Vision 2023 | 'Continue to invest': GDP data paints picture of region's economic challenges, chances for change

JOHNSTOWN, Pa. – The value of all industrial and human productivity in Cambria County adds up to more than $4 billion annually.

That includes locally made products shipped outside county lines, a company’s investment in a new building, and even a slice of pizza purchased in downtown Johnstown.

Cambria County’s gross domestic product, or GDP, is a measure of its economic vitality. Whether that GDP is growing or shrinking matters, as does Cambria County’s rank compared with other counties in the state, said Randy Frye, professor of marketing and management at St. Francis University and board member of Johnstown Area Regional Industries, the region’s nonprofit economic development agency.

In December, the U.S. Bureau of Economic Analysis published a report of 2021 GDP for counties all over the United States.

Cambria County is the 28th-largest producing county in the state, with a GDP of $4.27 billion – a ranking that unsurprisingly lands, Frye said, around the county’s rank for population size.

However, Cambria County’s rate of GDP growth ranked low, at No. 57 among Pennsylvania’s 67 counties, with a GDP growth rate of 0.5% in 2021. By contrast, the productivity of Pennsylvania’s counties as a whole grew by 4.4%.

And Bedford County, a neighboring county in the Southern Alleghenies region, had the highest rate of year-over-year GDP growth in 2021 of any Pennsylvania county.

Bedford County’s GDP jumped 14.5 percentage points, to $1.44 billion.

Cambria County’s GDP growth of 0.5% was anemic, Frye said.

Bureau of Economic Analysis data for years prior to 2021 show that Cambria County’s GDP has been relatively steady, though losing ground even in its reliable health care industry.

And 2021 was the first year since 2017 that Cambria County showed positive growth as it dug out of the COVID-19 pandemic.

‘Health care sector’

It’s not surprising to see slow positive growth in Cambria County in 2021, said Guo Kai, an assistant professor of business economics at the University of Pittsburgh at Johnstown.

He said that government stimulus spending as a result of the pandemic was likely a contributing factor.

The impact of the pandemic can be seen clearly in the negative performance of the health care industry, which dragged down the county’s GDP by 0.76% in 2021. Kai and Frye agree that the decrease likely reflects cancellations during the pandemic of non-COVID-19-related hospital visits.

“As fears subside, the regional economy will return to some normalcy … especially the all-important health care sector,” Frye said.

Health care provides jobs for 24% of the county’s workforce, a county profile from the Department of Labor shows.

A core of Johnstown’s economic activity since the demise of Bethlehem Steel Corp. in the 1990s, health care generates about $640 million of the county’s total GDP, more than any other single industry, the Bureau of Economic Analysis’ database shows.

However, historical GDP data from the Bureau of Economic Analysis shows the health care industry hasn’t been growing in Cambria County for the past decade: It’s been neutral or contributed slight decreases to the county’s overall GDP from 2012 to 2021.

Health care and social assistance had an average growth rate decline of 1% annually between 2010 and 2021, the Bureau of Economic Analysis’ online database shows.

But that translates to a show of relative stability, Kai said, considering the county’s annual population loss of 0.7% in that timeframe.

‘Diversified economy’

The population of Cambria County in 2021 was 132,167, down 7.9% from its population in 2010. While Cambria County’s population dropped, the U.S. population grew 7.3% and Pennsylvania’s population grew 2% during that period, according to USA Facts, a nonprofit organization that asserts it is the largest source for standardized U.S. government data, including census information.

In addition to population loss, the workforce participation rate – or the percentage of the population age 16 years and older that is working or actively looking for work – is also a greater challenge for Cambria County than its neighboring counties, Frye said.

“But maybe health care has plateaued,” Frye said. “Maybe we can’t count on it as much as we did in the past. We need a more diversified economy, but I think the 0.76% decline was abnormally high and pandemic- induced.”

Frye said the diversification of the economy would involve continuing to grow the county’s manufacturing core – that industry grew by 0.36% in 2021.

Diversification would also include entrepreneurship, especially in technology sectors, he said.

The leading industry for GDP growth in 2021 for Cambria County was professional and business services, which includes multiple categories of work, such as the scientific research and development services provided by Richland Township-based Concurrent Technologies Corp. and the analytical services provided by the Sourceree software company in Ebensburg.

Overall, professional and business services provided a 0.81% boost to Cambria County’s GDP in 2021.

“As a result of people working from home, people wanting a more balanced lifestyle, we are seeing people from the area take advantage of that by providing professional services remotely, leading to growth,” Sourceree President Adam Murphy said. “We at Sourceree are seeing big-city firms reaching out for our support because they can’t find people. We are providing software development and analysis services to big cities from here in Cambria County.”

Coal still contributes

Numerous industries export goods and services beyond county lines.

Kai said exports are one of four categories weighted in any GDP calculation. The other three are consumer spending, private capital investment and government sector spending.

Natural gas exports would be particularly helpful to Pennsylvania’s GDP growth at present, Kai said, as energy prices remain elevated in the global market, though that market may not not help Cambria County in particular.

The county doesn’t have the natural gas wells that many other western Pennsylvania counties possess.

However, the region still has coal.

With three mines in Cambria and Somerset counties, Rosebud Mining Co. has been mining 4 1/2 million tons of metallurgical coal a year since 2010, company president Jim Barker said.

Although coal-burning, blast-furnace steel mills including Johnstown’s Bethlehem Steel Corp. have shuttered as the country transitioned to generate a majority of its steel from recycling scrap in electric arc furnaces, 28% of domestic steel is still made from iron ore and metallurgical coal, Barker said.

“We ship to U.S. Steel, so we’ll ship to Ohio and Indiana,” he said. “We can’t have 100% recycled steel in this country. Our employees are proud to supply coal to domestic steel makers. And while some of the steel industry left, particularly in Johnstown, it still exists in the United States. It’s important strategically to maintain it.”

Rosebud also exports coal to Canada and Asia.

“Believe it or not, we ship some overseas,” Barker said. “There are coals from the west of Cambria County and Cresson that go to Japan.”

Defense still strong

Still, mining and quarrying has long been shrinking in Cambria County, GDP data shows.

However, the national defense manufacturing industry, another pillar of the county’s post-Bethlehem economy, continues to show growth.

Manufacturing as a whole increased the county’s GDP by 0.36% in 2021. Companies such as JWF Industries and Kongsberg Defence and Aerospace Inc. are continuing to grow.

JWF recently undertook work to build an entire line of military vehicles – the Flyer 72 vehicle – in Johnstown. Those vehicles are shipped all over the world.

Kongsberg landed a $1.5 billion contract in November to continue production, maintenance and upgrades to its Common Remotely Operated Weapon Station (CROWS) weapon systems in its Johnstown facility for the U.S. military.

Kongsberg will exceed 200 employees this year as it increases its workforce by a couple dozen employees to execute that contract – as well as a couple others for the U.S. Marine Corps, said David Zucco, director for Kongsberg Protech Systems USA.

“Our ability to leverage our knowledge and experience is what sets us apart from competitors,” Zucco said. “Our success is all because of our workforce.”

Continued investment in workforce development – which is part of JARI’s mission, Frye said – is crucial to population retention, labor force participation growth and economic development.

“I’m hoping – and I know JARI is hoping – that we stabilize the county’s population,” he said. “We are not going to grow exponentially, but we want to stop declining.”

‘Keep young people’

Frye said he sees hope for the future, as demographic data show younger workers are leaving the county at a lower rate than middle-aged workers.

Cambria County’s 35-to-49 age group declined by a whopping 20.4% between 2010 and 2021, but the 20-to-34 age group declined less severely, at less than 9% between the past two U.S. censuses.

“We didn’t have as much of a loss in the younger workers, which means maybe Cambria County and Johnstown are doing more to keep young people in the region,” he said.

Arts, entertainment and recreation contributed to Cambria County’s GDP growth by 0.16% in 2021, which represents a complete rebound from that industry’s 2020 losses.

Frye said he hopes that growth will continue with revitalization of downtown Johnstown, and quality-of-life factors the county offers – including outdoor recreation.

“We need to continue to invest in economic development and improve our infrastructure,” he said. “Whether it be downtown or highways or our airport, we have to revitalize our cities and communities. We have to fight crime and poverty, and spur entrepreneurship.

“I see a lot of that happening in Cambria County – people starting businesses, downtown restaurants are creating jobs and economic activity. I know they are not the highest-paying jobs, but they are creating vitality. It’s making people feel more confident in the regional economy.”

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