Across the country, the pandemic has created seismic shifts in workplace culture and structure. Some companies have gone completely remote. Others have adopted a hybrid work model; a few have packed up and relocated.
The Harrisburg region has been exempt from none of it, but was shaken nonetheless by the exits, announced this week, of two corporate giants who have long based their headquarters in Cumberland County.
The Rite Aid Corp. on Tuesday announced it will relocate its corporate headquarters from East Pennsboro Township to a new “enterprise headquarters” in Philadelphia.
On Thursday, Harsco Corp., based in Wormleysburg, announced it was also relocating to Philadelphia.
“It is concerning,” said Indrit Hoxha, an associate professor of economics at Penn State Harrisburg. “We are losing two corporate headquarters. Those are white-collar jobs. On the other hand, our area has been gathering new businesses. Warehouses and what not. I don’t think they are exactly the same. One is a white-collar job and the other isn’t but it pays the rent.”
Cumberland County officials said the region is growing and vital, and the numbers affected appears to be small.
Rite Aid pointed to the pandemic as a change agent into how the East Pennsboro Township-based company conducts business. Rite Aid now will focus on allowing its corporate employees to work remotely and come together occasionally in “collaboration hubs.”
Harsco, on the other hand, said it planned to migrate its Wormleysburg headquarters to Center City Philadelphia as a way to fuel growth and diversity. Harsco employs 12,000 people, but only about 100 in the Harrisburg area.
Harsco spokesman Jay Cooney said the pandemic had nothing to do with the restructuring plans.
“We are confident that this move to America’s sixth-largest city will provide us with more options to the future resources needed to fuel our growth including a strong infrastructure, a much larger and diverse talent pool, and closer proximity to our customers and federal government agencies,” said Harsco chairman and CEO Nick Grasberger.
Still, news of these two moves amid the pandemic and its impact on the corporate landscape has generated concern about the deeper ramifications of the region losing two major global business entities.
The pandemic, whether directly or indirectly, has affected the corporate outlook, Hoxha said.
“The pandemic made a lot of firms rethink how they are doing business,” he said. “They started seeing a lot of companies work from home. They started thinking can we get rid of these costs. Office space. They tend to be costly.”
Harsco expects the vast majority of corporate jobs in central Pennsylvania to migrate to Philadelphia, although several business and office staff positions will remain in the Camp Hill area.
Rite Aid’s vice president of communications Jeff Olson said he doesn’t expect any jobs to be lost, as corporate employees will continue to work remotely.
Still, the ramifications of these major business moves are typically felt in three ways, Hoxha said: directly, indirectly or induced.
The direct effect typically entails job losses, gains and the immediate economic activity resulting from a company relocation. The indirect effect relates to the ancillary impact a company has on other businesses —everything from catering food to the workforce to services. The induced effect generally refers to the impact a business has on spending at the granular level — meaning the more a worker makes, the more that worker is bound to spend on the local economy.
“While there might not be a big effect immediately, eventually there will be restructuring,” Hoxha said. “There’s a big debate whether to continue working from home. If we end up having most people go back to work, they have to deal with office space. Will there be job losses down the road? Probably. The question is when.”
The Rite Aid Corp. is pointing to the pandemic as a main factor for its relocation plans. The East-Pennsboro based pharmacy giant is relocating to Philadelphia.
Mark Pynes | mpynes@pennlive.com
Ryan Unger, president & CEO of the Harrisburg Regional Chamber and Capital Region Economic Development Corporation, is not too concerned about these two corporate moves.
“We always want to see job growth in this region and will continue to make the case for continued investment and expansion,” he said.
Overall, he said, the Harrisburg region is showing a robust economic trend. The region, he adds, has added 12,000 jobs so far this year and it has an unemployment rate that is better than the state average. The Harrisburg region also continues to recover at a faster clip than other parts of the commonwealth and is growing in population.
According to the Pennsylvania Department of Labor & Industry the unemployment rate in July was down to 6.6 percent. The Harrisburg-Carlisle region was reporting a 5.1 unemployment rate.
“Overall the economic headwinds are good for this region and we’ve got a good ecosystem and good bones to continue to grow,” Unger said. “We will reach out to those companies and others to continue conversations and dialogues about current and future plans for expansion.”
Cumberland County Commissioner Gary Eichelberger echoes that sentiment. He doesn’t expect the Rite Aid and Harsco headquarters exits to have a huge impact on the county.
“I don’t anticipate either is going to have a significant ripple impact, as far as employment or housing,” he said.
Harsco hasn’t had a strong worker presence in the area, he noted, while Rite Aid has been in transition for a long time.
In the past, the area depended on a handful of big companies to employ people, something Eichelberger said is no longer the case as more mid-range companies have set up shop here.
“We’ve had a lot of companies coming in with far more impact with workforce,” he said.
One of the region’s largest employer — the Hershey Food Company — signaled a sustained firm footing in the region.
The Hershey based global confectionary, which reported $2 billion in net sales in just its second quarter this year, said it had no plans to sever its ties with central Pennsylvania.
“Hershey is our historical home for more than a century, and we remain deeply committed to the area as our headquarters and a location where we make many of our iconic products,” said company spokesman Jeff Beckman, company spokesman.
The food giant has three manufacturing plants within a 40-mile radius, offices and a plant in Hazleton.
“Our investments in the area during the past decade, including new and expanded plant operations, new corporate offices in downtown Hershey and a new fulfillment center in Annville are evidence of our deep commitment to managing our business in the area for the long term,” Beckman said.
In the aftermath of Rite Aid’s and Harsco’s relocation, the biggest challenge for Cumberland County is bound to be figuring out what to do with the vacant real estate the companies leave behind.
“There is going to be some significant real estate impact,” Eichelberger said, noting the office market has changed during the coronavirus pandemic as more companies pivot to remote work.
As the economic landscape continues to evolve, as a result of the pandemic and a slew of technological forces, investment decisions are increasingly going to be based on availability of talent, Unger said.
“So we will continue to focus on programs and resources and services that will highlight why we agree with U.S. News & World report that this is the best place to live in Pennsylvania,” Unger said. “We have access to a high quality of life at a low cost of living with available arts and amenities. We have Harrisburg and the surrounding region with access to recreation. I think we will continue to look for companies that want to take advantage of that and talk about the region as a place where you could potentially work remotely and connect to a more global ecosystem.”
PennLive staff writer Sue Gleiter contributed to this report.