Tuesday, December 19, 2006

Pittsburgh is Still a Major Manufacturing Center -- Really!

One of the most counterproductive myths that still persists in the Pittsburgh Region is that manufacturing is dead and gone, or at best in the last stages of hospice care, wheezing and on life support.

Nothing could be further from the truth.

The fact is that manufacturing is the single biggest sector of the Pittsburgh Region’s economy in terms of income. Although only about 9% of the jobs in the region are in manufacturing, over 14% of the region’s employment income comes from manufacturing. That’s because the jobs in manufacturing have better pay and benefits than other sectors. Pittsburgh ranks 12th among the top 40 regions in the country in the proportion of regional income from manufacturing, and Pittsburgh’s manufacturing jobs have the seventh-highest average earnings.

Isn't the Pittsburgh Region still losing manufacturing jobs? Yes, but so is everyone else.

Pittsburgh lost about one-fifth of its manufacturing jobs between 1999 and 2005 – a reduction of over 27,000 jobs. But the U.S. as a whole lost almost the same proportion of its manufacturing jobs. In fact, every major region in the country lost manufacturing jobs, and many lost a larger share of their manufacturing jobs than did the Pittsburgh Region. Silicon Valley lost 29% of its manufacturing jobs. Austin lost 27% of its manufacturing jobs. Boston lost 23% of its manufacturing jobs.

Yet even though the number of manufacturing jobs decreased, the amount of personal income in the region from manufacturing increased. That's because we're growing the high-paying jobs while we're losing the lower-paying jobs.

If you go back a little further, before the recession of 2001-2003, you find that Pittsburgh was growing manufacturing jobs well ahead of the national average and ahead of most regions outside of the south and west. Regions like Boston, Charlotte, and St. Louis actually lost manufacturing jobs in the 1990s, while the Pittsburgh region was growing them.

Job creation, however, is a poor measure of the health of manufacturing firms and a particularly poor measure of the manufacturing sector's impact on a region's economy. In the good old days, manufacturing firms employed everybody, including their lawyers, accountants, engineers, and janitors. Now they contract out most of those functions. So when you look over time and see manufacturing jobs decrease and service sector jobs increase, that partly reflects a shift in the location and classification of jobs, rather than some fundamental death of one industry and birth of another.

One only has to look at recent news announcements to see that the Pittsburgh Region is still a very attractive center for manufacturing:

- Westinghouse's decision to expand here is a MANUFACTURING success story, and winning the China contract will be a boost to our economy.

- Medrad's decision to build a new headquarters AND medical device manufacturing plant here is a MANUFACTURING success story.

- The conversion of the Sony Video Glass Plant into an ethanol plant is a MANUFACTURING success story (and probably a boost to the agricultural industry, too), as well as a harbinger of the opportunities for our region in the energy sector.

The myth that manufacturing is dead or dying is very dangerous because it means that people may think it's unimportant to keep the region competitive for manufacturing, and that could cause us to lose the thousands of high-paying jobs that we don't seem to realize we still have.

If we don't lower business taxes, we could lose manufacturing jobs.

If we don't keep electricity rates competitive, we could lose manufacturing jobs.

If we don't keep air quality regulations competitive, we could lose manufacturing jobs.

Manufacturing jobs can go anywhere, and costs are important.

Manufacturing is a huge piece of the regional economy, and we have to both recognize that and work as hard as we can to preserve it, not to mention make it even bigger.


Blogger vishnuprasath said...

To get a good job, just focus your Search job, make it so that you can find the jobs that aren't readily available.

2:08 AM  

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