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New and Improved! Manufacturing in Pittsburgh

Harold Miller has something he’d like you to know—contrary to popular opinion, people still make things in Pittsburgh. Despite the decline of the steel industry, manufacturing remains the largest sector by income in the Pittsburgh region. Miller is former president of the Allegheny Conference on Community Development and director of Governor’s Office of Policy Development. He is currently a consultant and adjunct public policy and management professor at Carnegie Mellon. As part of the management team at pittsburghtoday.org, a clearinghouse for local economic and demographic indicators, he firmly believes economic data can tell us “what is really going on in the local economy.” So Pop City thought he’d be the perfect person to talk about the state of manufacturing in Pittsburgh. You might be surprised at what he has to say.

Q: What should people know about manufacturing in Pittsburgh that they might not be aware of?

A: There’s a pretty broadly subscribed myth that manufacturing jobs all left in the 1980s and that now all we have is service sector jobs. In fact, manufacturing is the largest sector in the area when you take into account the income it contributes to the region. Manufacturing isn’t free-standing either—all the lawyers, accountants, and janitors the manufacturers need—those jobs depend on manufacturing. When Sony Television decided to locate in Westmoreland County, that led to some manufacturers locating here and others not leaving.  Tuscarora Plastics in Beaver County kept their plant open to supply for Sony. Namsco Plastics in New Kensington supplied Sony. You could potentially have a cascading effect if some of these manufacturers leave; conversely, a manufacturer coming here creates a lot of other jobs.

Q: Knowing all this, what should we do?

A: Manufacturing firms can be quite mobile. Issues like the cost of doing business, access to transportation, access to workforce--these are things that can make us uncompetitive. The region can’t take these firms for granted. Tax rates, electricity rates, health costs, quality of work force, all these things make a difference in whether or not a manufacturer stays here or goes elsewhere.

Q: So what specifically do we need to do to convince manufacturers to stay here?

A: Some issues that we used to have aren’t issues anymore. Ten years ago, we literally did not have any large industrial sites where a manufacturer could locate. That’s been remedied with some new sites. Medrad, for instance built their new headquarters and manufacturing plant in the Victory Road Business Park in Butler County.

Some areas where we remain uncompetitive are taxes. We have by objective measures the worst corporate taxes in the country. Westinghouse only stayed here because of a very significant tax advantage they received when they were considering leaving. How many other firms might locate here, but don’t, because they see the taxes that they’d have to pay here?

The biggest issue is workers—we have a lot of manufacturers that complain about their ability to fill positions here. Part of the problem is that some of the young people coming out of high school don’t have the basic skills in areas like reading or math.  Another big problem is there is a strong lack of desire among young people to go into manufacturing. There is still a perception that it’s dirty, lower class work. There are still some dangerous jobs in steelmaking, but a lot of manufacturing jobs now use computers, and you’re more likely to use your analytical and problem-solving skills, not your muscles in these jobs. And these jobs pay a lot. It has an effect all the way down the line too, if you can’t fill a machinist job, you can’t get the machine shops to do their jobs and it has an effect all the way down the supply chain.

Q: What’s the future of manufacturing in Pittsburgh?

A: It will increasingly be more technology-oriented. That’s where our real competitive advantage is here—it’s not commodity manufacturing. Those jobs are going to go overseas. It’s going to be these high-value, value-added jobs with knowledge workers, like custom manufacturing or manufacturing with high capital content that’s going to be in high demand. A steel plant, for example, is high capital and doesn’t require as many workers as in the past. If the capital-to-labor ratio in a plant is high, there's no real advantage to the company of locating in a low-wage country.

Q: What are Pittsburgh’s advantages in manufacturing?

A: First of all, the people. Manufacturers always tell us the population here has a good work ethic. Also, despite all the complaints about potholes, there’s a pretty good transportation system, from roads and highways to rail, boat, and air. And given our proximity to the Northeast and Midwest, it’s a good location for manufacturers who serve the domestic market. Sony sells a lot of televisions in the Northeast and Midwest, so it made sense for them to set up a factory in Westmoreland County.

Also, a lot of high-end scientific research takes place here, so businesses that need researchers will find that attractive. Companies like to keep headquarters, R & D, and some manufacturing in close proximity to one another. Increasingly, it’s going to be difficult to have R & D here if we can’t keep manufacturing here.

Q: For young people coming out of high school, why should they consider manufacturing as a career?

A: It’s high wages and you’re producing something that other people can use. You’re in many cases using your head to make these products. High school guidance counselors need to get out and understand what manufacturing jobs really are—so kids can make their own choice of whether or not these jobs are right for them. It is less the mindless assembly lines of the Henry Ford era or the dirty back-breaking work people think of—it’s not your granddad’s job in a steel mill anymore.
Reid R. Frazier is a frequent contributor to Pop City, writing about technology.

Harold Miller

High tech manufacturing at Maglev, Inc., McKeesport

All photographs copyright Brian Cohen

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