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Legacy Economy: Pittsburgh Steel Crazy After All These Years

"Manufacturing is no longer just about production. Production is now the core of a much wider set of activities."
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Carnegie-Illinois Steel blast furnaces in Etna, Pennsylvania (1941). (PHOTO: PUBLIC DOMAIN)

Carnegie-Illinois Steel blast furnaces in Etna, Pennsylvania (1941). (PHOTO: PUBLIC DOMAIN)

Pittsburgh was steel. Pittsburgh is steel. The Rust Belt brand bruising the civic ego:

There are still some who assume Pittsburgh is a steel city, even though that has not been the case for many years. Images, brands, have staying power, and sometimes stereotypes persist that don't match reality.

He says his hometown of Birmingham, in the U.K., is still widely considered a centre of heavy industry – even though that was never the case, but rather it was a place of small manufacturers; his ancestors going back generations were silver smiths.

Hamilton's iconic reputation is well-entrenched in part because the industry employed generations of residents of the baby boom era, and because it ran hot for so long.

Hamilton, Ontario, is the latest manufacturing epicenter to do the fail. Instead of the Steel City (Pittsburgh), Hamilton is Steeltown. Figuratively, and in all likelihood literally, Hamilton's future is Steeltown. Introducing the legacy economic cluster:

With a critical mass of both product and service providers, the Pittsburgh region has become a key source of steel technology. Treado and Giarratani (2008) were the first to establish Pittsburgh as the leading metropolitan region in the United States for the provision of goods and services to the steel industry. They further argued that these suppliers had served as an important source of resilience for the Pittsburgh regional economy during a period of profound industrial transition.

This paper extends their analysis by arguing that the Pittsburgh ‘steel technology cluster’ also represents the kind of flexible response that Chinitz feared was not possible in a region so dedicated to a single industry. Pittsburgh’s ability to maintain a key position within the global steel industry, without maintaining a sizeable base of steel productive capacity, provides a valuable case study of the complex relationship between path dependence and regional resilience.

This paper is "Pittsburgh’s Evolving Steel Legacy and the Steel Technology Cluster." Read it and keep that Benjamin Chinitz stuff in mind. Edward Glaeser on that Chinitz stuff and Pittsburgh:

Chinitz argued that New York was doing better than Pittsburgh in those years because New York had lots of small, independent firms, a legacy of its garment industry. Smoke-and-coke intensive Pittsburgh was dominated by a few vertically integrated industrial giants and, in Chinitz’s view, they crowded out entrepreneurship and innovation.

Pittsburgh sucks and New York City is redoubtable. So says Chinitz and Glaeser. Treado and Giarratani beg to differ. Social science cage match, who will win?

Britain, like many other countries, has gone through a period of huge deindustrialisation. Nearly 9m people were employed in British manufacturing in 1966; by 2011 fewer than 3m were. Manufacturing’s share of the economy is around 10% today, half what it was in 1990. In different countries, from rustbelt America to rustic China, a chorus of voices is urging government to boost domestic industry so that it makes more stuff. The trouble is, according to a study published in Britain on October 30th, most policymakers don’t understand modern manufacturing, let alone how technology is transforming it.

In Britain and elsewhere the days of grimy smokestacks and oily rags have long gone. In the future many manufacturers will not even have a factory, according to the report, which was commissioned by the British government from expert panels made up of 300 business people and academics. Their verdict: “Manufacturing is no longer just about production. Production is now the core of a much wider set of activities.”

Emphasis added. Body slam! Chinitz and Glaeser don't understand modern manufacturing. Outside the ring, Michael Porter struts like a peacock. Steel City wins.

Motor City wins. Greater Detroit has its own legacy economy widely acknowledged as a failure. Vroom, vroom goes Ann Arbor:

“People quite often may say information technology is totally separate from the automotive world.” Governor Rick Snyder said at a recent Michigan Automotive Summit Detroit.

“That’s not a true statement. Look at the information technology in an auto, and the highest type of work being done in IT quite often comes back to an auto. So they’re worlds that are tied together.”

The shift in focus to smarter vehicles has the potential to make Washtenaw County a major player in the development of what many are calling “iPads on wheels.”

Granted, “iPads on wheels” sounds like the "Next Silicon Valley" absurdity. Chinitz and Glaeser might argue that Big Auto killed Detroit. Speaking for Treado and Giarratani without permission, Big Auto will save Detroit. In the middle of the debate is the legacy economy, one Motor City über alles.