Economic Forecast Optimistic but Mixed

            If you were at the Yorktowne Hotel early on the morning of November 17, you’re probably a little more in the know about where the economy is, where it has been and—probably—where it is headed. Revealing the latest economic indicators, two experts interpreted some trends concerning business that are both encouraging and challenging.

            Dr. Ken Slaysman, an economist at the York College Institute for Regional Affairs and professor at the college, addressed economic issues from a local standpoint. One indicator suggested the state is seeing a surge of economic activity and that we can expect that growth to continue into the beginning of next year. Yet a graph he displayed reflected a significant change in job creation from the manufacturing to the service sector.

Dr. Slaysman stated that York County is at a crossroads because of the change, but said the county is well positioned to move forward and grow. “The group strategizing that goes on in this community helps create a global vision, and helps people recognize the need to work across political boundaries to make stuff happen. York County is well ahead of the game in thinking globally and seeking out ways to implement those things locally through cooperative ventures.”

Dr. Edmond Seifried, a professor of Economics and Business at Lafayette College in Easton, PA, unveiled the latest indicators showing that the economy is still recovering, and said we may be seeing the end of low interest rates. He explained that, when the economy has been sluggish in the past, our monetary policy has often been to lower interest rates to stimulate the economy, as we did after 9/11. “If there is another terrorist attack, we won’t do what we did last time,” he stated. “That hurt us economically unequally, and the seniors, because many depend on their interest income, were hurt the worst. I feel certain there won’t be further cuts because the rates are already so low, and lowering interest rates to zero is extremely dangerous.”

Dr. Seifried cited Japan’s experience with a zero interest rate and explained some of the repercussions, including a scenario in which lending tends to stop and banks can’t make enough money to survive.

Attendees’ reactions to the presentations varied. “We may be in recovery,” said Three M Tool president Austin Hunt, “but it doesn’t feel like it.”

“If anything,” offered Rutter’s Dairy president Scott Hartman, “we think the local economy is doing even better than was presented. The only gray cloud on the horizon we can see is rising interest rates driving up the cost of doing business. But we have significant growth plans for the next few years. The relatively good outlook tells us to keep the pedal to the metal.”

Nabila Khalifa of Re-Stor-York, a company that supplies nonprofits like Habitat for Humanity and Bell Shelter with inexpensive building materials, says this type of presentation helps her “to spot trends and get an idea about whether it’s a good time to hire, to borrow money, to build equity, and to look at what you are going to do to advance the business.”

In an interview following the presentation, Seifried urged York County businesses to look at the trend on manufacturing job creation and realize it is not short-term. “Am I saying you won’t have any manufacturing jobs here in 50 years? No, but I’m saying it’s inevitable we will have more offshoring and more globalization. Why not try to position York so that…you can still be a vibrant community?” Rather than trying to stop the loss of manufacturing jobs, he suggests “confronting it as a community and asking: ‘What are we going to do…[and] what are we going to have as an income base?’ Do you have to have a manufacturing base in York County to be wealthy? Absolutely not. Go to DC—they don’t make anything and they have one of the highest per capita incomes in the world.”

Seifried suggests a high-speed rail into Philadelphia or DC and points out the County’s proximity to job-rich areas like Harrisburg and northern Maryland. “If you could pick a location anywhere in Pennsylvania and say ‘that’s where I want to be,’ you’ve got pretty much the best one.”

For York County businesses that manufacture a commodity, he advises: “Find a way to be super-efficient…do anything in your power to be competitive with other factories and other countries with lower wage costs than you…reconfigure your products and differentiate them.”

He cited Glatfelter, now using its unique skills to make different products out of paper, like surgical gowns. He also pointed to agriculture, which has been looking at ways to grade U.S. products the way they did beef, and to “Harleys, which you can’t duplicate.

“My advice to York County would simply be: Be aware of your problem, don’t think it’s temporary. It’s not; it’s permanent. But make lemonade out of lemons, because you have strengths that are undeniable.”