Wednesday, September 15, 2010

Pittsburgh's Economic Bloom

Oklahoma City is a hot destination. One big reason why is that the region experienced its Great Recession in the early 1980s:

It has been more than 28 years since that infamous Oklahoma City bank collapsed amid a slew of bad energy loans, and triggered an economic meltdown that took down scores of Oklahoma banks and thousands of Oklahomans' dreams.

As bad as the Great Recession has been nationally, Oklahoma's economy was in worse shape after Penn Square Bank's demise. It didn't gain the national attention of the recent struggles because the damage was limited mainly to this region of the country.

But that disaster has helped Oklahoma duck some of the recent economic problems associated with a housing bubble that never reached the Central Time Zone.

The Atlantic celebrates this rise from the ashes in an article titled, "Why Oklahoma City Could Represent the Future of America". One could just as easily write the same about Pittsburgh. In fact, I'd argue that Pittsburgh is a better model. While the OKC is trying to become a lot more like Pittsburgh, Pittsburgh is about to out-energy the capital of Oklahoma:

Pittsburgh is in the beginning stages of a new renaissance, this time around the energy industry, according to Keith Schaefer, co-founder, CEO and president of the smart grid firm BPL Global Ltd.

“We will become the global leader on energy right here in Pittsburgh,” Schaefer said as he shared his company’s story earlier today as part of the Pittsburgh Business Times Leadership Dialogue Series.

The region’s energy sector will create 170,000 jobs in the next five years, Schaefer predicted, and come to account for 25 percent of GDP.

To be sure, Schaefer is making a bold, perhaps outrageous, prediction. Whether or not the energy industry meets those expectations is not the issue. Pittsburgh is already experiencing a new renaissance around other sectors of the economy. Energy is icing on the cake.

Where have you gone, Roboburgh? I ask because of the following advice for struggling Michigan:

Michigan's economy, battered over the past decade by hundreds of thousands of lost manufacturing jobs, could surge again in coming decades by making robots for use in everyday life, futurist George Friedman said Tuesday.

He told about 500 people at the Michigan Chamber's annual Future Forum at Kellogg Center that the state is uniquely situated to build robots that can help the disabled, tend the elderly and perform many routine tasks.

"I don't know where the U.S. would put the robotics business but here. ... It's yours to lose," said Friedman, founder of the STRATFOR private security think tank in Austin, Texas, and author of the book, "The Next 100 Years."

Further on in the same article:

To Friedman, it's the same dynamic that forced Pittsburgh to reinvent itself as a research center after the steel industry collapsed and the Research Triangle in North Carolina to be created when the textile industry moved overseas. Closer to home, Ohio entrepreneurs who lost their jobs in the downsized rubber and tire industry have created new industries involving polymers.

Perhaps the greatest signature of Pittsburgh's reinvention concerns robotics. I'm confused as to why Friedman thinks the industry is there for the taking. Regardless, the futurist is bullish on robot manufacturing. That's just another part of the Southwestern PA economic portfolio.

Getting back to Oklahoma City as the future of America, Pittsburgh also avoided the real estate bubble. Brookings has published its second quarter MetroMonitor review which reveals Oklahoma City's housing market as overpriced while Pittsburgh's remains underpriced. But there was even more impressive news concerning jobs:

Employment rebounded from its low point in 87 of the 100 largest metropolitan areas by the second quarter of 2010, but only four gained back more than half the jobs they lost between their employment peak and their post-recession employment low point, and only one of those made a complete jobs recovery. By the second quarter, all but 13 metropolitan areas (Albuquerque, Boise, Colorado Springs, Las Vegas, Little Rock, Memphis, Ogden, Palm Bay, Portland (ME), Providence, Provo, Sacramento, and San Diego) saw employment bounce back from its post-recession low. However, only 10 metropolitan areas (Augusta, Austin, Baltimore, Charleston, El Paso, Honolulu, McAllen, New Orleans, Pittsburgh, and Washington) regained more than a quarter of the jobs they had lost between their pre-recession high and their post-recession low. Only McAllen recovered its pre-recession employment level.

Pittsburgh is doing a much better job of charging out of the recession than Oklahoma City. I mention this because the energy boom hasn't really hit Southwestern Pennsylvania in terms of jobs. The region needn't bank on Schaefer being correct. In many sectors of the economy, Pittsburgh companies are scouring the US for talent:

Well I just finished the Georgia Tech University job fair here in Atlanta. It went very well and met some great candidates that hopefully will consider positions here in the Pittsburgh region. I have about 50 good resumes from the fair. I even met up with Westinghouse who was recruiting at the event. It is always amazing to me, no matter where I go in the country, I inevitably meet someone from Pittsburgh or someone who still has family in Pittsburgh and wants to move back.

I'm not the least bit surprised that Westinghouse was in Atlanta. That company is growing like crazy and is a big part of Pittsburgh's energy scene. One shouldn't focus only on shale gas. The nuclear industry is thriving. But don't sleep on Roboburgh.

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