Great location, strong workforce make Lehigh Valley manufacturing destination

A Conversation With: Don Cunningham, president and CEO of the Lehigh Valley Economic Development Corp.

LVB: The manufacturing sector has changed a great deal in the Lehigh Valley over the last few decades. How is today’s manufacturing different than it was, say 30 years ago?

Cunningham: It’s much more diversified and larger. That may surprise some people. But manufacturing in the Lehigh Valley has more economic output today than ever before.

The combined GDP of the roughly 750 companies that produce goods and make products in the Lehigh Valley is $8.4 billion a year. That represents nearly 20 percent of our total economy. To put that in perspective, manufacturing is 12 percent of the total United States economy.

What that translates to is the Lehigh Valley is often one of the 50 largest markets in the country for making products. That’s significant because we are not in the top 50 markets in the U.S. by population.

Throughout our history, the Lehigh Valley has been a center of manufacturing and production in the United States. What is made here has evolved with the times as the domestic and international economies have changed.

What hasn’t changed is our position as a place of makers and producers. Nearly one-third of the consumers in the U.S. live within an eight-hour drive of the Lehigh Valley and we are a vital part of their supply chain for producing and delivering goods and products.

If people think the U.S. no longer makes things, they really need to come to the Lehigh Valley.

LVB: Is manufacturing still a large part of the Lehigh Valley’s economy?

Cunningham: It’s the largest part our economy again. It took us nearly 20 years since the closing and bankruptcy of Bethlehem Steel to build manufacturing back to being the region’s top economic sector, but we’ve done it.

There are 38,000 total manufacturing jobs here and it’s been steadily growing. But it’s much different today, much more diversified.

There are very few large employers of thousands of people except for Mack Trucks that has a workforce of about 2,500 people. The typical manufacturing operation today utilizes a lot of automation and technology and has a workforce of about 40 people. This has allowed for the growth of American manufacturing.

The manufacturing worker today is much more educated and trained, often requiring significant trade and information technology skills. The key to a vibrant manufacturing economy is to have a lot of smaller manufacturers making a wide range of goods and products. We no longer have all our proverbial eggs – or jobs – in just one or two big baskets.

LVB: What types of manufacturers call Lehigh Valley their home?

Cunningham: This is always the most difficult question to answer because the answer is just about everything. That said, there are some significant clusters, many that would surprise people. We still make a lot of consumer products from Crayola crayons to Martin Guitars to Samuel Adams beer and Ocean Spray juices.

Curtis-Wright, Lehigh Heavy Forge, and D. Gillette Industrial Services are making aeronautic and submarine parts for the nation’s defense contractors.

There are dozens of precision machine shops turning out pieces for just about every high-tech electronic and consumer product. There’s also really fun stuff like all the food, beverage, and pet food products. There’s not enough space here to list it all.

LVB: What draws manufacturers to locate operations in the Lehigh Valley, and what do we have that helps them succeed?

Cunningham: This one is simple. Our location and skilled workforce. We can serve one-third of the U.S. consumers in a short drive.

We’re one hour from the ports of Newark and Philadelphia. But, most importantly, we have the educational infrastructure: some of the country’s best high school level career and technical schools, community colleges and engineering colleges. It’s all about the talent.

Most importantly, it’s in our DNA. We’ve been making things here since the 1740s. It’s what the Lehigh Valley does.

Pa. chambers eye impact of special election

Lindsay Powell’s victory in Tuesday’s special election allowed Pennsylvania Democrats to retain their razor-thin 102-101 majority in the state’s House of Representatives. 

While the election was decided by voters in Pittsburgh, its impact will be felt far beyond the boundaries of Allegheny County. 

Ryan Unger, president and CEO of the Harrisburg Regional Chamber and CREDC, said there are pieces of legislation the chamber is hoping to see move forward here at the end of the year. 

“One is the Clean Slate Expansion (House Bill 689) which is with the senate now so that’s a good sign,” he said. “That’s one I think we feel could move before the end of the year. It probably won’t be impacted by that (Pittsburgh) election but it’s one we’re keeping our eye on. 

“The other big ones are corporate net income tax (Senate Bill 345) and net operating loss carryforward (Senate Bill 346), got somewhat wrapped up potentially in the budget. We’re hopeful with this election we’ll see movement potentially on some of those code bills and an opportunity to make some changes there. Most likely it will be in the fall for either one of those but there is hope that with strong revenues and with kind of a unique opportunity here we can get some movement before the end of the year.” 

Unger noted that there’s also a bill on transparency in permitting (Senate Bill 350), which he said makes sense in many ways. 

“You can see where your DoorDash is, but you don’t know where your permitting is,” said Unger. “So why don’t we bring that same philosophy to people’s work? It passed with bipartisan support in the senate and it’s now in the House State Government Committee. I’m not sure this election changes that but at least there’s more likelihood bills will move, now that (the special election) has been resolved. 

“Those are the kind of big-ticket things we’re looking at right now. Certainly, the budget is the biggest. The budget could potentially have a resolution around some of those bigger issues because we’re going to start talking about the next budget in 2024.” 

Unger said that while the Harrisburg Chamber hasn’t seen anything directly impact its work, any attention that is still being consumed by conversation about the budget impacts issues the chamber is focusing on. 

“There’s only so much oxygen in the room, right? I think we’re hopeful there could be some bipartisan agreement,” he said. “In reality, when you look at the grand scope of the amount of money the state spends and where the disagreements are, it’s relatively small, and we hope we can resolve those and move forward with these issues that are critically important to the business community.” 

Tony Iannelli, president and CEO of the Greater Lehigh Valley Chamber of Commerce, noted that in many communities in the Lehigh Valley, there’s a narrow edge for either Republicans or Democrats, and that the chamber takes those differences in stride. 

“We try to work with both sides to the best of our ability and we’ve been able to do that,” he said.  “We’ve been at this game for some time, and we realize we have to work with people on both sides of the aisle and come to some kind of compromise. That’s been our approach. 

“As a regional chamber that’s a combination of many geographic as well as our diversity, equity, and inclusion initiatives, I think we take all the changes in stride. Although it’s hard today, the goal is to find some kind of happy medium with legislation that we know has to have some flexibility to get to the finish line.” 

Alex Halper, vice president, Government Affairs Pennsylvania Chamber of Business and Industry, said state residents are fortunate that lawmakers on both sides of the aisle want to see a strong Pennsylvania economy. 

“Many are passionate about supporting their local businesses,” he said. “We’re confident that lawmakers will think about the economy and jobs and their local employers when they’re considering public policy.” 

Halper remarked that many of the Pennsylvania Chamber’s top priorities – improvements to Pennsylvania’s tax code, for instance – have broad bipartisan support. 

“We’ve seen our top priorities get passed with unanimous support out of the Senate Finance Committee, for example,” he said. “We have a Democrat in the House who’s introduced important business tax reform legislation, permitting reform passed with bipartisan support in the senate. 

“When we think about top priority issues for Pennsylvania employers, I think lawmakers on both sides of the aisle have embraced those as important steps to make Pennsylvania more competitive.”

Lehigh Valley rental market more competitive than Philly

If you think it’s hard to find a good apartment in the Lehigh Valley, you’re not wrong. 

A recent survey by RentCafe shows that the Lehigh Valley continues to have an extremely competitive rental market, more competitive even than Philadelphia, it said. 

The survey analyzed 139 U.S. rental markets using metrics like occupancy rates, the number of renters per vacant units, and lease renewal rates.   

The survey showed that in the Lehigh Valley as many as 18 prospective renters competed for the same vacant apartment during the peak rental season. That’s significantly higher than the 10 applicants competing for each apartment in Philadelphia. Furthermore, apartment seekers in Lehigh Valley had limited options to choose from, as a staggering 78.8% of renters chose to stay put. 

Developers are trying to keep up with the demand, building new apartment units, but despite a slight increase of 0.81% in recently built apartments, the occupancy rate in Lehigh Valley remained extremely high at 96.8%.  

Under these tight market conditions RentCafe said apartments were snatched up within 35 days, which is two days faster than the national average of 37 days.  

On a national scale, the rental market was moderately competitive during the peak rental season, scoring a Rental Competitiveness Index (RCI) score of 60. In stark contrast, Lehigh Valley had a RCI score of 118 out of 130.  


Low inventory continues to drive up home prices

Home prices in the Lehigh Valley are still hovering at record highs.  

With low housing inventory driving price increases, the Greater Lehigh Valley Realtors are reporting that the median sales price for a home in the Lehigh Valley in August was $331,750. That is still lower than the record high in June, which was $335,00. 

Justin Porembo, CEO of the GLVR, said new housing construction would help ease the problem.  

“Economists have been calling on the new-home market to make up for the supply deficits in the real estate market,” said Porembo. “It is critical to expand supply as much as possible to widen access to home buying. Home prices will be influenced by how much inventory is brought to market. Increased homebuilding will tame price growth, while limited construction will lead to home price appreciation outpacing income growth.” 

In addition to needing expansion – and affordability – in the new-home market, higher mortgage rates are also creating a standstill in the local real estate market, according to GLVR President Howard Schaeffer. 

“Higher mortgage rates are having a so-called ‘golden handcuff effect,’ discouraging homeowners who locked in low rates a few years ago from selling,” Schaeffer said. “This has created an inventory logjam in the housing market. 82% of home buyers say they feel ‘locked in’ by their existing low-rate mortgage, according to a survey from realtor.com. While significant movement toward the ultra-low 2% or 3% averages are not expected over the immediate horizon, the National Association of Realtors forecasts the 30-year fixed-rate mortgage could reach 6.4% by the end of the year, followed by 6% in 2024.” 

Sales were down, but so was housing inventory. The GLVR reports that closed sales dipped 16.6% in August, while inventory slipped 34.8%. 

There were only 588 housing units on the market in August for Lehigh and Northampton counties and new listings dropped 12.1% to 703. 

Homes sold in 15 days on average and the percentage of list price received increased 1.2% to 102.4% 

In Carbon County, the Median Sales Price increased to $250,858. Closed sales dipped by just six listings, coming in at 62. 


Despite severe storms, gas prices dropping in Pa.

While damage assessments are still being made in the wake of Hurricane Idalia, the national average for a gallon of gas fell by two 2.4 cents since last week to $3.803. At the same time the average price for a gallon of gas in Pennsylvania is 2.5 cents lower this week at $3.856 per gallon, according to AAA East Central’s Gas Price Report. 

Gas prices in the Lehigh Valley were already lower than the national or state average and the drop in price was slightly larger. The average price for a gallon of gas in the Lehigh Valley on Sept. 6 was $3.731 compared to $3.779 on Aug. 29, a drop of 4.8 cents, 

AAA said in its report that oil and gas experts have noted overall gasoline demand during the summer vacation season failed to match previous years despite retail gasoline prices below last year’s prices.  

Today’s national average is 2.6 cents less than a month ago and 2.4 cents more than a year ago. 

According to data from the Energy Information Administration (EIA), gas demand increased slightly from 8.91 to 9.07 million barrels per day last week. Meanwhile, total domestic gasoline stocks took a slight step back to 217.4 million barrels. Although demand has increased, fluctuating oil prices have limited pump price increases. 

At the close of last Wednesday’s formal trading session, West Texas Intermediate increased by 47 cents to settle at $81.63. Oil prices rose amid ongoing concern Hurricane Idalia would interrupt fuel supply in the Southeast.  

However, some fuel terminals have resumed operations, and more are expected in the coming days as storms subside and damage assessments can be undertaken. Additionally, the EIA reported that total domestic commercial crude inventories decreased significantly from 433.5 to 422.9 million barrels. 


Lehigh Valley office vacancy rate high, but that could end

While the commercial office space real estate market remains challenging, John Susanin, senior managing director for Colliers, said there has been a bit of an uptick in activity, which he attributes to companies “rightsizing” their office space. 

He said that the Lehigh Valley’s vacancy rate did experience a notable increase, rising from 19.6% to 21.4% during the second quarter of the year.  

However, one of the significant office deals in the region was an example of that rightsizing.  

PPL Corp. leased four floors at Two City Center, just down the street from its long-time corporate headquarters on Hamilton Street, which it is vacating.  

The building they are leaving, the iconic PPL Tower has been put up for sale and is likely to be considered for redevelopment into apartments.  

Similarly, there are plans for the 254,785-square-foot Grand Plaza at 835 W. Hamilton to undergo conversion into a mixed-use property consisting of apartments and retail spaces, with a few remaining floors dedicated to office use.  

This transition from a purely office-oriented property to a mixed-use development will remove substantial blocks of office vacancy from the market 

And that, he said, is where the vacancy rate will be impacted. 

“There is a continued demand for Class A office space, but there is no new construction planned,” he said. “Because of that there will be a slow and steady absorption over the next several years.” 

He said that while the vacating of office space during and after the COVID-19 pandemic was a factor in the stoppage of construction of new office projects, it wasn’t the main one. 

While residential rental rates have been skyrocketing in recent years, commercial office space rents have remained stable. At the same time construction costs have risen dramatically, sometimes doubling. 

That makes it harder for developers to justify the cost of construction, when the return may not be enough to generate a profit. 

Susanin also sees a gradual return to in-office work. 

“Certainly, the market has taken a step back, but many companies are pushing to return to the office at least part time,” he said. 

While up until this point companies have been generally using the “carrot” technique to lure employees back to the office with offers of lunch or other benefits, Susanin said he is seeing that transform into more of a “stick” approach with companies demanding employees return to the office “or else.” 

In the long term he said the result will be a lowering of the commercial office vacancy rate. 

Carroll Engineering opens Lehigh Valley office

A Warminster-based engineering firm has expanded into the Lehigh Valley, opening a new office in Easton. 

Carroll Engineering Corp. now has an office at 101 Larry Holmes Drive, Suite 201, Easton.  

The expansion will help the firm better serve clients in the Lehigh Valley and Northampton County regions. 

 By establishing a presence in the community, the firm aims to enhance its service delivery and foster even stronger relationships with its clientele 

“Easton’s vibrant community is a perfect fit for our growth trajectory. This new office not only brings us closer to our clients in the region but also allows us to be an active participant in the community’s development,” said Carroll Engineering President, Thomas A. Gockowski. 

The firm employs professionals and staff across Eastern Pennsylvania and Central New Jersey at offices in Warrington, Bucks County, Pennsylvania; King of Prussia, Montgomery County, Pennsylvania; Malvern, Chester County, Pennsylvania; Easton, Northampton County, Pennsylvania; and Somerset County, New Jersey. 

Community Action Lehigh Valley gains Wells Fargo grant

Community Action Lehigh Valley has received a $100,000 grant from Wells Fargo. 

The grant will go to help the local anti-poverty nonprofit support its counseling, financial coaching, housing, small business, and neighborhood revitalization programs. 

In addition, Community Action Lehigh Valley Executive Director Dawn Godshall was recognized at Musikfest for the nonprofit’s work to improve the quality of life for Lehigh Valley residents. 

Godshall called the Wells Fargo grant “transformative.” It is part of a 6-year, $300,000 grant from Wells Fargo through the Pennsylvania Neighborhood Partnership Program (PA NPP) aimed at empowering Community Action Lehigh Valley to drive the region’s economic progress. 

“Wells Fargo’s commitment to community enrichment is exactly the kind of partnership that helps Community Action to do the great work that we do,” Godshall said in a statement. 

Community Action’s areas of impact, including business start-up, aligns with Wells Fargo’s community impact and philanthropic focus areas. 

Wells Fargo Greater Pennsylvania Regional Branch Network Executive Laura Haffner noted Community Action’s work to advance economic opportunity in the Lehigh Valley.

“As the Bank of Doing, Wells Fargo takes action to put people and communities first and has long supported Community Action Lehigh Valley,” Haffner said. “And ‘doing’ goes far beyond the investments we make. It is the sum of the impact we have when we work together to tackle societal challenges. Community Action gets this – they make our community stronger, and we are proud to support them in their efforts.”

LVEDC and Discover Lehigh Valley team up on marketing

With tourism being an increasingly important component of economic development in the Lehigh Valley, bringing in around $1.3 billion in revenue per year, the two organizations promoting economic development and tourism are working together to promote the region. 

The Lehigh Valley Economic Development Corporation and Discover Lehigh Valley have unveiled a new series of logos they will be jointly using to promote the region. 

A marketing and merchandising campaign is planned that will feature the specially designed fonts and logos. 

“The Lehigh Valley has arrived as one of the most desirable places in the U.S. to live, visit and locate a business,” said Don Cunningham, president and CEO of the LVEDC. “It’s important that we have a unified brand, logo and identity to promote the Lehigh Valley. We hope this collaboration between the region’s two major marketing organizations can lead to others using and adopting this logo and promoting the Lehigh Valley.” 

The primary new logo features a highly legible font and colors. Both the LVEDC and Discover Lehigh Valley will adopt the font and logos for their branding. 

There will also be a special button logo that promotes products that are made in the Lehigh Valley. 

Lehigh Valley seeks federal designation as CHIPS Tech Hub

It’s official. The Lehigh Valley is seeking to be designated as a Tech Hub by the federal government — a move that could boost the region’s semiconductor and related industries. 

A designation could qualify the region for $50 to $75 million in CHIPS Act funding to grow the industry so it can contribute to fostering a secured domestic supply of components for current and future communications technologies. 

Tech Hubs. Which are officially referred to as Regional Technology and Innovation Hubs – were created by the CHIPS and Science Act of 2022 to “supercharge ecosystems of innovation for technologies that are essential to economic and national security.” 

The act was introduced by Congresswoman Susan Wild, D-Lehigh, who said she was thinking of the Lehigh Valley’s inclusion as a Tech Hub when she proposed the idea. 

Lehigh Valley Economic Development Corp. submitted the application to the U.S. Economic Development Administration on behalf of a regional coalition that includes tech companies, colleges and universities, state and local governments, and partners in labor, economic development, community services, and workforce development. 

“The history of the Lehigh Valley is very rich but one aspect that few realize is the role this region has played in the birth and development of the technology and semiconductor industry,” said Don Cunningham, president and CEO of LVEDC. 

He noted that seven decades ago, the nation’s first mass production of transistors began at Western Electric in Allentown. 

“We were the first Silicon Valley and still have many of the country’s leading technology firms – and some great new ones – thriving here,” Cunningham said. “Companies in the Lehigh Valley touch nearly every element of semiconductor development. The Lehigh Valley is part of the nation’s semiconductor history and its present. With this federal government designation, the Lehigh Valley will help the U.S. to once again lead the world in all aspects of technology.” 

While most semiconductor companies are based in the U.S., most manufacturing occurs in Asia. That raises economic, national security, and supply chain concerns. The goal of the Tech Hub program is to spur domestic production to eliminate those problems. 

Companies participating in the consortium seeking the Tech Hub designation include AAYUNA, Broadcom, Cisco, Coherent, Infinera, iDEAL Semiconductor, Intel, Air Products, EMD Electronics, LBN, and Evonik. 

The consortium also includes labor and workforce organizations such as International Brotherhood of Electrical Workers Local 375 and Workforce Board Lehigh Valley and institutions of higher education such as Lehigh University, Lafayette College, Penn State Lehigh Valley, Lehigh Carbon Community College, and Northampton Community College 

 Also supporting the designation are economic development organizations such as LVEDC, Ben Franklin Technology Partners of Northeastern Pennsylvania, and the Manufacturers Resource Center. 

Many of those partners submitted letters to the Economic Development Administration in support of the Lehigh Valley’s application. Olympus, Intel, Evonik and Ideal Semiconductor were among the companies that wrote letters in support of the designation. 

“I’m very proud to be working with LVEDC and so many other community partners to advance this Tech Hub application, because I believe there’s no better place for a Tech Hub than the Greater Lehigh Valley,” said Wild. “From our strong local economy and manufacturing sector, to the collaboration among our academic, workforce development, and business and non-profit communities, we are uniquely situated to host a Tech Hub and further drive American innovation and job growth. I will continue advocating every step of the way to deliver this monumental investment for our region’s economic sector.” 

Musikfest attendance sets record with 1.33M visitors

With 457 performers from 26 states and eight countries Musikfest managed to set a record for attendance as it celebrated its 40th year. 

The music and arts festival, which spans Bethlehem, attracted 1.33 million people to the city. 

“The biggest news for Musikfest 2023 is of course record-setting attendance numbers,” said Kassie Hilgert, president and CEO of ArtsQuest.  

She said those 1.33 million people came from 46 states including the District of Columbia and Puerto Rico and ten countries including Brazil, Canada, Costa Rica, Cuba, Germany, Mexico, Spain, Senegal, Sweden and The United Kingdom.  

“We celebrated with residents and visitors from near and far for this annual event that just keeps getting better year after year. I’m honored to be a part of such an amazing organization that includes just over 1,0000 Musikfest volunteers, who without their help, Musikfest wouldn’t happen.”   

While Hilgert didn’t have totals yet on how much revenue the festival brought to the Lehigh Valley this year, the event was expected to generate more than $70 million in direct and indirect revenue for the region.