Cunningham Argues For Regional Approach to Economic Development

Don Cunningham's LVEDC to roll out economic development strategy

He's been a news reporter, City Council member, Mayor, County Executive and even a member of former Governor Ed Rendell's cabinet. These days, Don Cunningham is President and CEO of the Lehigh Valley Economic Development Corporation (LEDC). He dropped in on Northampton County Council's economic development committee on March 6 to update members on a recent report card delivered by Garner Economics, LLC, the same firm hired by major corporations to do site selection. It's a $135,000 report card, too, paid for through a HUD grant. Though the lengthy report can be read at LVEDC's website, Cunningham summed it up in one sentence. "Economic development is a game of competition," he explained, noting that the Lehigh Valley is at play against other areas in the state, 49 other states and the world.

Recruiting big business into the area will create headlines, but Cunningham cautioned that another very important aspect of economic development is keeping what you already have. He stated that 75-80% of job expansion comes from business that is already here.

"We undersell ourselves," Cunningham told Council. "We tend to be more critical of ourselves than the outside world is."

The Lehigh Valley is the 68th largest metropolitan region in the United States, generating $33 billion every year in GDP. It includes 15,000 companies. "That is a significant region," observed Cunningham. "We do not have to define ourselves merely by, 'Oh, we're close to Philadelphia, we're close to new York.' We are the Lehigh Valley."

According to Cunningham, the economic development strategy in any area has to play to its own strengths. Chief of these would be the area's infrastucture and access to markets. "We got good bones," Cunningham said of our road and rail systems.

Another "huge factor", said Cunningham is a low crime rate. "You never want to have any level of crime, but when you compare it per capita against other regions, we have a very low crime rate, even in our cities."

One of our negatives is the relative high cost of labor, compared to non-union parts of the country. "That's obviously not a negative if you're the person earning the money and trying to live a middle class lifestyle," Cunningham observed. In addition, the cost of electricity, taxes and air pollution are considered areas of weakness.

Target industries that would be good fits for this area include high performance manufacturing (e.g. Victaulic), high value business services (e.g. D&B), life sciences research (e.g. B. Braun), and food and beverage processing (e.g. Samuel Adams).

To achieve these goals, Garner has made a number of recommendations, and Cunningham told Council that LVEDC would roll out its own action plan in May. But he added that the area's economic development growth is already winning, referring to a recent "Site Selection"  story listing the Lehigh Valley as the second fastest business market in areas of under 1 million people. Finishing second to Omaha, the Lehigh Valley had forty-six $1-million projects involving 50 or more employees. Omaha had forty-eight.

Garner had recommendations of its own, including a 1% sales tax and municipal consolidations of 63 municipal governments fragmenting the Lehigh Valley. Cunningham cautioned these are not recommendations of LVEDC. Council member Bob Werner complained, not only about the 1% sales tax, but said it would go back to LVEDC.

But Cunningham told Werner, "The study does not recommend anywhere that the money go to LVEDC. Wherever that came from is a fallacy. It doesn't say that." In addition, Cunningham said it is unlikely that a sales tax would happen and that decision would be made on a state level.

In response to Council President Peg Ferraro, Cunningham stated there is no large vacancy rate in office buildings, despite the building going on inside Allentown's Neighborhood Improvement Zone. But he stated the New Jersey migration into "bargain basement farmland" is over.

Werner continued his criticism of Cunningham and LVEDC. He complained that a similar report was done in 2010, to which Cunningham responded that these studies only have a shelf life of about three years. "That's how fast markets are changing, that's how fast you need to react," answered the CEO.

Werner then asked, "The bottom line is, what does this do for Northampton County?" He complained about the move of Bimbo Bakery from Northampton to Lehigh County.

"While you are living in the world of  'Are we getting as much as Lehigh County?', I will tell you that the outside world doesn't play that game," answered Cunningham. "You're competing with the world."

Cunningham went on to say there are 11 large, real prospects in Northampton County. "Let's celebrate that this region is on the United States map, and not get back to this parochial whining about where did this go, where did that go?" he argued. "The way we're going to win, is to win as a region. Northampton County, if it does its job, will get its fair share."

Cunningham also pointed out that while Northampton County lost 200 jobs to Lehigh with Bimbo Bakery, it picked up over 200 manufacturing jobs with the location of "Fresh Pets" to Hanover Township in Northampton County.

Cunningham told Werner he is trying to get votes while Cunningham is developing a regional strategy to get jobs.