Employment in the Lehigh Valley’s outsized manufacturing sector grew at a rate 11 times faster than the nation as a whole in the last five years primarily because the popular products made here helped drive the economic recovery during the pandemic, according to a new Lehigh Valley Economic Development Corp. analysis.
Home to iconic manufacturers including Mack Trucks and Crayola, the Lehigh Valley realized an annualized net employment gain of 2.2%, or 3,600 manufacturing jobs in total. U.S. manufacturing employment is at 12.7 million, rising by two-tenths of a percent annually in the last five years, according to workforce data analyzed on Chmura Economics’ JobsEQ platform.
At 35,000 jobs, manufacturing employment in the Lehigh Valley now exceeds what it was before the pandemic and its economic output, at $7.9 billion, ranks among the nation’s 50 largest manufacturing markets.
The region is a “boomtown” for growth, particularly among beverage manufacturers, because of its ample water supply, sewage infrastructure and location in the heart of the Northeast market, within a four-hour truck drive of 38 million people, said Adrian Ponsen, director of U.S. Industrial Analytics at CoStar, a leading source of real estate data.
The Lehigh Valley is located “in the middle of the Northeastern U.S.’s Washington D.C. to Boston corridor — the largest cluster of purchasing power in the Western hemisphere,” Ponsen said. “This not only makes the Lehigh Valley an optimal location for distributors, but also for manufacturers who want their production to remain as close to as many of their customers as possible.”
LVEDC President and CEO Don Cunningham said the data reinforces the message that he’s been sending for years: the Lehigh Valley still makes stuff.
“Manufacturing has a long and rich history in the Lehigh Valley and remains a cornerstone of the evolving economy,” Cunningham said. “The new data speaks volumes about the resilience of our manufacturers and the economic assets that make the Lehigh Valley a manufacturing powerhouse.”
The data in the analysis measures manufacturing employment growth in Lehigh and Northampton counties from the first quarter in 2017 to the first quarter in 2022 and is based on a four-quarter moving average, which smooths out seasonal variations.
The data JobsEQ uses is derived from the Quarterly Census of Employment and Wages, a cooperative program involving the Bureau of Labor Statistics and State Employment Security Agencies. The program serves as “a near census” of monthly employment and quarterly employment and wage data by industry on the national, state and county levels, according to the Pennsylvania Center for Workforce Information and Analysis.
On the eve of the pandemic, the Lehigh Valley’s economy was expanding as it produced a record Gross Domestic Product topping $44 billion, larger than three states, and manufacturing was fueling that growth. Global employers, such as B. Braun Medical and Coca-Cola, announced significant expansions in the region.
When COVID-19 disrupted the economy, Lehigh Valley manufacturers adapted to the supply shocks and labor shortages brought on by the pandemic as it worked to supply the nation with medical supplies, food and other essential items.
By the end of 2020, the Lehigh Valley became the nation’s 49th largest manufacturing market. By the end of 2021, exports had recovered, rising to a record $4.1 billion, according to the U.S Bureau of Economic Analysis.
Last year, manufacturers completed $221 million worth of development which was linked to 1,000 new jobs in the Lehigh Valley. Another $500 million worth of development, tied to more than 700 jobs, is either under construction or announced.
Among them is B. Braun Medical, a German-owned life sciences company with its U.S. headquarters in the Lehigh Valley and manufacturing operations. The company is expanding its Allentown plant as part of a $1 billion investment in modernizing and updating U.S. facilities, adding 250 employees to the 2,000 already employed here.
“The expansion of our Allentown facility reflects B. Braun’s long-time commitment to grow our business in the Lehigh Valley,” said Robert Albert, senior vice president and chief marketing officer. “With its central location, high quality workforce, vibrant communities, and ability to partner with leading healthcare and academic institutions, the Lehigh Valley is an ideal location for a company like ours.”
Manufacturers value the Lehigh Valley for its affordable location 90 minutes from the financial centers in New York City and within a day’s drive of a third of the U.S. population. Exporters can take tax advantages in the region’s Foreign Trade Zone that LVEDC administers. The Lehigh Valley has a skilled workforce, and the region is growing in population. Educational partnerships are working to keep the talent flowing.
That has helped stem the fallout from the disruptions caused by COVID-19 and rebound employment quicker than other parts of the country, Cunningham said.
The Lehigh Valley, which is home to Freshpet and Just Born, outperformed the nation when it came to employment growth among food and pet food manufacturers, an LVEDC target sector, over the last five years. The nation’s employment in the sector grew by an annualized rate of 1%. Food manufacturing in the Lehigh Valley grew at a rate of 7.9% or 1,245 jobs.
Among the stronger manufacturing employment gains in the Lehigh Valley were in chemical manufacturing, a wide-ranging sector that includes everything from shampoo to vaccine production. Employment in chemical-making grew at an annualized rate of 7.9%, or 1,068 jobs, over the last five years, eclipsing the national rate of 1.5%.
Some of the local manufacturers working in that space include Piramal Critical Care, which makes inhalation anesthesia products; BioSpectra, which makes pharmaceutical ingredients; A.P. Deauville, which makes personal grooming products, and Evonik, a German specialty chemical company which bought a specialty additive business from Air Products, a Fortune 500 company headquartered in the Lehigh Valley.
The Lehigh Valley is continuing to show strong signs of manufacturing growth. Last month, Phoenix Tube, a leading manufacturer of stainless-steel products, announced it is expanding its operation in Bethlehem, a move that will result in a new production line and the creation and retention of at least 165 total jobs.
“While high inflation and uncertainty over the recovery still looms, interest in the Lehigh Valley among manufacturers continues to be strong,” said Kristin Cahayla-Hoffman, vice president of business development and attraction for the LVEDC.
She said 31 of the 38 prospects the LVEDC was tracking in July were manufacturers.