30 Years: Pittsburgh moves from heavy industry to medicine, tech, energy

Part of the 30 Years, 30 Changes series on the Pittsburgh region

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Three little letters -- .edu -- were symbolic in Pittsburgh's transformation from a steel- and manufacturing-based economy into one that has a finer focus on computer technology, medicine and university research. On April 24, 1985, Carnegie Mellon University became one of the first six colleges to register an .edu domain name -- cmu.edu, berkeley.edu, columbia.edu, purdue.edu, rice.edu, and ucla.edu all came online at the same time, a full decade before commercial Internet access became commonplace in U.S. households.

That event came three years after CMU had launched its "Andrew Project" (named after Andrew Carnegie and Andrew Mellon), a hardware and software partnership with IBM that helped wire CMU's campus, linking administrative offices, academic buildings and public dorms, deploying computer labs across campus and connecting them so that they could share files, email, and more.

The changes at CMU, which came during the expansive tenure of school president Richard Michael Cyert (who served from 1972 to 1990), somewhat paralleled -- and in many ways drove -- the changes occurring in the Pittsburgh economy during the same period and over the next three decades. CMU grew from a regional technical school into a national engineering powerhouse, and Pittsburgh's economy -- through years of stops, starts and sputters -- eventually emerged as one that could serve as a turnaround model for other troubled Rust Belt cities.

"I was born and raised here. Went to school here. I worked four years in a steel mill," said John Manzetti, Pittsburgh Life Sciences Greenhouse CEO.

His career path mirrored the city's slow revival. He left Pittsburgh in 1969 and spent the next two decades in the manufacturing industry, at Babcock & Wilcox Co. When he returned to Pittsburgh in 1988, to work at Carnegie Group Inc. -- a CMU spinoff -- his hometown was noticeably a different place.

"Wow, where did all the steel mills go?" was among the first thoughts to cross his mind when he arrived here for his job interview. Over the next two decades, heavy industry moved out and high tech moved in.

"It was driven by Pitt and CMU, largely," Mr. Manzetti said. "The city wanted to make a change. The universities were certainly key to that."

The shift in focus was "all centered around research, and commitment to making the change. We wanted to do that -- certainly because we had to -- [but] it worked" because of the billions that Pittsburgh's colleges and foundations poured into technology research, allowing Pitt and CMU to double down and pursue federal research dollars.

Another driver of that change was the creation of the Ben Franklin Technology Partners program, a state-sponsored economic development initiative geared toward the economy of the future. In 1983, when the partnership was created, "our unemployment rate hovered around 15 percent. We were in desperate straits and we had to try something different," former Pennsylvania Gov. Dick Thornburgh, who held office from 1979 until 1987, told the Post-Gazette in 2012.

The change to the economic fabric was dramatic. Gulf Oil, Sunbeam, Rockwell and others disappeared from the Pittsburgh landscape.

Today, the region's three largest employers -- outside the state and federal government -- are UPMC, the newly christened Allegheny Health Network and the University of Pittsburgh. Carnegie Mellon is among the region's top 10 private employers. U.S. Steel is now out of the top 10, while another old-guard manufacturer -- Westinghouse Electric Co. -- has been reinvented, focusing on nuclear engineering and energy, following the company's purchase of CBS and the disassembling of its non-nuclear business lines.

The city's economic metamorphosis -- and its stability during the Great Recession -- attracted the attention of the White House in 2009, when, in May, the president's press office announced that a G20 conference would be held in Pittsburgh later that year. The G20 is a meeting of the world's top economies and central banks.

"Pittsburgh stands as a bold example of how to create new jobs and industries while transitioning to a 21st-century economy," President Obama said in a statement issued in advance of the summit. "As a city that has transformed itself from the city of steel to a center for high-tech innovation -- including green technology, education and training, and research and development -- Pittsburgh will provide both a beautiful backdrop and a powerful example of our work."

Pittsburgh's revitalization is repeatedly held up as a lesson for other depressed Rust Belt cities, particularly Detroit, which filed for Chapter 9 bankruptcy in July. Like Pittsburgh and its dependence on steel for much of the 20th century, Detroit built its economy on auto manufacturing. While both experienced horrific industrial meltdowns, Detroit has failed to diversify its economic foundation and attract new businesses to shore up its shrinking tax base.

The Steel City's transformation was driven partly out of necessity -- the post-World War II economic model of using lots of men to fabricate metals and other devices was no longer operable. Technological improvements meant less manpower was needed to build things, and what men were needed could be hired more cheaply in other countries. By the 1960s, it was already clear that "Pittsburgh's competitiveness in steel production had been draining away for decades," Christopher Briem, economist at the University of Pittsburgh's University Center for Social and Urban Research, wrote in the Post-Gazette.

Some of that transformation also came by way of old-fashioned politicking -- to the east, Johnstown's shift from metal fabrication to defense industry contracting was a result of U.S. Rep. John Murtha's longtime chairmanship of the House Appropriations Subcommittee on Defense. His multi-billion-dollar largesse was often criticized by anti-earmark types, and some of his closest business allies have been scrutinized by federal investigators both before and after his 2009 death (including a raid on Concurrent Technologies Corp., a nonprofit originally established by Murtha, last month).

And some of the region's ongoing transformation is due to geographic happenstance -- much like Pittsburgh was fated to make iron and steel, thanks to our abundance of coal and river access, southwestern Pennsylvania now finds itself positioned on top of massive natural gas reserves, held in the Marcellus and Utica shales.

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Bill Toland: btoland@post-gazette.com or 412-263-2625. First Published October 12, 2013 8:00 PM


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