5 “Need-to-Knows” for Pennsylvania Business Leaders
Strategy development by necessity involves environmental scanning. All too often, though, environmental scanning focuses on the familiar or relatable and excludes larger changes and paradigm shifts that at the time seem either unrelated or are misunderstood. Below are five seemingly disparate, yet related, changes that will impact Pennsylvania businesses in multiple, overlapping ways. Consider them as you strategize and plan for this decade and beyond.
1. A Man, A Plan, A Canal – Panama!
In addition to being an overly cute palindrome, the ongoing expansion of the Panama Canal (slated for completion in 2016) will impact Pennsylvania in the very near future. Twice as much cargo (and the movement of larger container ships) through the canal mean an expansion of shipping along the eastern U.S. seaboard. In addition to the obvious impacts upon the Philadelphia region, this expansion will most likely also result in the creation of an inland port in Bethlehem, PA. One obvious impact: increased intermodal traffic (aka more trucks on the roads).
2. Trucks, Trucks & More Trucks!
The U.S. is currently short 35,000 truck drivers, a figure projected to increase to 240,000 by 2022 and according to PennDOT figures, approximately 427,000 Pennsylvanians have commercial licenses. Self-driving, road-legal big-rig’s, such as the one recently debuted by Mercedes, may help to alleviate the projected driver shortage. No matter how you slice the issue, though, more goods will be transported over Pennsylvania’s highways with I-81 alone expected to see a 50% increase in truck traffic by 2040. One potential impact: potential higher shipping costs for Pennsylvania goods. Additionally, the future Pennsylvanians purchasing these goods will look a bit different than the ones from 2015.
3. Pennsylvania – God’s Waiting Room???
Pennsylvania is currently the 6th most populous state in the nation and by 2040 our citizenry will have increased from 12.8 million to 14.1 million people. Migration from overseas will account for 85% of this growth and the remainder will be home grown. Similarly, in 2020 15% of our population will be over the age of 65 and by 2040 that figure will have increased to 23%. While the slight graying of our population doesn’t place Pennsylvania in serious competition for the title of God’s Waiting Room, it is an important demographic change, as is the further diversification of our citizenry. These important changes will impact every Pennsylvania business in some way (and at the very least the citizenry will need both electricity and medical treatment).
4. Mr. Golden Sun… Please Shine Down on Me.
Take a step waaaay outside the box and consider electricity generation. Specifically, consider solar photovoltaics. Most Pennsylvanians are aware of the Marcellus Shale gas boom and our historical relationship with coal. What often gets summarily dismissed, however, is the future impact that photovoltaic power generation energy will have on Pennsylvania. Over the past five (5) years, the price of solar power has fallen 75% while overall capacity doubles every two years. This pending inflection point will dramatically decrease costs (potentially on a scale equivalent to Moore’s Law) while increasing the viability of large-scale implementation within Pennsylvania. Before you summarily dismiss this idea, consider that Germany generates between 6.2% and 6.9% of its net electricity from photovoltaics – and they lie a full 15 degrees North in latitude from Pennsylvania. Assuming that cost parity can be achieved between photovoltaics and traditional electrical generation (and setting aside the issue of government subsidies) the generation of electricity from photovoltaics is a potential impact point for Pennsylvania that should not be dismissed.
5. Not So Weird Science.
At a recent CEO Roundtable hosted by PA Bio, the passion exhibited by industry leaders underscored why Pennsylvania’s life sciences industry employs 80,000 and has an approximately $40 billion annual impact on the Keystone State. This is why more than 15,000 people will attend the 2015 Bio International Convention with a $40M impact upon Pennsylvania. The importance of Pennsylvania’s life sciences industry will do nothing but increase and a 2014 report from JLL noted that while “a majority of space activity is being driven by small and mid-size companies . . . strong employment bases and mature industry infrastructure keeps these [Pennsylvania] clusters competitive.” In plain language, Pennsylvania is uniquely positioned to use its existing life sciences infrastructure to help nurture and grow small and medium-sized companies, who will be the largest drivers of growth within the life sciences industry overall. This will allow Pennsylvania to not only remain competitive but also grow in influence when compared to the other major U.S. life science hubs. In short, this industry is poised for growth and innovation.
It’s tempting to try and wrap these five impact points all together in a nice neat package. Yet different businesses will experience the changes wrought by these impacts in different ways. Your challenge is to not only consider these points but to consciously seek out large pending changes during your own environmental scanning… because the five outlined above are not the only changes coming to Pennsylvania. When developing a good strategy be sure that you know what the environment really looks like instead of what you wish it to be. Only then, can effective strategies be developed to mold the future that you envision.
© 2015 Chad C. Harvey. All Rights Reserved