The local economy in 2012 proved mixed as the region climbed out from the recession and looked hopefully to 2013.
The post-recession year was marked by some good news and some bad. While the region saw no devastating plant closings or layoffs, nor did it see any dramatic economic development announcements take hold. Rather, there were promises of what would come. Resort developer Kalahari eyed the region for a huge development in Tobyhanna Twp., possibly the largest construction project in Poconos history. A new initiative looked to develop the region's biosciences sector.
Energy prices remained low. The housing market appeared to hit bottom and turn around. Huge natural gas infrastructure projects were under way, or close to launching, including the Constitution Pipeline, other gathering systems and natural gas-fired power plants.
Persistently high unemployment
The Scranton/Wilkes-Barre area continued to hold the unwanted distinction of having the highest unemployment rate among the state's 14 metro areas for the year. The most watched economic indicator, unemployment in January began at 8.9 percent and rose gradually though the year, topping out at 9.6 percent in the summer and settling there in October, the last month for which data is available. A closer look at the data shows some good news: an increase in the number of people working in the region and more jobs in the area. The residential unemployment rate remains high, however, because of the growing number of sidelined workers re-entering the labor force.
Biosciences initiative unveiled
Area business and civic leaders unveiled in December an initiative that may be the next big sector of the Northeast Pennsylvania economy: biosciences. Hoping to leverage a nascent biosciences sector, the Commonwealth Medical College and Northeast Pennsylvania's benefits of cost and location, the multi-county initiative aims to make a concerted pitch to the biosciences sector, which includes everything from agriculture to medical devices and pharmaceuticals.
Mericle's massive development
Mericle Commercial Real Estate Services announced plans in August for a massive development of commercial real estate in Luzerne and Lackawanna counties that will open up approximately 15 million square feet of space and the opportunity to create or retain thousands of jobs in Northeast Pennsylvania. The company is preparing more than 90 sites and building dozes of speculative commercial buildings on about 1,700 acres it owns in 10 business parks in the two counties.
TMG's new headquarters
The fast-growing insurance administration company TMG Health Inc. cut the ribbon on a $20 million complex at Valley View Industrial Park in the fall.
The 150,000-square-foot building will house up to 1,250 employees involved in medical billing and claims management, combining the company's Dunmore and Scranton workforces. TMG is based in King of Prussia and opened an office in Scranton in the early 2000s.
Downtown housing boom
Despite the fiscal problems of Northeast Pennsylvania's cities, growing numbers of people are moving into urban areas, leasing new loft apartments in converted factories and office buildings.
The city of Scranton saw more than $10 million of investment in three ongoing developments adding 74 apartments to Central City. About half of those were at the former Scranton Chamber of Commerce Building at Mulberry Street and North Washington Avenue. Art Russo, a Scranton building contractor and real estate developer, already had several new apartment conversion under his belt and added more than two dozen more at a former factory at the 800 block of Adams Avenue in Scranton.
In Wilkes-Barre, Sam Johnson of Weatherly turned a bank building on South Main and Ross streets into 16 high-end apartments. Penthouse apartments on top of the Luzerne Bank building on Public Square have been fully rented for as much as $1,700 per month, underscoring the demand for downtown living. The Empire Silk Mill building at 92 S. Empire St., is being renovated into 30 loft apartment.
Snö Mountain red ink
One of the region's top attractions, Snö Mountain, entered bankruptcy in the fall, and a judge ordered the ski resort and water park be sold in 2013. Snö Mountain/Snö Cove faces more than $24 million in debt. The 440-acre Scranton skiing and water park filed for Chapter 11 bankruptcy reorganization Oct. 15. The once-county owned resort had been hurt by high capital costs, competition from other parks, and poor weather conditions. It continues operating.
FNCB gets current
The region's largest community bank, Dunmore-based First National Community Bank, made a major move toward emerging from its fiscal morass by getting current with its financial reporting. Under pressure from regulators the bank had to restate several quarters of questionable financial statements and spent a few more quarters sorting things out before reissuing statements and getting up-to-date in the summer, putting it on track to restoring faith with regulators and shareholders.
But new challenges emerged in 2012. A derivative action brought by a shareholder was announced in spring. One of its insurers, key to a settlement to the shareholders, is fighting to have its policy protecting bank officers declared void. The bank's largest shareholder and former chairman of the board, Louis DeNaples continues to fight in federal court to overturn the lifetime banking ban and forced stock sale imposed on him by regulators.
Marcellus Shale pullback
The rush for Marcellus Shale gas in Northeast Pennsylvania took a breather in 2012 as natural gas prices plummeted and oil and gas exploration companies shifted their efforts to higher-priced oil and wet gas deposits in Western Pennsylvania, Ohio and elsewhere.
The withdrawal helped cool the overheated economy in the Endless Mountains region where the cost of living, particularly housing, skyrocketed in once sleepy hamlets rural towns. Drilling continued, but at a slower pace. Also, pipeline developments, including the Constitution Pipeline, and gathering system construction helped maintain activity and jobs.
Falling energy prices
Natural gas prices, electricity prices and - by the end of the year, even gasoline prices - were down in 2012, a bright spot among otherwise dim economic news.
Energy prices slid as a result of the recession, when less power is generally used. Prices have remained low even as demand increased. As natural gas reserves in shale formations have been tapped and new production come on line, natural gas prices hit near historic lows, pushing down utility prices paid by households. Low gas prices have driven down electricity prices as power generation shifts to natural gas from more expensive fuels.
The price per gallon for gasoline peaked at more than $3.90 in late summer then slid to near year-ago levels of about $3.30 per gallon.
Transitions at chambers
The Greater Wilkes-Barre Chamber of Business and Industry announced a new CEO, while the Greater Scranton Chamber of Commerce announced its long-time chief would step down.
William D. Moore, formerly a principal with Organization Dynamics in Connecticut, was named the chief executive officer of the Wilkes-Barre chamber in May. He replaced Todd Vonderheid.
In November, Austin Burke announced he would step down at the Scranton chamber after 31 years as president. He remains in his position until a successor can be found. His work in Scranton and as part of regional efforts has propelled him to national initiatives. For 10 months, Mr. Burke served as Pennsylvania's interim Secretary of Community & Economic Development under Gov. Ed Rendell.
Changing restaurant landscape
The dining landscape in Northeast Pennsylvania changed greatly in 2012, particularly in downtown areas.
Very sensitive to competition and recessions, many long-time eateries called it quits. Scranton lost two long-time eateries - Farley's Eatery & Pub and the Banshee Pub. Newcomer Jersey-Style Subs and Cangiano's Italian Specialties just across Spruce Street from each other, also closed. Cangiano's replaced by Cafe Trio.
Wilkes-Barre downtown has taken a more international approach. A sushi restaurant, Akeno Sushi, opened in March at 72 S. Main St., formerly occupied by Bonvie's Beefy King. An Indian restaurant is slated for the space formerly occupied by Blue Chip Gourmet at East Northampton and South Main streets. Bottlenecks Saloon and Eatery recently opened at 3 S. Main St. in space next to Barnes & Noble formerly occupied by Wendy's. Developers also had plans for Brick and Mortar's Steakhouse, a combination of a New York Jewish delicatessen and a "Rodizio-style" Brazilian steakhouse, on Empire Street.
Declining Cinram sold
Amid the decline in pre-recorded media, digital replicator Cinram Manufacturing Inc. was sold in 2012.
Cinram International Income Fund sold off most of the company's assets to an Arizona private equity concern, Najafi Companies, for $82.5 million. Cinram, which has a manufacturing facility in Olyphant, was in bankruptcy. About 500 people remain employed there. Cinram's predecessor helped develop the CD technology, revolutionizing and digitizing the music business. Once a pillar of the region's economy with close to 3,000 employees in the busy season, the replicator has declined in the Internet era, where media is transferred digitally and fewer CDs or DVDs are purchased.
Kalahari eyes Poconos
A Wisconsin-based resort developer has proposed a water park, resort and convention center in the Poconos that could be the largest development in the region's history.
Kalahari Resorts is eying the site of the historic Inn at Pocono Manor in Tobyhanna Twp. for the $350 million project. This would be the third indoor water park in the Poconos, joining Great Wolf Lodge in Scotrun and Split Rock Resort in Lake Harmony. But Kalahari would be much larger. Kalahari officials said the project could include a water park and a 300,000-square-foot convention center that would be one of the largest in the state. The project could employ as many as 1,500.
Guard Insurance sold
Guard Insurance Group in Wilkes-Barre was sold to a unit of billionaire Warren Buffett's Berkshire Hathaway.
Clal U.S. Holdings, which owns Guard Insurance Group, was sold to Nebraska-based National Indemnity Co. for $221 million, according to a report from Clal to the Israeli stock exchange. As part of the sale, National Indemnity Co. also took on a $48 million loan that Clal borrowed from a large international banking institution, according to the report. Carl Witkowski, chief operating officer of Guard Insurance Group, said the sale will mean growth and additional jobs.
Mohegan Sun breaks ground
Bruce "Two Dogs" Bozsum, chairman of the Mohegan Tribe, used a jackhammer to break ground for a $50 million hotel and convention center at Mohegan Sun at Pocono Downs in Plains Twp. in July.
The seven-story hotel with 238 rooms is expected to be complete by the end of 2013. The hotel will create more than 270 permanent positions at the hotel and 350 construction positions.
The casino also saw leadership changes last year. Bobby Soper, president and CEO, was promoted to run the Mohegan Sun casino in Uncasville, Conn. Mike Bean became president and general manager of the casino in October.