Pittsburgh transforms from steel city to tech titan
Formerly an industrial powerhouse, in the 1970s Pittsburgh went into a decline. Then diverse local interests came together to rebuild the city into a tech, healthcare and financial services hub, ensuring its survival through education and innovation. Natasha Turak reports.
For evidence that the city of Pittsburgh leads the frontline of new industry, look no further than its selection as the site of the first ever White House Frontiers Conference in October 2016, a high-profile event focused on building the US’s capacity in science, technology and innovation.
Hosted by the University of Pittsburgh and Carnegie Mellon University (CMU), the conference focused on the capacity of technology to improve lives and create jobs and investment, exploring fields from healthcare innovation, clean energy and the Internet of Things to robotics, artificial intelligence and space exploration.
Speaking at the event, US president Barack Obama called Pittsburgh “a city that has harnessed innovation to redefine itself as a centre for technology, healthcare and education”.
“Pittsburgh has been revitalising itself through technology for a very long time,” said Mr Obama. “That’s how this city came back after an iconic industry fell on tougher times, doubling down on science, on tech, on innovation – all of which can create amazing new jobs and opportunities.”
From steel to tech
Few places embody the phenomenon of a comeback city quite like Pittsburgh. Known historically for its dominance as a steel-producing city – a driving force for industry and manufacturing around the world from the mid-19th century onward – global economic change forced Pittsburgh into dramatic decline before its ultimate turnaround.
Beginning in the 1970s, manufacturing plants and steel mills, the engines of the region’s economy and employment, began shutting their doors. By 1983, 250,000 people had left the city and the unemployment level had reached 18.3%.
Today, the Pittsburgh region (comprising 10 counties in south-western Pennsylvania) tells a story of striking resilience, an example of what can happen when a diverse group of stakeholders come together to invest their work and inventiveness into reviving a community.
It started in the 1990s, says Dennis Yablonsky, CEO of the Allegheny Conference on Community Development (ACCD), which serves the Pittsburgh region. “Led by the then-president of CMU, literally a few hundred leaders – government, business, academic, philanthropic – came together and concluded that through innovation and collaboration between institutions, we could develop our cluster of industries to be productive again,” he recalls.
The region became the third in the US to fully recover from the 2008 recession, its unemployment rate is now below the national average, and it is one of the country’s fastest growing destinations for millennials.
A combination of academic institutions, private enterprise, historic philanthropy and new industry innovators – and a spirit of pulling oneself up by one’s bootstraps – is due credit for the remarkable renaissance of Pittsburgh from former steel town to one of the world’s premier destinations for advanced industries such as cyber security, artificial intelligence and robotics. Google and Uber are just a few of the many blue-chip companies that have set up operations in the city in recent years.
A smart ecosystem
The base of Pittsburgh’s power, its business residents say, is its human talent. Annually, 35,000 students graduate from Pittsburgh’s 35-college university network. Some 50% of young adults in Pittsburgh have a bachelor’s degree, compared with the national average of 35%.
CMU and the University of Pittsburgh, both tier-one research institutions and incubators for numerous start-up companies, are among the city’s most vital assets, internationally reputed for their technology and science programmes. And the city’s wage rates are 95% of the national average. In Silicon Valley the figure is about 158% of the national average, according to the US Bureau of Labor Statistics.
Pittsburgh’s present-day economic foundation lies on five pillars: financial and business services, advanced manufacturing, IT, healthcare and life sciences, and energy.
“We have this whole knowledge-based industry,” says Mr Yablonsky. “We went from a place that was totally dependent on one sector – 50% of the economy was heavy manufacturing – to an economy that is very balanced. The largest sector – financial services – now [makes up] 23% [of the economy]. It’s very diversified, and all driven by innovation.”
State and local community leaders have developed a strong ecosystem to support new companies. The ACCD and the 300-member Regional Investors Council work with state-level players to ensure businesses have what they need to grow and stay in the area. And a $3bn investment in university, corporate and government R&D annually underscores the region’s commitment to leading innovation. Thanks to this, Pittsburgh is home to more than 400 foreign-owned firms employing more than 50,000 people.
“We have a unique asset in that we have the second highest concentration of philanthropic assets in the country,” says Mr Yablonsky. “There is more than $6bn dollars of philanthropic assets here.” The foundations left by prominent industrialists such as HJ Heinz, George Westinghouse and Andrew Carnegie invest solely in Pittsburgh. “So we have $300m every year in grant making that goes on here,” adds Mr Yablonsky.
Building for the future
Building on its manufacturing history, Pittsburgh is carrying that spirit of creativity into the future. It is a venture embodied in Pittsburgh 4.0, the city’s own contribution to Industry 4.0, so named to describe the newest industrial revolution toward automation and increased data exchange in manufacturing.
The Pittsburgh Regional Alliance describes Pittsburgh 4.0 as the synergy between manufacturing prowess, energy, technology and innovation – assets the city aims to utilise to automate and revolutionise manufacturing around the world.
Multinational 3D design, engineering and entertainment software corporation Autodesk, which employs nearly 8000 worldwide and has an annual revenue of more than $2.5bn, acquired Pittsburgh start-up Allpoint in 2013. Senior manager Aaron Morris, who earned his PhD at CMU, says the city has been waiting for its moment to shine again.
“As you can see, Industry 4.0 is the future of everything: it deals with data, security and all the things Pittsburgh has been sitting on for a while,” he says. “We got into robotics in the early 2000s, we thought it was going to bust loose. So we’ve been waiting a long time, and now this is the world. You’ve got to have faith. The world is ready and starting to recognise it, which is why companies such as Autodesk are able to get investment.”
Forthcoming challenges include increasing the millennial retention rate beyond university and ensuring education keeps pace with changing industry demands. Regional players are teaming up with schools and businesses to introduce new career opportunities to young people, from CMU’s Cyburgh PA Initiative 2016 for cyber security learning to ShaleNet’s engineering training for the natural gas industry.
When Mr Yablonsky began his own artificial intelligence start-up in the 1990s, there were 50 tech companies in the region. Now there are 1600, along with 500 life sciences companies and a thriving healthcare sector, the largest employer in the area.
Mr Yablonsky also highlights the local quality of life. Living costs are 96% the national average, and Pittsburgh offers more than 500 arts and cultural organisations, three professional sports franchises, and plentiful green space for a healthy and active lifestyle.
Pittsburghers say that the steel made in the city’s mills was exported to “build the world” in the 20th century. Those business and trade connections remain, but have now expanded into new sectors that define the frontiers of advanced industry. Led by its work ethic, scientific prowess and history of resilience, Pittsburgh’s rich ecosystem is helping lead the US through the 21st century.
The fDi Report 2016
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