A new crop in Pennsylvania: warehouses
Many are being built at such a dizzying pace that locals worry area's long-term economic well-being is at risk
Pennsylvania
FROM his office in an old barn on a turkey farm, David Jaindl watches a towering flat-screen TV with video feeds from the hatchery to the processing room, where the birds are butchered.
He is a third-generation farmer in Pennsylvania's Lehigh Valley. His turkeys are sold at Whole Foods and served at the White House on Thanksgiving.
But there is more to his business than turkeys. For decades, he has been involved in developing land into offices, medical facilities and subdivisions, as the area in and around the Lehigh Valley has evolved from its agricultural and manufacturing roots to also become a healthcare and higher education hub.
Now he is taking part in a new shift. Huge warehouses are sprouting up like mushrooms along local highways, on country roads and in farm fields.
The boom is being driven, in large part, by the astonishing growth of Amazon and other e-commerce retailers and the area's proximity to New York, the nation's largest concentration of online shoppers, roughly 129 kilometres away.
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"They are certainly good for our area," said Mr Jaindl, who is developing land for several new warehouses. "They add a nice tax base and good employment."
But the warehouses are being built at such a dizzying pace that many residents worry the area's landscape, quality of life and long-term economic well-being are at risk.
E-commerce is fuelling job growth, but the work is physically taxing, does not pay as well as manufacturing and could eventually be phased out by automation.
Yet the warehouses are leaving a permanent mark. There are proposals to widen local roads to accommodate thousands of additional trucks ferrying goods from the hulking structures.
In the township of Maxatawny, Pennsylvania, just west of the Lehigh Valley, a giant warehouse is slated to be built at the site of a 259-year-old cemetery that holds the remains of a Revolutionary War captain and what is believed to be the unmarked grave of a woman he had enslaved.
Not far away, near a group of Mennonite farms, a tractor-trailer hit a horse-drawn buggy in late March, flipping it and sending one passenger to the hospital and the horse on the loose.
Closer to Allentown, the area's largest city, FedEx has built a new "ground hub", one of its largest such facilities in the United States. A billboard down the road advertises legal representation for people injured in truck accidents.
Developers are confident in the industry's growth, however, particularly after the pandemic. Big warehouse companies like Prologis and Duke Realty are investing billions in local properties.
Many of the warehouses are being built before tenants have signed up, making some wonder whether there is a bubble and if some of these giant buildings will ever be filled.
"People are calling it warehouse fatigue," said Dr Christopher R Amato, a member of the regional planning commission. "It feels like we are just being inundated."
Manufacturing positions
There are now almost as many warehouse and transportation jobs in the region as manufacturing positions.
But that is not a milestone all celebrate - not in an area that hopes to keep alive its higher-paying manufacturing sector, even though some of its biggest employers like Bethlehem Steel closed long ago.
Manufacturing jobs in the Lehigh Valley pay, on average, US$71,400 a year, compared with US$46,700 working in a warehouse or driving a truck. The region is still home to large manufacturing plants that produce Crayola crayons and marshmallow Peeps candies.
Don Cunningham, the chief executive of the Lehigh Valley Economic Development Corp, said the warehouse jobs are lifting employment and wages, particularly for unskilled workers.
The CEO, whose father worked in the local steel industry, said he recognised that distribution jobs were not ideal.
"But to be able to make US$16 an hour with a high school diploma, there aren't a lot of places in the US where you can do that," he said. "This is a really nice sector for low-skilled workers. It at least gives them a fighting chance to carve out a livable wage."
To Kirk R Johnson, the Lehigh Valley is a dreamscape. There is available land, but not too much, which helps keep values high. Two major interstates pass through the area ferrying goods through the Northeast. About 30 per cent of American consumers are within a day's truck drive.
Looking for an opportunity to invest, Mr Johnson, the chief investment officer of the Watson Land Co, a giant owner of warehouses in Southern California, teamed up with Mr Jaindl.
Together, they are developing three new warehouse projects around the Lehigh Valley, totalling more than three million square feet, or about 60 football fields. They are being built speculatively, meaning no tenants are lined up.
"There are tons of risk in development, and building speculatively is one of them," Mr Johnson said.
Mr Jaindl said many concerns in the area about warehouses were unwarranted. He said that the Lehigh Valley still had a large manufacturing base and that his land company was also seeing demand for houses and hotels, reflecting the economy's strength beyond warehouses.
As an active farmer whose grandfather started the business with just a handful of turkeys, Mr Jaindl took his stewardship of the land seriously, he said. His family is regarded as one of the most generous philanthropists in the area.
He said the warehouse critics did not often acknowledge how vital the industry had become during the pandemic.
Many of the warehouses are being used to distribute food across the Northeast.
A physically taxing job
Jason Arias found an honest day's work in the Lehigh Valley's warehouses, but he also found the physical strain too difficult to bear.
He moved to the area from Puerto Rico 20 years ago to take a job in a manufacturing plant.
After being laid off in 2010, he found a job packing and scanning boxes at an Amazon warehouse. The job soon started to take a toll - the constant lifting of boxes, the bending and walking.
"Manufacturing is easy," he said. "Everything was brought to you on pallets pushed by machines. The heaviest thing you lift is a box of screws."
One day, walking down stairs in the warehouse, he missed a step and felt something pop in his hip as he landed awkwardly. It was torn cartilage. At the time, he was making US$13 an hour. (Today, Amazon pays an hourly minimum of US$15.)
In 2012, he left Amazon and went to a warehouse operated by a food distributor. After a few years, he injured his shoulder on the job and needed surgery.
"Every time I went home I was completely beat up," said Mr Arias, who now drives a truck for UPS, a unionised job, which he likes.
Dr Amato, the regional planning official, is a chiropractor whose patients include distribution workers. Manufacturing work is difficult, but the repetitive nature of working in a warehouse is unsustainable, he said.
Two years ago, there were no warehouses near Lara Thomas' home in Shoemakersville, Pennsylvania, a town of 1,400 people west of the Lehigh Valley. Today, five of them are within walking distance.
A local-history buff, she is a member of a group of volunteers who regularly clean up old, dilapidated cemeteries in the area, including one in Maxatawny that is about three kilometres from her church.
The cemetery, under a grove of trees next to an open field, is the final resting place of George L Kemp, a farmer and a captain in the Revolutionary War.
Last summer, the warehouse developer Duke Realty, which is based in Indianapolis, argued in county court that it could find no living relatives of Kemp and proposed moving the graves to another location. A "logistics park" is planned on the property.
Meredith Goldey, who is a Kemp descendant, was not impressed with Duke's due diligence. "They didn't look very hard." BLOOMBERG
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