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Reading Economic Report

Reading Economic Report

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Published by Reading_Eagle
A look at recent economic trends in Reading, Pa.
A look at recent economic trends in Reading, Pa.

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Published by: Reading_Eagle on Jul 28, 2014
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04/03/2015

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ReDesign Reading CDC
Reinventing Economic Development
613 Franklin Street Reading, PA 19602 610-685-2236 www.redesignreading.org info@redesignreading.org
www.redesignreading.org
 
Dear Reader,
 
In the attached Reading Economic Report, the Local Economy Center (LEC) at Franklin & Marshall College has done an excellent job of highlighting the economic trends in Reading, and contextualizing them within Berks County as well as with other local, state and national trends. These trends are very important at helping us to understand our current reality, and provides useful information to regional leaders as we develop an economic strategy that ensures Reading is thriving throughout the 21st century. As individuals interested in the future economic vitality of the City of Reading, this report provides some critical new insights, in addition to some helpful reminders of data we sometimes overlook. To start, worsening macroeconomic trends have had large impacts on our local economy. As we see in the report, the trends are not unique to Reading and Berks County, but rather mirror national shifts. The long-term flight of manufacturing, which corresponds to over a half century of suburbanization, deindustrialization, and globalization, has been devastating for Reading, as it has for so many other manufacturing towns (Mallach, 2012). Second, the LEC report focuses on the unique industrial structure and trends in the City of Reading. Looking at Reading in the context of the County and other areas shows that the challenging economic dynamics affecting it are especially strong, earning its reputation as a distressed City. One implication of LEC analysis is that the City of Reading has special economic development needs, and improving macro-economic trends alone may not address those needs.
 
By presenting these local trends alongside those of other regional cities including Allentown, Lancaster, and York, the report helps to draw attention to the nuanced differences between those different economies. The authors of the LEC report suggest that direct comparisons to Allentown and Lancaster are misguided due to fundamental differences in industrial characteristics. They conclude that although manufacturing has been a critical component of each city's local economy, this is even more pronounced in Reading. Whereas Allentown and Lancaster have specific advantages that helped them diversify their economies, Reading’s strategy may rely more heavily on harnessing production-based energies.
 
Berks County and the City of Reading are intimately interconnected; one cannot exist without the other. The historical emphasis on manufacturing relies heavily on the urban workforce. In fact, despite supplying only 15% of the total county workforce, City residents supply 25% of the total jobs in the manufacturing sector. Any integrated economic development strategies must take into account the geographic distribution of employees in various sectors. Another important piece to remember is that even though a sector shows up as a small percentage of the local GDP, that does not mean that we should disinvest from this sector. There are real people working in each of these sectors, and the dynamics of each sector have cascading effects on the rest of the economy. It is important to think about the residual impacts of each sector, not just their impact on GDP, but on how these elements promote economic resiliency and increased quality of life for residents. The future of Reading's economic health lies in a multi-pronged strategy that invests in the expansion of production activities while also increasing support to non-manufacturing activities that diversify our economy.
 
 
The LEC report juxtaposes this economic data with demographic trends, noting the high percentage of Latino entrepreneurship and the high percentage of young people under the age of 19. These emerging trends represent significant components for any economic development strategy. How are we making sure that the next generation is equipped to actively participate in economic life? How do we ensure that our policies and technical assistance support the growing number of Latino entrepreneurs? These populations will increasingly determine the economic direction of the region, and therefore any economic development strategy must be developed with heavy representation of young people and Latinos. It is important to recognize that the LEC analysis fits inside of the context of other reports recently released here in Berks County: The Economic Forecast and the Vital Signs reports. Each of these reports provides helpful insights into the health of our greater Reading community. In May, 2014, the Berks County Economic Forecast report was released. This collaboration between the Reading Eagle and Kutztown University provided a great overview of the industrial structure of the Berks economy, its trends, and projections about what the future may hold in various economic sectors. Notable is the importance of manufacturing as a share of the local economy, and the projected growth in most industries, with construction and agriculture/mining as particular exceptions. The forecast projects continued growth in manufacturing, though at a slightly decreasing rate. Econometric projections are, of course, only one part of the puzzle. The 2014 Berks Vital Signs Report, released by the Berks Community Foundation in conjunction with Alvernia University's O’Pake Institute for Ethics, Leadership, and Public Service, provides an excellent overview of important quality of life indicators in employment, health, safety, education, transportation, housing and the environment. Released earlier this year, this community indicators report combines statistical data with invaluable insight into the perceptions of the Berks community in these areas. Any economic development strategy must take into consideration these broader quality of life indicators. The analysis presented here by the Local Economy Center has added to this conversation in some very critical ways. In the context of the other reports produced for Berks county, this analysis helps to inform the various potential strategies for economic stimulus in the City of Reading specifically. As those strategies are developed, implemented, and refined, it is important to keep a few things in mind:
 
An economic system is a complex phenomenon made up of lots of interconnected components. There is no single strategy that will cause a magical economic renaissance. The lure of the single solution is dangerous, and significantly reduces our understanding of the adjacent possible. The key to economic revitalization will be a diverse strategy that leverages our strengths and harnesses the resiliency, diversity, and entrepreneurialism of our workforce and population. So what will those next steps look like?
 
The one-time industrial prominence of the City of Reading as the “industrial capital of the world” is a critical part of our history, but our path forward must take into account the new economic and environmental realities of the 21st century. In an age of global capital mobility and climate change, our challenge in Reading is not dissimilar from the three primary challenges of other historically-industrial urban centers: 1) How do we figure out how to ground capital locally? More specifically, how do we make sure that a dollar spent in Reading stays in the local economy as long as possible before leaving? 2) In addition, how do we make sure that our economic system works within the natural limits of the containing ecosystem? 3) Finally, how can we ensure an adaptable, competent workforce that can meet the quickly changing needs of industry in the 21
st
 century? Several key components will be necessary. Traditional economic development approaches will continue to be important, which will focus on the identification of specific bricks and mortar projects and workforce development  programs. This will ensure an ample supply of employees with the skills necessary for the needs of our local industries. Due to the particular economic development needs of the City of Reading, production-based activities will play a critical role, especially labor-intensive initiatives that can engage the City’s workforce. The fundamental shift in the nature of manufacturing in Reading remains consistent with the national trend toward “decentralized networks of small, specialized firms” (Mistry & Byron, 2011). We need to support the local industry that does exist, and encourage innovative entrepreneurial industrial activity as well, especially industrial activity that embraces adaptive and sustainable uses of our natural resources. Weatherization initiatives, for example, could have a huge local impact by increasing employment while decreasing economic leakage spent on energy costs.
 
Support systems and incentives for current and potential manufacturers will be paramount. The Greater Reading Economic Partnership has reported that in the last ten years, prospective manufacturer interest has doubled and now accounts for over 70% of their business lead generation. Current initiatives that support this strategy are the Reading Chamber of Commerce and Industry’s flagship
 Reignite in PA
 program that targets outreach, coaching, mentoring, training and consulting for small- and medium-sized manufacturers, and the “Career in Two Years” campaign that encourages the growth of a competent, local workforce that can supply the labor needs for modern industry. An economic development strategy must identify and leverage our other regional assets, such as Go Greater Reading's initiative for a destination market analysis that will help to identify some of the key market niches played  by the greater Reading area, such as the region's comparable affordability and access to nature and outdoor recreational activity.
 
In addition to these traditional approaches, we need to support complementary initiatives that encourage social innovators to experiment with ways to solve structural economic problems like the widening wealth gap, vulnerability to macroeconomic forces, environmental degradation, and social inequality. A robust economic development strategy will include initiatives that build community wealth, strengthen social capital, and impact the most vulnerable parts of our local population. Production cooperatives will be a key ingredient here, and will require specific technical assistance as they emerge into new market niches. Localizing supply chains produce a multiplier effect in the regional economy. A basic economic leakage analysis has identified manufacturing as a critical area for improving local economic resiliency. What products are being imported which could be produced here and captured by local entrepreneurial activity? Despite the lower household incomes in Reading, the highest density of household purchasing power actually exists inside the City, as demonstrated on page 43 of the LEC report, which may inform potential market expansion. We will need to get creative about what economic activity means. In its most basic form, economics is the study of how society provisions its resources to its citizens. Economic development, therefore, goes beyond simply increasing the number of monetary exchanges and maximizing dollar values. It means that our strategies for  promoting economic development need to focus on how we are meeting the needs of our population, and how we ensure that key constituencies are playing a productive role in the provisioning of those needs.
 
As targeted economic interventions are developed as part of a revitalization strategy, we will need to ask several important questions. What policies and changes are necessary to structure enabling conditions for multiple economic development approaches? Who benefits from the current allocation system and who will benefit from the  proposed interventions? How do we match unmet needs in our local community with underutilized assets? How do we ensure that the economic system we are building promotes equality of opportunity for all members of our community?
 
The LEC report highlights some significant challenges that Reading faces with respect to educational attainment, unemployment levels, and economic sectoral shrinkage. At ReDesign Reading, we take the information presented in the LEC report as a challenge - a challenge to be creative. We need to support all of the elements of our economy, and make sure that all of the members of our community are included in the next phase of our economic life. We are excited about all of the opportunities present in the greater Reading area to reinvent our local economy. As we take an asset-based approach to community economic development and focus on identifying underutilized resources to release locked capital and wealth in our community, we encourage all of those reading this report to be an active part of co-creating our regional economic future. Brian Kelly
 
ReDesign Reading
1. Mallach, Alan.
 In Philadelphia's Shadow: Small Cities in the Third Federal Reserve District.
 Philadelphia. Federal Reserve Bank of Philadelphia, 2012.
 
2. Mistry, Nisha & Byron, Joan.
The Federal Role in Supporting Urban Manufacturing 
. Washington, D.C. The Brookings Institution, 2011.

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