SW Penn Tech Sectors Still Growing, PTC Reports

The Pittsburgh Technology Council recently issued its annual State of the Industry Report, which reveals that in spite of an extended national recession that began in 2000, the region’s technology industries have held their own, at least through the mid-point of the current economic downturn. The report covers the 13-county southwestern Pennsylvania region and presents industry statistics for 2001, the last year for which complete data is available from government and other sources.

Commissioned by the Council and conducted by Carnegie Mellon University’s Center for Economic Development, the report examines the economic role that the technology industry clusters play in southwestern Pennsylvania. These clusters include information technology, advanced materials, biomedical and biotechnology, advanced manufacturing and environmental technology. In addition, the report reveals progress on other key indicators of economic health, such as venture capital investment and research and development (R&D).

The number of technology and technology-related businesses rose 8.9 percent to 10,200 over the previous year, and they now represent 14 percent of all business establishments in the region, according to the data. Employment at core and supporting technology firms increased 2.4 percent over the prior year to 260,000, the report adds. Also, the region’s technology payroll rose 5.3 percent between 2000 and 2001 to $11.7 billion.

In terms of university R&D, State of the Industry Report shows R&D spending at southwestern Pennsylvania's universities and at the Software Engineering Institute (SEI) was $492 million, an increase of 36 percent compared to five years ago. In 2000, the University of Pittsburgh was ranked 30th on a list of 589 North American universities in terms of R&D spending. Carnegie Mellon University was ranked 79th on the same list.

Challenges and opportunities facing the southwestern Pennsylvania region include attracting and retaining talented technology workers, ensuring entrepreneurial vitality, increasing available risk capital, improving the regional and state business climate, and developing real estate appropriate for technology firms. The Pittsburgh Technology Council, which promotes many of these initiatives for the region, states that it is addressing workforce concerns through its Workforce Development activities. In other areas, such as capital availability, the council says it is pursuing state legislation to help small businesses sell unused R&D tax credits.

For the purposes of the report, Standard Industrial Classifications (SIC) are used to identify technology industries, which are defined by three criteria — the percentage of sales invested in R&D, the percentage of scientists and engineers employed, and the number of specialty technology workers. Southwestern Pennsylvania is comprised of Allegheny, Armstrong, Beaver, Bedford, Butler, Cambria, Fayette, Greene, Indiana, Lawrence, Somerset, Westmoreland and Washington Counties. The State of the Industry Report is available at: http://www.pghtech.org/pittsburgh/report.html