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.