Warehousing grows as manufacturing slows

Since 1990, our economy has gone through three major recessions, in 1990-91, 2001-03 and 2008-09. With the last one, some areas are still recovering and have not reached the pre-2008 recession employment level.

John Kooti

With that in mind, let’s take a look at the transition of the economy since 1990 in two metropolitan statistical areas along Interstate 81 in Pennsylvania: Harrisburg-Carlisle and Chambersburg-Waynesboro.

The transition highlights the dramatic shift away from government and manufacturing jobs and toward employment in the supply chain industry, including warehousing, transportation and other professional services.

The Harrisburg-Carlisle area, which is considered to be a hub for transportation and warehousing, has significantly changed since the early 1990s. Employment in local, state and federal governments has continued to be significant, in spite of losing more than 5,000 jobs since 2003. Government employment grew rapidly, reaching a peak of 65,000 employees in 2003.

Following a period of stability, employment has been declining since the 2008 recession, reaching a level of less than 60,000 employees in May. As a result, the government sector’s share of total employment decreased from 22 percent in 1990 to 17 percent this year.

Manufacturing employment has seen a 42 percent decrease, from 36,000 in 1990 to 21,000 in 2017, leading to a declining share in total employment from 13 percent in 1990 to 6 percent in 2017.

By contrast, warehousing, healthcare and professional services added significant jobs during the same time period, contributing to an overall employment growth of 24 percent in the Harrisburg-Carlisle. Warehousing growth has been unmatched, adding around 10,000 jobs since 2013 in the Harrisburg-Carlisle MSA alone.

The transformation of the economy in the Chambersburg-Waynesboro MSA is very similar to the Harrisburg-Carlisle.
Since 1990, manufacturing employment dropped by 38 percent, from roughly 14,000 jobs in 1990 to less than 9,000 in 2017. Government employment decreased by 24 percent since 1990, from roughly 10,000 in 1990 to less than 8,000 employees in 2017.

However, the 27 percent increase in nonfarm employment since 1990 has been greatly influenced by warehousing, health care, professional services, and retail and wholesale trade. Warehousing employment has exploded, from roughly 1,000 employees in 1990 to roughly 7,000 in 2017 — a 600 percent increase.

Examining the data from Harrisburg-Carlisle and Chambersburg-Waynesboro reveals very similar characteristics.
Although, the economy is diverse, warehousing has become a major source of employment in the region, from only 14,000 jobs in 1990 to 36,000 in 2017. This is an incredible story of success in attracting warehousing to the area along the I-81 corridor through south central Pennsylvania.

The importance of the supply chain industry in the area has been recognized by students and employers. For example, Shippensburg University’s John L. Grove College of Business (where I am dean), has had a supply chain program since 2005.

The program has experienced an incredible increase in enrollment in a very short period of time, reaching more than 200 students (including double majors) in 2017.

Adding to it, Shippensburg’s program has also had 100 percent job placement. And we’ve added a supply chain concentration to our MBA program.

In other words, the future of the industry looks strong.

John Kooti is a professor of finance and dean of the John L. Grove College of Business at Shippensburg University. His email is JGKooti@ship.edu.