We Mean (International) Business

Germany. Britain. Japan. Canada. France. According to recent statistics from the Pittsburgh Regional Alliance, more than 268 foreign-owned firms from 25 nations operate in the area and by sheer numbers, these countries have the most presence. Based on the Allegheny Conference on Community Development calculations, Germany ranks first with 68 firms in the region then United Kingdom – 52; Japan – 28; Canada – 20; France – 16.

Close behind is up and comer India, with at least a dozen companies that have operations in the Pittsburgh area, from Infosys to TCS, with more to come. “Yes, there is a trend, clearly,” says Girish Godbole, founder and CEO of CEO ally, Inc, a management strategies company. “Not just sales offices but manufacturing presence and joint ventures in areas that you wouldn’t have imagined a few years ago.” Wastewater treatment for one and energy sectors for another.

“Another very large area is agricultural products and forest products like timber for importing into India," adds Godbole who is active with the iPort initiative of T.I.E,  the local chapter of a national group that fosters entrepreneurs, innovations and networking. iPort encourages Indian companies to invest money in Pittsburgh and helps companies establish here.

“Pittsburgh has very good technology centers in healthcare and material science and computer science so there’s a lot of interest on the part of Indian companies to come to the Pittsburgh region.”

The Big Picture

Foreign investment in the Pittsburgh region is responsible for roughly 38,000 jobs, according to the Conference. Soon 20 more will be added with the upcoming relocation of Goodfellow Cambridge Ltd, a high-value specialty materials supplies, which just announced a move of its U.S. headquarters from Philadelphia to Pittsburgh.

Why do so many foreign firms set up shop in Pittsburgh? “Location, location, location!” says David Murdoch, partner with law firm Kirkpatrick & Lockhart Nicholson Graham, and Honorary Consul for the Federal Republic of Germany. The draw to Pittsburgh, he says, is “an educated workforce, a strong work ethic and the presence of numerous cultural and sporting choices.”

A Closer Look

What began for Sendenhorst, Germany-based VEKA AG in 1982 as a joint venture with TRACO has become a multinational operation based near Zelienople, Beaver County. A designer and manufacturer of vinyl extrusions into doors, windows, vinyl decking and drywall, VEKA has facilities in approximately 21 countries, with North, Central and most of South America run from its Zelienople office.

Walter Stucky, president and CEO, gives high marks to Pittsburgh’s tradition of a technologically-savvy workforce in areas such as tool and die making crucial to VEKA’s operations. Other key benefits for a Pittsburgh operation are the region’s strategic location within a 500-mile radius of a many major U.S. population centers and access to technology innovations from Pittsburgh universities.

A Departure

Would it surprise you to know that two German twenty-somethings have moved their U.S. headquarters to Greensburg, Pennsylvania from Louisville? As an entirely Web-based operation, Spreadshirt.com can go virtually anywhere it wants. Founded in Leipzig two years ago, Spreadshirt.com enables users to design, buy and sell custom T-shirts online.

Chief Operating Officer Carsten Petzold says that Greensburg is the right location for expansion and lower costs, while the company’s small Pittsburgh office gives Spreadshirt.com access to tech and public relations expertise and the design talent of the Art Institute of Pittsburgh.

The region’s strengths, he believes “are better on the IT administration end” than other areas such as front-line tech skills and tech sales talent. He is encouraged, though, by “a lot of young professionals” in the Pittsburgh area who purchase online product.

The Biggest Company You May Not Have Heard About

As a Bayer Corp. spin-off, Lanxess has been operating quite successfully as a foreign firm in Pittsburgh for decades. Randy Dearth, president of Lanxess North America says that since the 1950s, there have been Mobay, Miles, Bayer and now Lanxess. The product groups researched and produced by Lanxess North America include high performance rubber, engineering-grade plastics, chemical intermediates and high performance chemicals.

“Pittsburgh has so much to offer in sports, culture, and a good standard of living,” he says. That’s a plus in recruiting and retaining employees. Another plus is the proximity to metros in which the company has key customers. “Pittsburgh on its own sells itself,” he says.

What’s more, Dearth is “pleasantly impressed” with area politicians. While mentioning Congressman Tim Murphy and Allegheny County Chief Executive Dan Onorato in particular, he cites the breed in general as being very supportive with development money, implementing necessary post-9/11 security rules and being responsive to problems faced by the chemical industry.

A Surprise in Jeanette

Neither the name of the firm, Elliott Co., or its CEO, Antonio Casillo, would give people a clue to its correct foreign parentage. Mention Elliott/Ebara Group, however, and those tuned into international business may perk up. In fact, the turbomachinery company founded almost 100 years ago by William Swann Elliott has been part of Japan’s $5 billion Ebara Corp. since 2000.

Casillo cites two of the area’s benefits for Elliott and Ebara: the ideal recruiting for engineering and other technical types and an overall strong work ethic found in Pittsburgh. Both Elliott Co. and its parent benefit from proximity to so much academic R&D, he adds.

Smoothing the Way

Despite a number of roadblocks ranging from the lack of direct international flights to old images of the city that stubbornly persist, the Pittsburgh region continues to be a hub for a significant number of foreign-owned firms. In the international business community, the buzz about the many advantages of Pittsburgh is strong. And of course it’s trumpeted by national, state and regional economic development agencies.

Another drawback? “Corporate taxes must be reformed to be more competitive,” says Murdoch, whose concern is that the commonwealth and the Pittsburgh region retain and add businesses.

He also believes that the city and commonwealth need active outreach and a change in perspective, to “think globally and act locally.” Murdoch points to the German “A Time to Make Friends” campaign built around the recent World Cup Soccer finals as the perfect opportunity to invite and reach out to foreign delegations and companies.

A smaller but equally successful Pittsburgh example, Murdoch says, was the blending of business and culture with the Pittsburgh Symphony’s European tour. That included business meetings with receptions hosted by the chairmen and CEOs of Pittsburgh companies in each city.

With more infusion of foreign firms, from large companies to smaller businesses, the economic vitality of Pittsburgh will continue to improve. As Michael Langley, CEO of the Allegheny Conference notes, the skilled workforce in Pittsburgh is among the top ten most-educated in the country. We decided to make the move to Pittsburgh because it will fulfill our need for a highly-skilled workforce,” says Richard Dunn, managing director of Goodfellow’s UK-based holding company. More cost-effective operations combined with a diverse economy where other advanced materials suppliers are flourishing, completed the picture for us.”

Larry Slater is owner of Slater Research Services, a Pittsburgh-based marketing research firm.

VEKA operations entry

All photographs copyright © Jonathan Greene
except Antoniio Casillo, courtesy of the Elliot Co.