Capital Ideas: Bill Flanagan

Pittsburgh and Lansing have both suffered enormous economic blows, with the steel industry fallout hitting Pittsburgh and the auto industry clobbering Lansing. They both have affordable housing, access to world-class universities, riverfront space and, perhaps most importantly, both represented innovation in the early 20th Century but lost focus when times were good and let innovation slide.

Since the collapse of the steel industry in the 1980s, Pittsburgh’s been reinventing itself. City leaders and grassroots efforts have redeveloped the waterfront, invested in entrepreneurs, focused on retention and aimed for increasing diversity.

This year, The Economist ranked Pittsburgh one of the Top 50 most globally livable cities, Fortune magazine ranked it the second-best large city in the U.S. to launch a new business, and it hosted the G-20 partnership, which brings industrial and emerging-market countries from around the world together to discuss major security and other policy issues.

Though it’s taken 20 years and there’s still work to be done, in many ways Pittsburgh is what Lansing could be if people here continue to invest in the city, work together and foster entrepreneurship.

Bill Flanagan, executive vice president of corporate relations for the Allegheny Conference on Community Development, says the going was tough, and required gumption and change, but was also possible.

Capital Gains: What precipitated Pittsburgh’s economic collapse?

Bill Flanagan: It was related to the old steel industry. It peaked then from 1979 to 1983 and then there was a rapid decline and we lost about 10 percent of our workforce. In 1983, we had about 18 percent unemployment in the metro areas.

We’ve had 10 years of denial, 10 years of getting our act together and 10 years of moving forward together. The first 10 years was denial. Through the 80s and the early 90s the region was just basically waiting for the mills to come back.

In the last part of the 80s, there was an economic boom across the U.S. with job growth, but Pittsburgh got left behind. Then in the early 90s Carnegie Mellon University did an analysis of how Pittsburgh stacked up to other regions. We were losing population, we had an appalling job growth, an appalling rate of entrepreneurship and the universities were not leading in terms of commercialization.

The report was pretty scathing. That was a wake up call for the region.

The big thing that came out of it was an effort to create more regional structures to deal with economic development issues. This was the beginning of the realization that steps needed to be taken to eliminate duplicating economic development structures, so there were many mergers.

We had a head start, because the universities starting investing in the 50s and 60s and were starting to hit their stride just as the steel economy started to collapse. Also, the health care industry was starting to take hold, and that was initially what drew job creation to the area for 10 years.

The third piece was quality of life in Pittsburgh. We always had a great symphony, and in the 70s and 80s there was investment in arts and culture. The Pittsburgh Cultural District was created in 1984 to bring people back downtown. Residential development took about 10 or 15 years, but we’re starting to see that happen.

CG: What tipped Pittsburgh over the edge?

BF: In Pittsburgh it was more desperation. I think that’s what Detroit is going through now.

We did a big communities initiative in the 90s and created a big formal structure to bring together a series of regional workshops to focus on different issues. Hundreds of people from the community and technology [sector] got together to figure out how to put the structures in place. It took five years to get those structures working together, and we only began to hit our stride in the middle part of this decade in terms of effectiveness.

We had to have that wake up call that things were going to hell in a hand basket.

CG: What was Pittsburgh’s attitude toward entrepreneurship, and has that changed?

BF: No question has it changed. If we went back into the early 80s and late 70s, this was an entrepreneurial town. Pittsburgh was one of the most entrepreneurial places on the planet. We had these enormous industries grow up here because of young entrepreneurs like Carnegie and Westinghouse.

People in the community got in the habit of working for these big organizations and not being entrepreneurial, and that spirit dissipated and was just not part of the culture here. People didn’t want to go to college. They got a job in the mill and supported their family nicely.

I think in the 70s there were some companies that spun out of the big companies and a little entrepreneurship got going with growth in technology and innovation. That began to change the culture a little bit.

We began to have a little entrepreneurial cluster of software companies. That started to beat the drum and was apparent in the 90s that we were still lagging in terms of start-ups and entrepreneurs.

You have to look at the whole picture. We gradually increased entrepreneurship and the structure to support that. To me, what really sets Pittsburgh apart is the spirit of cooperation. You don’t see that in a lot of other places. It’s really a bit of a throwback. You plug away and get better and better and over time the G-20 shows up and you know you’ve done a great job.

CG: What impact did cultural change have on the success of the region?

BF: I think one of the lessons regions need to learn is that they need to decouple this notion that manufacturing means jobs, and that the jobs they provide are enormously important because they pay well, and they have a great multiplier effect because they support other jobs in the economy.

Manufacturing is important to the economy, but it’s not the employment driver that it was historically and that is just the reality of globalization. Pittsburgh got killed by globalization and has now adapted to it.

CG: What impact has that embracing of globalization had on Pittsburgh?

BF: I think Pittsburgh is different (than Lansing) in that it’s one of the least diverse places in the U.S. The only ethnic growth that we have in proportions is people from India because they come to work at the universities. The reason for that is that we had no jobs for 20 years, really. We didn’t have enough jobs for people who lived here, much less to attract people here.

In this decade, those trends began to shift. We’re seeing an increased rates of nationalities coming into the region. There’s still an open question as to whether Pittsburgh is as welcoming as it need to be in order to attract people that it needs to succeed. To win the global game we will have to be more welcoming and better train our own workforce.

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Bill Flanagan is the executive vice president of corporate relations for the Allegheny Conference on Community Development.

Ivy Hughes is Managing Editor of Capital Gains. 


View of “The Point” in Pittsburgh

th Street Bridge (a.k.a. The Andy Warhol Bridge)

The G20

A kayaker enjoys Pittsburgh's riverfront

Towering skyline

Photographs copyright Brian Cohen from our sister publication Pop City

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