Pittsburgh’s renaissance holds lesson for Cleveland
Posted by Scott Stephens/Plain Dealer Reporter November 23, 2008
PITTSBURGH — The city that once defined rust belt decay might show the rest of the nation how to weather a recession.
When steel and heavy manufacturing vanished a quarter-century ago, Pittsburgh lost 200,000 jobs in three years. Hulks of deserted mills, their furnaces dead-cold, glowered from the banks of the city’s three rivers like the eerie stone faces on Easter Island. Young people fled, turning the town’s fabled black-and-gold color scheme to gray.
Fast-forward 25 years. As most of the nation reels in debt and despair, Pittsburgh is on the move: A new $200 million downtown office tower, upscale condos, a casino, a new hockey arena and a riverfront convention center.
Its air and water are clean, and its waterfront is lined with bike trails and entertainment complexes. Six Fortune 500 firms hang their hats here. Carnegie Mellon University serves as a magnet for some of the world’s best and brainiest young people.
A downtown cultural district boasts 14 blocks of theaters, restaurants and galleries. Macy’s and Saks Fifth Avenue anchor a growing downtown shopping corridor. Foreclosures declined 20 percent compared with a year ago, and home prices are steady.
Last year, Places Rated Almanac named Pittsburgh America’s most livable city. Forbes magazine included it among the world’s 10 cleanest cities. Kiplinger’s Personal Finance rated Pittsburgh among the 10 smartest cities to live and work in. An affiliate of the Financial Times called it one of North America’s top three cities of the future.
Even the beloved Steelers, who won four Super Bowls during the salad days of the ’70s, are back among the National Football League elite. And as they dominate the rival Browns on the gridiron, Pittsburgh seems to be colonizing Cleveland on other playing fields.
Last month, the Pittsburgh-based PNC Financial Services Group gobbled up National City Corp. Then, Howard Hanna Real Estate Services grabbed Real Living Realty One, giving the Pittsburgh-based firm nearly 40 percent of Northeast Ohio’s home sales.
Oglebay Norton Co., a fixture in Cleveland for 154 years, shuttered its headquarters this year and moved about 50 employees to Pittsburgh. The storied minerals company had once hired John D. Rockefeller and had owned the Edmund Fitzgerald, the freighter that sank in Lake Superior.
Giant Eagle now dominates Northeast Ohio with 95 supermarkets and 52 convenience stores and gas stations. The grocery chain is based in — you guessed it — Pittsburgh.
“The reports over and over again say things are not good, but there’s good news taking place here,” said Pittsburgh’s 28-year-old mayor, Luke Ravenstahl. “People are moving here. We continue to be well-positioned to survive an economic downturn.”
Analysts say the boom is occurring — at least in part — because the city already had its bust. The loss of heavy industry in the early 1980s forced Pittsburgh to diversify its economic base. As was the case with Cleveland, health and education emerged as the new sources for breadwinner jobs. But Pittsburgh also managed to attract and nurture entrepreneurs specializing in global markets for technology, research and development and environmental science.
“The diversity of the economy in Pittsburgh puts us in a better place than many cities in the country,” said Mike Langley, chief executive of the Allegheny Conference on Community Development, a nonprofit, private-sector development group. “We’ve been through and worked through problems. It’s actually kind of hardened us like steel.”
The bust also caused a seemingly disastrous — but ultimately beneficial — shift in demographics. When the jobs left Pittsburgh, so did a generation of baby boomers. Today, that void has been filled by “millennials” — those 27 years old and younger. It’s no accident that Pittsburgh is one of the few cities to offer free Wi-Fi within its borders.
Meanwhile, the city’s substantial elderly population, living on the safety net of Social Security, pensions and Medicare, is less affected by a recession than younger working folks.
“The city has done a remarkable job of reinventing itself because it had to,” said Michael Edwards, president and CEO of the Pittsburgh Downtown Partnership, a nonprofit group that works with businesses, civic organizations, foundations and elected leaders on developing the city’s 100-block downtown. “We’re trying to build a city for the future.”
Much of that future is moored in the past. The Pittsburgh Technology Center, an office park on the site of a former Jones & Laughlin steel mill, is a research hub employing 1,000 people and one of the best examples of brownfield redevelopment in the nation.
U.S. Steel Corp. is spending $1.2 billion to turn its aging Clairton Coke Works in the gritty Mon Valley into a site producing specialty metals and tubing. The project will reduce emissions, create 600 construction jobs and guarantee continued employment for the mill’s 1,300 workers.
Westinghouse Electric Co. is hiring 1,000 engineers in suburban Cranberry Township to build 33 nuclear reactors around the world.
And General Electric and the University of Pittsburgh Medical Center are joining forces to open 25 cancer-care centers in Asia, Europe and the Middle East.
Even the city’s iconic hometown beer, Iron City, has a new lease on life. The 147-year-old brewery, the nation’s third-oldest, went into bankruptcy in 2006 after it couldn’t pay its water bill. Private investors, helped by a state economic development grant, rescued the business. It’s now a smaller, leaner operation, but 100 jobs were saved and the suds still flow.
“Folks here in Pittsburgh don’t want to see the brand go away,” said Timothy Hickman, Iron City’s new president. “It’s part of the roots and fabric of this town.”
Developers are turning some of those roots into upscale digs for well-heeled city dwellers. In the Strip District, an ecclectic mix of produce stands, dance clubs and boutiques on the banks of the Allegheny River, the long-forgotten Armstrong Cork Co. building has been transformed into the trendy Cork Factory loft apartments.
Nearby, the old Otto Milk Co. building is now the new Otto Milk Condos: 60 one-, two- and three-bedroom units going for $183,000 to $1.3 million.
They are the kinds of fashionable addresses that attract couples such as John and Nasrin Jordan. The Jordans, who are both managed-care consultants, enjoy the excitement and culture of downtown but tired of the hour long drive between the city and their home in Upper Burrell.
When Pittsburgh began offering generous tax abatements for new downtown housing, the Jordans were among the first in line. They settled on a place in 941 Penn Ave., a refurbished 10-story building with 18 luxury condos about a block from the city’s new convention center.
“We were looking toward the future,” said Nasrin Jordan. “We spend a lot of time downtown. We love the city, and we love being here.”
Jack Benoff, the Philadelphia-based developer of both Otto Milk and 941 Penn Ave., said downtown Pittsburgh is an economic hothouse in which investments like his can bloom into profits. Benoff said his 941 Penn Ave., which hasn’t yet opened, has all but one unit sold.
“I looked at Columbus also, but I liked Pittsburgh,” Benoff said. “The city is just great to work with. The only skeptical people, to be truthful, were the banks.”
There are other skeptics, to be sure. While acknowledging Pittsburgh’s considerable gains, some observers say the city is far from recession-proof. Like Cleveland, Pittsburgh is losing population. Vacant storefronts still mar Fifth and Forbes avenues, two major downtown arteries. A recent police crackdown in the downtown Market Square netted 117 arrests in a single month, but crime remains a problem in many neighborhoods.
And while it’s true that housing values in Pittsburgh haven’t fallen the way they have in the rest of the country, it’s also true that there never really was a housing boom here.
“When you dig into the numbers, it doesn’t seem that different from Cleveland,” said David Bergholz, former executive director of the Cleveland-based George Gund Foundation and someone who has lived and worked in both cities. “Cut away some of the froth, and it’s hard to see where they are better positioned.”
Critics also point out that not all Pittsburghers have shared in their city’s successes. Most data show black residents of the city face far more severe poverty than any other racial group. In many cases, the quality of life for blacks in Pittsburgh is below national averages, according to a 2007 study by the University of Pittsburgh’s Center on Race and Social Problems.
One reason for the gap: Bigger cities like Detroit and Washington have a larger, more politically active black middle class that can push for policy change.
Still, Bergholz and others acknowledge a growing gulf between Pittsburgh and Cleveland in at least one area: Higher education. Once neighborhood rivals, Carnegie Mellon and Pitt are now collaborative partners, twin forces in research, science and technology.
The University of Pittsburgh Medical Center, a $7 billion health-care conglomerate, is the city’s largest employer with 50,000 workers and hospitals in Ireland, Italy and Qatar. Seventy-five miles south, West Virginia University gives the region a third first-tier research institution.
“You don’t have an equivalent of Pitt in Cleveland,” Bergholz said. “It’s a big engine, both regionally and nationally.”
So is Carnegie Mellon. The university’s Heinz College was the first in the nation to require its public-policy curriculum to include information technology courses. Google chose the university as a site for one of its research and development offices.
Recent CMU grads started a nonprofit company that plants sunflowers in abandoned urban fields and converts oil from the flowers into clean-burning biodiesel fuel. The firm, which has 100 volunteers, began as a research project.
“We attract a group of talented students from all over the world who impact all aspects of the community,” said Ann English, senior director of operations at Heinz College.
Locals admit that the city’s unusual topography — a bad dream for out-of-town drivers — has been a catalyst for the city’s revival. Crisscrossed by the famous three rivers and surrounded by steep hills, Pittsburgh’s downtown is compact. An unusually high percentage of the region’s residents work downtown, and half of them use public transportation to get there.
But the political landscape is equally important. A few years ago, Allegheny County scrapped its creaky system of three elected commissioners, opting instead for a county executive. The setup is imperfect, but the streamlined system appears to be blending well with Ravenstahl, who has worked hard to forge ties with the county’s 127 other municipalities.
That cooperative approach extends beyond the county’s boundaries. As part of a 10-county regional coalition, Allegheny County’s interests don’t go unnoticed in Harrisburg.
“When we put our political muscle together, we have more votes than Philadelphia,” said Richard Stafford, a professor at Heinz College and former CEO of the Allegheny Conference.
Stafford said that regional cooperation mirrors the city’s ability to persuade diverse and powerful interests — gray-haired CEOs, union bosses and deep-pocketed philanthropic leaders– to row in the same direction.
“If you improve government, education and your infrastructure, at some point you will turn things around,” Stafford said. “It’s almost a mathematical certainty.”
That turnaround is most obvious to the people who live and work here. Karen Duganier, a commercial contract manager who lives in Pittsburgh but spends substantial time in Cleveland, said the Steel City has done the better job of remaking itself for a new economy.
“Pittsburgh made the transition,” Duganier said. “They adjusted to change better than Cleveland.”
The Pittsburgh Plan: Five things that could work here
1. Regionalize. Pittsburgh has lost population, but regional ties give it as much — or more — clout in Harrisburg as Philadelphia. Cuyahoga County could streamline county government and forge a regional coalition for more power in Columbus.
2. Develop and use the waterfront. From Pittsburgh’s old convention center, there wasn’t a window that allowed a glimpse of the river. The new waterfront convention center has a boat dock from which visitors can catch a pleasure cruise.
3. Develop educational leadership. Carnegie Mellon University was once a good regional school. Now it’s a great university of international renown. Plagued by abrupt changes in leadership and budget woes, Case Western Reserve University has not grabbed that mantle.
4. Cooperate. Recognizing that their fates are entwined, corporate and labor leaders in Pittsburgh have been successful at setting aside many of their differences to work for a common good.
5. Strategize. Like Cleveland, Pittsburgh’s philanthropic and business communities have had open checkbooks. Pittsburgh often has had a sharper vision of how the money should be spent.