Thursday, December 11, 2008

Is Sony's Closing A Harbinger of More Bad News to Come?

Today's Tribune-Review demonstrates how much change is going on inside the regional economy. Although the economic data measure the bottom line -- are there more jobs in total than there were a month or year earlier? -- those numbers are the net sum of what can be big pluses and big minuses above the total line.

The front page story is about strategies for attracting new businesses to the Sony manufacturing facility in Westmoreland County, following announcements Tuesday that the plant will shut down over the next 16 months, eliminating jobs for 560 workers.

The story in the Business section is about how the energy industry in the region is hiring hundreds of workers and having trouble filling all of its jobs.

And in the middle, appropriately, is a story titled "Skilled workers unlikely to be jobless long."

In the good old days, people could expect to work at the same company all their lives. But the good old days are gone -- even when the economy is growing, it's a given that some companies will shrink, while others will grow. The issue for a specific geographic region of the country is whether its economy has enough diversification that the growth offsets the decline.

Too many people think that "diversification" means more service jobs and fewer manufacturing and other industrial jobs. What diversification really means is diversification within industries as well as across industries. Detroit's problem isn't that it has too many manufacturing jobs, but that its manufacturing jobs are too concentrated in one particular type of product -- automobiles.

Southwestern Pennsylvania had the same problem in the 1970s with the steel industry. Today we're more diversified, partly because we have many jobs in other industries like health care and higher education, but even more importantly because we have many manufacturing jobs in industries that are not dependent on steel.

So is the Sony plant closing a sign that our region's industrial base is going to collapse? No, because we have exactly one television assembly plant -- Sony. It's been great that it's been here, employing so many people and supporting supplier firms across the region for so many years, and it's unfortunate that we're going to lose it, but it doesn't really tell us anything about what will happen to our local companies in the steel industry, the medical device industry, the solar power industry, the safety equipment industry, the information technology industry, the energy industry, or any of the dozens of other types of manufacturing and other businesses we have in the region. Many of those businesses are stable or growing, and our focus should be on keeping them stable or growing, and on starting new businesses, in order to make sure there are jobs for the workers displaced from Sony, its supplier firms, and any other businesses that lose jobs during the recession.

Rather than waiting for the other shoe to drop, let's work on adding more shoes (of different kinds!).


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