Saturday, February 16, 2008

Very Good News: PPG is Staying in Pittsburgh

Some extremely good news for the Pittsburgh Region appeared in the Pittsburgh Tribune-Review today (Saturday) in an article that most people will probably overlook as a story about commercial real estate. In the article, Ron DaParma reports that PPG Industries has extended the lease for its headquarters operation in PPG Place for ten years beyond the current lease expiration of 2011.

This might appear to be pretty ho-hum stuff unless you understand that PPG's previous CEO, Raymond LeBoeuf, made no secret of the fact that the company was unhappy with the way the City of Pittsburgh had treated it, with what it perceived as greater interest by the state and region in attracting new companies than retaining existing companies (in contrast to other states and regions that had actively courted PPG to move out of Pittsburgh), and with the region's lack of appreciation for PPG's many civic and philanthropic contributions. One of the reasons LeBoeuf sold PPG Place was to make it easier for the company to move out of Pittsburgh if it chose to do so.

What would be at risk if PPG left? As Ron DaParma points out, PPG has over 1,000 employees at PPG Place, and it has almost 2,700 in total across the region in its three R&D centers, its remaining manufacturing operations, and its headquarters.

That means that PPG's lease renewal is every bit as significant as Westinghouse's decision last year to keep its 2,200 jobs here and expand by an additional 1,000. Yet Westinghouse's decision was front-page news, and PPG's wasn't. The difference? Westinghouse explicitly threatened to leave, and PPG didn't. The other difference is that Westinghouse asked for significant incentives to stay, and got them, while PPG didn't. So, in fact, PPG's decision probably deserves an even bigger headline.

Although it appears that PPG is here to stay, at least for a while, the region would do well to heed former CEO Ray LeBoeuf's words in 2003: "Pittsburgh isn't actively supporting the companies that are here...Before they go out looking for new people to come in, they should look at who's here. When we look at new initiatives, Pittsburgh is not the only option we look at...No one has asked me how to keep our business in Pittsburgh."

What can the state and region do to support existing companies as well as attract new ones? One obvious thing to do is make the state's business taxes more competitive, starting with reducing the corporate net income tax below its current second-highest-in-the-nation level of 9.99%. That will make the state more attractive to its existing businesses as well as help attract new businesses. And it's a much fairer way to do it than handing large subsidies only to new businesses or those that threaten to leave.


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