InnovateCity: The Steel City
With roughly 2.3 million people, the city of Pittsburgh is the second-largest city in the Commonwealth of Pennsylvania. The city is historically known for its steel industry, hence the name “Steel City.” However, a lack of competitiveness in the metal manufacturing cluster became a problem in not only Pittsburgh but in all of the United States. Japanese and German firms rebuilt after World War II and introduced basic oxygen and continuous casting technology (which was invented in the United States, but not adopted by major U.S. steel companies). This set the stage for the rapid decline of the U.S. steel industry in the 1970s and the Pittsburgh area faced an economic crisis as regional industries waned. Virtually overnight, 150,000 jobs were wiped out, marking the end of an era.
Despite the difficult period, Pittsburgh has since created an innovative environment to push forward economic growth. The region has been able to capitalize and re-invent itself by developing a highly-skilled workforce and other related businesses.
As a result, in the past several years, Pittsburgh has re-emerged as a one of the nation’s leading centers for technology, health care, advanced materials, life sciences, homeland security, and financial services. The region now supports 1,600 technology and research companies, including a major campus for Google, Intel, RAND, Disney research and hundreds of smaller startups.
As of 2007, the total annual payroll of the region's technology industries, when taken in aggregate, exceeded $10.8 billion.
Pittsburgh public schools, such as the Carmalt Academy of Science and Technology and the Pittsburgh Science and Technology Academy, have designed an ideal learning environment that infuses science and technology across the curriculum. In addition, Mayor Luke Ravenstahl and Superintendent Mark Roosevelt launched the “The Pittsburgh Promise”. With contributions of $100 million by the University of Pittsburgh Medical Center, The Pittsburgh Promise is made to all children who graduate from Pittsburgh Public Schools and who live in the City of Pittsburgh. It says that if they maintain an average GPA of 2.5 and an attendance record of 90%, they will earn up to a $40,000 scholarship to attend any accredited post-secondary institution in Pennsylvania.
Professor Michael E. Porter of Harvard University—along with the Council on Competitiveness, the Monitor Group, and ontheFrontier—produced a report on what he termed a “cluster of innovation initiative.” It examines the composition and performance of the Pittsburgh regional economy, how industry clusters developed and innovation arose, how cluster affected the region’s economic future, and how the region can establish a strategy and action program to drive its economy and clusters forward. A key takeaway is that Pittsburgh should seek a diversified, mature, and strong-performing economy. The city can do so through public-private collaborations to build a global leadership position on advanced manufacturing and new technologies, unlocking commercial potential in universities, and the development clusters with diverse and advanced industries (e.g., robotics, medical devices, and bioinformatics).
Higher education institutions, such as the University of Pittsburgh and Carnegie Mellon University, understand the changing environment of technology-based economic development. These schools are examples of how industry partnerships and entrepreneurial culture along with investment in labs, engineering centers, and accelerator space for start-ups foster a community of innovation among its faculty, staff, students, and sponsors which proactively contributes to the development of the region’s economy.
As a result, The United States of Venture Capital, an interactive report, highlighted that Pittsburgh created 18 high-tech start-ups and attracted $87 million dollars in 2011.
The Pittsburgh Technology Council estimated that the 9,908 technology firms tallied in 2010 represent more than 16 percent of all companies in the region.
- Employs 282,994 individuals, 18.6% of the overall workforce.
- The $18.2 billion total annual payroll of technology and related companies represents more than 37% of the region’s wages.
- 87 hardware firms within the 13-county region employ more than 5,100 people with a total annual payroll of $314 million.
- 924 software firms employ nearly 10,600 people with a total annual payroll of $837 million.
- 641 telecommunications firms employ more than 11,200 people with a total annual payroll exceeding $808 million in the 13-county region.
- Over the course of a five-year period ending in 2010 within the Pittsburgh metropolitan area, 101 companies received nearly $788 million in venture capital.
By promoting a business climate that encourages entrepreneurship and growth, Pittsburgh has been able to develop economic activities with governments that have led to:
- $20 million increase in Pennsylvania’s R&D tax credit
- Enacted a 1 mil reduction in the capital stock and franchise tax.
- Technology based economic development initiatives including support for the Ben Franklin Technology Development Authority and the Pittsburgh Life Sciences Greenhouse.
- A new 25 percent tax credit for qualified investments in early stage technology businesses.
Finally, the quality of life in the city of Pittsburgh has improved. Most recently, Pittsburgh was rated the “Most Livable City” in America by Forbes. Pittsburgh's art scene, job prospects, safety and affordability all contributed to that high placement. Specifically, the ranking was a feature of five data points: unemployment, crime, income growth, the cost of living, and artistic and cultural opportunities
Next Stop: Chicago, Illinois
We’ll explore some of the emerging opportunities in the nation third-largest metropolitan area.
About InnovateCity Project
An analysis on venture capital, entrepreneurialism, technology, R&D, research and development, new business, startups, exports and more. Topics include venture capital, entrepreneurs, cluster mapping, research and development, patents, manufacturing, broadband deployment, STEM attainment, technology transfer, and much more.