In a sea of international tumult over tariffs, trade, and tension about producing more in America, the Lehigh Valley remains an anchor of manufacturing stability, quietly growing jobs, output, and the variety of products produced.
In just the last year, this two-county market in eastern Pennsylvania – tucked between New York City and Philadelphia – has surpassed $9 billion in manufacturing GDP, cracked more than 37,000 skilled manufacturing jobs, and added more than a dozen new manufacturers in a half-dozen different industries.
As manufacturing recipes are rewritten every four years in Washington, D.C., our mid-sized market – one of the country’s fastest-growing – has kept its head down over the last 20 years and rebuilt an economy based on making and moving goods.
Manufacturing is the largest part of the Lehigh Valley’s economy. It’s 16% of the region’s $55.7 billion GDP, which is more economic output than three U.S. states. In comparison, manufacturing is 12% of the U.S. economy.
Success has come from a regional strategy focused on developing employment talent with the right skills, a diversified manufacturing base, quality infrastructure, and a quality of life and place that attracts a growing population. It builds off the region’s natural assets of location, technical and higher education, quality health care, and a non-partisan cooperation centered on the greater good of the region.
Over the past year, the Lehigh Valley has welcomed new or expanded manufacturing facilities for pharmaceutical supplies, food, candy, beverages, backup power technology, HVAC filters, semiconductors, optical electronics, flow meters, metal fabrication, and medical supplies.
In a reversal of trends that began during the COVID-19 pandemic, manufacturing jobs, at 37,197, now surpass the number of jobs in transportation and warehousing, at 36,535. The region’s average annual manufacturing wage is now $83,583. The average annual wage in transportation and warehousing is $59,344.
Combined, the industrial economy of making and moving products is the region’s largest employer at 73,732 workers, with the majority working at about 700 manufacturers. Health care and social assistance is the second-largest employer, with 69,582 jobs, accounting for 20.6% of the region’s total employment of 341,325.
The latest vacancies for industrial buildings also reflect a shift. Buildings under 200,000 square feet, which are most often used for manufacturing, are in high demand, with a vacancy rate of only 3%. Larger industrial properties used primarily for e-commerce or logistics are now 9% vacant, a still-low rate but higher than during the pandemic.
While the trend lines on manufacturing and distribution have inverted during the last year, they are opposite sides of the same industrial economic coin and will forever be linked. Proximity to large consumer markets, rail lines, and ports – and the ability to store and distribute goods with quality infrastructure – is foundational to growing a large and diverse manufacturing economy.
The ability to bring in raw materials and component parts is as vital as the need to move products out to consumers. Lehigh Valley manufacturers often rely on global supply chains, just as they source component parts or export end products to other countries. Tariffs, or taxes, on both incoming and outgoing materials are a disruptor that has driven the region’s manufacturing executives into boardrooms to crunch numbers on current cost equations in comparison to their competition.
While the impact of tariffs varies depending on a company’s products, supply chains, and the relative position of their competition, the uncertainty and ever-evolving deadlines of the current process create instability that delays decision-making. It remains to be seen if new federal policy and increased tariffs will help or hurt the growth of manufacturing in the region.
On a more local front, to rebuild and grow American manufacturing, it must be cost-competitive with producers worldwide. Being able to make, move, and store products near large markets, like the one-third of American consumers located within an eight-hour drive of the Lehigh Valley, makes the region cost-effective.
Industrial buildings and distribution centers, typically referred to as warehouses, are a critical ingredient of a manufacturing economy. It’s the region’s availability of cold storage for pharmaceuticals and food and beverage products, as well as dry storage for items such as guitars, crayons, and medical devices, that attracts and retains manufacturers. A cost-effective market for moving goods becomes an attractive one for making them.
The irony is that making things in America is generally loved, while moving them about and storing them in warehouses is generally hated. The not-in-my-backyard movement has slowed the development of all industrial buildings as local elected officials have reacted to resident opposition. The construction of new industrial space has been at its lowest point in the Lehigh Valley over the past decade, at approximately 1 million square feet. During the pandemic period from 2019 to 2023, new construction ranged from 5 to 7 million square feet every year.
With vacancy rates creeping up for logistics and distribution, there is no pressing need for new, large industrial buildings. To keep making things here, however, there will need to be new and expanded industrial flex buildings of 350,000 square feet or less. Zoning laws and decisions need to recognize the difference.
Lehigh Valley is unique in America. Without protectionism or a helping hand from Washington, D.C., the region has rebuilt a manufacturing economy. We found a formula for Made in the USA. Let’s hope that we can keep it.
