Can Pittsburgh save Detroit?
[cnn-photo-caption image=http://i2.cdn.turner.com/cnn/2009/images/03/18/art.pittsburgh.jpg]
Randi Kaye
AC360° Correspondent
Detroit, Michigan is teetering on the brink of collapse but it might be able to save itself by taking a good look at Pittsburgh, Pennsylvania.
Back in the '70s and '80s, Pittsburgh’s steel industry collapsed and hundreds of thousands of people left town. This is similar to what we’re seeing now in Detroit with the auto industry.
Pittsburgh, in effect, died. It had to find a way to reinvent itself after it had been relying on just one industry for economic growth for so long. So Pittsburgh turned to what residents and local economists might call "recession-resistant" industries, like health care and education.
Many locals call it the "Meds and Eds” economic approach. It seems to be working.
The University of Pittsburgh Medical Center is now the biggest employer in town with 26,000 people. Carnegie Mellon University is well known for an innovative Robotics program, and biotech is hot here.
Even the first office tower in downtown in 20 years is under construction. Guess who’s building it? PNC Financial Services ... a bank! Call it luck, but PNC pretty much got out of the mortgage business before the whole subprime mess and never wrote bad loans so they are actually growing without any stimulus money! Their conservative style paid off.
These reasons are why experts say Pittsburgh might make a good model for Detroit. Both cities long relied on one industry, have strong research universities and have seen their populations shrink.
And it’s not just that Pittsburgh is surviving, it’s thriving. Foreclosures are down, while in the rest of the country they’re up. Unemployment has crept up to 6.5 percent, but it’s still well below the national unemployment rate of 8.1 percent.
Home prices in the Pittsburgh region increased, on average, by nearly 1 percent in 2008, while nationally, home prices declined 8.2 percent, the steepest annual amount on record. Moody’s says Pittsburgh will be the only city out of the top 100 U.S. metropolitan regions to post a gain in housing prices one year from now.
Detroit should take notice. There may be a life-saving lesson here. Sure, Pittsburgh isn’t perfect. It will lose jobs this year and condo sales downtown have slowed, but TIME Magazine calls Pittsburgh, “One of the Bright Spots on Main Street.” That’s a pretty big compliment when the economy is in the tank, don’t you think?
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Filed under: Randi Kaye • Road to Rescue |
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No doubt diversifying your industries is a good thing to do. However before we throw in the towel on heavy manufacturing we have to ask what is ONE of the biggest reasons we're in the Economic mess we're in? WE DON"T MAKE ANYTHING HERE ANYMORE! The US Economy has been all about shuffling paper and selling services, but ultimately manufacturing is what creates a lot of the REAL wealth. Hopefully the US Auto Industry will stabilize, hopefully Detroit and cities like it will perk up and diversify, they'd better or at best they'll continue to see Brain Drain.
Two points:
1. Marcia above is in for a rude surprise. When Chrysler dies, her precious suburb of Warren is first in line to become America's foreclosure central.
2. It would be great if Detroit followed Pittsburgh's example. That might be possible, IF we managed to eradicate the pig-ignorant and tainted "leadership" that passes for the Detroit City Council, which has successfully thwarted virtually every credible plan for rejuvenating this city. Detroit is full of brilliant minds and hard working people; unfortunately, none of them are represented in city government.
Until the politics of Detroit changes nothing will change...Look at COBO Hall. The biggest show every year is the North American International Auto Show...Expansion of COBO is crucial to keep that show in Detroit. Too bad, the egg heads on the city council are so short sited thaey cant see beyond the noses on their faces.
Until Wayne, Oakland , and Macomb counties come together as one, the city and the state will lose.
One thing people take for granted of Michigan is the bountyful fresh water supply that exists all over the state with the great lakes and numorous inland lakes.
One of these days water will be the new oil and the world will be envious of Michigan.
That day will definitely come.
In the meantime no one is moving there for the weather or culture and arts. They need to focus on making Detroit a 24/7 community that draws young people to stay and be proud. I like many young educated people that grew up near Detroit really wanted to stay but I had no choice but to leave for a better opportunity and a better place to be 20 something and building a career. In the meantime my roots slowly get planted in that city making it harder for me to get back.
You are wrong about PNC. They did get stimulus money, which they used to buy National City Bank. Then Jim Rohr, the president and CEO of PNC, took clients to the Superbowl in the company jet, all at the expense of company.
As Pittsburghers know, Pittsburgh is a great city. Ethnically rich communities, suburbs where it is common to see deer and turkey, country drives within a half hour, a moderate climate with predominantly mild winters, wide deep rivers for lots of boating and fishing, a strong work ethic, a great health system, and great educational opportunities. If you're thinking of moving here, though, you'd better like driving vertically! There's no such thing as a "flat, straight stretch of road" in Pittsburgh! it's about time that Pittsburgh started getting some serious attention!
As a Pittsburgher I can tell you things aren't perfect here, but they sure seem to be better than most places. The collapse of the steel industry was HUGE! Almost every family was impacted in one way or another. But a concerted public/private effort was undertaken to turn things around. We were lucky to get a series of young, forward thinking mayors who led the way...Flaherty, Caliguiri, Murphy, O'Connor and now an under 30 year old Luke Ravenstahl. Thank you Randi for the compliments.
Get your facts straight. PNC DID get stimulus money. And instead of using it for credit purposes, as what the intention of the bailout was about, they turned around and used that bailout money to buy up National City. The government basically bought National City, gift wrapped it, and gave it to PNC. They have grown due to bailout money assistance.
That is so wrong. PNC got 7.6 billion in bailout money. Sure they would do fine without it. But they recieved 4 billion, and decided to buy National City Bank because the reserve was not going to give any to National City for whatever reason.
As with most cities in the "Rust Belt", Buffalo was in a similar situation when Bethlehem Steel closed and most of the city's industry was forced out or boarded up. Like Pittsburgh, Buffalo is reinventing itself as a leader in the Medical Field. Now if they can only reduce the size of the government to match that of the reduced population!
By the way...in addition to my previous comment....I make less than $21,000 a year and barely making it from paycheck to paycheck.
Pittsburgh is ahead of its time, the people are brillant and tough, the Steelers aren't 6 time Champions for being weak just for one example. The Pittsburgh people are not greedy, they are what this country was once was.
too bad the government of Detroit is too busy blaming things on "suburban oppression" to take the lead in fixing their city.
Health care costs are astronomical, and unsustainable, in this country. It would seem that if a city invests in thousands of jobs in healthcare, and reasonable cost reform occurs, they would be looking at potential layoffs, eventually, also. Either demand for employees, or salaries, are going to have to fall, at some point.
I love Pittsburgh–lived there for a couple of years and got my M.A. from Pitt, so don't get me wrong–but it's not quite as rosy there as you make it out to be. The population there is collapsing. Young people are leaving Western PA in droves. The city of Pittsburgh has become, in many ways, a retirement community. Yes, it's remade itself into a beautiful, classy, economically diverse city, but it's not out of the woods yet, by any means.
I lived in Lansing, Michigan for three years. The entire state of Michigan kept slipping farther and farther toward economic collapse the entire time I was a resident there. This should come as no surprise to anyone. Businesses have been fleeing from there since the 70's. Michigan desperately needs to attract new businesses and find alternatives to the auto and general manufacturing industries. I constantly heard bad news regarding the Michigan economy for three years and got so tired of it I packed up and left. Detroit is just the tip of the iceberg as far as Michigan's troubles go.
Having spent the better part of 8 years getting my degrees in pittsburgh I can say the city is deluding itself. It can't keep the graduates of its universities to stay in town and innovate for the city. At the same time the amount of non stop flights to Pittsburgh from the coasts are going down. Putting up a few strip malls and shopping districts doesn't mean squat.
I think it's just human nature to not do anything unless you have to. Same with Pittsburgh, Detroit, etc. Very few are foresighted enough to do something PRIOR to THE COLLAPSE...hint hint
Pittsburgh has made progress but there is still a ways to go. The public transportation system is awful and so is traffic. With much of the downtown traffic going through tunnels and over bridges, there is a limit to how much you can do to fix the problem. I would love to move back but refuse to work downtown. There's limited parking and its expensive – not to mention the Mon flooding parking areas a long the river! But I hear from family that areas outside the city are growing due to these problems, such as the northern areas around Wexford, Warrendale, Cranberry. Hopefully soon I can move home!
Maybe just some symbolism, but it summarizes this article very nicely:
Lions: First 0-16 team in the NFL
Steelers: won the Super Bowl this year.
I've lived in Pittsburgh for my entire 60 years. Here's what the story doesn't tell you – our population has declined from nearly 700,000 in the steel-making days to only about 320,000 today. All the unemployed people left, and they were mostly our young people. We've lost an entire generation of our young people. The public school system that includes the entire city is projecting an enrollment of only around 25,000, compared to over 70,000 in 1970. We are now one of the oldest communities in the country. We also have one of the most incompetent and corrupt local governments on the planet. And housing prices here have not gone down because they never went up – you can buy a 6 room home in the city for around $65,000 – or much less if you want to settle for a bad neighborhood. If Detroit is looking for a model of a city made up of decent people that is still relatively safe compared to most other American cities, then by all means come – but if they are looking for an economic model then they should look elsewhere. Oh, by the way, rumor has it that the Pittsburgh Steelers will change their name to the Pittsburgh Nurses.
GO STEELERS!!
I was born and raised in Detroit. As I grew up, the changes in Detroit (and for the worse, mind you) all started with that idiot mayor Colmen Young. Before him, Detroit was a clean and safe city to live and raise a family. Homes didn't become run down. People cared about their neighborhood and neghbors. It used to be truely an "Americana" steeing. Ever since, Detroit has been spiraling downward... now going on 20+ years, and totally out of control. The people of Detroit need to stand up, and take back the city, and get it back on track to progress. They can start by cleaning it up, and get rid of all the crap and neglect they allowed it to become. The only good Detroit has are the Red Wings.
Pittsburgh is a Great City with a great football team-Steelers. I left Pittsburgh in 1984 when US Steel shutdown the MonValley plants, to move to Phoenix . It has done a fantastic turnaround and I'll be returning when we retire. It has a great mix of eastern european ethnics.
While Pittsburgh has managed to survive...I wonder how long any economy (city, nation or state) can survive with actually producing anything. Can Pittsburgh survive with a largely service oriented economy (health and education). Unless someone is producing something (autos, auto parts, etc.) where will the money come from for health care and college tuition. Granted Detroit has had its head in the sand for a long time...but the ripple effect of losing the big three would echo far and wide across this nation...and not merely in one city. It would put a dent in many economic realms including health care and education in states other than Michigan. One way or another this nation needs to find a way (investment in new plants and equipment?) to insure that we are capable of producing the goods we buy and not merely servicing them.
Isn't Pittsburgh's city government effectively bankrupt?
I have lived in the Pittsburgh region all of my life. It is a wonderfu city, and I am glad its progress has begun to gain national recognition. It is no longer the smoky steel town of the old days, but a vibrant city with plenty to offer its people – both young and old.
I'm not sure I would call Pittsburgh either "conservative" or "thriving". It is holding its own and wasn't hurt as badly as the rest of the country because the real estate prices never escalated like they did in the south or southwest.
Pittsburgh did recover from the demise of the steel industry and enjoyed a resurgence a decade ago. However, the taxes in the state (like the rest of the north-east) are sky-high and industry as well as individuals are paying extremely high taxes.
Unions continue to reek havoc on the industries in the state and many industries leave for greener pastures.
So, while Pittsburgh recovered, it is far from a Utopia.
@Ray: You're right on about Flint. The movie "Roger & Me" came out 20 years ago, and after Flint and Lansing, the domino has hit Detroit – big time.
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@Marcia: Automation Alley is indeed helping. Unfortunately, even A2 was not immune to the economy when Pfizer closed 2 years ago and about a dozen of my friends and neighbors had to pull up stakes and leave.
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I think the bigger point of AC's article is that Motown itself has to make the change, not just our ring of fancy suburbs. With KK out of office, perhaps there's a chance...
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I'm headed to Cass Ave this Saturday to make sandwiches for the homeless. Every little bit...
As someone who moved to Pittsburgh to pursue a graduate degree, I expected the city to fit the old steel image it has. But it's very different now. Pittsburgh has a vibrant arts community in the cultural district and Strip, diverse neighborhoods - many of which have a small town feel, top of the line medical facilities and great post-secondary eduction. You package that with down to earth people, relatively inexpensive real estate, and a generally friendly atmosphere and it's a great place to live.
Pittsburgh is often held up as an example of an industrial city that's turned itself around. But for some reason, people still expect a depressed steel town. If Detroit (and Cleveland, which is in worse shape) can manage economic recovery and an image recovery, it could do better than Pittsburgh. Pittsburgh was lucky enough to have some of the infrastructure (schools and banks) in place ahead of time. I'm not sure if those conditions exist in Detroit. I think those pre-conditions were key to Pittsburgh's success..
A lot of cities need to look at Pittsburgh – too many rely on 1 or 2 main employers and if these go away they face a world of hurt. In our 401Ks we invest in a handful of different funds to stay diversified and so we don't lose as much money if one fund or another bites the dust. Seems like we could use this same reasoning with our cities. I'm greatly looking forward to Randi's report to see what Pittsburgh has done that other cities could use as a model..
All that is wrong with Detroit can be gleaned by simply looking at what has happened in the last few weeks concerning Cobo Hall. The disconnect between the overwhelmingly black city and the mostly white suburbs is wider than it has ever been. Not much can get done in the city until it is repaired and it cannot be repaired without two willing parties. I don't believe that the City is a willing party at this time. There is a huge power vacuum in the wake of the ouster of Kwame Kilpatrick and there are a number of people and interests jockeying to fill it. The foolishness over Cobo is one result of that power struggle. The quote of the week came from one city council member who told the suburbs and the state: "If you want to help us, just give us the money and butt out." Did Pittsburgh ever face something as daunting as that before it could even get down to the business of recovery?
I grew up in Detroit, the city I still call home, living there from '63 through '90. That being said, this is a city that simply doesn't care and isn't interested in saving itself. Since the late 1950's, the city has put up with (both promoted and marketed) mediocrity, produced products that were junk, missed every conceivable signal that it was in trouble, refused to think differently, refused to adapt, mocked other methods and any thinking that varied from it's own, and the list goes on. This isn't just the auto industry mindset, it is pervasive in all areas of society in Detroit. I'm convinced the city will never change, doesn't want to change, doesn't care to change. Just let them be... they've made their bed and now they can sleep in it. The rest of us have moved on.
Pittsburgh may very well be the finest city in the United States for many reasons:
diversified economy, cost of living, great universities, topography, verdant landscapes, lots of nice people, superb gothic architecture everywhere, a magnificent world-class orchestra...
Pittsburgh also has a pretty good football team, I understand.
Pittsburgh's turnaround actually began in the early-mid 1960s, with some forward looking people in elected office. Detroit has a long way to go.
After having lived in the Detroit area for almost all of my 25 years, I actually left my beloved hometown after months of looking for a new job and ended up moving to Pittsburgh early in 2009. This city is thriving and successful and employment was easy to find. I hope Detroit can recover and learn from Pittsburgh. Detroit has great people who work hard and have a lot of talent. It's a shame that the political and business leadership of the area doesn't have the foresight to help the area thrive.
Pittsburgh never really saw the housing bubble that the rest of the country saw. In addition, Pittsburgh didn't have the cancerous city government that was on display in Detroit.
Makes me proud that I live in Pittsburgh, great city.
I too moved from the Pittsburgh area in the 80's from home, family & friends at the age of 30. It has been a long journey but we worked hard and long hours and survived. We never went back. I am sure happy that this town survived. The people are hardworking, family oriented, and happy blue colar workers for the most part...This goes to show why the Steelers keep winning superbowls. Its got alot to do with the crowd!
Detroit is three times larger than Pittsburgh... and when Detroit suffers the nation suffers. Motown and the auto industry affect many more than the steel industry.
Here's a twist on comparing States, particularly for the auto industry. States like Mississippi, Alabama, Kentucky and Loiusiana receive back 65% to 100% back from the federal government for every federal tax dollar they pay. For example, Mississippi gets back $2000 in aid for every $1000 it pays; Alabama $1650 for every $1000 it pays; Loiusiana $1778 for every $1000. On the other hand, Michigan gets back $920 for every $1000; Illinois gets $750 for every $1000; New Jersey gets back $610 for every $1000. Here's the kicker... every one of those southern states gave hundreds of millions of tax abatements and incentives to foreign car manufacturers to set up in their respective states. Could they do that if they were not subsidized by the "wealthier" states like Michigan?
We need to switch to a dollar in aid for every dollar collected. Michigan should not be subsidizing southern states that are giving away our money to foreign owned companies. And I'm from New Jersey!
I dont agree with one particular statement by Marcia in Warren. She has missed all of the businesses that have closed down because of the colapse of the Auto Industry here in Detroit. This is much like the small city of Flint back in the late 80's and early 90's. When GM closed all the plants up there and move them to various cities and towns the entire city of Flint crumbled and it has not had a comeback since. That is what you may call a domino effect Marcia and if you havent felt it yet....you will soon enough.
I am a part of the retail side of the Auto Industry and we are suffering worse than we have in 30yrs. There are no sub-prime banks to tackle the growing credit downturn that most of Michigan (not just Detroit) people are experiencing. You have banks that were doing business in our state that have pulled out of (Michigan) completely. They are doing business in other states but not Michigan. This was because of the poor performing portfolio's that Michigan ( not just Detroit) was putting on thier bottom line profits. We as a State are suffering and as a City!
Its people like Marcia who are ill informed!
get better informed suburb Marcia, WAKE UP!
P.S. Oh by the way I live and work in the suburbs Troy MI!
You appear to be lumping the entire state of Michigan in with Detroit. True, Detroit is known as the Motor City, but you have to look beyond the city itself to appreciate what is going on. In Oakland and Macomb counties automation allies have sprung up that basically have nothing to do with the auto industry. A new research and development facility is opening up in Ann Arbor and a whole lot more that the media gloss over.
Maybe if you guys did your research before heading here you would have known this, but I guess you really didn't want to. So Michigan and the Metro area suffers because people will be ill informed.
Buffalo has been learning that lesson for a long time. Sadly this is going to keep happening until there is a complete economic crash.
Yes, Detroit has some deep-rooted problems, but just as America is experiencing now, they will both turn around, be better in the long-run because of an innate resistance to failure and because of people like henry ford...and now "green companies" in ann arbor, brillant sports ownership, an eventual turn-around in auto and universities like UofM. It's hard to see the light in all this mess (both in Mich and America), but this isn't a recession, a problem or an economic failure, it's a change that's been a long time in the waiting.
"Their conservative style paid off."
enough said
Economic diversity worked for Pittsburgh-the question is in this time of economic crisis and failing financial instiutions--what solvent financial institution is going to invest in Detroit? I wish the solution was as simple as you wrote in your article.
I moved to Detroit in July to be with my, now ex-partner. I have been looking for a job for 5 months, now and have not had any success. Unfortunately, I have lost my vehicle, my partner, and nearly my sanity. Due of the auto plant closures and other various auto industry related lay-offs, those workers have taken most of the available jobs. I haven't even been able to find work in a restaurant!
Kudos to Pittsburgh but Detroit is a different animal, with deep rooted problems that the auto industry is only a part of. Until Detroit's leaders relent and accept help from outside the cities boundaries, not much will change......the city will continue the same downward spiral it's been on for decades. I hope for better days ahead, but it might take a miracle.
No city should ever put all of it's eggs in one basket to have to totally rely on one industry. That is where Detroit went totally wrong! Now they are paying the price of the auto industry's ridiculous management of their companies. They'll pull through this just like Pittsburgh did and will be wiser and stronger in the long run. It just takes time. Hopefully the people there can hold out for that.
Cindy..Ga.