Shenango Valley Economy Shows Signs of Vibrancy
SHARON, Pa. -- Business expansions across the Shenango Valley point to an economy in growth mode, fueled by renewed energy in the retail, commercial and industrial sectors, officials say.
“Generally, the atmosphere here is very positive,” says Robert McCracken, president of the Shenango Valley Chamber of Commerce. “Companies are quietly beginning to do things.”
McCracken observes that while some effects from the Great Recession linger, businesses in the Shenango Valley are expressing more confidence in the local economy than they did two or three years ago.
Other companies have the capacity to expand but are holding off until they gain more clarity on national and state issues, such as the Pennsylvania gubernatorial election in November and the impact Obamacare will have on businesses next year.
“All of this can affect the way business is done in Pennsylvania in 2015,” says McCracken, also the president of the Lawrence County Chamber of Commerce. “But, it’s nice to see money being invested.”
McCracken points to several large-scale projects either underway or recently completed. “Sharon Tube expanded their operations last year and CCL Container is expanding right now,” he relates.
CCL Container Inc., Hermitage, is nearing completion of a 100,000-square-foot addition that includes a new production operation and warehousing. The company manufactures aluminum bottles and containers used to hold aerosols and soft drinks.
Other companies such as Canada-based Noise Solutions Inc. opened a new manufacturing plant in Sharon earlier this year, McCracken adds. The company manufactures noise-suppression products used in the oil and gas industry.
“It’s exciting right now,” he remarks. “The five-county region is still an industrial-based economy and it’s great to see companies adding second and third shifts.”
Much of this manufacturing resurgence is, in some measure, the result of oil and gas exploration in the Utica and Marcellus shale formations in eastern Ohio and western Pennsylvania, McCracken relates. “Anything related to shale is doing really well,” he observes. “The products they’re making are being shipped all over the United States.”
Indeed, he reports that most of the exploration in the northern tier of the Utica shale is concentrated in Lawrence and Mercer counties in Pennsylvania, while other energy giants have tapped the liquids-rich Marcellus in the southwestern portion of the commonwealth.
Houston-based Hilcorp Energy Co. is the most active among energy companies in the Shenango Valley in drilling and piecing together gathering lines, McCracken says. And, although Shell Energy subsidiary SWEPI LP has sold its leases in the region, Rex Energy, based in State College, Pa., has acquired them.
“Shell selling their leases isn’t a bad sign since someone else has scooped them up,” McCracken says.
Meanwhile, Sharon, Pa., is preparing for its third WaterFire this year on Sept. 27, an outing expected to draw thousands downtown, McCracken says. “It’s nice to come downtown for a WaterFire and there’s another new sign up on a building,” he says.
National chain restaurants and retailers are moving into areas of the Shenango Valley where commercial traffic is on the rise, McCracken notes. The opening of a Kohl’s department store last year has led to additional retail activity along the state Route 18 corridor in Hermitage, for example.
Over the last year, new fast-food restaurants and other establishments have popped up near the Kohl's development, a signal that national retailers are confident in the spending capacity of the region. “These are signs that they believe people have money to spend,” he says. “Retail involvement is driven by household income. As you see that rise, you’ll see more and more looking at this market.”
Gary Hinkson, city manager of Hermitage, reports the retail economy has witnessed a steady comeback since the Great Recession, helped in part by the city’s use of development tools such as tax increment financing, or TIF.
“It was the first time it’s been used in Mercer County,” Hinkson reports. Under a TIF, a percentage of the real estate taxes generated from a specific development project -- in this case, Kohl's -- goes directly toward paying off any bond used to provide infrastructure to the site.
“It’s already provided benefits,” Hinkson says. “It has increased tax revenues to taxing bodies, attracted more consumers and shoppers, and there’s evidence that it’s spurring more development.”
Assistant City Manager Gary Gulla says other interests near Route 18 have expanded or reinvested in their operations. First National Bank of Pennsylvania recently spent $1 million on its back office operations, creating 30 jobs in the city. “As they grow, it results in more jobs in the Hermitage community,” Gulla says.
Joy Cone -- the largest producers of packaged ice cream cones in the world -- continues to reinvest in its operations and now employs 400 full-time equivalent positions at the plant. And, Elwood Crankshaft, he notes, has added “dozens of employees” over the last several months.
“We didn’t lose any companies during the recession,” Gulla reports.
Gulla says Hermitage has roughly $2 million worth of infrastructure projects under contract and is continuing its neighborhood investment program, an effort that focuses on rebuilding some of the older, established residential community.
“It’s a targeted approach,” Gulla says. “We’re on our fifth area right now.” The city appropriates between $3 million and $3.5 million to redevelop one area of the city at a time. The objective is to upgrade neighborhoods with new infrastructure before deterioration could set in.
The icing on the cake, in Hinkson’s eyes, came in July when CreditDonkey, a credit card comparison and financial education website, rated Hermitage the best city to live in Pennsylvania.
“The cost of housing, commute time to work, dining establishments and, most importantly, public safety, were all factors in the study,” Hinkson says. “Our retail centers are doing great. All of this makes us attractive.”
Copyright 2014 The Business Journal, Youngstown, Ohio.
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