June 30 marked the end of the 2019-2020 fiscal year for Allentown Economic Development Corporation. It was an impressive year of growth, culminating in a pandemic that would unsettle even the most experienced economic development expert.

We asked AEDC Executive Director Scott Unger to reflect on the past 12 months and to explain the organization’s response to the crisis, as well as his projections for what is still to come.

What are some of AEDC’s highlights from the 2019-2020 fiscal year?

Bridgeworks Enterprise Center

“For the first time in a long time, our business incubation program, Bridgeworks Enterprise Center, is fully subscribed. We welcomed Binah Winery in January 2020 which brought the building to full capacity. This, in addition to signing leases for some other smaller spaces, is the highest utilization of the program and the building that we have ever experienced, which is especially impressive when you consider that our business incubator is not significantly state, federally, or locally funded; it’s almost entirely self-supported.”

“In 2019, the 10 Bridgeworks incubator clients earned nearly $12 million in revenue, a substantial 69 percent increase over 2018. These companies now employ a collective 38 full-time employees and another 35 as either part-time or contracted employees. The full-time employee head count has grown by 36 percent year-over year. Total salaries, wages, and contractor fees paid to these employees totaled $2,092,920, an 11 percent increase over 2018.”

“This year we continued our decade-long focus on building improvements. We are beginning renovation work on the last suite in the building, which was last renovated in 1989. The space will be divided in half to create an additional unit, as well as making electrical improvements and updating HVAC systems to our current standards. We also completed exterior improvements to the building, including a beautification project at the main entrance and exposed the original brick façade on the side of the building facing Harrison Street.”

Urban Sites

“The 17-acre former Allentown Metal Works site received a $500,000 Redevelopment Assistance Capital Program grant, bringing the total state funds available for the project to $2.5 million. More recently, we applied for an additional $2.5 million in matching funds from the U.S. Economic Development Administration. If we’re successful in securing the grant, the funds will be used for renovation work to Building G of the site, which we’re anxious to begin. This first phase will allow for the eventual full build out of the facility, creating new manufacturing jobs and further re-industrialization of the South 10th Street industrial corridor.”

Meanwhile, across the street from AMW, for the first time in nearly a decade, industrial space in Plant No. 1 became available for rent. These spaces are ideal for small-to-mid-size manufacturers, the type of space that doesn’t often become available for companies of that size.”

“There was also strong interest in AEDC-owned real estate from developers this past year. We presently have two agreements of sale that we are negotiating despite the pandemic, while a third agreement is on track to close by the end of the year.”

AEDC

“We restructured our staff, adding Erin Hudson as our Marketing & Communications Specialist, a new position, and merged the Programs Manager position with the Economic Development Programs position so that David Dunn is now directing BEC as well as the loan programs.”

How did AEDC respond to the COVID-19 pandemic?

“Well, needless to say it has been a challenge to operate, but we are figuring it out as we go along. Bridgeworks remained open since it fell into the approved category of facility support services and many of our client companies continued manufacturing within their own spaces. We also increased our cleaning processes throughout the common areas of the building and reminded our tenants to follow social distancing and other guidance. We rearranged AEDC staff hours, so we weren’t physically overlapping in our small office space. We also worked offsite whenever possible, but made sure to always have office and facilities staff available to assist with deliveries, mail, calls, and building support.:

Urban Made

“Economic development organizations like ours saw a spike in activity due to the various state and federal grant programs that were rolled out in response to COVID-19. Our staff temporarily assisted Lehigh Valley Economic Development Corporation in processing applications for the state’s COVID-19 Working Capital Access Program. AEDC also received an increased number of emails and phone calls from Allentown-based businesses about the federal Paycheck Protection Program.”

“While our mission focuses primarily on economic development within the City of Allentown, we received calls for assistance from businesses located in some of the surrounding townships about these loan programs. We did the best we could to answer their questions and provide them with the resources they needed. Overall, there was a high demand for the services of our Urban Made program which also encompasses four economic loan programs that we administer.”

“When the City of Allentown started its Temporary Outdoor Seating Areas program, we gave HiJinx Brewing and Colony Meadery the flexibility to add outdoor seating for their customers in alignment with the city’s plan. This allowed them to get back to having guests at their businesses instead of only doing to-go orders.”

How do you think the manufacturing sector will come through the pandemic?

“It seems that manufacturing has been more resilient during COVID-19 than other sectors of the economy. But even within the manufacturing sector, some businesses saw significantly increased demand for their products while others were well below their normal activity. So, it has been a bit of a feast or famine scenario, depending on the specific industry. Highly leveraged businesses are more likely to struggle during times like these than those with little to no debt. Stockpiling cash is a common defensive posture for a business to take during uncertain times. But when it comes to start-ups and early-stage manufacturers, most of them don’t have surplus cash because they are just starting out and are financially fragile. They are often cash-flow negative for the first one to two years, depending on their manufacturing sector. That makes it hard to adjust, so they need to be as flexible as they can be.”

“Overall, I think that the pandemic could be an opportunity for American manufacturing, and for manufacturers right here in the Lehigh Valley. We saw how long it took to get certain basic supplies distributed to hospitals and first responders, as well as things like cleaning supplies and paper products. Some of these items, or at least subcomponents of them, are made in foreign countries and were greatly delayed in getting here. I expect that there will be pressure to bring manufacturing of these products back to the United States.”

“Manufacturing is still an important industry in the region. In the Lehigh Valley, manufacturing makes up 18 percent of our GDP, whereas nationally the manufacturing sector provides only 13 percent of the national GDP. That means that our region and our city have even greater potential to bring more manufacturing here in the years to come.”

What do you think is important for the community to know about AEDC?

“AEDC is an independent nonprofit that has supported the manufacturing sector for 40 years and self-generates approximately 96 percent of our revenue. We are committed to returning underutilized, vacant sites back to productive use, often for manufacturing purposes. We are continuing to pursue our mission by cultivating start-up businesses, providing lending assistance, and helping companies find a home within the city where they are able to reach profitability and generate significant, local economic activity.”