Monday, August 31, 2009

Global Face Of Pittsburgh

For those of you who don't know, that's Braddock Mayor John Fetterman. Given the reactions to my earlier post today about the Pittsburgh reniassance, I thought I'd offer an alternative narrative about the state of the city that the world will see:

It is hard to imagine a cooler political figure than Mr Fetterman in contemporary America, who appears totally focused on broken-down Braddock, and what can be done to make life better there.

That's from BBC News. The global press isn't just hanging out in the Golden Triangle, despite the best efforts of the Pittsburgh city bosses. And go figure. They think Rust Belt Chic is cool.

I can hear Anthony Bourdain laughing. Baltimore builds up this gorgeous habor and you take you audience to the Mean Streets. Has everyone forgotten the Bronx of 1979? At least Giuliani was able to clean up Manhattan.

There is something special going on in America's shrinking cities. From Aaron Renn's Twitter feed, the doings in Springfield, MA:

Perhaps local efforts should stipulate their own criteria for success. At a recent public meeting sponsored by the Springfield Institute, more than 90 members of the community gathered to discuss and debate which municipal performance indicators mattered most to them.

Commitments to places and to the people in them can be interpreted as substitutes for one another. My fellow Economix blogger Edward Glaeser, for instance, argues that the goal of compensating victims of Hurricane Katrina in New Orleans would be better met by giving individual residents checks than by trying to rebuild the city.

But the urban planners Randall Crane and Michael Manville emphasize the potentially complementary characteristics between investments in individuals and communities. Commitments to places often represent commitments to those who live in them, helping create confidence and trust, assets sometimes described as social capital.

Some of our cities will probably lose the race to reinvent themselves. But some local economic development efforts could win big. That’s why I’m cheering for Springfield’s social entrepreneurs, who rank high among my local heroes.

Civic innovation going on in places such as Springfield and Youngstown is the real Pittsburgh story. This makes Fetterman, reluctantly, a celebrity. It is a different kind of urban vibrancy, perhaps an acquired taste. It won't measure up to your city. That's not the point. We are witnesses to a new urban paradigm.

Pittsburgh Renaissance: False Positive

Mike Madison (Pittsblog) dishes up some of his tough love for Pittsburgh. The PR machine is cranking out one feel good story after another, using the upcoming G-20 Economic Summit as a springboard for revamping the image of the Steel City. Mike tempers the enthusiasm:

Question: Is Pittsburgh undergoing a renaissance?
Answer: Only if you focus on bright, shiny buildings in the Downtown neighborhood and in a couple of neighborhoods nearby.

Mike has a lot to say on the matter and this is only part I. A wandering eye to the top of Mt. Washington, for example, might wonder what all the fuss is about. The celebrated Pittsburgh is, indeed, geographically concentrated.

Actually, I think that is worth celebrating. I'm not alone:

Unlike other notorious Rust Belt cities, Pittsburgh is most certainly not a dump. While it might suffer statistically in a variety of economic categories, it has arguably the healthiest downtown and most active midtown area (Oakland, home to Carnegie Mellon and the University of Pittsburgh ) in flyover country excepting Chicago.

That Pittsburgh isn't a "dump" is faint praise. But a vibrant downtown is a big deal. The Chicago renaissance followed this pattern. This is the urban economic geography of globalization. We don't get to sweep Uptown under the rug and exclaim missioned accomplished. However, I would argue that the term "revitalization" does apply to the entire region, even if most of the area appears to be to the contrary.

I think Pittsburgh's renaissance claim is legit. We needn't qualify it. But that doesn't absolve the leadership of past mistakes. Furthermore, I would be very suspicious of anyone claiming credit for the turnaround. And where does Pittsburgh go from here? The pension disaster could derail everything. Status quo approaches from those fat on recent successes will do more harm than good.

Pittsburgh may do well in spite of itself, but I wouldn't bank on it.

Sunday, August 30, 2009

Cheap Urban Vista As Urban Economic Indicator

Room with a view should come at a steep price, correct? Pittsburgh is bursting at the seams with some of the greatest urban vistas in the United States, perhaps the world. The dramatic topography is a wonderful setting for a city. However, the most famous view of the Golden Triangle is indicative of a lousy economy:

But that dilapidated house—with fenestration clearly intended to absorb the spectacle of the Pittsburgh skyline—burns in my memory. Even in 2006 that would not have happened in a city with a robust economy; it would have never happened, and Mount Washington wouldn’t remain sleepy, geriatric, and lower middle class.

The real estate development this blogger is looking for is further up the Mon along the South Side Slopes. What does a market look like that has a glut of properties with a great view? Pittsburgh. Simply put, such gorgeous sight lines aren't at a premium.

More dear is an Oakland location near CMU and Pitt. But I wouldn't expect an outsider to know any of the above. I'm not sure most locals understand what is going on in their city. The real estate market in Pittsburgh is one of the most robust in the entire country, at least right now. Regardless, there are other reasons why Mt. Washington doesn't look like Queen Anne Hill in Seattle. A moribund economy is a factor, but the city is full of inexpensive spectacular views.

Talent Shortage Panic

During an economic downturn, the tendency is to protect the labor market. In fact, protectionism on all fronts is the rule. Japan's workforce is one of the oldest in the world and the country desperately needs immigrant talent. But the opposite is happening as the polity reacts irrationally to global economic woes. In the United Kingdom, demographers and economists are fretting about the lack of skilled laborers:

"If we have got shortages even during as bad a recession as we have had in 40 years, what the hell is going to happen to the labour market on the other side of this?" asked Kevin Green, chief executive of the Recruitment and Employment Confederation.

Latent demand for skilled workers is likely to create renewed pressure for immigration in an upturn, potentially fuelling social tensions. "Even though we are in the depths of the recession, there are areas which are feeling either a general or in some cases quite an acute level of skill shortage," said Alistair Cox, chief executive of Hays, Britain's largest listed recruitment company.

The reason immigrant pools, as opposed to domestic job-seekers, are the short-term solution is education. Foreign-born talent is ready to step into the open position right now. This workforce crutch can also distort the labor market, failing to increase wages and entice adults to train in the areas with the most demand.

This dynamic should inform a new kind of geopolitics, talent trade:

If Nasscom chairman Pramod Bhasin is to be believed the Indian technology services skills, admired the world over, can change things in its own backyard. ...

... While the IT sector, with exports growing from almost zilch to $50 billion in less than a decade and employing over two million, is now set to bring the benefits of technology to the country, the Indian youth will also help address the global shortage of workers.

“There will be a shortage of 15-18 million skilled workers in the US, Japan and Scandinavian countries already faced with massive manpower shortages. These can also be met by the Indian labour pool,” he said.

India's emerging economic strategy should interest the Rust Belt, a prolific producer of talent in its own right. How does India intend to take advantage of the export of talent? I hope Cleveburgh is paying close attention.

Saturday, August 29, 2009

Plugging The Brain Drain Is Wrong

Attempts to stop brain drain are a waste of resources. Worse, it does harm to citizens. Tightening up the borders of the labor market robs workers of power and puts more money in the pockets of ownership. If you follow the travails of the foreign born, then the disadvantages of captive labor are obvious:

Commission chairman Jordan Arrazola told capital daily Milenio in an interview published Friday that the recruiters involved in the scam are members of the CTM, one of Mexico’s most powerful labor unions.

“They make them (the workers) believe they are in the United States and don’t let them go out, they practically have them locked up,” Arrazola said.

“The foremen threaten to report them to ‘la migra’ (U.S. immigration authorities) to get them deported,” the official said.

Even legal channels for immigrant talent put workers at a considerable disadvantage. Capricious policy squabbles leave many in limbo, as this horror story from Canada highlights. Anything short of full citizenship is fraught with peril. This doesn't do domestic labor any favors since it can depress wages and displace tenured employees.

From the perspective of individual talent, geographic mobility is a good thing. Pittsburghers who decry newcomers or the loss of young adults are bizarrely ironic: Fundamentally anti-labor. You want to help "The Man"? Stop brain drain.

Friday, August 28, 2009

Rust Belt Arts Diaspora

Via Pop City, AmericanStyle Magazine once again rates Pittsburgh as a top "arts destination" for US mid-sized cities. In fact, it is an urban Rust Belt sweep in that category:


Chattanooga is interesting because of how it shot up into the rankings. Not typically thought of as Rust Belt, the city is a lot like Pittsburgh. There's even a Westinghouse connection:

Westinghouse Electric Company celebrated the grand opening of its first United States Boiling Water Reactor (BWR) Training Center and its second WEC Welding Institute on August 20, 2009 in Chattanooga, Tenn. The grand opening celebration, attended by 225 Westinghouse employees, BWR customers and invited guests, included a ribbon-cutting ceremony, followed by site tours which featured 18 BWR tooling exhibits and welding demonstrations.

Nick Liparulo, senior vice president, Nuclear Services, cut the ribbon on the refueling bridge over the training center's full scale BWR mockup with the assistance of Shigenori Shiga, senior vice president and chief coordination officer, Westinghouse Coordination Office; David Howell, vice president, Field Services; Wayne Bentley, vice president, BWR Operations & Growth; and Bruce Phares, director, BWR Reactor Services.

In commenting on the new facility, Mr. Liparulo said: "Our investment here in Chattanooga is reflective of both the scope of the nuclear renaissance and our ongoing commitment to meet the diverse needs of our growing customer base. We see an exciting and long-term future for our industry, our company and this state-of-the-art facility."

Some time soon I'll have to visit Chattanooga a see the renaissance with my own eyes.

Burgh Energy Report

Increasing demand for energy in China should be news in Pittsburgh. A big natural gas deal between China and Australia is also of interest. And just over the two weeks I've failed to log an energy report, America's natural gas reserves have been all over the news:

The biggest source of greenhouse-gas emissions is electricity generation. Coal, the cheapest fuel, currently produces America’s baseload power: coal-fired plants run constantly to meet basic demand, with natural gas switched on when demand is higher. But gas could play a bigger role: there is a third more gas-powered than coal-fired capacity available. A reasonable carbon price would mean that gas plants would be switched on more often to replace coal. And in the longer run carbon prices will rise under Waxman-Markey, as the House bill is known. This could make gas the preferred fuel for baseload power—and make building old fashioned coal plants uneconomic.

The natural gas industry is making a big political push in the United States and President Obama's green policy narrative would seem to position the White House as behind it. There are plenty of advocates in Congress, as well. This is an economic boon for Pittsburgh:

Many of the Barnett Shale’s biggest operators are shifting resources toward what they see as an amazing opportunity in the Appalachian Basin play, which runs through parts of New York, Pennsylvania and West Virginia. It appears the core area – the richest area – is in southwestern Pennsylvania. ...

... The Marcellus has many advantages, but perhaps the greatest is its proximity to a developed natural gas market.

The northeastern U.S. is the largest and most developed gas market in the world, so there is a price differential where you don't have to pay for the pipeline cost of bringing it up from the coasts, [Terry Engelder, a professor in the Department of Geosciences at Penn State University,] said.

Also, Texas-based companies are already engaged in philanthropic giving:

In addition to being a leader in the development of the Marcellus, Chief also has made a commitment to helping the local communities where it operates prosper and grow. In May, Chief announced a $402,000 donation over the next three years to help fund an anti-gang mentoring program operated in the Pittsburgh Public Schools. In January, Chief donated $50,000 to help families struggling to pay their home heating bills in several Pennsylvania counties. Chief has also funded scholarships, bid on livestock at county fairs and made donations to local fire departments and emergency providers, ensuring continued education and providing safety gear.

I imagine that the investment in regional communities will only grow. The drilling companies are anxious to develop a positive public image. There will be sites in state parks, among other environmental concerns. Not everyone will welcome the coming boom with open arms and managing this natural gas rush will be difficult. Perhaps Chief and others will pay off the City of Pittsburgh's crushing debt?

Thursday, August 27, 2009

Brain Drain Report

While the dominant policy narrative continues to be retention, I'm seeing more and more discussion about talent attraction and boomerang migration. Instead of the usual lowlights in Tallahassee, Olean, Philadelphia, or the entire state of Michigan, I'll highlight a few of the more promising developments in the ebb and flow of human capital.

The problem in the Rust Belt is the inability to make peace with the migration data. This keeps Collegia and Next Generation Consulting in business. I'll let a scholar at the University of Wisconsin-Madison do the talking:

Contrary to popular belief about so-called brain drain in the Midwest, exodus of college-educated workers from the region does not appear to be much more severe than out-migration from states in other parts of the country. Economically distressed Michigan, for example, has about the same rate of retention of college graduates as Virginia or Massachusetts. And while younger college-educated workers from the Midwest are more likely to be working outside their home states than the national average, as they enter their late 30s and beyond, they're less likely, indicating they tend to return home later in life.

Rust Belt talent is more likely to boomerang back home. That would seem to be a better use of resources, which is what Dr. John Kennan suggests. Someone in Lexington, KY is paying attention:

Many lament a so-called "brain drain" of talent from cities as college graduates leave college towns like Lexington for the big city. Many have interpreted research by the likes of Richard Florida and others to mean that to compete in a 21st century economy; we must retain and attract these people. However, the facts paint a somewhat different picture. Kauffman foundation research shows entrepreneurship rates are the lowest among those 20-34. The fastest growing segment is among those ages 45 and above. The typical entrepreneurial, creative type is 40 years old, married with at least one child. This holds true even for web technology startups. While Facebook may have been founded by a college-aged guy, Twitter's co-founders were all in their mid-30s. The facts indicate that those just out of college are likely to always be pulled in the direction of the opportunity to live and work in big cities. However, as they get older, get married and potentially look at having kids, many creative types will look for areas of the country with a lower cost of living and high standards of living. This is where cities like Lexington can compete. With a low cost of doing business and a solid quality of life, Lexington should be focused on attracting creative types as they get into their 30s. It is not about having more bars in downtown, it is about having diverse entertainment options including family friendly ones and doing a better job of promoting the options we already have. In fact, Lexington is attracting these types of creative individual; it just isn't publicized or recognized. The creative types in their 30s and 40s are more financially secure and have the experience necessary to be successful as an entrepreneur. Statistics show they will be more likely to start a business then they would have been in their 20s.

Instead of spending some much time, energy and money on those who would leave, how about funneling all of it towards those who would come back?

Wednesday, August 26, 2009

Mysteries Of Pittsburgh Solved

If you have ever wondered why President Obama showers so much love on Pittsburgh, then this blog post is for you:

…there’s something fishy about why Pittsburgh has essentially become this administration’s pet-project at every turn….ESPECIALLY when cities like Detroit, Cleveland, Buffalo, Dayton, Youngstown, New Orleans, Columbia SC, Charleston WV, and on and on….are in FAR worse shape than Pittsburgh whose actually emerged as a pretty nice city in the last 20 years.

…that makes me wonder what the motivation is…and i’m not the only one wondering this…even the drudgereport had a blurb about what seems to be a mystifying funnelling of money from the Obama administration to the city of pittsburgh, for reasons nobody has figured out yet.

But they will…trust me on that…something is going on here, and it will become a major story in the not so distant future.

Yinzers are running the world.

Legal Talent Geography

For soon-to-be graduates, the job market looks bleak. One strategy is to expand the geography of your search. Students in law school are now combing the forgotten parts of America:

But students who miss the brief window of opportunity to land an offer this fall may struggle to break into firms once next year’s class rises. When Julia Figurelli, a second-year student at the University of Pennsylvania, decided to enter law school a year ago, she expected to find a lucrative law firm job in three years — if not collecting the $160,000-a-year associate salaries at one of the uppermost partnerships. By the time she obtains her J.D., she says, she will have around $200,000 in debt.

“Had I seen where the market was going, I would’ve gone to a lower-ranked but less expensive public school,” she said. “I’m questioning whether law school was the right choice at all.”

Once aiming to work in Philadelphia, Ms. Figurelli is now hunting for jobs in lower-paying markets, like Pittsburgh and Fort Lauderdale, Fla. “I’m looking anywhere my competition isn’t looking,” she added.

Pittsburgh is off of the talent map for two reasons. One concerns depressed wages likely due to the glut of locally produced graduates. The other is the legacy of the Rust Belt, which has frozen Pittsburgh in the 1970s. At least, that's how the rest of the world sees Southwestern Pennsylvania.

How does Pittsburgh get back on the map? The Great Recession is just what the doctor ordered. Desperate times call for desperate migrations. Ms. Figurelli represents a pioneer movement that will open up new markets out of necessity.

Audrey Russo, CEO of the Pittsburgh Technology Council, describes the second wave of Rust Belt in-migration:

Pittsburgh is also a place where more and more people want to return. Not a day goes by that I don’t hear from someone who wants to return to raise their kids, to retire or to start a company here. To live in Pittsburgh and SWPA means that you have made a choice to be part of the next era of firsts. We are not just another Silicon Valley. We are southwestern Pennsylvania, a region that will be the hotbed of slow, continuous and steady improvements in the next 25 years. Our sustainable approach to the newest economy will serve as the bellwether by which other regions rebuild their economies and communities.


But just as recent college graduates from institutions outside of the region will have to figure out how to crack that dense social network in Pittsburgh, expatriates will have to concoct creative schemes that will underwrite a successful boomerang migration. I expect both of these relocation demographics to inform an innovation boom in Pittsburgh. To thrive in New York City takes guile that only the most motivated are willing and able to employ. This has been the missing ingredient to the Pittsburgh Renaissance. That's all about to change.

Tuesday, August 25, 2009

The Pittsburgh Way

I shouted into the Burgh Blogosphere inquiring about the relationship between ├╝ber planner Paul Farmer and Pittsburgh's comeback. Chris Briem kindly informed me about Farmer's role in the planning department. Not that I'm a scholar of such things, but I can't recall seeing the name "Paul Farmer" associated with the reshaping of a struggling Pittsburgh. A little bit of research yielded this gem from 1998:

Paul Farmer's reputation as a visionary planner is what first caused Minneapolis officials to seek out and court him in 1994. Farmer had already served 14 years as deputy planning director in Pittsburgh when he accepted the Minneapolis post. He'd worked as a planning consultant in Canada, India, and Germany. He'd taught urban planning at several universities. In Pittsburgh, Farmer led the charge to redevelop 35 miles of waterfront, install busways and a light-rail transit system, and transform contaminated land into parks, businesses, and residential neighborhoods--all projects that city leaders have long been anxious to see happen in Minneapolis. ...

... When you came to Minneapolis, it was clear why the city wanted you working here. Projects you steered in Pittsburgh--light-rail transit, the riverfront, downtown improvement--have had city councils across the country drooling.


Reverence for the Pittsburgh transformation is already, at least, 15-years old. More recent media love is just catching up with what is an APA legend. The linked story concerns the "firing" of Farmer from his Minneapolis post. In retrospect, he lived up to his reputation and his Pittsburgh legacy was still viewed favorably towards the ending of the 90s.

That Farmer's name, along with Tom Murphy's, doesn't come up now is most curious. Why isn't Farmer more celebrated? Because he is a Shreveport, Louisiana native? I guess Luke Ravenstahl deserves all the credit.

Monday, August 24, 2009

Youngstown Business Incubator Success Story

I've been back in Colorado for about a week. I'm still buzzing from my trip to Youngstown. I'm pleased to report that the Greater Youngstown 2.0 project was well received and I expect to be able to announce an expansion of our efforts within the next month. There is international interest in our innovative approach to talent attraction and economic development. If you would like to learn more, then check out this story about us in the Youngstown Business Incubator supplement for this month's Inside Business magazine. You can also read about how the incubator is driving the revitalization of Youngstown's core. The YBI success story is nothing short of astounding and we at GY 2.0 are proud to be part of it.

Urban Renewal Diaspora

Picked up at Null Space, Next American City takes aim at the latest Pittsburgh renaissance:

Still, what the report and conference participants stressed is “The Rest of the Story.” Pittsburgh is well-deserving of the praise it receives, but it must be recognized that the city is only “halfway to a success story.” There are many more jobs to be created and something is still to be done about the dwindling population. The more important lesson to be learned by Pittsburgh is that an “invisible hand didn’t save Pittsburgh….Planning did.”


Paul Farmer, a Shreveport native and CEO of the Chicago-based American Planning Association, dropped in on the forum to observe. He was in town visiting family.

Farmer got interested in planning soon after he saw Shreveport's last plan, which came together 50 years ago under Mayor Jim Gardner. That document led to the construction of Clyde Fant Memorial Parkway and Interstate 220.

Shreveport's population has been static for decades, but its borders have stretched. That will continue to be a major challenge, said Farmer, who has worked to revitalize cities such as Pittsburgh and Minneapolis.

So, Burghophiles, what role did Farmer have in Pittsburgh's revitalization? I sense a Tom Murphy connection story coming.

Sunday, August 23, 2009

Shifting Geography Of Globalization

As you can tell from the title, I'm not done with thinking about emerging geographic paradigms of globalization. The dominant map of the industrial era was the numerous, small fiefdoms that outlined the jurisdiction of one mill or one part of the production chain. I'm watching this landscape legacy play out between the Ohio cities of Youngstown and Girard. The former wealth-producing parochialism is now strangling the Rust Belt.


“We had the perfect little cul-de-sac back here, our own little world,” said Eloisa Sanchez, the woman on the porch. “We’re afraid of what’s coming.”

Since January, The New York Times has made regular visits to the fraying neighborhood to chronicle — in print, photographs and video — how, in one small place, the foreclosure crisis has reshaped the view of homeownership as a cornerstone of the American dream. The continuing economic fallout has brought a reckoning for those who believed that home equity would always rise, financing lives beyond their means, while also creating unexpected opportunities for people previously on the sidelines of homeownership.

Over the last two years, half of Beth Court has been in foreclosure, and homes whose owners took out thousands of dollars in equity during the bonanza years are now worth less than half the price paid for them.

What's coming won't favor Joel Kotkin's suburban sprawl or Richard Florida's urban center of innovation. Both Kotkin and Florida are describing the same landscape, the world of Reagan-Thatcher globalization. These were the dominant patterns of living and working, perfectly aligned with the economics of the time.

What will be the new geography of globalization? The primary concerns will be talent shortages and aging demographics. I've found workforce development strategies to be useful for understanding a particular era of globalization. Just for convenience, I'll term the industrial era as "Globalization I". Arguably, there are epochs of globalization before it. But I haven't looked at those geographies. "Globalization II" was born in the 1980s, the decade of the Rust Belt. And we are now entering "Globalization III".

Cultivating talent locally is characteristic of Globalization I. Attracting talent from elsewhere is the hallmark of Globalization II. As for Globalization III:

It goes without saying that no matter how much talent a company might have, there are many more talented people working outside its boundaries. Yet all too many companies focus solely on acquiring talent, on bringing talent inside the firm. Why not access talent wherever it resides?

Replace the word "company" with "region" and I think you get the point. As we figure out the logistics of network innovation, more geographic arbitrage opportunities will emerge. Proximity will still matter, but not in a 20-minute rule kind of way. The winners of Globalization III will be the places that have done the best job of talent export. If Chicago rose with Globalization II, then so will Pittsburgh with Globalization III.

Saturday, August 22, 2009

DC Steelers

I'll start this post with an indirect line to my point. Baltimore's renaissance is a result of its proximity to Washington, DC. Regional redevelopment would appear to be a function of the right urban pair and some lucky geography. I make mention of DC's gravity because of tonight's football game between the Steelers and Redskins:

Redskins fans surely haven't forgotten the last time the Steelers came to town. Coaches and players can't shake the maddening image of twirling yellow towels, either. But team officials have concocted a plan to sure no one experiences a repeat Saturday night when the Steelers return.

To make sure FedEx Field doesn't again turn into a giant blanket of Terrible Towels, the Redskins will distribute 50,000 "Redskins Rally" towels at Saturday's preseason home opener. The Redskins' version will be white.

There isn't anything like it in sports. Steelers fans are able to take over the opposing stadium and make the home team feel as if it is on the road. Many months later, the Washington Redskins organization is still feeling the sting.

We are about 90-minutes from kickoff in the heartland of the Burgh Diaspora. In a city of transients, Pittsburghers reign supreme. Go ahead a wave your white towel, Skins fans. It will look like surrender in the sea of gold.

Friday, August 21, 2009

Labor Mobility Geography

When I blog about "labor mobility", I mean to write "geographic mobility". That's half of the story. Education is the more conventional understanding of labor mobility. The New York Times has a video about the value of community colleges, looking at a school in Dayton (Ohio), for helping displaced workers find a job.

In his book "Caught in the Middle", Richard Longworth discusses the importance of community colleges in the battle to cope with economic globalization. I read it while teaching at a local community college. I even used Longworth's book as the course text. Concerning retraining, this is the best avenue.

Community college graduates are more likely to stay in the region. The teachers and adminstrators do a better job of working with local businesses and addressing talent needs. Resources for workforce development should be concentrated in community colleges, where the return on investment is greatest.

Where does that leave four-year colleges and universities? I don't think they should be centers of labor mobility. Graduates from these institutions are the nomads, relatively speaking. This is the geographically mobile workforce that defines the United States and its economic success:

Lana Wrightman, whose father was a ranching cowboy, spent most of her childhood “ping-ponging from ranch to ranch, mostly between Texas and Wyoming”. She reckons that by the time she reached her late teens she had clocked up about 20 separate homes (though some were short spells with relations) and gone to four different middle schools and two high schools. It was a restless childhood, driven both by necessity and by lifestyle aspirations, which she now views with mixed feelings.

“I never formed close friendships because I knew that I would be moving on in a short time,” Wrightman says. On the other hand, she thinks that not putting down deep roots made her more independent and adaptable, especially when it came to travelling as a graduate student to the UK.

Her contemporaries did not exhibit the same independence or ease of transition and were, she believes, the worse for it. “My first group of friends had lived a very rooted existence and were leaving home for the first time,” Wrightman says. “They found university very difficult and I found their close-knit, needy friendships claustrophobic to the point of suffocation.”

Wrightman's story highlights the pitfalls on exclusively depending upon a retrained local workforce. The region will weed out certain characteristics of risk taking needed for robust innovation and job creation. But there is also perile in the obsession of attracting the creative class. The most educated are the most geographically fickle. What becomes of your city when the 15-minutes of destination fame is over? Furthermore, what do you do with the labor "stuck" in various neighborhoods where poverty is a chronic problem? In that regard, Dayton has it half right.

Take Three: New Geography Of Globalization

I didn't intend to do a series of posts on this topic and I've got two thematic reports to publish, but I dug up a few more links that seem to fit. Pittsburgh is actively seeking to position itself as a big player in the global supply chain universe. The region is late to the globalization game:

With US domestic air cargo traffic down for 10 months in a row, year-on-year, the industry is scrabbling harder to get more business from Asia, especially China. Regions that until a few years ago were comfortably feeding off local and coast-to-coast traffic, have had to wake up to a new era.

One of these is Pittsburgh, which for nearly a century was the centre of steel and related industries. Those days are gone and the city is the centre of the Rust Belt. The regional airport authority recently visited China to promote the airport to 11 airlines and officials said they would be returning for a more detailed and aggressive sales pitch.

Given the trends I've written about over the last few days, is this a wise strategy for Pittsburgh to pursue? The "new era" may have come to a close thanks to the Great Recession. Another concern is the peak oil problem, which has some people "Betting on the Rust Belt":

Sussing out the geography of the future in advance is no easy task, but the constraints bearing down on what’s left of the American economy offer a few hints worth noting. Now that we’re on the downslope of Hubbert’s peak – world production of conventional petroleum peaked in 2005 – energy costs will, on average, take a larger bite out of economies around the world with each passing year. One of the implications is that transport costs will no longer be a negligible part of the cost of goods shipped over long distances. More energy-efficient transport modalities will tend to replace less efficient ones because they, and thus the goods they ship, will be more affordable; equally, diseconomies of distance will tend to outweigh economies of scale and foster the reemergence of regional economies. Among the likely beneficiaries of these changes are the towns that thrived best in an earlier, more regional economy -- those that are well served by rail and water transport, surrounded by farming regions that don’t depend on irrigation, not too far from major markets, and provided with ample and inexpensive real estate for the factories and warehouses of a downscaled and relocalizing industrial economy.

Welcome to the Rust Belt – and, among many other towns, to Cumberland.

I'm not suggesting we take such apocolytic visions seriously. However, the geographic rationale is strikingly similar to that of the Financial Times article that launched my series. The risk mitigation is different, concern about access to natural resources. But the proximity proposition dovetails nicely with fears about the vulnerabilities to global supply chains. Obviously, rising oil prices are a big part of that picture.

The point is that the next round of globalization may favor the Rust Belt, as opposed to ravaging it. I'm less worried about rising oil prices because of how quickly energy markets respond to demand slack. And the glut of natural gas suggests a much more complicated picture than the one doomsayers are promoting. Offering my own vision of the future, technologies of trust will drive the new geography of globalization. As a result, I'm still bullish on the Rust Belt and Pittsburgh.

Thursday, August 20, 2009

New Geography Of Globalization

I will provide a brief update on yesterday's post about the shrinking geography of global supply chains. Because proximity helps to mitigate risk, a corporate headquarters is moving from Georgia to Pittsburgh:

Fenner Dunlop Americas will move its corporate offices from Scottdale, Ga., to Pittsburgh in November, the company announced. The decision stems from the significant manufacturing investments made in the last few years to coincide with the company’s long-term strategy in North America. The Fenner Dunlop business combined with the newly formed Fenner Dunlop Conveyor Services now has the majority of its assets in the northern part of the continent. The new head office will be closer to Fenner Dunlop’s North American manufacturing bases in Ohio and Canada for belting products, as well as key locations of the company’s newly acquired service businesses and major customer regions.

Pittsburgh is a good base for Eastern Rust Belt (including Ontario) operations. I imagine we will see more of this kind of corporate migration in the near future. Along those lines, keep a close eye on the V&M Star investment deal in Warren that is currently at an impasse. Didn't you hear about the proposed $1 billion investment?

Wednesday, August 19, 2009

Nearshore Rust Belt

All the global city at half the cost. That was my first thought while reading this article in the Financial Times while flying to Akron/Canton last Thursday:

So, as bankers reel in shock, this poses an intriguing new question: will recent experience now force a rethink of assumptions in non- financial spheres too? After all, in recent years so-called “Davos man” has taken it for granted that globalisation, free market capitalism and innovation were all thoroughly good things. But as faith wilts, might business leaders rethink their dependency on, say, cross-border manufacturing supply chains, too?

There are hints of a change afoot. This week, for example, Gerard Kleisterlee, chief executive of Philips, the electronics group, told the Financial Times he expected large companies to move away from far-flung globalised supply chains. He blamed the shift on “green” issues, explaining, “a future where energy is more expensive and less plentifully available will lead to more regional supply chains”.

But green issues may not be the only factor at work. In recent years, western manufacturers have scrambled to streamline their operations in ways that were often similar (e.g. all turning to China for cheap manufacturing). But this concentration has created new vulnerabilities and forms of contagion risk. Or, as a fascinating report* prepared for the World Economic Forum last year notes: “The economic optimisation of supply chains, with the geographic concentration of risk as a frequent corollary, has enhanced the systemic vulnerability to a supply chain failure.”

On one hand, offshoring never has been more popular. On the other hand, global supply chains are not so farflung. Mitigating risk and company logistics are why many American companies seek a presence in Mexico and even Canada instead of venturing into cheaper labor markets halfway around the world.

Domestic nearshoring opportunities also exist. A good example is the VXI call center that just landed in Youngstown:

Youngstown was targeted early on, [Nick Covelli, VXI senior vice president, sales and marketing,] said. “We have some outstanding employees who hailed from Youngstown,” he said. Over time, those employees kept suggesting the area as a possible location, so VXI officials asked their site consultant to focus specifically on Ohio and Pennsylvania.

VXI officials were “pleasantly surprised” when they contacted local officials, who took a “very similar approach” to their work as VXI does, and were impressed with their confidence and positive attitude, Covelli said. Local officials asked what it would take to make the deal work for Youngstown, and explained the benefits of the area labor pool and higher education system.

“In the downtown area, what you guys have going on, that was really quite impressive,” he added.

In deciding, VXI eventually narrowed to two communities, Youngstown and another one “not too far away” in Pennsylvania, Covelli said, which had a “very aggressive incentive plan on the table [although] probably not as good financially” as Youngstown’s. “But with the availability of the site, the confidence that we had in the labor pool and the attractiveness of the community for bringing several hundred jobs, we felt we could be successful with those three components in place,” he said.

Youngstown won the deal with trust and sound financial risk management. The reason we don't see more nearshoring in the Rust Belt is because most people don't realize the opportunities available. Pittsburgh is a very inexpensive world class city. The rest of the country is just beginning to make this discovery. And as the Financial Times article indicates, the fickle winds of globalization may soon favor America's forgotten hearth of innovation.

Tuesday, August 18, 2009

Young And Dumb In Detroit

The media is jumping all over the story about Detroit and its emerging urban frontier of opportunity. The scale of devastation is awesome to contemplate. That's really the glitch in recovery hopes, but more on that later. I want to highlight the boomerang trend sweeping the Motor City:

[Ryan] Cooley grew up in Detroit but left to become a Chicago banker. Four years ago, though, he decided to come home and take a chance on Detroit real estate, and he bought three modest brick buildings in the Corktown neighborhood. Cooley, 33, said it cost only a couple hundred thousand dollars for all three buildings. Something similar in Chicago would have been four times as much.

He is so bullish on the city that he set up a real estate business in one of the buildings. In another he helped open a popular new restaurant. Slows Bar-B-Q has become the anchor of this mini-one block urban renewal.

The text of the article isn't a transcript of the entire NPR story. Do give it a listen and learn about the boomerang ethos that inspired my blog. This is what is going on in Youngstown, right now.

Cooley's piece of the Detroit Renaissance looks like about the size of the Youngstown Renaissance. My concern is that Detroit is too vast and the creative energy too diffuse. The pockets of renewal might continue to thrive, but get lost in the economic turmoil of the entire city. In that regard, Youngstown is more manageable and the core vitality is the right geography to deal with the current whims of globalization.

This is why Youngstown made Entrepreneur magazine's list and Detroit did not.

Monday, August 17, 2009

The Poop On Pittsburgh

Good or bad publicity? You be the judge:

I'm at the Daily Kos party, introducing the comedy segment of the evening, and I ask, "Be honest, how many of you thought Pittsburgh was a shithole before you came here?" And just about everyone raised their hands. I assume those who didn't were mostly locals. Then I asked, "So what do you think now?" And everyone cheered wildly.

To paraphrase Anthony Michael Hall in the movie Sixteen Candles, "Pittsburgh. King of the Shitholes."

Pioneers Of Migration

I spent Friday and Saturday in Youngstown, Ohio discussing my diaspora networking project with many regional stakeholders. Thursday and Sunday were travel days and I'm just beginning to catch up with e-mail and blogging duties. One of the components of our efforts is mapping out-migration. (A link to one of our maps was posted in the online edition of the Wall Street Journal last Thursday) In the big meeting at the Youngstown Business Incubator, I endeavored to explain the pattern. The same kind of network migration that has the Brazilian population booming in Martha's Vineyard also help to inform the destination for Youngstown brain drain:

A migration network, legal or illegal, typically grows by word of mouth, starting with a small group of pioneers. When Lyndon Johnson Pereira’s time on Martha’s Vineyard was nearing its end, he told his childhood friends Manuel and Edilson, immigrants living in Boston, that a restaurant on the island was hiring. Word travelled fast: that tip resulted in more than 20 Brazilians, almost all young men from Pereira’s home state, showing up to work the following summer. Most arrived with Pereira’s same twist on the American dream: to make enough money to build a better life in Brazil.

Most Rust Belt cities are in desperate need of the above type of pioneers, international or domestic. This is why Ann Arbor struggles to get out from under Detroit's shadow. No one is sending word back home about opportunity there and all of flyover country continues to suffer from the broad brush strokes of economic misfortune.

What shocked most of my audience was the large number of out-migrants who stayed in the Rust Belt. No, not everyone left the cloudy days behind for Sun Belt splendor. Save those hardy pioneers, the apple doesn't fall from the tree unless you know someone who travelled a long way from home. Thus, refugees from one state (California) in deep economic crisis keep heading to another state (Oregon) with similar problems. And thus, why most people who left Youngstown went to Cleveland, Pittsburgh and Columbus.

Wednesday, August 12, 2009

Pittsburgh Personal Income

From my Burgh civic pride file, relatively good news about personal income:

Per capita personal income grew 3.9 percent between 2007 and 2008 compared with the national average of 3.3 percent. Between 2006 and 2007, per capita personal income in the Pittsburgh metropolitan statistical area grew 6.2 percent, compared with 6 percent nationwide. The data comes from a new U.S. Bureau of Economic Analysis report released Aug. 6.

The numbers are absolutely worse, but the outpacing of the national average is picking up. I'll be interested to see if the trend continue between 2008 and 2009.

Tuesday, August 11, 2009

Raining On Pittsburgh's Parade

Joel Kotkin of New Geography offers a sensible critique of urban livability rankings. But he takes the "voting with your feet" metric too far when poking holes in The Economist's claim that Pittsburgh is America's most livable city:

In this sense, Pittsburgh represents the American model of the slow-growth European city. This may appeal to those doing quality-of-life rankings, but not to those who have been fleeing the Steel City for other places for generations. Immigrants are hardly coming in droves either – Pittsburgh ranks near last among major metropolitan areas in percentage of foreign-born residents. As longtime local columnist and resident Bill Steigerwald notes, since 1990 more Pittsburghers have been dying than being born. If this represents America's urban future, perhaps it's one that takes its inspiration from Alan Weisman's "A world without us."

The exodus from Pittsburgh is a tired libertarian refrain. Kotkin goes on to list "more dynamic places", all of which likely sport higher out-migration rates than Pittsburgh for at least a generation. I guess all those refugees don't care for the poor quality of life in New York and Los Angeles.

Fair enough to temper Pittsburgh boosterism, but there is no need to fabricate or misrepresent in order to make a point. Without immigration, a lot of American cities are aging and experiencing natural decline. They would look a lot like Pittsburgh, save that people are fleeing them at a higher rate.

Monday, August 10, 2009

Super Mobility

The Institute for Public Policy Research (IPPR) suggests the United Kingdom do something to attract and retain "super mobile" talent. You can read the overview here. Talent in the highest demand happens to be the most geographically fickle. That's not necessarily a bad thing:

Rather than focus on the question of whether or not homeownership is on its way out, it might be worthwhile to consider whether or not reduced homeownership is a bad thing. Homeownership is often cited for its ability to create stable neighborhoods; this, in turn, presumably translates into stable tax bases, as well as healthy businesses, public parks, big shaggy dogs, and apple pie. On a broader context, however, all these benefits are largely the outgrowth of sufficient jobs.

To a certain extent, homeownership and a stable job market don't necessarily go hand-in-hand. As homeowners in Detroit, Buffalo, Youngstown, and many of America's other rust belt cities can certainly attest, homeownership can often keep workers from going to where the jobs are.

In bad economic times, in fact, homeownership can act as a sort of force multiplier: in a boom market, homeowners can generally count on finding buyers if and when they need to move. However, when jobs dry up, and a family desperately needs to move, selling a house can become a long, painful exercise in dropping values, lost money, and lowered expectations. Taking this to its extreme, job options narrow and families go into default, making it even harder to sell homes. Suddenly, a home becomes a huge cinder block around the neck of its owners.

The above analysis nicely highlights the tension between the success of workers and the communities in which they live. As far as the neighborhood is concerned, migration is a bad thing. Hence, irrational xenophobia and brain drain hysteria tend to drive workforce development policy. The result is economic failure.


The nationalisation (part, full or implicit) of financial services has brought territories back to the centre stage of the world economy at the expense of networks and their flows. Relations between cities and states are being readjusted in the latter’s favour as globalisation faces its greatest challenge, says Professor [Peter] Taylor.

Right now, localization is holding sway over globalization. The rooted (the stuck) are enjoying their day in the sun. But as the IPPR argues, this won't last very long. Talent shortages loom and the most geographically mobile again will be an elusive prize.

Sunday, August 09, 2009

Brand New Pittsburgh

The power brokers of Pittsburgh have decided upon a marketing strategy for the upcoming G-20 summit. City boosters are anxious to leverage the media attention. You can get a list of the expected sound bytes here. The part of the narrative that interests me:

Yet green jobs may also help reverse Pittsburgh's massive population decline. Plextronics, the company whose carbon-based "ink" produces solar energy, had just three employees when it was founded in 2002; today, it has about 70 -- with plans to hire 10 to 15 more in the next year-and-a-half.

The company's average age is 30, and 43 percent have young children. More than half are college educated.

The low cost of living makes it easy to recruit workers, said chief financial officer Sean Rollman. He also noted there are large companies in the area, such as Alcoa and Bayer, to partner with, and that colleges including Carnegie Mellon and the University of Pittsburgh provide a natural talent pool.

The ease of attracting talent to Pittsburgh is news to me. Low cost of living is a good selling point, to a family household wage earner. I look at the article as a wish list for the windfall stemming from the global spotlight. Looks as if the region is more focused on attracting new business to the region.

That's a good approach. The G-20 publicity won't do much to engineer in-migration. But job creation could as long as the right industry comes to town. There are labor gluts, as the subpar wages would attest. There are also acute shortages. Buyer beware.

Friday, August 07, 2009

Energy Geopolitics Report

With Thursdays dedicated to brain drain news and Friday a slow day for the blog, I'll start cobbling together all the energy stories for a post on this day of the week. A good blog to read, if energy markets interest you, is Knowledge Problem. That hyperlink is to today's post about natural gas, which is also the focus of my musings.

Pittsburghers should keep up with the news out of Russia, a big natural gas producer and a key fuel source for Europe. Britain is fretting about its reliance on this resource and the capricious supply coming from the east:

Since coal is too dirty, nuclear plants are too slow to build and renewables are of only limited use, investors are turning towards more gas plants, encouraged by rollercoaster power prices that make planning long-term and expensive projects difficult. Gas plants are cheap to build (though expensive to run), so they seem ideal for a market with a murky future, like Britain’s. The first sizeable new power station in Britain for half a decade—built in 2008 at Langage, near Plymouth, by Centrica, a big energy firm—is gas-fired, and there are plenty of others on the drawing board. The Department of Energy and Climate Change reckons that three-quarters of the fossil-fired power stations already planned are to run on gas.

The UK's energy portfolio looks to be increasingly tied to the situation in Russia. The article suggests to me that global demand for gas should be on the upswing. Right now, there appears to be a glut. (See the Knowledge Problem post) But that isn't stopping Russia from investing in the infrastructure to deliver more of the fuel.

Which brings me to Turkey, another country that Pittsburghers should closely track. Russia is trying to cozy up with Turkey and gain a strategic advantage:

Under the deal Mr. Putin obtained Thursday, Gazprom will be allowed to proceed with seismic and environmental tests in Turkey’s exclusive economic zone, necessary preliminary steps for laying the South Stream pipe, Prime Minister Erdogan said at a news conference.

After the meeting, Mr. Putin said, “We agreed on every issue.”

The trans-Anatolian oil pipeline also marginally improves Russia’s position in the region. The pipeline is one of two so-called Bosporus bypass systems circumventing the straits between the Black Sea and the Mediterranean, which are operating at capacity in tanker traffic.

The Bosporus choke point is already dangerous and Turkey would like to see much less pressure on that sea lane. The United States and Russia have been competing for control of the alternative route, making that drama one of the most captivating geopolitical subplots. Regardless, instability in Turkey will now have a greater impact on drilling in the Marcellus Shale:

"Early success from our Marcellus activities indicates this play possesses some of the most compelling economics in our onshore portfolio," Anadarko Chief Executive Jim Hackett told investors on the company's second-quarter earnings conference call.

Bad news out of Russia or Turkey will only make the "play" more attractive.

Thursday, August 06, 2009

Brain Drain Report

It's Thursday! Time for another installment of the Brain Drain Report. A lot of competition for workforce development goat of the week. Plenty of political nonsense getting thrown around in New Jersey. Institutions of higher education tie increased funding for themselves to keeping talent from leaving, a classic brain drain boondoggle. Virginia also gets in on the act. A community in Iowa celebrates the rare local who stays. Cleveland is still enamored with this folly. Watertown, NY is considering a commission to address my favorite red herring. All of the above are worthy candidates for 15-minutes of infamy. But the following schmaltz from a Long Island newspaper wins the prize:

There’s still time to reverse the disturbing trend. With the right leadership and zoning decisions, Long Island can once again be a landing point for young families starting out and for single New Yorkers alike. Once that happens, companies will find the region more attractive, which, in turn, creates jobs.

The brain drain debate must never take a back seat, because it’s among the biggest impediments to the region’s recovery.

For one night in Nassau, at least, it didn’t.

Cool downtowns don't keep young adults from leaving. Don't let a brain drain huckster tell you otherwise. I would suggest that the biggest impediment to the region's recovery is the irrational anxiety about brain drain.

For a more rational approach, please see India:

A little over two decades ago, when the then prime minister Rajiv Gandhi -- during a visit to the United States to meet with President Ronald Reagan -- was asked about the flight of top professional talent from India to the US, he said it was not a 'brain drain' as it was being dubbed, but a 'brain bank' for India to draw upon whenever necessary.

Indian Ambassador Meera Shankar was asked the very same question by the members of The Indus Entrepreneurs, Washington, DC chapter during an interaction.

She, too, like the former prime minister said, it was not a brain drain, but rather "brain circulation". "What goes around, comes around, and I have seen that movement of Indians to other countries has had a very positive impact back in India."

I'm surprised that an Indian official embraced brain drain some 20+ years in the past. India's relationship with its expatriates hasn't exactly been all warm and fuzzy. And I've read about China being much more proactive in exporting talent. However, India today seems to be embracing a diaspora economy. (See yesterday's post)

Wednesday, August 05, 2009

Rust Belt Brewing

Competing For Immigrants

I've collected more immigration blog fodder than I can use in one post. Some good references may not make the cut, but I'm sure the issue will re-emerge at some point in the near future. I'll cut to the chase for those of you (like me) who consume a lot of media. (Via Global Immigration Counsel) The war for talent is heating up:

Indian IT firms have boosted operations in Mexico in recent years to serve Latin American and U.S. customers. One advantage to doing so involves the North American Free Trade Agreement (NAFTA), which enables Mexican and Canadian professionals to work in the U.S. without an H-1B visa.

In other words, Indian firms could send employees to Mexico, and then move some of their Mexican workers to the U.S. under the auspices of the treaty. The Mexican workers would not need an H-1B visa to work in the U.S., though they would need what's called a TN visa. That visa is available to Mexican and Canadian nationals who qualify under a number of professional categories and meet specific education and experience requirements.

If Indian companies set up a visa safety net in Mexico it will be because of concerns about legislation from U.S. Sens. Chuck Grassley, (R-Iowa), and Dick Durbin, (D-Ill.). Of particularly concern is the bill's so-called "50-50" rule that limits the number of workers on H-1B or L-1 visas to half of a firm's total U.S. headcount. The majority of Indian companies in the U.S. have far more people working with visas than not.

The NAFTA benefit -- essentially allowing Indian companies to move relatively lower cost workers in and out of the U.S. without the H-1B visa -- was cited this week by Phaneesh Murthy, president and CEO of IT services firm iGate Corp., in Fremont Calif. IGate has the majority of its 6,500-plus workforce in India.

Murthy told analysts during an earnings call that U.S. visa restrictions could prompt his company to increase work in Mexico.

"We will probably utilize a higher growth in our Mexican center by having more people come from Mexico to the U.S., where they don't need the H-1B because of being part of NAFTA," said Murthy, according to a transcript on the financial site Seeking Alpha. "So, I think our business models will change and we are ready for those changes in business model," he said.

This at a time when the exodus of foreign born skilled labor from the United States is setting records. If I read the threat correctly, then we might expect the IT industry to be flooded with even cheaper labor. Paging Ross Perot and the giant sucking sound.

While we are busy pushing jobs to Mexico, Australia is aggressively courting Indian talent:

The Australian minister for immigration and citizenship Chris Evans, who is in New Delhi, in the wake of widespread violent attacks against Indian students in Australia, told ET that in view of the ageing workforce in Australia, the government was increasingly looking to attract Indian IT, engineering and medical professionals as permanent residents under the skilled stream migration programme (SSMP).

Australia has its own problems with anti-immigrant backlash. But that doesn't stop the government from addressing what is a demographic crisis. So, I can't simply blame the constituency for America's brain dead immigration policies.

Attracting talent is hard work. Even if you could drum up enough local support, how would you go about increasing immigration to your shrinking city? Ask North Bay, Ontario:

North Bay is increasingly being viewed as a collaborative model for smaller communities in Ontario because of its successes with immigrant attraction and retention.

The latest example is the Ontario Ministry of Agriculture, Food and Rural Affairs (OMAFRA) three-city immigrant attraction and retention case study community project including North Bay, Brockville and Chatham-Kent. North Bay is seen as the furthest advanced of the three. Results of this project will contribute to government policy aimed at encouraging immigrants to settle in communities other than Toronto, Montreal and Vancouver. Successes to date are not by accident. They are by design," says Mayor Vic Fedeli.

Read more about North Bay and immigration here. (There is even a Pittsburgh connection) The point being that the Rust Belt could do something similar if the region had the political will to do so. I don't think enough stakeholders and voters appreciate the talent shortage problem.

Job Boom In Pittsburgh

Pittsburgh may accelerate through this downturn faster than most people expect. The region has more than a few big bets on the table and almost all of them look to be good ones. The latest from the nuclear industry:

Westinghouse Electric Co. CEO Aris Candris said today that the nuclear power company's pace of hiring — about 700 people a year worldwide — is filling up its new headquarters in Cranberry and means Westinghouse will lease and build out in the northern suburb.

"We'll be growing, and growing a lot," CEO Aris Candris told nearly 200 people attending a breakfast meeting of the Pittsburgh Technology Council at Downtown's River Club. ...

... Candris said Westinghouse initially projected the Cranberry quarters would eventually house about 3,200. But in little more than a year after opening, the facility will be almost full, as 300 to 400 of the new-hires this year are expected to be based in Cranberry.

"We'll be leasing space all over the place and have construction plans at the existing campus, too," said Candris. He declined to be specific but said the expansion would take place in the Cranberry area.

In other words, initial job creation numbers look to be quite conservative. As I indicated in a post yesterday, the main concern is finding enough talent to meet the growing worldwide demand for nuclear technology. I'd guess that much of the new workforce will come from outside of the region.

That local talent supply can't keep up with demand is mostly good news. Pittsburgh needs a few good paths of in-migration. Once again, I remind Youngstown of the activity going on right next door.

Tuesday, August 04, 2009

Odds And Ends

I'm going to dump a few links here that neither deserve a post of their own nor dovetail into some grand narrative. I am concerned about the talent shortage in the nuclear industry. Shrinking labor pools are a big drag on the Rust Belt renaissance. Where is Westinghouse going to find all the workers it needs to fulfill contracts with China and India?

I'm probably making too much of the numbers, but I find the disparity between Philadelphia and Pittsburgh interesting:

MNI's city data shows Philadelphia is the state's top city for manufacturing employment, home to 48,608 jobs, with jobs down 5 percent over the year. Second-ranked Pittsburgh accounts for 35,399 jobs, with employment down 2.1 percent over the past 12 months. York is home to 24,350 industrial jobs, down 5.5 percent over the year, while Erie accounts for 21,616 jobs, down 2.8 percent. Allentown is home to 19,379, down 1.6 percent over the past 12 months.

The decline of manufacturing is notably less than that of Philadelphia. There is enough of a difference to wonder why this is so.

The last tidbit comes from Steamboat Springs, Colorado. The career trajectory of Smokey Vandergrift caught my eye:

Steamboat’s old-timers live on, thanks to Smokey. He spent 30 years filming legendary figures like Gordy Wren and Skeeter Werner, and produced a stack of documentaries capturing local history. “History was my salvation, in a lot of ways,” says Smokey, 64. As a student at Denver University, he took history classes to keep his GPA from sinking. But, he confesses, “I never knew I would use it for much of anything until I came here.”

That was in 1979. By then, he’d blown his hearing working in a Pittsburgh steel mill, completed degrees in sociology and forestry, earned a nickname (a campfire cinder ignited his cowboy hat), and worked as a ranger at Denali and Mesa Verde National Parks. When he took a marketing position at the Steamboat Ski Area, video was the hot new technology, and Smokey found himself in the movie business.

That's quite a story for a blue collar worker, but I suspect it isn't that rare for someone from Pittsburgh.

Detroit Is Dead

Detroit, among other Rust Belt locales, has been called a dying city. That generated a fair amount of outrage. A fellow from the American Enterprise Institute goes further and performs the postmortem:

What killed Detroit?

The collapse of the automobile industry seems the obvious answer. But is it a sufficient answer? The departure of meatpacking did not kill Chicago. Pittsburgh has staggered forward from the demise of steelmaking. New York has lost one industry after another: shipping, garment-manufacture, printing, and how many more? ...

... The second factor in Detroit’s decline is the city’s defiant rejection of education and the arts. Pittsburgh has Carnegie-Mellon. Cleveland has Case Western Reserve University. Chicago has the University of Chicago, Northwestern, and a campus of the University of Illinois. Detroit has… Wayne State.

Read the entire article. I didn't expect to see an AEI scholar preaching Jane Jacobs. But there it is. The story isn't just throwing dirt on all shrinking cities. Both Pittsburgh and Cleveland are, to some extent, celebrated as success stories. Doing so makes the invective against Detroit all the more damning.

If this was 1983, what would the author be writing about Pittsburgh? 1977 in Youngstown? Is there any difference between Detroit now and those two places at the nadir of their own economic collapse?

Monday, August 03, 2009

Writing Buffalo

I intended to write about immigration today, but one of my Sunday posts is garnering some interest. In Dayton, art and poetry are used to weave a counter-narrative to negative Rust Belt publicity:

Michael Gainer, founder and chief of operations for the New York-based, non-profit Buffalo ReUse, will make a presentation on a creative way to deal with blighted housing that also grows jobs.

“We’re eager to get there and share what we are doing and hear what is working for other communities,” said Gainer, founder and chief of operations for Buffalo ReUse. “We hear all the bad stories from outsider perspectives who don’t understand the treasure Buffalo is. It’s reassuring to know there are others struggling with the same things.”

You might think of the event as redefining urban vitality. I think of it as exploring the possibilities of socio-economic frontiers. Or, artists and city boosters are simply celebrating shrinking city cool:

The praise follows major Buffalo strokes on our architecture, culture and communal spirit from the New York Times, USA Today, Wall Street Journal and Newsweek. The national buzz about Buffalo has never been louder in the quarter-century I have lived here. The lightning rod is genius architect Frank Lloyd Wright’s Martin House complex in North Buffalo, nearing the end of a 12-year, $50-million restoration.

The praise does more than make us feel good. It means more visitors spending money in hotels, bars, restaurants, shops and museums. It justifies what a lot of folks have said for a long time:We have world-class architecture, art and other attractions. Restoring and marketing it will polish our national image and create a cottage industry in cultural tourism. We already are seeing the payoff.

“Two-thirds of our visitors are from outside the region,” said the Martin House’s Mary Roberts. “It’s new money into our economy.”

It's more than Buffalo. The good word about Youngstown is getting out. "The Office" helped to put Scranton back on the map. Need I mention Pittsburgh? Pittsburgh?

I'm in the mood to go feather bowling. (Is that one word or two?)

Sunday, August 02, 2009

War For The Soul Of The Rust Belt

Regions are fictions, not entries in a reference book. Power is generating a following of the map you created. This is the art of geography. Via The Pitch (Kansas City), taking issue with Jonathan Franzen's Midwest:

I tend to think Franzen's conception of the Midwest is framed rather extremely by his experiences as a regional expatriate (and being one myself, I think I can tell), and I would argue—or this is at least how I argue with myself—that his emphasis on the distance between the Midwest and the centers of power is not as definitive or as determinative as what specific forms of communication and transportation existed to bridge those distances. Indianapolis ain't Brigadoon, Mr. Franzen. It's the ways that ideas and trends get filtered out by the narrowness of the channels of communication and transportation that is determinative, and not so much the time lag that he talks about. But it's much more romantic to think of the Midwest as a land time forgot, I suppose.

Also, as someone who grew up right on I-70, I think his cartography's kind of bullshit.

This isn't an academic debate. Economic development is at stake, as Richard Longworth would remind us. If you think it doesn't matter, review the shitstorm over Anthony Bourdain's conception of Rust Belt Chic. Who gets to represent Buffalo to the world?

I'm amused with the pulling rank, the flashing of credibility. Conveying the authenticity of place is a difficult task. Sometimes (more often than not), outsiders do it better. There is a grand narrative to be found. We're still looking for one.

Transit Geeks Diaspora

Is Pittsburgh an emerging hub of transit technology innovation? The supporting anecdote:

“With Google Transit, travelers unaware of the convenience of public transportation can do research and choose for themselves,” MBTA general manager Daniel Grabauskas said in a written statement issued today.

What Grabauskas may not know is, one of the engineers on the Google Transit project prefigured the T’s foray into GIS in 2005, with an unauthorized mashup of transit schedules with maps of the Boston area. Joe Hughes developed the tool while living in Boston in 2005, and published it to his blog, retrovirus.com. His application scraped the MBTA’s online schedules and route maps, allowing any Internet user to query nearby MBTA routes and schedules by location. Before moving to Boston in 2002, he’d set up a similar system in Pittsburgh, where he attended Carnegie-Mellon University. In 2005, not long after he built the MBTA hack, he moved to Mountain View, Calif., to take an engineering job at Google’s headquarters there.

“Most of us on this project are transit geeks at heart,” said Hughes. “I’d like to see public transit information as essential a part of any map you might see as any other mode of transportation.”

A blogger compatriot once wondered aloud if Rust Belt refugees were more attracted to urban planning than other people from outside of the region. Perhaps this is true. And maybe the Pittsburgh connected are more likely to end up as part of the Transit Geek Diaspora.

Procyclical Domestic Migration

Much to my surprise, the relationship between economic cycles and domestic migration is as counter-intuitive as the out-migration rates from Rust Belt states. More people move long distances during an economic upswing, particularly young adults. The image of Okies leaving the Dust Bowl is incorrectly informing our expectations:

More generally the national slowdown in economic activity may also be impeding inter-state migration. In investigating business cycles over the past 60 years, Raven E. Saks and Abigail Wozniak find that labor migration rates rise with cyclical upturns and fall with downturns, especially for younger working age people. These effects are independent of the degree of differences in inter-state economic conditions, and may reflect the shifting costs of job search and job matching that take place over the business cycle.

Out-migration during a recession is the exception, not the rule. If you think the brain drain is bad in Michigan now, just wait until the national economy begins to recover. That's when the labor market will undergo a massive restructuring.

Given the relative strength of the Pittsburgh region (see here and here), I expect the in-migration dividend to kick in during Q3 or in Q4. It depends on when the news of better times actually sinks into the heads of prospective migrants. Actually, there is some indication that the Pittsburgh magnet is already in play:

In Indiana County, the number of jobs was the same in June 2009 as in June 2008, the only county in our region that had no change in jobs in the midst of the recession. So why did its unemployment rate increase from 5.7% to 8% during the same period? Because the number of jobs is a net figure – Indiana County lost a total of 600 jobs in manufacturing, construction, and professional and other services, but it gained 600 jobs in trade, transportation, utilities, education, health services, leisure and hospitality, and government. Many of those who lost their jobs became unemployed, while some of the new jobs were likely filled by new residents of the county.

The overall bad numbers might be hiding positive trends. But can the region re-absorb displaced workers? Fast enough to keep them from leaving in search of a job? The latest energy boom suggests it can.