Commentary: Pittsburgh still finding its place in global economy
Share with others:
You don't have to be entertained by Russian import Evgeni Malkin at the Consol Energy Center, a diehard Pirates fan pinning hopes for this season on a Latin American prospect or a manufacturer competing against China's devalued currency to realize it's a global world out there.
Still in denial? Consider Pittsburgh's former role as the center of the steel industry.
After several decades of habitual restructuring, the Steel City must be content to be the home of the world's eighth-largest steel producer -- U.S. Steel. That's how much your place in the global scheme of things changes when the 695 million metric tons of steel China produced last year was eight times greater than the output of U.S.-based steel producers.
This year's list of Top 50 public companies reflects how the changing global economy has transformed Pittsburgh. Eight of the 66 companies eligible for ranking -- based on their significance to the Western Pennsylvania economy -- are headquartered outside the United States.
Another 20 of the 66 companies are U.S. businesses headquartered outside of Western Pennsylvania.
Although the remaining companies account for more than half of those eligible, many of the 38 locally based companies analyzed are dwarfed by nonlocal companies on the list.
Compare GlaxoSmithKline, a health care products provider based in the United Kingdom with a year-end market capitalization of $115 billion, to Moon engineering company Michael Baker Corp., which had a $187 million market cap. Or the $5.5 million in revenue reported by West View Savings parent WVS Financial to the $43.2 billion in revenue posted by the Royal Bank of Scotland, parent of Citizens Financial, Western Pennsylvania's second-largest bank.
Pittsburgh companies pale even in comparison to one of their in-state rivals. The $4.2 billion in profits cable giant Comcast recorded last year is more than 32 regionally headquartered public companies posted in revenue.
To some extent, the 66 companies that the Post-Gazette ranked reflect what global partners have done with former Pittsburgh companies, either because the hometown businesses were crown jewels waiting to be plucked or fallen giants in need of re-engineering.
Five out-of-town companies -- Bombardier, Curtiss-Wright, Eaton, Emerson Electric and Siemens -- inherited former parts of Westinghouse Electric when the conglomerate was disassembled following its sale to CBS in 1995. (Another former Westinghouse unit, Wesco International, still calls Pittsburgh home.)
About a dozen other public companies qualify for the list because they purchased or merged with companies based in Pittsburgh. Those include Bank of New York Mellon, which acquired Mellon Financial in 2007; Akron's FirstEnergy, which acquired Greensburg-based Allegheny Energy last year; FedEx, the Memphis transportation giant that acquired RPS of Moon in 1998; and Finmeccanica, the Roman operator of what used to be Union Switch and Signal.
To be sure, there are plenty of home-grown public companies on the list, big and small, that have been able to prosper in an increasingly global economy.
PNC Financial Services and H.J. Heinz, bulwarks of the region's economy since the 19th century, rank favorably on a number of fronts.
Heinz has survived by pursuing opportunities overseas: More than half of its fiscal 2011 revenue of $10.7 billion comes from operations outside the United States. Smaller regional companies are following its lead.
MSA, the Cranberry supplier of safety products, collected more than half of its 2011 revenue of $1.2 billion outside North America.
More than 60 percent of Saxonburg laser optics provider II-VI's $502.8 million in annual revenue came from overseas operations. The company fortified its overseas operations in 2010 with its $94.4 million purchase of Photop Technologies, a Chinese supplier of crystals, optics, microchip lasers and other products.
The global impact on Western Pennsylvania's economy continues to grow despite the fact that it's harder to get here from many places around the globe. You can blame changing economics of the airline industry -- if the term "economics" can be applied to an industry where bankruptcy is the rule rather than the exception.
As capably chronicled by colleague Mark Belko elsewhere in this special section, Pittsburgh International Airport currently offers 144 daily nonstop flights to 34 cities vs. the 633 daily nonstops to 114 cities it offered in 2001. The airport is international only in the sense that Delta offers nonstop service to Paris for part of the year, service sparked by $9 billion in subsidies from the state and the Allegheny Conference on Community Development.
It must be that subsidies -- whether to support airports or cheap Chinese imports -- are part of global best practices.
The airport figures demonstrate that while Pittsburgh has done much to establish a new role for itself in a hyper-competitive environment, more remains to be done. The globe continues to spin and Pittsburgh must spin with it.
First Published March 20, 2012 12:00 am