major expansion or new development projects last year that created or retained more than 5,000 jobs.

For a sixth consecutive year, we placed in the Top 10 regions nationwide with a population between 200,000 and 1 million, and in the Top 10 in the Northeast U.S. for regions of any size for economic development projects completed. The rankings are part of Site Selection’s prestigious Governor’s Cup Awards.

Economic Data

GDP in 2020 was $42.9 billion, only slightly down from a record $44.2 billion in 2019, despite the mandated closure or reduced operations of many businesses during the 2nd and 3rd quarters to stem the spread of COVID.

$7.9 billion of that GDP – 18.5% of our private sector output – came from manufacturing, launching the Lehigh Valley into one of the United States’ Top 50 manufacturing markets. The importance of the Lehigh Valley’s premier role as a manufacturer, producer and distributor of goods became clearer as many of the region’s 700 manufacturers produced food, drinks, medical equipment, supplies and other essential items that sustained the nation. By way of comparison, manufacturing is only 12.5% of economic output in the U.S.

GDP in food and beverage grew by 60% in the Lehigh Valley over the last decade and 25% nationwide.

The region’s well-balanced largest economic sectors remained the same with finance, insurance and real estate 1st, manufacturing 2nd, health care & education 3rd, and professional services 4th, all within $3 billion of each other.

New Projects from 2021

Frederick Horowitz, CEO of A.P. Deauville, cutting the ribbon at the grand opening of the new Forks Township facility in October 2021.

The 50 new projects of 2021 showed the Lehigh Valley economy was not slowed by the pandemic. Here are some highlights:

A.P. Deauville: One of the nation’s leading marketers and manufacturers of personal care products relocated from New Jersey, opening its new manufacturing operations in Forks Township, creating 105 new jobs.

Cigars International: The online and catalog-based retailer of quality cigars expanded its headquarters in Bethlehem by 100,000 square-feet, nearly doubling its existing space The company has more than 500 employees in the Lehigh Valley, and ships about 2.5 million packages from here each year.

Martin Guitar: C.F. Martin & Co. opened a new 200,000 square-foot distribution facility in Tatamy, allowing the iconic guitar maker to meet growing market demand and accommodate expected future growth. Up to 50,000 instruments will come out of the new facility each year.

Sharp: Sharp, a global leader in advanced clinical supply chain services and pharmaceutical packaging, increased its manufacturing capacity by upgrading its four-facility campus in Upper Macungie Township, and expanding its pharmaceutical packaging facility in Lower Macungie. Sharp has 1,400 jobs in the Lehigh Valley.

Stuffed Puffs: Stuffed Puffs, a confectionery maker of chocolate-filled marshmallows, opened its new headquarters and manufacturing facility in Hanover Township, Northampton County. The company’s first phase houses customized, automated production lines.

Yourway: This biopharmaceutical company based in Upper Macungie Township finalized its plans to expand an additional 300,000 square feet, a project that will allow its packaging, storage, and distribution facilities to double in the Lehigh Valley. The company will be able to significantly extend its temperature-controlled storage capacity, addressing the growing need for services for clinical trials.

Bio Med Sciences: The manufacturer of burn treatment, plastic surgery, and aesthetic skin care products relocated to a new facility in Hanover Township, Lehigh County, tripling its existing space and creating new jobs.

BusPatrol America: BusPatrol, a Virginia-based school bus safety-technology company, leased a floor in City Center’s Tower 6 office building in Allentown for use as its East Coast hub.

Capital Blue Cross: Capital Blue Cross completed a $4 million renovation to its regional headquarters in Allentown, which includes a new Capital Blue Cross Connect health and wellness center on the ground floor.

D. Gillette Industrial Services: This manufacturer of assembly parts and equipment for the military relocated to a new location in Forks Township, a move that expanded its operations and created jobs in the region.

Follett: The manufacturer of refrigeration products moved forward with its $12 million plans to expand its Forks Township manufacturing facility.

Penn State Lehigh Valley: PSU-LV completed a $14.4 million expansion at its campus in Upper Saucon Township, which includes a high-tech STEM wing complete with a state-of-the-art organic chemistry lab.

SunOpta: This leading global fruit-based food and beverage company expanded and added capacity at its Upper Macungie Township facility, one of several such expansions to have occurred over a six-year span.

Employment Data

This has translated to a nearly complete jobs recovery since the outset of the pandemic in March 2020.

Our biggest employers are in the Health Care & Social Assistance (18.5%), Logistics (11.4%), manufacturing (10.7%), and Retail (10.1%) industry sectors.

The unemployment rate in the two-county region has recovered from a high of 17.1% in April 2020 to 4.3% in December 2021.

The Lehigh Valley metro region added 11,900 jobs across all industries in 2021 – the most jobs gained in a single calendar year since at least 1990. The total number of workers, however, is slightly less than what it was in December 2019 as many workers have decided to leave the workforce, making the supply of talent the single most important issue in the regional economy.

Prosperity

This has translated to higher wages and growing income for Lehigh Valley residents. The median household income was nearly $67,000 in the Lehigh Valley, compared to about $62,000 in PA and $63,000 in the U.S. per capita income in the region, the state and country are all about the same at $34,000 per year.

The poverty rate stayed level in the Lehigh Valley during the last decade, remaining at 10 percent of the population, compared to 12.4% in PA and 13.4% in the U.S. While 10 percent is still too many, those numbers are being held in check by a market-based minimum wage that’s approaching $20 per hour, created by the growth of industrial and manufacturing jobs in the region.

Our mission at LVEDC is to support the recruitment, growth and retention of employers and the creation of jobs for people of all skill and education levels. Every three years, we engage our board, key stakeholders, and strategic consultants to develop a new strategic plan to re-assess how to best use our resources.

We launch a new plan this year. It may be our most bold and ambitious to date as we build upon the current economic foundation to target strategic areas for growth, as well as continue to develop talent strategies, market the assets of the Lehigh Valley for new people, and companies and generate the data and information to support the hard work of targeted economic growth. I encourage you to go to the LVEDC website and read the plan.

There is exciting work to do and opportunities on the horizon for the Lehigh Valley. That includes new strategies and approaches to grow and develop the high-value target sectors: life sciences and pharmaceuticals, professional and creative services, advanced manufacturing and high-value production, and food and beverage production

The average wages in the four target sectors are well above our industry-wide average of $57,911. The average wage was $69,800 in food & beverage manufacturing, $78,062 in advanced manufacturing, $95,705 in life sciences, and $99,130 in high-value business services.

Lehigh Valley’s life sciences sector includes global leaders like Olympus, B. Braun, Sharp, OraSure Technologies, Thermo Fisher, and McKesson. We’re already home to 173 life sciences offices, labs, research centers, manufacturing facilities, and distribution centers with 2.5 times the concentration of medical device jobs and 1.5 times the concentration of pharmaceutical manufacturing jobs than the U.S. average.

The region’s life sciences sector employs 6,430 people and has an average annual wage of $96,430. Since 2017, 2 million square feet of life science space has been proposed, constructed, or completed since 2017.

There’s opportunity for more.

We’re also particularly well-positioned to benefit from growth in the medical device industry. Many medical devices and diagnostics are already made in the Lehigh Valley, from catheters, infusion pumps, rapid tests, and other life-saving innovations. Employment concentration in the LV for surgical instrument production is nearly 5 times as large as a typical U.S. region. Globally, the medical device industry grew 5% to $472 billion in 2020 as demand increased in the fight against Covid-19.

Several Lehigh Valley companies – led by B. Braun, Olympus, Tyber Medical, and OraSure Technologies — have rolled out consequential innovations in the market despite supply chain shocks and labor challenges.

There is more to come.

The Lehigh Valley remains in steady evolution. Day by day, month by month, a new Lehigh Valley emerges. New generations and new people are filling our cities and driving our companies – new companies, different than those of my youth.

Unlike our bodies, the Lehigh Valley is being reborn.

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