Manufacturing output launches Lehigh Valley into national Top 50 market
By Pamela Sroka-Holzmann | For lehighvalleylive.com
The Lehigh Valley’s manufacturing output and its growth amid the coronavirus pandemic has launched the region into one of the Top 50 manufacturing markets nationally.
Federal data shows Gross Domestic Product (GDP) nationally and in the Lehigh Valley, declined overall in 2020 due to a second quarter economic collapse at the start of the pandemic. But the region’s manufacturing sector increased, ranking 49th out of 384 of the largest metropolitan areas in the United States.
Economic output by the Lehigh Valley’s manufacturers reached $7.9 billion in 2020 as area companies produced food, drinks, medical supplies and other essential items during the pandemic. The Lehigh Valley metro region’s GDP in 2020 was $42.9 billion -- down from an adjusted figure of $44.2 billion in 2019, according to an analysis of the data released this week by the Lehigh Valley Economic Development Corp.
This was attributed largely to business restrictions and the March 2020 shutdown set forth by Gov. Tom Wolf to help thwart the spread of COVID-19, according to data released this month by the U.S. Bureau of Economic Analysis, the economic reporting arm of Department of Commerce.
Don Cunningham, president and CEO of the Lehigh Valley Economic Development Corp., said the Lehigh Valley economic output has been on a steady rise over the past five years.
“While that is slightly down due to the pandemic, the region’s manufacturing sector delivered, becoming even more important during a time when the U.S. needed goods produced here,” he said.
In the past, the region’s manufacturing growth centered more on the steel and auto industries. Today, the Lehigh Valley’s manufacturing sector is more diverse with 676 manufacturing establishments in Lehigh and Northampton counties in 2019, according to the U.S. Census Bureau. There were 34,250 people employed in manufacturing in the second quarter of this year.
Some of the largest players include the Forks Township pipe manufacturer Victaulic; Lower Macungie Township truck maker Mack Trucks; Hanover Township, Lehigh County medical device manufacturer B. Braun; the Forks Township crayon maker, Crayola; and Bethlehem-based candy manufacturer, Just Born Quality Confections.’
In July, U.S. President Joe Biden toured the Mack Truck plant, discussing a plan to expand domestic manufacturing. Biden said during the visit his administration would reach out to small companies that may not even know that the federal government is interested in products they make, or would make if they could get a contract to do so. That also would help the recovery from the economic downturn, he had said.
The Lehigh Valley Economic Development Corp. attributes the region’s strategic location, capable labor force, and cost-effective reputation as reasons large manufacturing companies are attracted to the Lehigh Valley. The group attributes its growth to the large amount of manufacturers deemed “essential” businesses amid the pandemic. The majority were able to continue operations when many other businesses were curtailed or shut down, said LVEDC spokesman Colin McEvoy.
“We had reported from even back in the early months of the pandemic that data showed the Lehigh Valley had one of the highest percentages of workers in ‘essential’ businesses among all metro areas,” McEvoy told lehighvalleylive.com Wednesday.
Manufacturing of non-durable goods, which includes disposable items, was one of the areas the Lehigh Valley’s economy grew in GDP in 2020. The majority of those goods are produced by companies in the “food and beverage” and “life sciences” sectors -- two sectors the Lehigh Valley Economic Development Corp. said it targets for attraction and expansion.
The Lehigh Valley’s GDP is larger than the GDP of three states: Alaska, Vermont and Wyoming. If the Lehigh Valley were a country, its economy would rank 88th worldwide, according to an analysis of 2020 GDP data compiled by the World Bank.
“The 2020 GDP data shows the resilience of the Lehigh Valley’s economy,” Cunningham added. “We began 2020 after posting a record high GDP for the Lehigh Valley and are weathering the worst economic crisis in a generation because of the balanced economy that has been growing here over the last decade.”
The 2020 GDP decrease, however, is not unique just to the Lehigh Valley.
Of the 384 metro regions, 282 experienced decreases, as did Pennsylvania and the United States. The results for the metro region include Northampton, Lehigh, and Warren counties, as well as neighboring Carbon County. The Lehigh Valley remains the nation’s 65th largest economy of the nation’s 384 metro regions.
While manufacturing is now the region’s second largest sector, it doesn’t dominate the area’s economy. Here’s a look at the Lehigh Valley’s top four business sectors (remaining the same despite the economic disruptions):
Finance, Insurance, and Real Estate: $8.1 billion
Manufacturing: $7.9 billion
Education and Health Care: $6.2 billion
Professional and Business Services: $5.3 billion
Finance, Education and Health Care, and Professional and Business Services each experienced a decrease in economic output compared to 2019. The largest decrease of any sector was in Arts, Entertainment, Recreation, Accommodation, and Food Services, down from $1.5 billion in 2019 to $1.1 billion in 2020. That sector, however, also was ravaged by restrictions amid the pandemic.
Please note the U.S. Department of Commerce’s Bureau of Economic Analysis (BEA) adjusts its GDP figures annually to account for new information and projections. As a result, figures reported in 2019 or other previous years may have been changed or adjusted over time. The private sector output for 2019 was adjusted upward from $43.3 billion to $44.2 billion. Manufacturing output was reported at $7.1 billion in 2019, but adjusted to $7.9 billion.
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Pamela Sroka-Holzmann may be reached at pholzmann@lehighvalleylive.com.
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