Wednesday, August 10, 2011

Rust Belt Competitive Advantage

Bank of New York Mellon Corp. said on Wednesday it will cut about 1,500 jobs, or about 3 percent of its global work force, starting this fall to reduce rising operating costs,

But its Pittsburgh operations might be spared the knife, said bank analyst Gerard Cassidy, at RBC Capital Markets, Portland, Maine.

"What Pittsburgh has going for it is the lower cost of doing business, which could spare jobs there," said the analyst. "There's also a possibility they might even relocate people there simply because it is a cost-effective place to do business."

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Do check out a repost of the Angie Schmitt (from the must-read Rust Wire) piece critiquing Cleveland boosterism over at The Urbanophile. It has sparked debate in St. Louis, since this is a Rust Belt problem. I'm guilty of pimping Pittsburgh, perhaps fiddling while Homewood burns.

Lost in the polemics are trends of improvement. As usual, Chris Briem (Null Space) serves up useful analysis of the latest good numbers for Pittsburgh. You spend too much time dwelling on what is wrong, you'll miss what could address those issues. I see things quite differently from Angie and Tim Logan (St. Louis Post-Dispatch). The negativity is crowding out what is working.

Legacy costs cut both ways. Educate your children too well and they will all leave. Rust Belt cities are victims of their own success. Thus, I take what most people see as liabilities and frame them as assets. Brownfields are the new greenfields. Don't dismiss that as glass half full thinking. Pay attention to what BNY Mellon is saying:

Spokesman Ron Gruendl said it was too soon to say where the job cuts would be made, but added that BNY Mellon "remains fully committed" to its overall strategy of moving jobs to its low-cost global growth centers, which include Pittsburgh, Manchester, England, and India.

Pittsburgh is a growth center, globalization on the cheap. Highlighting the corporate strategy isn't boosterism, despite ignoring crime and public pensions. Pittsburgh is doing something right and I can hear the critics in my head, "But the region is shrinking."

Yes, the population is declining. The City's debt is so big and bad, no one will talk about it. Urban blight is rampant. The powers that be are too parochial. Steeler fans are annoying. I get it.

I also see a city with tremendous urban job density and a physical geography that lends itself to innovation. Pittsburgh is beautiful and inspiring. The parochialism doesn't seem to apply to me. At times, I feel as if I've been handed the keys to place. I chose Pittsburgh. I wasn't born there.

The numbers add up, not only in Pittsburgh. I like what is going on in Youngstown. Cleveland is an embarrassment of riches. I would bet that St. Louis has more than just green shoots. I write that with full confidence that no one will forget the mountain in front of us that we still must climb.


Paul Wittibschlager said...

Pittsburgh, Cleveland, St. Louis, Buffalo...these are really great places to live and raise a family. And the dirty little secret is that you can find really good jobs in these places. Don't let that out, I don't want to see huge growth in Cleveland mess things up.

rootvg said...

If there were "really good jobs" in the Rust Belt other than in fields caring for all the blue collar elderly, we wouldn't have left for Dallas in 1995. We knew then what was going to happen there. You could see it.

Jim Russell said...

A lot has changed since 1995, at least it has in Pittsburgh. I think Cleveland is on the cusp of following the same path.

rootvg said...

For jobs involved with managing old people's money or hospice care that might be true. For working in technology infrastructure, there's no way because there's no new investment. We've tried again and again as recently as last year. I told them what we do, what we make and where we live. They handed our resumes back and laughed at us.

Even so, why would we take such a risk in our forties when we're making six figures each and my wife has a taxpayer guaranteed pension?

Jim Russell said...

For jobs involved with managing old people's money or hospice care that might be true. For working in technology infrastructure, there's no way because there's no new investment.

You couldn't be more wrong. Besides, your anecdotal experience is not an indicator of anything.

I think you are right in not taking the risk. Looks like you and your wife have a good thing going where you live. The Rust Belt doesn't need any more people who are so risk averse. Trying to attract you to Cleveland would be foolish and a waste of resources.