The latest forecast from PNC Financial Services Group economists doesn't offer a lot to smile about. It does predict an end to the region's three-year slide in payroll employment, but only barely. We remain burdened with the overhang of a still-shrinking US Airways and the lack of a major growth industry.

But there are some signs of better days ahead. The University of Pittsburgh and Carnegie Mellon University, for example, are cooperating on a range of initiatives aimed at making the region a hotbed for promising biotech and information technology ventures, the sort of collaboration that was often forsaken in the past.

The University of Pittsburgh Medical Center, a research goliath, is committed to commercializing a range of ventures, either on its own or in partnership with other medical and technology providers. These include plans for possible construction of a vaccine manufacturing plant.

And, perhaps most important, PNC's forecast calls for manufacturing employment to start growing again, ending a prolonged slide since the late '90s.

It may seem unlikely, given how hard this region has been hit by heavy manufacturing's exodus, but much of the region's economic future still hinges on what it always has hinged on -- making things.

A report last year sponsored by the state and conducted by the consulting firm Deloitte & Touche identified so-called "driver" industries that have a significant presence in southwestern Pennsylvania and offer possibilities for growth, including medical equipment, chemicals, electrical equipment, plastics and metalworking machinery.

Many of these industries are driven not by brawn but by brain power, with the lunch-bucket crowd giving way to lab-coated technicians. The manufacturing is clean and automated, requiring workers to be skilled in computers and often capable of working several jobs on an assembly line, not just one.

These industries also tend to be represented by a lot of little firms instead of just a few big ones, which means there are both opportunities for growth and protection from the inevitable failures and mergers of a few. More importantly, the jobs pay well, reflecting a key benefit of manufacturing -- its so-called multiplier effect.

The National Association of Manufacturers estimates that every $1 of manufacturing output generates $1.50 in additional spending on goods and services. That compares with less than a 50-cent multiplier in the service industries.

Moreover, many small local manufacturing firms are home to the sort of innovation that always has been a hallmark of this region, from its early days as an electrical, glass and metals center. Overall, manufacturing is a virtual hotbed of innovation, responsible for two-thirds of private-sector spending on research and development in this country.

A 2002 book, "Manufacturing Works," by Dave Beal and Fred Zimmerman, notes that U.S. manufacturing productivity over the course of the past two decades surged at a 3.2 percent annual rate, twice the rate for other industries, and that the value of U.S. factory output in the late '90s was twice that of Japan's and greater than that of France, Germany and the United Kingdom combined.

The bottom line: Despite all the bellyaching about how this country doesn't make anything any more, about how we have ceded manufacturing leadership to other countries, the simple truth is that it's not true. We are still the world's dominant manufacturing country.

It is true that as the value of our output has more than doubled since the 1970s, the percentage of the work force devoted to production has fallen by nearly half. It is that latter figure that tends to get emphasized when we talk about manufacturing -- the millions of jobs lost over the years as automation and technology have replaced workers on the factory floors. This often gets reported as a sign of manufacturing weakness, when the opposite is true -- it's a strength. To be able to produce more with less is a good thing.

It is hard, to be sure, to see a day when manufacturing in this region will ever be what it once was. Frankly, it can't be.

But it is possible for even high school graduates to land middle-class jobs in some of today's factories if they are willing to start at $8 to $10 an hour before receiving the training and getting the experience for jobs that pay $40,000 or so a year, plus benefits.

That's the message that members of the region's tool-and-die industry would like to get out. At a dinner last week in Penn Hills, several executives at firms in what is know as "Carbide Valley" -- a string of tool-and-die makers employing thousands in small factories along the Allegheny River banks and back roads of the Alle-Kiski Valley -- said the biggest issue they confront isn't China, taxes or health care. It's a looming shortage of workers.

Much of their work force is over 50, with the first wave of baby boomers getting ready to retire. But these companies, whose dies and molds are used in high-speed stamping and other metal-shaping machines that can spit out everything from beer cans to circuit boards by the hundreds and thousands per minute, just can't seem to attract the young high school graduates they say they need.

It seems the image of manufacturing among many high schoolers remains one of dingy, smoke-filled factories ridden with layoffs in down times. It's just not cool.

His group's challenge, said Jim Gilmore, apprentice coordinator for the local chapter of the National Tooling and Machining Association, is to somehow make it cool. Maybe he could do it with the following math problem.

What's worth more: a job that in a four years may pay as much as $40,000 a year, or a college degree that costs $40,000 or more and doesn't promise a job? How that gets answered could very well determine the fate of the region's tool-and-die sector.