Monday, September 07, 2009

Pittsburgh: The Steel City Transformed

The eyes of the world will be on Pittsburgh this month, and those expecting to see a dirty, smoky steel town will be amazed to see clear skies and people fishing in the rivers while the world’s leaders meet in one of the largest green buildings on the planet. They’ll also likely hear that the region has weathered the recession better than most places in America.

The obvious question will be: How did Pittsburgh do that?

Unfortunately, even many Pittsburghers won’t get the story quite right. They’ll say that Pittsburgh is no longer the Steel City; that manufacturing is gone; that most of our Fortune 500 companies have left; and that the region now has a “service economy.” But the truth is very different.

First of all, we’re still a Steel City. The 10th largest steel company in the world – United States Steel – is not only headquartered in Pittsburgh, it still makes steel here. Allegheny Technologies, one of the top specialty steel makers in the world, has eight manufacturing plants in the region, and several other specialty steel companies have facilities here. As a result, we still have 7,000 steel jobs in the region, and over 12,000 in the primary metals sector.

Manufacturing? Although we lost 100,000 manufacturing jobs in the 1980s, 90,000 are still here, and manufacturing is still the biggest contributor to the region’s income, providing nearly $10 billion of the $75 billion in earnings workers in the region received in 2008. What’s changed in 30 years is how diversified our manufacturing sector is, with cutting-edge companies in life sciences, robotics, information technology, and energy joining leading firms in traditional industries like steel and chemicals.

Fortune 500 companies? After years of hand-wringing about the companies that left, few people have noticed that today, 8 of the Fortune 500 are located in our region, almost as many as in 1980. The City of Pittsburgh has more Fortune 500 headquarters today than all but eight cities in America.

A service economy? Sure, but we’re not talking about barber shops and laundromats. Our economy is being powered by global service businesses like K&L Gates, Reed Smith, and Burt Hill, and by leading financial services firms like PNC and Federated Investors.

But the most dramatic change in the region’s economy in the past 30 years can be summed up in three words – CMU, Pitt, and UPMC. Few remember that in 1980, UPMC didn’t even exist, and Carnegie Mellon and Pitt were merely good regional universities.

Today, UPMC is the one of the largest academic medical centers in the world, and the largest employer in the region with 50,000 employees. A $7 billion corporation, it would be on the Fortune 500 list if it were publicly traded. It’s not just big, it’s global – people from all over the world come to Pittsburgh for cutting-edge treatment, and UPMC now has facilities in several overseas locations.

Today, the University of Pittsburgh has 40% more students, but what’s really different is their higher caliber – half of the freshmen are in the top 10% of their class, more than twice as many as in the mid-90s.

Pitt conducts over $650 million in research each year, a ten-fold increase over 1980, and it ranks 5th in the country in attracting federal health research funding.

Today, Carnegie Mellon University not only has 60% more students, it’s become a global university, with 1/3 of its students coming from other countries, campuses in Australia and Qatar, and programs in Europe and Asia.

More than $300 million in sponsored research is conducted at Carnegie Mellon, a 10-fold increase since 1980.

The nearly one billion dollars in research at CMU, Pitt, and UPMC each year not only attracts some of the best students and faculty in the world to the region, it makes Pittsburgh a hotbed for technology growth. Over 200 companies have been spun out of Carnegie Mellon over the past 30 years, and Pitt research has spawned 42 start-up companies just in the past 5 years.

Thanks to the outstanding leadership of all of these companies and organizations, Pittsburgh has been able to retain many of its historic strengths as well as create the engines of growth for the future. That’s the story world leaders need to hear.

(A variant of this post appeared as the Regional Insights column in the Sunday, September 6, 2009 Pittsburgh Post-Gazette.)


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