- [Voiceover] Live from your Public Media Studios, WVIA presents "Keystone Edition Business," a Public Affairs program that goes beyond the headlines to address issues in Northeastern and Central Pennsylvania.

This is "Keystone Edition Business."

And now, moderator Steve Stumbris.

- Hi, I'm Steve Stumbris.

The health of a region's economy directly affects everyone, from the biggest business, to the individual.

Factors like available jobs, the pay rates for those jobs, unemployment rates, and the cost of living, all have an impact on the economic health of the area, and that, to a degree, dictates how attractive the region is to new businesses.

Tonight I'm joined by three experts who will discuss the state of business in Northeast and Central Pennsylvania.

If you have questions, you can email us at keystone@WVIA.org, or tag us on social media with the #keystonebusiness.

But first, Sarah Scinto reviews some of those factors and where our region stands.

(relaxing music) - [Sarah] There is a direct relationship between the state of Pennsylvania's businesses and the financial health of the population.

A survey from the Institute for Public Policy and Economic Development found that families' economic standing had improved by the end of last year.

Data from the survey also shows that most businesses have recovered, or are starting to recover, from the pandemic.

Textile mills, construction firms, specialty contractors, retail stores, and hotels have all seen a recovery to pre-pandemic levels or better.

The manufacturing industry has been slower to rebound, while the insurance industry has actually declined.

The labor market is also on the upswing.

The statewide unemployment rate is at 4.3%, the lowest it's been since June of 2019.

Wages also increased in most counties last year, with a 3.6% increase in Lackawanna County, and a 6% increase in Luzerne County.

Workers statewide saw about a 5% increase overall.

Unfortunately, this pay increase isn't going as far, as the price for almost everything, except gasoline, went up in August, according to the US Bureau of Labor Statistics.

For "Keystone Edition Business," I'm Sarah Scinto.

(relaxing music) - Good evening, I'd like to introduce our experts, here to discuss the state of business in Northeastern and Central Pennsylvania.

First, Teri Ooms is the Executive Director of the Institute for Public Policy and Economic Development.

Eric Esoda also joins us, he's the President and CEO of the Northeastern Pennsylvania Industrial Resource Center.

Finally, Kim Wheeler is the Executive Director of SEDA-COG, an Economic Development Agency serving Central Pennsylvania.

Thanks for joining us, everyone.

So WVIA asked your thoughts on the state of business in Northeastern and Central Pennsylvania, and here's what Angie Grove Pence said: "I see that businesses are shutting down, but no real new growth and new businesses are coming in to take their place."

To address comments like that, and others that we have heard from residents throughout the region, I have a few questions to start things off.

So Teri, Eric, Kim, thanks for being here with us.

- [Female Speaker] Thank you.

- We'd like to talk about the overall state of business in the region.

Now, Teri, I know that the institute has done research on this, and has an economic tracker addressing this, highlighting items of importance and data that are relevant to us.

Can you share your perspective from the institute on the state of business?

How healthy our business is in Central and Northeast Pennsylvania.

And any comments on, well, what has really stuck with them, really hit them in a lasting way from the pandemic?

- Sure, businesses in Northeastern and Central Pennsylvania have seen improvement since the start of COVID.

We were riding a great high until COVID hit, and then in March of 2020, when the pandemic hit, everything stopped or went into slow motion.

It was a matter of adjustment.

Even the businesses that had to remain open were still struggling with, "How do we go about this?"

When we started with supply-chain issues, and then of course the labor issues that ensued, and we saw businesses in all sectors really struggle.

But as time went on through the pandemic, we reached out at midterm towards, I'm not even sure we're at the end of the pandemic, but maybe towards the end, we saw businesses responding that everything was moving in a very positive direction.

Right now, if you look at our gross domestic product for Northeastern Pennsylvania, it's not only recouped what we lost during the pandemic, but the growth has been beyond percentages of growth in prior years.

So overall, we're doing really well with that.

Employment has dropped, but more, unemployment has dropped, but more important than that is unemployment rate is a part of an equation.

And part of that equation is labor force participation.

And that is an important number, because if employees are not going back into the workforce, unemployment is dropping for the wrong reasons.

And what we're seeing now when we break apart that equation is that the labor force is increasing.

So more people are going back into the labor force to go to work, because that is really what employers are facing now, are workforce issues.

We have a lot of individuals that can't go back to work because of barriers of childcare and transportation, taking care of elderly relatives, or they themselves are immunocompromised and have that fear about going back to work.

But then on the positive side, there's a lot of small business growth, a lot of entrepreneurial growth that's taking place.

And it's out there and it's really happening, and the numbers are there.

And we've actually seen a lot of midsize and larger companies move into the area in the past year-and-a-half as well.

- [Steve] Well, thanks Teri.

So let's talk about those midsize and larger companies.

Many of whom, Eric, I know are manufacturers, and I know that in your role, interacting with manufacturers throughout Northeast Pennsylvania, can you address that same topic?

What's the health of that sector, what have they seen?

What key impacts have they faced, and how are they working to recover?

- Sure, and Steve, thanks for having having us here today.

This is a great kickoff to the season.

As you know, the Northeast PA Industrial Resource Center is one of seven industrial resource centers that covers the state of Pennsylvania.

We cover 11 counties of Northeastern Pennsylvania and Central Pennsylvania, providing technical services to thousands of manufacturers that reside within those 11 counties.

And the viewing audience for today's show also encompasses IMC's service area, as well as MRC's service area, our sister centers to the South and to the Southeast.

And we are really optimistic about what we're seeing in the manufacturing space right now, not just in our own regions, but across the state of Pennsylvania.

When you take a look at even the most recently released governor's action team report about companies that are choosing to domicile, or grow in Pennsylvania, it's predominantly manufacturing.

In Central Pennsylvania, 100% of job growth is attributed to manufacturing in the Lehigh Valley area, 74% in the Northeastern Pennsylvania, over 50% of job growth.

Again, attributing to, attributed to manufacturing by the governor's action team.

We're really seeing strong sustainable growth as well, which is why we're optimistic.

And what I mean by that is while our manufacturers have returned to about 98% of their pre-pandemic levels of employment, we believe there's another 5% to be had if they could fill the jobs that are currently available.

So we're looking at, as Ms. Ooms also pointed out, plus 100% real sustainable employment.

But the reason behind that growth is what's really impressive.

The pandemic did definitely impact our manufacturers, from a workforce availability, as well as the supply-chain perspective, right?

But it also changed the way, fundamental ways, in which consumers and other businesses buy product.

What we've seen from a consumer standpoint is it changed the way that we think about food, about food packaging, about product customization, and what we want delivered right to our doors right away.

The derivative change in that was now we're talking about manufacturers in our area that are changing the way they create food packaging.

They create food cancerization as well as bottling and canning, and they're also changing the way in which their products are packaged.

And that's leading to growth in the paper industry.

So we're seeing a lot of different growths just by the way consumers changed during the pandemic.

Businesses also changed, a return to nationalism, where we want our products sourced locally.

We do not want our products sourced globally, and that went hand-in-hand with consumer demands for American-made products as well.

So we're seeing a lot of great sustainable growth taking place, and we're seeing wins, like Ball Corporation, Canpack, and Nexi, Unity Labs.

We're seeing a lot of wins in our region as well because of that.

- Well, thanks, I know we've had a chance to talk about the impacts on manufacturers, and particular examples, particular regions, that packaging in that food service or food-supply chain.

What areas of Northeast Pennsylvania is that most commonly found, and have you observed?

- A big factor in site selection, particularly for food manufacturing and food packaging manufacturing, is to be along a major thoroughfare corridor, right?

Because it's all about time to market, speed to market.

Every day that that product spends on the road is one less day that it's available to be on the shelf.

And when you're dealing with products that have a stale life on them, or shelf-life on them, we need to get those products to market right away.

So we're seeing growth along the 81 Corridor, as well as the 80 Corridor.

In more rural communities, we're not necessarily seeing the growth in the food or food packaging, because they don't have the infrastructure there to yet support that, but we're seeing growth in, really, stamped and perforated metals, and your traditional foundry work in those areas as well.

- All right, thank you very much.

Now, the impacts on businesses beyond manufacturing and beyond Northeast Pennsylvania.

Kim joins us from SEDA-COG, and I know that working very closely with you and your team in Central Pennsylvania, you have had your finger on the pulse of how businesses have been impacted.

We know that we collaborated on getting a vital survey so you could hear what the needs of businesses were early in the pandemic.

And then more recently, what did you, and what did your team learn from what you heard from respondents, to that business survey?

How were businesses impacted?

- Sure, thank you, Steven, thank you for having me here today.

It's a pleasure to join this conversation.

As you know, just a little recap for the audience, SEDA Council of Governments covers 11 counties, not the same exact 11 counties as (indistinct), but in Central Pennsylvania, just north of Harrisburg.

And we are one of seven local development districts around the state that do what we do.

We have a variety of different ways that we engage with businesses.

So we not only provide small-to-medium size loan financing for businesses for expansion, and development, and startup, et cetera, but we are working with businesses that want to export their goods overseas.

We work with businesses that wanna do business with the government, and provide an array of funding match-up, you know?

Matching technical and funding assistance to businesses of all sizes.

So we have a lot of different ways that we engage with businesses in the region.

And so just through those examples, we've been able to learn a lot of what we've already been talking about here today.

But we also were able to do a survey, as you mentioned, both in 2021 and in 2022.

Some of which brought to light this, not only the workforce issue, but the real, you know, the things that were... 57% of our respondents, if I remember correctly, were having supply-chain issues.

Over 67% were having issues with workforce and being able to retain.

And that same consideration for, "Are we paying our, you know, our workers enough?"

And we've seen a lot of shifting of, you know, of workforce around the business, you know, community.

And although there's been a lot of obstacles and hurdles, I think we all can agree that there's a lot of hope on the horizon, because we have been seeing them pivot and adapt throughout the entirety of this pandemic period.

The businesses that we interact with have been seeing, have been able to shift the way of doing business, in that they're not only adapting the product, but the services that they provide.

They're providing more online services, they're doing businesses more remote, so it makes them more attractive, I think for this region.

We were seeing a lot of, you know, movements not only in, but out of the region as well.

And to be able to have a place where people can live and keep their roots, but able to work remotely, has been a real advantageous thing for our region.

People really love to live in the Central Susquehanna Valley and this region.

So the remote work, the selling services online, I think just... Joint purchasing has been another piece of things, that they have really widened their network of who they do business with.

- [Steve] What do you mean by "joint purchasing?"

- So we've been finding that businesses are going, they're finding peer companies that they can actually do purchasing in a larger, you know, sort of power group.

So that they can actually get the product into our region easier than just a, and at a better cost, than just singly.

And so they've been... What's been interesting is finding the networking that they have been developing through the last two years, to find like-minded, and across the state, but also within our region, so that they're actually putting their, you know, sort of their purchasing power to action in a more powerful way.

So that we can get the materials and the goods in this region.

So that's been really interesting to find out.

And I think that it's, generally, we're finding that companies are finding their way through the wage issue.

And where they may have less workers right now, but they're able to capture them and retain them by being able to, you know, increase their wages and keep the people that they have.

So that's been a positive.

- So Kim, what you remarked on the, how some businesses, as some regions are coming together, that collaborative efforts- - Yep.

- across an industry, for example, or perhaps across a region.

I think that's an interesting, and perhaps counterintuitive offshoot, of the pandemic.

- [Kim] It is.

- Which was a time of isolation for so many of us individually.

But what you observed is some businesses came together, and that's actually the next topic I'd like to steer towards is those regional efforts.

Or perhaps those cross-industry efforts, where businesses are finding ways to work together, or are accessing resources in a shared way.

What I'd like to ask is, are there particular regions, particular industries, in which you see great examples of initiatives where businesses are thriving?

So business of a particular region, or an area that has enacted a new program to serve the businesses of that region.

I guess, Teri, are there any that come to mind for you that you call as an example of what's working?

- Yes, as a matter of fact, there is a business in Industrial Park in Scranton owned by the Greater Scranton Chamber of Commerce that has worked to get bus transportation into their Industrial Park.

So it didn't exist before, and they had a number of companies that were complaining that employees couldn't get to work.

Or they would be able to get near the Industrial Park, and then have to walk the last two or three miles to get through the park.

And we're seeing where the Chamber worked with the transportation authority in the Scranton Area Community Foundation to get bus service into that park, which was a huge thing.

Here in the Pittston area with Miracles, various parks here, there's everything from now bus stands that didn't exist before, near my daycare, a gym, things that would attract workers and serve as a convenience factor for them.

i2M Manufacturing in Mountaintop, I think is probably by far the most innovative in their approach.

When kids were home from school, and parents couldn't come to work, they actually hired a certified retired teacher, and brought that teacher into their facility to work with kids in grades, I wanna say, 1 through 5 or 6, help them do their work remotely.

Work on their homework, took them outside and did some activity time so that the parents could come to work.

And during the time that they piloted this, they had no absenteeism.

So there's a lot of innovative, thought provoking things, that businesses are coming up with to address their own challenges, which is a very positive factor in that it could help things going forward.

And that's what we like to see is that innovation, the collaboration that Kim spoke of, is a key factor.

- Now, Kim, actually jumping back to you, those examples of where businesses have come together, or regions where there have been revitalization, or efforts to adapt to the pandemic.

And then see a brighter future for a region or industry beyond.

Any examples come to mind for you?

- I think one of the biggest things that we're seeing is something we've been talking about for a really long time, which is asset-based development.

And what I mean by that is businesses are starting to really become more context sensitive, in terms of how they not only deliver their services, but the types of businesses that are starting.

So for instance, we have, as I mentioned earlier today, such a wealth of outdoor recreation and natural lands, that people want to be here.

And it's not just about coming on the weekend and, you know, going for a bike ride, or a hike, or fishing.

People are developing their businesses around the assets of the region.

So we've been talking about this for as long as I've been in this, you know, in this career.

But it is truly starting to really shape in a lot of places around Pennsylvania.

But we're seeing it related to the outdoor area recreation park down in the Shamokin area, lower Northumberland County, where it is drawing thousands upon thousands of people on the weekends, to bring riders, ATV riders, horseback riders, and others, to utilize the outdoors.

You know, to basically enjoy the outdoors and the towns around it, particularly the city of Shamokin, Pennsylvania, has really captured a moment in time.

To be able to say, "We can thrive from this again."

Like we, you know, "We once were a coal community, but we are now turning, and changing, and pivoting how we, and who we, respond to."

And so we actually saw 14 new businesses during the first year of the pandemic, when everyone else was closing their doors or shortening their hours.

We saw brand new businesses, a lot of small businesses on the Main Street, but supporting in, by and large, the outdoor recreation industry.

And we're starting to see that pop more and more, and particularly the small towns are having that asset of being able to capture, that's where people wanna spend their money.

They wanna bring their money home and local, and have a meaningful impact in the local economy.

So I think you can't say enough about the culture and the business development here in this region, that's really trying to make a valiant effort to make a connection, that nexus between where we are, who we are, and how we wanna grow our future.

We're starting to see that a lot.

And to Teri's point about transportation, we started to see a context sensitive development, and we never had rural transportation or transit.

And we're now starting to see this sort of on-demand, but yet this stop-hopper type of transit service in small communities throughout the lower-Central Susquehanna Valley.

Because of that issue of people not being able to afford, and not have, you know, to be able to get from place to place, whether it's doctor's offices, or work, and childcare.

And we've been, just a lot of those types of examples are starting to come to be, over the last, I would say, 12 to 14 months.

- Yeah, well I'm inspired by those, and- - [Kim] It is inspiring.

- You know, of course, hearing of that growth of small business, that is a topic.

And small business owners are near and dear to my heart and my work.

- [Kim] Yes, it is.

- So I'm definitely gonna come back to that.

But one thing I wanted to ask Erica little bit more about, knowing that manufacturers are extremely sensitive to disruptions in supply chain, the raw materials that they work with.

And transportation, of course, you remarked on I-80 and Interstate 81 as those conduits for their supplies coming in, their products going out.

Can you talk a little bit more about how, well, examples from manufacturers and manufacturing industry that have adapted?

Perhaps with technology or other innovations, in how they do business for the better since the pandemic.

- Sure, I think that from a supply-chain perspective, our manufacturers have really a renewed interest, as I mentioned a little bit earlier, in creating those localized and in-state supply chains.

More organically and authentically than they perhaps had in the past.

We recently completed a survey of more than 500 manufacturers.

And the resounding response to the question about, "Would you consider an in-state supply chain," was definitely so.

Price is obviously still a concern, right?

There are some price sensitivities to what you can afford to pay for your supply-chain inputs.

But all else being equal, and even if 10% more than their currently supplied product, which is outsourced, our manufacturers would tend towards buying in-state, and creating those regional or localized supply chains.

That's one way in which they're adapting, or they have adapted.

And when you take a look at what we saw at our Manufacturing Expo in May of 2022, just about six months ago, we saw 61 companies come together to explore ways in which they can deal with each other, and leverage each other, which was really a great undertaking.

In terms of how they're becoming smarter at what they're doing, if you will, in implementing those new technologies, that's something that we're really excited about.

When you take a look at the way in which our manufacturers are embracing some newer technologies, whether they be additive manufacturing, also known as 3D printing, or automation, or smart and connected factories with line of site to their supply chains.

It's really leading us to believe, once again, that the growth we're seeing in manufacturing is sustainable.

You don't make these kinds of investments when you're looking for that short-term return.

We know that our manufacturers are in it for the long-term, they're looking to automate those low-value add jobs so that they can upscale their employees that they have, to more higher value, and therefore higher paying jobs, right?

They're looking to take on the folks that can program and ultimately maintain those new technologies, which is again, driving up the wages that we're seeing in manufacturing, but they're definitely in it for the long haul.

And we're seeing that not only with the golden scissors and the brown shovels that we're seeing going into the ground with the new companies that are moving in, but the incumbent manufacturers as well are expanding at a rate that we're really impressed with.

- Well, we love to see a good groundbreaking and a celebratory ribbon cutting.

Love to see those throughout the region.

Some of the ribbon cuttings that we [Witness] are from the smallest businesses.

And I think in closing, as we move towards the end of our conversation tonight, which has been great, I wanna bring it home with small businesses, and how they have been forming since the pandemic.

In my experience, and looking at data from US Census on business formation statistics, we saw from 2019, immediately pre-pandemic, to '20, more than a quarter of increase in new business formation.

And then again, the next year from 2020 to 2021, another 24% higher rate of formation than ever.

So one quick final thought, what do small businesses need to do, perhaps, what resources do they need to access, to stay in business and to experience sustained growth?

So Teri, Eric, Kim, any of you who wanna chime in on what do those newest businesses in the state need to do?

- Well, one of the things that could challenge the growth of small business is the workforce issue.

Because we are going to continue to have a workforce shortage over the next two decades.

And manufacturing, even some of the big boxes, can afford to pay higher wages, which may stifle small business growth.

They'd be priced out of the market for labor.

So I think proper planning, business planning, and thinking about contingencies.

And what Eric had mentioned about looking at automation opportunities, and Kim brought up web selling, and web services, things that they can do to protect their business and plan for the long-term.

- Well, thank you very much, Teri.

And we're about to close out the episode.

Again, Teri, Eric, Kim, thank you so much for joining us.

So pleased you were able to share your experience.

Thank you for participating tonight and for joining us.

If you want more information on this topic, please visit WVIA.org/keystonebusiness.

And remember, you can re-watch this episode on demand any time online, or on the WVIA app.

For "Keystone Edition," I'm Steve Stumbris.

Thank you you for watching.

(relaxing music)