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.