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Warehouse boom squeezes small manufacturers

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Dermody Properties is developing a nearly 1.1 million-square-foot warehouse off Exit 16 of Interstate 78 in Bethel Township, Lebanon County. This photo was taken in January. Construction is expected to be complete by June.
Dermody Properties is developing a nearly 1.1 million-square-foot warehouse off Exit 16 of Interstate 78 in Bethel Township, Lebanon County. This photo was taken in January. Construction is expected to be complete by June. - (Photo / )

The industrial landscape in Eastern and Central Pennsylvania is flourishing with warehouse and distribution centers.

They are creating jobs and boosting the local economy. But smaller manufacturers are feeling the pinch as they fight to fill skilled jobs, retain good workers and get their goods shipped to customers.

Manufacturing officials say that they have to raise wages to compete with the starting salaries offered at warehouses and distribution centers. Transportation of goods, meanwhile, is hampered by a shrinking pool of truck drivers, less capacity on truck hauls and growing highway congestion.

“Skilled workers are really in the driver’s seat these days. Employees are in a good position where they can go anywhere,” said Ken Laga, director of marketing for Nazareth Pallet Co. Inc. in Northampton.

The shortages stretch from the production floor to the driver’s seat. To help, employers are promoting their companies at job fairs and in advertisements and giving people with prison records second-chance opportunities, Laga said.

In Bethlehem, Jack Pfunder, president and CEO of the Manufacturers Resource Center, said, “Worker shortage is probably the No.1 issue in warehousing and logistics, and same with the smaller manufacturers.”

He said that finding and keeping entry-level workers on the production floor is an ongoing problem, and it spills over to the transportation department, where there is a shortage of truck drivers.

Manufacturers struggle to compete with warehouses and distribution centers, which pull workers away with starting wages that are hard to match. Other perks also are critical.

“People want a better work-home life balance, so employers have to get creative with employee schedules,” said Pfunder, whose organization works with manufacturers in the Lehigh Valley, Berks, Carbon and Schuylkill counties. “The rate and pay to keep workers has been raised substantially, as the younger generation is impatient. They can go down the street for fifty cents to a dollar more an hour.”

According to Pfunder, it appears easier to get raw materials into a manufacturing facility, but when it comes to shipping goods out, scheduling can be tricky. The driver shortage comes into play, and larger companies are taking up more space on trucks.

“You cannot ship the orders if you do not have the people to do the shipping,” he said.

Darlene Robbins is president of Northeast Pennsylvania Manufacturers & Employers Association in Pottsville.

Robbins polled several small manufacturers in Schuylkill County. She said she found that they are having a tough time shipping their products. The larger manufacturers, warehouses and distribution centers are taking precedence, as they produce larger volumes of goods and take up more capacity in trucks hauling goods to the end user.

More creativity and planning is required to keep costs down, she said. Manufacturers have to give more advance notice for larger shipments, for example.

“One manufacturer said it was impacted by limited capacity on loads, and sometimes the trucks do not show up at all,” Robbins said.

At the Manufacturers’ Association in York, executive director Tom Palisin said that shipping and procurement have been “hit hard by the shrinking workforce.”

Smaller employers have more trouble negotiating shipping rates, and they do not always have their own transportation departments – unlike larger manufacturers, warehousing and distribution companies.

On a brighter note, Laga at Nazareth Pallet said that the surge in warehousing and distribution has kept the pallet company busy, since those facilities all need pallets to store and haul products.

“It has meant an increase in customer growth, and we have invested in more capital and added a production line of custom pallets,” Laga said. “We have positioned ourselves to be more aggressive, and we have the advantage of knowing a warehouse is coming into (Pennsylvania) before it gets here.”

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