Should Old Acquaintances Be Forgot

Just an end of the year musing on something that Pittsburgh has admirably and fully now moved past: the loss of US Airways’ hub.  It was much more than an acquaintance.  US Airways and Pittsburgh were akin to a married couple.  But this relationship definitely deserves to “be forgot”.

For me, the blessedly last insult came when US Airways final scheduled flight made stops in Phoenix, Charlotte and Philly, bypassing Pittsburgh, the city that gave birth to the airline.  But that shouldn’t have surprised anyone knowing that American Airlines’ CEO Doug Parker was at that point in control of the corporate joystick.  A convicted drunk driver, (one of his arrests was related to festivities celebrating America West Airlines – “America’s worst” in my deliberately limited experience with them - takeover of USAir), Mr. Parker was considered a wunderkind at the start of his career at American Airlines but the path to corporate dominance would have required patience so he left for Lufthansa and then did a midair turn back to America West. Thus began his ascent to claim his place back at the top of his ultimate goal, American Airlines.  Along that flight path he jettisoned assets [workers, airport hubs, prior corporate agreements with government entities] as if they were excess fuel.  Pittsburgh and Greater Pitt was his biggest dump.

So now there’s no more US Airways [Useless Airways to many frequent fliers] on which to focus our opprobrium.  PIT now has the line-up of air-carriers standard at mid-sized, non-coastal airports [although I would like to see Alaska and Virgin added] with American in a somewhat outsized role due to history.  I know that frequent flier rewards programs are what inextricably bind many travelers to a particular brand, for better and worse. [Full disclosure: I’m a Million Miler on Delta.  Please know that MM status, along with an advanced booking, will get you ….maybe an exit row seat.]  So with American’s full transfer of US Airways FF program miles over to their own, the tendency in Pittsburgh’s frequent fliers flock, especially business travelers, will be to stick with American.  We should hope that tendency gets diluted over time.

Delta is the airline that, admittedly with local government subsidies that are, in turn, fairly standard at smaller airports, brought PIT back to having a non-stop European route.  OK, understood that it’s not a year round route but it’s a solid start.  Globetrotting Pittsburghers, especially higher-fare business travelers, should go out of their way to patronize that service.  And Southwest seems to be cautiously but continually adding to their routes from PIT.  I’m sure it caused some head scratching at SWA’s Love Field HQ when Pennsylvanians did not embrace Southwest’s PIT to PHL service.  It was that very route type, so similar to DAL-HOU or DAL-AUS, which built Southwest: intra-state city pairs that are many hours of driving time apart.  Sorry, US Airways frequent flier program had hogtied Pennsylvanians and consequently sucked more of their travel dollars to Phoenix HQ in order to finance Parker’s larger vision.  A vision where Pittsburgh now gives no whiff of competition to Philly.  Or Charlotte.  And as inside the company rumors have it, both those current hubs are about to be supplanted by Miami, a gateway almost equidistant from Europe, Latin America and Africa.  [Please don’t forget about the southern hemisphere where the world’s future is being born, literally.]

So wise up Pittsburgh.  Shake off old habits. Ring in some new.  You’ve now got more options than most mid-size airports.  Use them.  Or ultimately lose them and pay the price with higher fares and lower regional economic growth.

Let’s Note This One

It’s sometimes a good thing to look back, compare and then cogitate over events.  In the December 2, 2015 Federal Reserve “Beige Book” report, it was noted that for the Fourth Federal Reserve District, which includes western PA, sales of “new and existing homes rose almost 10%” compared with a year ago.  And “nonresidential contractors reported continued strong activity” in the commercial building sector.

On the same day, the National Association of Realtors in its 2016 forecast predicted Pittsburgh would be the second hottest housing market for millennials, pushed out only by Atlanta and ahead of Austin, Boston and Nashville.

The “Post-Gazette” reports that the millennial population of Pittsburgh is growing faster than the national average, with researchers at Cleveland State University’s [Cleveland!] Center for Population Dynamics saying “you could argue that Pittsburgh is the fastest-rising metro in the country in its population of college-educated 25-to34 year olds”.

And WalletHub, one of those popular sites that provides so many “best of” lists, has Pittsburgh pegged in the top 20 of Best Cities to Live ahead of Minneapolis and Charlotte and right next to Washington, D.C. and Portland.

At the same time, the Beige Book report quoted above also notes the following in the Fourth District economy: “The steel industry continues to struggle against an array of headwinds …”

How many years ago was it that if the steel industry struggled, Pittsburgh was on its knees.  Increased housing sales?  Growing population?  Forget it!  Remember a generation ago when the expression was “if the US economy gets a cold, Pittsburgh gets the flu”?  What a remarkable change has occurred.

Pittsburghers have always been proud of their city – and with good reason – but I also contend not proud enough.  Now let’s take some note of what has been wrought from our hills and river valleys.  And note it with real pride.

Pittsburgh’s Labor Market: the Future is Now

There’s been so much talk in both political and business pages about the Trans-Pacific Partnership, or TPP, that it got me to thinking about Pittsburgh’s increasingly smaller part in this larger and, for most, unsettling economic world order.

These far reaching economic partnerships are both credited with and condemned for broadening product and labor markets, with the result that both products and workers are further exposed to market forces.  But these international trade agreements are nothing new.  Trade pacts have always been concomitant with the actual trade.  Or maybe trade pacts were just realized in different guises than today.  Whether between Great Britain and China, Arabia and Africa, Portugal or Spain and the Americas – who knew if it was a trade pact or a police action or enslavement?  However characterized, contracts were drawn up and pathways of goods and people were established.

My concern here is how will Pittsburgh survive in this new global market, [same as the old global market, to paraphrase The Who]; one that shifts the rewards of income ever more quickly among producers.  We’ve all read the articles about income inequality and how higher incomes are going to better educated workers in “knowledge industries”.  One disconcerting item often noted about these industries is that they create employment in the hundreds, or low thousands at best.  The era of heavy industry or consumer goods production that employed tens of thousands with decent wage rates has moved away from America to cheaper labor continents.  And still America continues to lose at an astounding rate those types of jobs that require large number of workers, skilled or otherwise, engaged in a large production [I don’t want to limit this to “manufacturing”] enterprise.  Gone are the days when one company can supply enough jobs to build a whole town in America, Silicon Valley burgs notwithstanding.

Adding to this outlook is a piece recently featured on CNBC’s Web site where one well-regarded investor proffered that artificial intelligence will make “most” current jobs “obsolete”. Robotics has a lot to do with that and Pittsburgh will hopefully continue to develop that expertise cluster.  But more generally, I believe the only real growth in employment will come from those jobs that can only be provided by one human being to another.  Medical research, health care, education, and to a lesser extent what are known as business services such as legal, accounting and sales.  Yes, oil and gas production provided a boost to Pittsburgh’s and the nation’s economy recently, but it has also declined almost as quickly due to its cyclicality.  And jobs in software development have been a boon to a number of local economies but aside from over-developing the Bay Area, Boston and Seattle, the increase in GDP is again, so uneven, that these industries seem to be drivers of the new income inequality.

Pittsburgh needs and deserves a more well-balanced economy and one that provides employment in areas that will generate higher incomes to more workers.  Many careers that are characterized as “creative” industries, while injecting elements of excitement into the local scene, are not those on which to raise a family or build an economic engine.  I hope Pittsburgh’s leaders in education, healthcare and government see the distinctions among various job creation project in light of the larger, much larger, and very rapidly changing global economic landscape.

To echo a recurring theme of my own and so many others, and as the only idea I can think of to end this piece, I have to note that educational attainment seems to be the key to income and quality-of-life development.  More discussions on that topic to come.

It’s All Gonna Be Fine

OK, we’ve all been here before.  Everyone relax and keep doing what Pittsburgh is doing: moving forward to a continually brighter future.

It was just announced that US Steel Corp will not be building a new [architecturally mediocre, IMHO] headquarters in the Lower Hill.  Anyone who’s been reading the business sections recently has smelled this coming.  US Steel is no longer the leviathan of metal it once was.  In fact, it may have missed the survival boat altogether.  Larger primary metals companies have built worldwide operations, mostly via the Third World, admittedly where environmental and employment concerns are sadly less of a concern.

US Steel played their own part in this current state of affairs.  My father was a draftsman in their engineering department.  Besides working on projects from Pittsburg, California to Birmingham, Alabama to Gary, Indiana he also helped US Steel sell its project expertise [and maybe sell off its intellectual capital] to steel companies in South Korea and India and beyond.  But in the 1960s and 1970s, US Steel was invincible, right?

But back to Pittsburgh’s brilliant future.  Let’s acknowledge the future of any world class city is and has always been in “knowledge industries”.  Not to deprecate manufacturing with that statement: in the late 19^th and early 20^th centuries, making steel [or glass, or aluminum or ketchup] WAS a knowledge industry.  What Pittsburgh gave the world a hundred years ago was nothing short of an economic revolution on the same scale as what the Silicon Valley is doing today.  But in those lyrics of George Harrison, all things must pass away.

Alcoa took its headquarters to New York and that was a gut punch.  But there are still many hundreds on the North Shore and more importantly, many well paid high tech researchers at their suburban research center.  Mellon Bank’s purchase was almost worse in terms of local prestige.  That was truly a sell-out by an outsider [from Charlotte, of all the upstart places] who was simply climbing the Wall Street C-level ladder.  But in the aftermath of all that Pittsburgh has more BNY Mellon employees here than they have in New York City [albeit probably not on the same pay scale].  And Kraft Heinz says it will maintain dual headquarters after the merger.  Dual headquarters almost never work [unless you are Shell Oil].  What galls most about Heinz is that the Heinz name is woven into Pittsburgh’s psychic fabric.   But that speaks to my point….

It’s time to make new history; weave a new pattern.  It’s time to keep that social and economic loom working [pardon my overplayed analogy] full time to produce the cloth that will be Pittsburgh’s re-emergence as a world class city taking a prominent place among those cities located on humanity’s mental map.

Why Not Pittsburgh, Google?

This may be my laziest posting and certainly my shortest.  But I just saw a piece in a West Coast business journal that the City of San Jose is actively lobbying Google to be the next city with Google Fiber service.

So why not Pittsburgh?  It’s not like we don’t have any “Googlers” in town.  And hopefully were getting more all the time.  So what gives?  Already on the list are Austin, Kansas City, Provo, and upcoming Nashville, Charlotte and San Antonio.

Why not Pittsburgh?  Is anyone in Pittsburgh’s City government asking Google?  I mean, you can at least ask, right?

Regarding Immigration, Get Back to the Forefront Pittsburgh

Immigration has become topic Number One in the world, or at least in the first world’s media eye, with immigration reforms continuing to be a political hot potato in the US and mass migration from the Middle East and Africa perhaps leading to epoch changes to Europe’s demographics in ways seen only occasionally in world history.

Population migrations have occurred throughout history from the time Asian peoples crossed the Bering Strait into North America to the waves of southern and eastern Europeans who doubled America’s population within a couple generations and literally changed the perceived face of America in the Industrial Age.  So the 21^st century’s migrations should not surprise us.  It’s not a question of if we will allow these mass population movements; it’s a question of how established natives handle their new neighbors.

During the Industrial Age, Pittsburgh played a front and center role by being a prime destination for those “huddled masses yearning to breathe free”, as well as wanting to make a decent living for themselves in a new world.  That seems to be what today’s immigrants are seeking as they stream north from Latin America to US Sunbelt cities, and from the Middle East and Africa to northern Europe.  I want to see Pittsburgh reestablish itself at the forefront of places that more than just welcome; that actively seek, immigrants from troubled places.

These days, “everyone” in the region including Pittsburgh Mayor Peduto, Allegheny County Executive Rich Fitzgerald, every major higher-ed institution, every business-led association, and countless not-for-profit organizations chant the somewhat exaggerated mantra that “Pittsburgh is not diverse enough”, whatever that really means.  But if by one definition it means the region needs to attract more foreign-born residents then …let’s do it.  Usually the opportunity for a better life and a higher living standard are what attracts in-migrants be they from any geographic source.  Strikingly Western Pennsylvania has failed at that effort since World War II ended.  So maybe a different approach is what’s called for.

Assuming that different approach is needed, my challenge question is “Who is going to step up to the plate and work with legal authorities, the US federal government mainly but also international NGOs, to make it known that Pittsburgh wants you to move here?”  It’s really as simple as that.  If lack of diversity is a bad thing, all the high paying and high profile “directors” in diversity positions writing op-ed pieces deprecating our region will solve nothing.  One more local government commission or study on the subject will result in …one more report.  And because there is a defined and legal gatekeeper to immigrants from outside the US borders [the US federal government], there’s a defined procedure whereby any one of these diversity proponents with a law degree or human resource training should be able to develop a program to put Pittsburgh, again, at the forefront of immigrant destinations.

Stick to the Game Plan

Let’s face it.  The reason anyone starts a blog site is a bit of ego, some hubris, and lots of need to get things off their chest.  Guilty as charged.

So with that as an introduction I need to say that I believe there are so many good things happening in Pittsburgh now, and the City finally, FINALLY, has taken on a more optimistic spirit, with local cheerleaders aplenty, that besides an occasional special shout out to something of particularly exciting import, I am left with pointing out areas I perceive as lacking.  If you, the reader, can stand for that on a periodic schedule, thank you and read on.

A September 4, 2015 article in the “Post-Gazette” headlined “Tech industry driving office growth in Oakland and beyond”.  Duh uh.  The “tech industry” is about the only thing, other than healthcare, driving office growth anywhere, in this country at least.  Forty years ago or so the various economic development groups in Pittsburgh all realized the best path to revitalization was using Pittsburgh’s higher education community to build up a “technology” sector.  While that decision was prescient in hindsight to most of us and merely “on trend” to the really smart folks who lived economic development, something interesting happened on the way to building a technology based economy: “technology” became the economy.

Technology is THE engine of the 21^st century economy.  Heck, it’s the engine of our lives.  I realize that sounds like a platitude these days, akin to lending insight into the obvious, but it’s the reality that needs a full hearted embrace by the larger community.  “Dem mills ain’t comin back”.  Sorry but take a look at any employment report for Pittsburgh or the US in the last 20 years and it will tell you there’s a continual decline in our manufacturing sector overall.  Within that sector however it’s the “high tech” manufacturing that shows at least some income growth.  And that’s the story of all sectors.  Technological advances drive steelmaking, auto manufacture, healthcare, finance, retail, communications, and on and on.  If you can name it, it is an industry that is growing because of technology advances.

So let’s dispense with any lingering reverse snobbery in this region that still believes men and women who work in offices and research labs are somehow not as “authentic” as guys who 50 years ago sweated at much physical risk in a steel mill.  Technology IS today’s industry.  And everyone else is in a sector meant to serve the larger purpose of technology.  But I’ll leave that line of thought for a future screed.

Come back to the 5 and Dime …

What downtown Pittsburgh really needs is a good 5 and dime, a variety store like another G.C. Murphy or H.L. Green.  In 2015 those stores are called Target or Big Lots or even TJ Maxx to some extent. And dare I mention WalMart?  Those types of stores fill the daily needs of the broadest swath of incomes and tastes, commuters and residents.  But instead, many years ago, Pittsburgh got a solution for which there was no problem.  It’s taken some time but the proof of that contention has appeared.

Macy’s announcement to close its downtown store points out more than just the evolution of the local, or even national retail environment.  The fact that the closing was not met with howls of anguish from Pittsburgh politicians and pages of copy in local newspapers analyzing the, surely negative, ramifications speaks volumes about Pittsburgh’s newfound self confidence.  The closing’s shock was mitigated in the same announcement with plans that the former Kaufmann’s building will become an upscale mixed use development which in turn supports recent assertions of Pittsburgh’s attractiveness as an investment locale.

But here I call attention to the case for remembering recent history – and hopefully not repeating it.  Ever again.  It wasn’t so long ago in the administration of Mayor Tom Murphy that the City taxpayers were committed to provide subsidies to May Department Stores so they could desecrate the architectural gem that was the former Mellon Bank building across from Kaufmann’s in order to insert a Lord & Taylor department store.  At the time I believed those types of subsidies were folly and time has proven me correct, not that it’s a reason to take satisfaction.  The important point is that the high gloss veneer provided by upscale retail is not a basis for economic development.  I am not opposed to government subsidies when they help increase employment or social wellbeing in an area.  But taxpayers deserve a real return on government investment.  For economic development projects, this means recruiting businesses that provide jobs with wages that are higher relative to the local norm and will also return tax revenues to the subsidizing government entity.  Consumer retail outlets have historically shown they are not economic growth engines.

Instead of pouring public monies into retail and real estate schemes, the City’s past Administrations would have been more productive to partner with our universities and hospitals to help expand infrastructure needed for their growth initiatives which in turn would have added high income jobs.

During the Richard Caliguiri administration I recall there was an effort to recruit a Macy’s department store to Pittsburgh in a downtown mall development, City Center, proposed for the Grant Street corridor.  I remember at the time comments made about how Pittsburgh would enter the big leagues if we had a Macy’s. Guess what? The Universe always gives you what you ask for, just not usually in the way you expect.  We got our Macy’s and in fact Pittsburgh is getting back to the economic big leagues – but the two are unrelated.  Retail follows income; retail does not create income.  Income creation is the key to economic and social development.  And Pittsburgh still sits woefully low on per capita income rankings for major metros.

Pardon a little dig.  After Mayor Murphy’s pyrrhic success at recruiting Lord & Taylor to downtown [as well as his failure to bring Nordstrom to downtown’s Fifth Avenue Place – he did love a good department store project], did His Honor move on to other development projects within Pittsburgh?  Why no; he moved to that income producing freight train that is Washington, D.C. and the Urban Land Institute, while leaving behind what became an architecturally damaged structure in the very heart of our downtown.  Experience is the best teacher and we usually learn more from failures than successes.  I hope those City officials involved in these retail fiascos remember their lessons when expounding on solutions for America’s urban areas from well located think tank pedestals such as the ULI.  

And what downtown Pittsburgh needs is a good 5 and dime. With a shout out to Robert Altman.

It Pays to Advertise, even a little

No, this is not a discussion about Pittsburgh’s seemingly genetic inability to promote itself.  I’ll make that topic a rant for the future.  As Steve Case, the founder of AOL said at a recent economic development conference in Pittsburgh, the city “has a humility, a reluctance to beat its chest and talk about all the great things” happening here.  But these are times when such an approach is more vice than virtue.

What I’d like to see is Pittsburgh advertise itself as a destination for the job seekers from across the globe, but specifically today, those that will be coming from Greece.

Look, the economic mess in Greece is not going to be resolved with a quick solution.  Already there are reports of a “brain drain” as Greeks with the education, skills and financial wherewithal migrate to countries from northern Europe to Canada to Australia.  I have to believe because of history and family connections, a certain number will come to the States.

The “Washington Post” recently reported that Greece’s population has a higher percentage of college graduates than the US.  Those degree holders would find Pittsburgh a natural landing spot.  With a historically large Greek community already in place and with jobs available in the fields of medicine and engineering, Pittsburgh is attractive to degreed immigrants from any country on earth looking for a better life.  Isn’t that obvious?

So let’s advertise it.

Why All The Fuss?

There’s a bit of a kerfuffle regarding Uber hiring away 40 plus Carnegie Mellon staffers from CMU’s National Robotics Center for Uber’s new, and welcomed, driverless car engineering office in Pittsburgh.  Is there a problem here?  I don’t get it.  What’s not to like?  Isn’t “the new economy” all about disruptions such as this.  That’s a declaration, not a question.

A dynamic economy at any geographic level is constantly changing.  This is precisely what Pittsburgh lacked for two or more generations: a chance for individuals to reinvent themselves, let alone the city and region.  It’s why the now talked about “Diaspora” of the young and the talented happened when they moved to the East Coast, the Research Triangle, Texas and Florida, and about every other point beyond.  All they [we] were trying to do was find a place to best use talents.

And that’s the chance Uber is giving to those CMU engineers.  I’ve read the comments coming from CMU upper level managers and they are surprisingly [to me] chary with their enthusiasm for this turn of events.  I would think they should be thrilled that their staff has opportunities to move into what must be higher paying jobs in the private sector.  But it seems not; which is all too typical of an industrial era management style reminiscent of indentured worker conditions.  In contrast let’s particularly note that Robotics Institute’s managers are very enthusiastic about this enterprise.

Of course CMU’s high level managers, as management types anywhere would be, are concerned that they now have to replace these engineers.  That’s management’s job – hiring and staffing.  In the nationwide robotics market, these folks are in demand.  So maybe Pittsburgh’s notoriously lower wage scale needs to finally, FINALLY, start rising.  It’s the only way the region will compete to keep the aforementioned young and talented in the area.  And forget the BS about “well we can pay less in Pittsburgh because the cost of living is lower”.  The cost of living is lower because income levels are depressed.  Those incomes provide only so much anyone can pay for a mortgage, as one example, thereby keeping Pittsburgh housing values, and overall cost of living, depressingly low.  But trust me, as a former young person I can tell you, after you graduate from college, the last thing on your mind are single family housing prices.  A $3 flat white or a $7 craft beer is the same price on University Avenue in Palo Alto as it is on Penn Avenue in East Liberty.

So let’s celebrate a too-rare big name, national headlines win for Pittsburgh.  The future is creeping into the local job market, disrupting the all too comfortable lives of organization managers in the region.  Finally.

Couldn’t Have Said It Better

OK, maybe I’m being lazy.  But maybe I am simply deferring to a better intellect.  Charles Rosenblum’s cover piece in the online edition of the “Pittsburgh City Paper” deserves to be read by all.  Thank you Mr. Rosenblum.  I concur and only wish I had written about this sooner myself.

Go Here: http://www.pghcitypaper.com/pittsburgh/why-cant-pittsburghs-building-boom-produce-better-buildings/Content?oid=1824154

Some History for Perspective?

Thursday April 16, Allegheny County Executive Rich Fitzgerald is shown on front and landing pages of local media officiating at an opening event for a new gourmet market in downtown Pittsburgh.  So is this grand opening a rare enough event for the Allegheny County Executive that it warrants this much media coverage?  This takes us back a few years when the first piece of economic development at Greater Pittsburgh International Airport was the grand opening of a Sunoco gas station and county and State politicians all showed up to celebrate.

At the end of 2006, IBM released a marketing piece touting a “partnership” with UPMC using the following headline: “University of Pittsburgh Medical Center partners with IBM to make tomorrow’s patient care a reality”.  OK that sounds great and over the last seven years one would think IBM could be made to see the advantages of establishing some research programs in healthcare information near its partner, UPMC.  But that has not occurred.  Meanwhile in Austin, TX, AthenaHealth of Watertown [Boston], MA announces it will take 110,000 sq/ft of office in downtown and hire over 600 employees for a new development center taking advantage of Austin’s “dynamic talent pool”.  Obviously, despite the presence of CMU, Pitt, Duquesne and two dozen other higher ed institutions in metro Pittsburgh, we lack a sufficiently dynamic talent pool.

This year Pitt, CMU and UPMC announced a partnership to develop the most current technology in data analytics for the healthcare field; a great idea.  Meanwhile Massachusetts economic development officials this week announced that IBM is establishing IBM Watson Health and will be locating its new health care analytics division in the Boston area, hiring “hundreds of employees” and partnering with some of the biggest names in health care to provide an analytical software able of capturing and analyzing all a person’s health information.

On April 8, 2015 Dennis Yablonsky of the Allegheny Conference on Community Development delivered the economic development scorecard for the Pittsburgh region.  At what was called “Win Day” in previous years this year was played low key with no splashy title.  Job creation in the region dropped 22% from 2013: with 5,406 new jobs created due to the Conference’s efforts.  [Note the importance of those six extra jobs suffixed onto that number.]  On April 16, 2015 State of Georgia and Atlanta officials announced the creation of 900 new jobs by Kaiser Permanente for a midtown Atlanta location.  In one swoop and for one employer, Atlanta gains 16% of the yearly total for metro Pittsburgh.

All this is with the backdrop of the US economy gaining economic momentum.  Is Pittsburgh still locked in much of the same ol’ same ol’ where we look good when the rest of the US is suffering because we’re already so far down that we can’t drop further and thus our region looks good by comparison?  But then when economic growth returns to majority of other places, Pittsburgh and western PA is left further behind.  I’m one of those who is sick and tired of the “slow and steady” apologia that local leaders offer when it comes to discussions of Pittsburgh’s economic vitality.

On April 15, 2015 GSK, the international pharmaceutical company, announced the closing of its Moon Twp regional offices losing 274 jobs and moving operations to New Jersey.  And from all reports and plain old logic, reports have it that sooner rather than later Kraft Heinz [note the order of names in that combo] will consolidate headquarters in Kraft’s 900K sq/ft suburban Chicago campus, removing one of Pittsburgh’s most venerable and historically identified corporate names.  That would be a cruel blow for more than just the jobs and prestige: Illinois is a governmental basket case about to go bankrupt.  And no one can claim Chicago area weather is better than Pittsburgh’s.  But a more diverse corporate community and an international airport hub served by the world’s two largest carriers does have attractions.  [Ask Seattle about losing Boeing which relocated to Chicago a few years back, much to this blogger’s amazement.]  But I’ve previously blogged on losses like these as well as our minor wins like retaining downsized corporate headquarters like US Steel and how Pittsburgh simply needs to replace these legacy companies with growth engines of the future.  Kaiser Permanente, AthenaHealth, IBM Watson …where are the new companies for the 21^st and 22^nd centuries.  Is this the best we can do?

Various Things

HJ Heinz is buying Kraft Foods.  Or merging with them.  Dual headquarters of Chicago and Pittsburgh will be kept.  For now.  And so Pittsburghers are apprehensive as we smell the upcoming loss of another corporate name locally.  But really, we’re talking “old school” here. While Heinz is a venerable name, woven into the fabric of Pittsburgh and western PA, and is in fact a very relevant consumer products company, it is not an entity that will create economic wealth that Pittsburgh going forward needs.  So don’t sweat it.  Work toward the future.

A similar case is Mayor Peduto and the City Planning Commission prodding US Steel to revise their architecture plans for US Steel’s new headquarters building in the Lower Hill development.  I agreed with their assessment of its design from the first time I saw it – it looks like any ol’ suburban office building in any ol’ city in America.  But instead of tweaking the nose of a local corporate mainstay, that is downsizing their HQ office from 400K square feet to close to 250K, just celebrate the fact that US Steel is staying in Pittsburgh when Chicago was clearly an option.

 

Which leads us to this: recently Pitt and CMU announced [another] joint technology development effort, this one to focus on medical information and health care data.  An excellent 21^st century strategy.  Here’s hoping this one produces needed technology with attendant spin-off enterprises for western PA.  The reason this effort is more newsworthy and noteworthy than anything to do with Heinz or US Steel can be seen in a couple real estate deals in San Francisco, which are in fact an indication of employment numbers.  Within the last year, two Bay Area companies, Uber [who we should be proud to say just established a Pittsburgh robotics research center] and Salesforce.com announced new office leases in the heart of downtown San Francisco.  The square footage numbers are eye popping: Uber is taking 900K sq/ft and Salesforce.com taking 2.1M, that’s million, sq/ft.  Combined, that’s more than another 600 Grant Street building.  Pittsburgh could use some of that.

We should still be hopeful that when oil and gas prices rebound, and they surely will, both Shell Oil and Chevron Corp will be putting regional offices in or around Pittsburgh.  I’m not a “city snob” – anywhere in the metro area they want to establish those will be great for what we all call Pittsburgh.  But again, those enterprises only have so much airspace in which to grow.  The future is calling.  Let’s see if Pittsburgh’s movers and shakers can push the City to embrace it more fully.

The Struggle Continues

No I am not referring to the struggle for full racial equality even though a recent University of Pittsburgh study pointed out that Pittsburgh still has a ways to go in the area of economic equality for its African American residents.  No, I am talking about the overall economic development of the city and region.  A series of reports this year point out base level weaknesses in Pittsburgh’s economy that can only be addressed through continued hard work.

The Brookings Institution’s Metropolitan Policy Program ranked the world’s 300 largest metro areas for economic vitality and Pittsburgh was a sorry 253 out of 300.  Admittedly only two US cities cracked the top 50 – Austin and Houston, Texas – but that illustrates how much catch-up we, and the rest of America, need to play.

Related to that report is one from the US Conference of Mayors on projected job growth for 2015 with Pittsburgh forecast to have a paltry 1.6% job growth or 18,000 total new jobs this year.  While any job growth is welcome to those of us who lived through the death of the local steel industry, this percentage is very weak compared to more dynamic cities with which Pittsburgh must compete.

And which cities might those be? An example is found in “The Wall Street Journal” story on Google building fiber optic cable systems in the next round of cities [currently in Kansas City, MO and Austin, TX] including Atlanta, Nashville, Charlotte and Raleigh-Durham.  Note that all of these cities [excepting KC] are listed in a Forbes ranking of the 10 fastest growing cities in America.  Along with the expected Seattle, Denver and San Francisco, cities in Forbes’ ranking share one thing: a vibrant high tech sector. The existence of a fiber optic network, already found in many European and Asian cities [not to mention municipal systems in Provo and Chattanooga], will only enhance these cities reputations among job creators, both corporate and individual.

I am confident Pittsburgh is making strides developing a critical mass of high tech jobs.  But these reports are evidence that no one involved with local economic development can rest for a moment in that effort.  High tech is not some silo of employment similar to manufacturing or agriculture.  High tech is today’s only means of job creation in substantial numbers.  Every job category that is quantified – from agriculture to manufacturing to finance to health care – is dependent on high tech advances for its job growth.  Period.

The last down notes to add to my dirge are negative headlines related to two employment sectors that helped Pittsburgh limp through the Great Recession better than most: oil and gas, and healthcare.  Headlines in both Pittsburgh newspapers note falling oil prices are lowering Marcellus shale employment, with Chevron “paring its workforce” in its Appalachian division as one example.  And the “Post-Gazette” this week reported that healthcare employment at Pittsburgh area hospitals dropped 2.5% from 2014 levels.

Never end on a bad note, I’ve been taught.  So here goes: in almost each of the negative reports, when the associated authors were asked specifically about Pittsburgh, all of them ended with some statement expressing real optimism for Pittsburgh’s future.  Yes our city has “buzz”; positively so.  Just go to NEXTPittsburgh.com to see a listing of promising new high tech start-ups for evidence of such.

But the struggle must continue.  New hotels and restaurants and stores all enhance the overall quality of life and in the long run make Pittsburgh a more attractive place for a creative population.  But the bottom line is that all these things need income – money - to grow and thrive.  And income comes from jobs.  And in the new worldwide competition for jobs, no one, especially a comeback story like Pittsburgh, can rest for one moment.