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"The strength of the Lehigh Valley is a diversified economy," says Jim Burns, of Pennsylvania Power & Light. "We were able to foresee that it might not be in our best interest to have all of our economy residing in one to three local businesses, but to have it in a lot of different businesses, so when there is a downturn in the economy, our economy can continue to go."
Granted, about 20,000 continue to go to nearby Philadelphia or New York, but there are just as many coming in from New Jersey and the north. And yes, the majestic hulk of Bethlehem Steel's coke ovens and buildings still broods over the Lehigh River like a colossus. But now the museum/commercial district being installed on that property is being designed by the same firm that designed Baltimore's Inner Harbor. And the heritage of that tradition and the people who built it lives on in the new and various ventures that dot the landscape in Allentown, Bethlehem and Easton.
"We're at about 600,000 people, which gets us up to No. 94 in ranked MSAs," says Bob Wendt of the Lehigh Valley Economic Development Corp. (LVEDC), explaining that the Lehigh Valley is the third-largest metro area in the Commonwealth behind Philadelphia and Pittsburgh, just beating out Harrisburg by about 50 people.
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"We have a median household income equal to that of Houston, Texas, but our retail sales are not that great, so one could conclude that we make a lot of money, and we keep it," he says.
Strengthened by such economic development drivers as engineering powerhouse Lehigh University, 44 business parks, a community college system that partners with industry, a strong optoelectronics cluster, and a median house price of $120,000 within 75 minutes of both New York City and Philadelphia, the economy of the Lehigh Valley has begun to build an equally diverse roster of successes.
Mack Truck actually left the area a few years ago to locate in South Carolina. But they came back. And in areas replete with an inviting mix of architectural and human character, new ventures from the likes of B. Braun, T-Networks, Cenix and OptronX are popping up alongside old standbys like Binney-Smith (makers of Crayola crayons), Martin Guitars, Lutron (maker of dimmers and lighting control devices), Kraft Foods and Just Born Foods, makers of Mike and Ike and Peeps confections.
Not far from where the original coke mines were established, leaders in the optoelectronics field (which serves end users like Cisco, Hitachi and Nortel) are mining the rich veins of talent originally associated with such outfits as Agere Systems, its parent Lucent Technologies and JDS Uniphase, where significant layoffs have occurred over the past couple years. In January, Agere announced it would combine most of its Pennsylvania and New Jersey operations into its Allentown, Pa., headquarters and would sell its Orlando, Fla., operation. Meanwhile, in the past two years, more than $262 million has been invested in opto startups in the area.
"With all of the angst that has gone on at Lucent and Agere, the Lehigh Valley has actually been a net beneficiary," says Wendt. "They've consolidated, and the Allentown production facilities are being totally revamped to accommodate new lines of production."
New facility developers are just as flexible.
"This facility is a build-to-suit, long-term lease, and we found that the landlords and Phil Schenkel with Brandywine are very interested in the industry we're in and very accommodating to our unique specifications on the building," attests Ed Coringrato, founder of Cenix, which also operates a facility in Irvine, Calif.
"People say, 'We don't want heavy industry.' Where is heavy industry anymore? There is no smokestack or belching furnaces. Technology has really refined heavy industry to what people think of as light industry."
Lehigh Valley Economic
Development Corp.
Besides the high degree of specialized skill sets present in the area, the high-precision processes required in these new companies also benefit from such mundane facts as seismically stable and affordable land. Many of these small companies are in a slowdown mode themselves right now, but using the opportunity to optimize their products for fast and flexible deployment when things pick up again.
"There are two reasons to take manufacturing international: low-cost labor or tax advantages, and localization." says Coringrato. "In our industry right now, a lot of our competitors have actually gone into China or Bangkok or Ireland or Singapore for those one-time savings. We have not needed to do that, because we're able to achieve similar, if not better, cost structures here in the United States using automation. We're able to procure our material at a lower level, and we're able to have higher throughput. We've essentially taken the labor out of the equation because of the automation. So there are viable alternatives to going into various regions of the world."
That does not mean you can't bring the world to you. Both Coringrato and Aaron Fisher, president of fellow opto firm T-Networks, have recruited professional talent from the likes of China, Korea, Brazil, Great Britain and the U.S. West Coast.
"And it's not just the attraction of the company itself," says Fisher. "The attractiveness of the area has had a lot to do with it."
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Fisher's 65 employees are working on redesigns that appeal to customers wanting to reduce costs, and he sees the industry's comeback as still a year away. But that has not kept him from going ahead with office space expansion in the 50,000-sq.-ft. (4,600-sq.-m.) former warehouse facility they occupy on a five-year lease. The high talent level remains readily available for further cluster development, he says, calling it second only to Silicon Valley in terms of integrated circuit and opto-electronics knowledge.
"The advantage here is it's more attractive to live in," says Fisher, who hopes that attractiveness seeps into the improved products that his team is preparing to launch.
As Fisher puts it, "We built the rocket. Now we've got to light it."
What LVEDC President Ray Suhocki and his colleagues have learned is that the pharmaceutical/biotech cluster is the next one they want -- so much so that LVEDC itself had to move out of its own offices on airport property so that Aventis Pharmaceuticals could put its corporate jets and helicopters in the hangar and offices that they occupied.
"We're just outside of the New York air traffic control," observes Wendt. "When weather is bad and traffic is heavy, you can always get out of our airport. Otherwise you're stacked up. So they helicopter their executives out here, and they get out."
Most of all, Lehigh Valley boosters are witnessing the kind of synergy that only a multiple-city confluence can create.
"You can have a greater relationship between cities aligned either as triangles or quadrants, as opposed to linear," observes Wendt, citing North Carolina's Research Triangle as the ultimate example. "I get calls from people who say, 'I'm looking for a new facility, and I need 100 acres [40 ha.] in Allentown.' Well, are you sure? People doing research are going to use that metro area definition, and it's going to be the largest city in your area."
"Fortunately, the three cities are starting to take on an established, fundamental identity," explains Suhocki. "When you have one million people in three cities, you have to make sure they don't become competing cities all trying to be the same thing. If they do, you just can't support it. You have to pick your identity and build that piece of it."