Breaking Down the Business Climate in Lancaster County

Lancaster County, Pennsylvania, is situated in the southeastern part of the state. It’s known for its picturesque farmland, rolling hills, and traditional Amish communities.

Where is Lancaster?

Lancaster County consists of its namesake city and surrounding towns, bounded by the Susquehanna River to the west and Octoraro Creek in the southeast. Geographically, Lancaster County is characterized by fertile agricultural land, dotted with small towns and villages. The county is intersected by several major highways, including Interstate 76 (the Pennsylvania Turnpike), which runs east-west through the southern part of the county, and US Route 30, which bisects the county from east to west.

In terms of rail connections, Lancaster County is served by Amtrak’s Keystone Service, which runs along the Keystone Corridor, providing rail connections to major cities such as Philadelphia and New York City. Freight railroads also serve the area.

While the county has a small municipal airport of its own, the larger Harrisburg International Airport (MDT) is located about 30 miles northwest of Lancaster County, providing the primary air connectivity to the region.

What is SWOT?

We’ll use SWOT to understand the business climate a little better. A SWOT analysis (SWOT an acronym for “Strengths, Weaknesses, Opportunities, Threats”) helps identify the factors that can affect the success of a business or project. Broadly speaking, strengths and opportunities are internal and external positive factors, respectively. Conversely, weaknesses and threats are internal and external negative factors. We discuss more in detail how to use this technique on your website here.

An effective SWOT Analysis is just the first step in forming a strategy. The next step is to leverage strengths, overcome weaknesses, take advantage of opportunities, and mitigate threats. It is often used as a starting point for strategic planning and decision-making.

Analysis of Lancaster’s Business Environment

Strengths:

• Diverse Economy: Lancaster County boasts a diverse economy with strengths in agriculture, manufacturing, healthcare, tourism, and retail sectors. This diversification helps mitigate risks associated with economic downturns in any one industry.
• Strong Agricultural Sector: The county’s rich agricultural heritage and fertile land contribute to a robust farming industry, including dairy, poultry, livestock, and crop production. This provides a stable economic foundation and supports related businesses.
• Entrepreneurial Spirit: Lancaster County has a vibrant community of small businesses and entrepreneurs, fostering innovation and creativity. This includes a thriving artisanal and craft industry. The area also boasts numerous tech startups and niche businesses.
• Strategic Location: Positioned in close proximity to major metropolitan areas such as Philadelphia, Baltimore, and New York City, Lancaster County benefits from access to large consumer markets and transportation networks.
• Tourism and Heritage: The county attracts tourists with its picturesque landscapes, Amish culture, and historic sites. Businesses related to tourism, hospitality, and crafts thrive here.
• Skilled Workforce: The region benefits from a skilled labor force, particularly in manufacturing, construction, and technology sectors.
• Transportation Infrastructure: Proximity to major highways (US 30, US 222, PA 283) facilitates logistics and distribution for businesses.

Weaknesses:

• Limited Workforce Pool: While Lancaster County has a growing population, there may be challenges in sourcing skilled labor, particularly in specialized industries such as technology and healthcare.
• Infrastructure Constraints: Some areas of the county may face infrastructure limitations, including transportation and broadband access, which could hinder business growth and competitiveness.
• Seasonal Tourism Dependency: While tourism is a significant economic driver, the industry’s reliance on seasonal fluctuations may lead to revenue volatility for businesses dependent on tourist traffic.
• Seasonal Tourism: While tourism is a strength, it can also be a weakness due to its seasonality. Businesses heavily reliant on tourist traffic may face challenges during off-peak months.
• Limited Diversity: The economy is somewhat dependent on agriculture and tourism. Diversification into other sectors (e.g., tech, healthcare) could enhance stability.
• Infrastructure Gaps: Some rural areas lack robust infrastructure (high-speed internet, utilities), affecting business growth.

Opportunities:

• Growth in Healthcare and Biotechnology: Lancaster County has seen growth in healthcare services and biotechnology sectors, presenting opportunities for businesses to tap into emerging markets and partnerships.
• Sustainable Agriculture and Food Production: With increasing consumer demand for organic and locally sourced products, there are opportunities for businesses in sustainable agriculture, specialty foods, and agribusiness innovation.
• Tourism Expansion: Expanding tourism offerings beyond traditional attractions to include cultural events, eco-tourism, and culinary experiences can attract visitors year-round and diversify revenue streams for businesses.
• Infrastructure Development: Investments in transportation, broadband, and utilities infrastructure can enhance connectivity and support business expansion efforts in under-served areas.
• Entrepreneurship and Innovation: Encouraging startups and fostering innovation can further diversify the economy. Initiatives like co-working spaces, trade shows, and business incubators can attract new ventures.
• Agribusiness Expansion: Leveraging the agricultural base, Lancaster County can explore value-added agribusinesses (eg. organic products, specialty foods).
• E-commerce and Online Retail: Lancaster has become a brand in its own right. The rise of e-commerce presents opportunities for local businesses to expand their reach beyond the county. However, this goes both ways – competitors outside the area can poach customers.

Threats:

• Economic Uncertainty: Economic fluctuations pose risks to businesses in Lancaster County, namely in tourism. Recreation is often one of the first things scaled back in a household during an economic downturn.
• Competition from Online Retail: The rise of e-commerce platforms and online retail giants presents a challenge to traditional brick-and-mortar businesses in Lancaster County. You’ll need to lean on adaptation and innovation to remain competitive. Stress what makes you unique.
• Environmental Risks: Climate change, natural disasters, and environmental regulations may pose risks. The area is no stranger to tornadoes, otherwise rare elsewhere in PA. Such risks are real for businesses in agriculture, manufacturing, and tourism.
• Competition from Nearby Cities: Proximity to Philadelphia and Harrisburg means businesses face competition from larger urban centers. Even agribusiness can face competition from nearby Bucks and Lehigh counties.
• Labor Shortages: Despite a skilled workforce, shortages in specific industries (e.g., healthcare, tech) can hinder growth. That is, there is always a risk demand can outpace supply in the labor market.
• Regulatory Challenges: Businesses must navigate local, state, and federal regulations, which can impact operations and costs. This is especially true for agribusiness, which face mounting environmental regulatory burdens.

In summary

Lancaster County has demonstrated resilience and adaptability in its economic climate. Despite facing challenges such as an aging demographic and a tight labor market, the county has maintained a low unemployment rate and sustained consumer spending levels. Today, Lancaster County’s economic climate offers a mix of opportunities and challenges. Businesses should capitalize on strengths, address weaknesses, and adapt to changing market dynamics.