Allentown Economic Development Corporation

Rail-Served Sites Play Key Role for Lehigh Valley Manufacturers

Bring up the topic of rail service in the Lehigh Valley and you’re bound to find yourself quickly enveloped in a discussion about bringing passenger rail to the region. But while transporting people to and from the region is certainly worth discussing, it’s the impact that freight rail service has on the region’s economy, and more specifically in the manufacturing sector, that is also worth talking about.

“Freight is still alive and well, and it is becoming critical to the future of commerce in all of the region’s cities in order for manufacturing to thrive and expand,” said Scott Unger, Executive Director of Allentown Economic Development Corporation.

Class 1 railroads still come through the region thanks to Norfolk Southern, and R.J. Corman Railroad Group operates a short line railroad regionally. Earlier this year Reading & Northern Railroad (which does not service the Lehigh Valley) issued an announcement that recapped its success in 2016 in which is “grew merchandise traffic by 16 percent with almost 20,000 carloads.” The railway is also investing in new locomotives, acquiring other regional lines, and making upgrades to its rails and equipment.

“If railroads like R&N are experiencing record growth, it illustrates that that there is a demand for freight rail in our region,” said Unger.

So why should we support rail to grow the manufacturing industry in Allentown as well as the Lehigh Valley region as a whole? Here are a few important reasons.

1. Manufacturing is the biggest influence of the Lehigh Valley’s GDP.

In September 2016, the U.S. Department of Commerce’s Bureau of Economic Analysis released its annual report on the U.S. gross domestic product. The report, based on 2015 data, showed manufacturing as the leading industry sector in the Lehigh Valley at $5.56 billion, or 15 percent of the region’s overall GDP.

“Manufacturing provides better-paying jobs and thereby better quality of life for its workers,” said Unger. “In order to attract larger manufacturers to expand in the region, we will need more rail-served sites. By not having enough rail-served industrial sites in Allentown, manufacturers of a certain size won’t consider relocating or expanding here because we can’t provide what they want and need.”

“The manufacturing and industrial markets continue to grow in the Lehigh Valley,” said Don Cunningham, President & CEO of Lehigh Valley Economic Development Corporation. “And access to rail-served sites is critical to their future growth. While we want to attract all levels of manufacturing to the Lehigh Valley, certain types and sizes of manufacturers, such as those producing larger products like in heavy industrial, will need it most.”

“Having more rail-served sites would definitely be an asset in the Lehigh Valley, and at present, they are few and far between,” said Jim Petrucci, President of J.G. Petrucci. “My firm works with some manufacturers who have a specific prerequisite or qualification for a rail-ready site. They don’t just want it, they need it, and there aren’t enough of those sites in the region at present. ”

“It can definitely be a deal breaker,” said Cunningham of the rail service requirement some companies have for new locations.

2. Rail-served sites bring inbound wealth to the area.

For decades railways have moved freight in and out of Allentown allowing manufacturers to bring in raw materials by train and ship them back out to companies as finished products, or components of other products to be created by other manufacturers.

“The payment for those products comes into companies in the city and that’s inbound wealth for the people living and working here,” explained Unger.

3. It’s a more efficient method of transportation.

It is more cost effective for manufacturers to bring raw materials to their facility by rail instead of trucking it in. It’s also more cost effective to ship out the finished product in bulk via freight train than by truck since trains are more efficient at moving large loads.

“Boxcars can move a larger amount of product at a greater dimension and weight than a semi can across the road, and in about the same amount of transport time,” explained Unger. “A single-track railroad has a similar capacity to move freight as a multi-lane highway.”

“Having more rail-served sites in the Lehigh Valley would allow us to remove some trucks from our roadways which would help with the overall traffic congestion that we see each day,” said Cindy Feinberg, Co-Founder of Feinberg Real Estate Advisors, LLC. “At present, there is a limited availability of sites that are rail-ready or rail-possible, and it’s a major investment for a developer to bring rail to a site that doesn’t already have it.

4. We need to focus on rail service if we value manufacturing as an industry.

“Manufacturing as an industry is important to the overall economic development of our region,” said Feinberg.

“I personally believe that rail is going to become more, not less, important in the future as ports continue to expand, especially up and down the East Coast,” Petrucci said. “More opportunity will be created for sites with rail access.”

Cunningham agreed. “I’d like to see the restoration and expansion of freight rail in the region. But we need to eat the apple one bite at a time. The best way to do that is to focus on getting rail service to one site at a time where there is the most potential. Allentown Metal Works in South Allentown is a prime example. Restarting freight rail access to that site is possible once the right buyer is secured. The more success stories we have, the easier it will become over time to sell the idea of rail service for other manufacturers.”

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