US Cities Series: Pittsburgh makes its mark as an international city
A model of economic transformation, Pittsburgh today is known for its innovation, energy, and as a center for education and healthcare. But is the Steel City on track to become a leader in international business?
US cities are a critical factor in powering international commerce, innovation, and culture. By 2025, McKinsey Global Institute estimates that of the 600 world cities that generate 60 percent of the global GDP, roughly 14 percent will be in the US.
Apart from the major cities of Los Angeles and New York City, where do other US cities fit into the future global economy? This part of the Global Risk Insights’ US Cities Series considers Pittsburgh, Pennsylvania.
A model for the rest of the Rust Belt
Most economists can describe how Pittsburgh emerged from the 1980s in the wake of the devastating collapse of the steel industry to become an example of how a Rust Belt city can pull off a miraculous transformation.
Rust Belt cities, stretching from the Northeast to the upper Midwest, struggled with a drastic decline in population, urban decay, and entire economic sectors drying up within the span of a few years. In Ohio, several such cities have reinvented themselves, but were hit hard by the 2008 recession and are tentatively recovering. Pittsburgh, however, with its newly diversified economy, managed to largely avoid the 2008 recession.
Across the Rust Belt, production and manufacturing is returning. This is driven in part by the growth of middle-class workers in overseas industrial countries such as China. In the US, the young and educated are also flocking back from major east and west coast cities due to higher living expenses.
Pittsburgh is a short distance from Washington, DC and has strong links in education and business among the Pittsburgh expats who reside there. Pittsburgh, described frequently as the US’ biggest small town, also sees regular cooperation between social classes, interest groups, and political leanings.
The 2009 G-20 and beyond
The biggest moment of international recognition came at the beginning of President Obama’s first term in the form of the G-20 summit.
“Prior to hosting the G-20, I believe much of the nation, and certainly much of the world, viewed Pittsburgh as it did three decades ago when contraction in the steel industry forced miasmic economic restructuring,” Christopher Briem, an Economist with the University of Pittsburgh’s Center for Social and Urban Research, described to your Global Risk Insight correspondent. “The opportunity to showcase the city to such a wide audience of international leaders and the international media has pretty much reset the world’s view of Pittsburgh.”
According to Briem, “The local steel industry has evolved into a service provider for producers elsewhere in the nation and internationally. This is also reflected in how some of our service sectors are looking internationally. The University of Pittsburgh Medical Center, for example, has an expanding set of partnerships with hospitals and health systems overseas. This may not show up in traditional export statistics, but reflects the changing nature of the regional economy here.”
Known for its “Eds and Meds” economy, Pittsburgh is strengthening international ties in its health sector. Israel, a world leader in medical technology, has been building business ties with the city’s universities. The Global Venturing Israel conference, hosted by the University of Pittsburgh’s Joseph M. Katz Graduate School of Business, just wrapped up this March.
At the time of the 2009 G-20, Pittsburgh was the home of the world’s largest LEED certified convention center. The city’s lead in environmental trends continues.
Pittsburgh’s Mayor Bill Peduto recently announced the P4 Pittsburgh Initiative. The framework outlines plans for the redevelopment of city space in an environmentally sustainable way. P4 will also host an international summit in Pittsburgh at the end of April. A focal part of the event will look at the success of sustainable practices in the Nordic countries.
Pittsburgh is also attracting a growing number of tech startups. Among many others, tech companies such as Google have set up regional offices there. With the help of schools such as Carnegie Mellon University, Duquesne University and the University of Pittsburgh, local startups pulled in $333 million from venture capital firms in 2014.
Pittsburgh also looks to profit from the recent Heinz-Kraft Foods merger. Officials had to reassure the public that Heinz would maintain a branch there, but the deal will make Pittsburgh a critical base for the company, now ranked 5th among international food giants.
Light ahead despite roadblocks
Obstacles remain for city leaders, however. Policy makers still have to contend with the city’s difficult road system and parking issues. Allegheny Valley Bancorp just announced the consolidation of its offices due to inadequate street parking. Infrastructure development is ongoing. The infamous Greenfield Bridge is scheduled to be demolished and replaced this fall.
The city’s international airport has also struggled in recent years. The long, slow death of the US Airway’s hub at the airport hit the region hard but new multi-million dollar upgrades may hold promise. In addition, the discovery of gas from the region’s Marcellus Shale under the property could help turn around the airport’s misfortunes.
The region’s energy resources will still be a major source of revenue. The Pennsylvania Economy League of Greater Pittsburgh estimated that longwall mining added $1.94 billion to the local counties.
In short, the international spot light continues to shine on Pittsburgh in the years following the G-20 summit. With its recovery and forward-thinking track record, Pittsburgh is ready for business.