WHAT'S STOPPING PITTSBURGH FROM GROWING?; BASICS, NOT GRAND STRATEGY, MAY BE BEST ROUTE TO GROWTH

BYLINE: Dan Fitzpatrick, Pittsburgh Post-Gazette

In 1994, with Western Pennsylvania struggling to overcome a recession and population, headquarters and manufacturing losses, economic development officials challenged the region to create 100,000 new jobs by 2000.

Amid one of the greatest booms in American history, Pittsburgh came close -- tallying 87,900.

It was reason for optimism.

But then, in 2002, the same officials at the Allegheny Conference on Community Development issued a second appeal: 50,000 new jobs by 2005. The result was significantly less encouraging: The Pittsburgh area lost jobs in 2003, 2004 and 2005, due in large part to thousands of job cuts from US Airways, the after-effects of and the onset of a national recession.

The lesson for economic development boosters? Control expectations.

While the pace of job growth in southwestern Pennsylvania is still well behind the national average (the region's payrolls expanded a scant 0.2 percent over the course of the last two years), and population losses continue to act as a drag on expansion, the Allegheny Conference, the region's best-financed and most venerable business booster group, is finished with the strategy of setting ambitious job-creation goals -- a recognition that success or failure on that front is largely dependent on the vagaries of the national economy.

Ask about the new strategy, and it sounds like a return to business basics. "The regional agenda is to promote our strengths and remove our barriers to growth," said Kathryn Klaber, the Allegheny Conference's executive vice president of competitiveness. "I think we are looking at the areas where we can have control."

To the conference, that means lobbying the state to lower the corporate net income tax, the second highest in the country. It means trying to bring about a consolidation of city and county governments as a way of making the public sector more efficient. It means promoting the region's 250th anniversary in 2008 as a way of raising visibility, bringing back international service to the local airport to give businesses more flying options and studying ways to improve the transportation connections between Oakland, Hazelwood and Downtown as a way of supporting future growth.

The Pittsburgh area "has a lot of strengths," said James Rohr, chief executive officer of PNC Financial Services Group, Pennsylvania's largest bank, and chairman of the Allegheny Conference. But "over time we need to be a competitive region to be able to win jobs."

What will success look like?

By the end of 2008, according to a document distributed publicly by the conference in 2006, the area will be "back in the international spotlight." There will be "substantial cuts" in business taxes, "improvements to the transportation network" and "a more rational, effective and efficient local government system."

The only new goal that employs data as a benchmark involves the retention and attraction of local and out-of-town businesses. By 2008, the conference wants its business development efforts to result in twice as many companies locating or expanding in the Pittsburgh area -- or twice as many "wins," as the conference puts it. Biotechnology, information technology and advanced manufacturing companies are preferred.

The number of local "wins" in 2005 was 20, followed by 29 in 2006.

"We are on track" to hit the goal of 40 in 2008, said Jim Futrell, the conference's vice president of market research and analysis.

Even amid the simpler approach, though, some economic development experts miss the sweeping ambition of a decade or so ago.

"There may be risk adverse-ness in the civic and corporate community," said Tim Parks, former president of the Pittsburgh Regional Alliance, a business development agency that is now part of the Allegheny Conference. "They don't want to raise expectations beyond reason. That may be a rational and smart thing to do, but it seems we miss the ... push to be bold about some of these intractable problems."

Harold Miller, former president of the Allegheny Conference, was among those responsible for the 100,000-job goal in the 1990s, and he acknowledges second thoughts about the approach. "I am not sure that was necessarily a wise number," he said.

But that does not mean job trends are not worth watching -- especially if the region can be specific about what types of jobs it would most like to create. Measuring total employment -- the basis for the 100,000 goal -- means highlighting weaknesses in population-dependent sectors such as leisure and hospitality, areas that typically pay less than manufacturing, for example. And Pittsburgh, as it turns out, was one of the few regions in the country to add manufacturing jobs in the late 1990s -- "a reason for optimism," said Mr. Miller, president of Future Strategies LLC, a management and policy consulting firm based in Pittsburgh.

What's more, the setting of the 100,000-jobs goal also had results that could not be quantified but, it seems, were nonetheless beneficial.

The milestone was part of a sweeping strategy known as the tongue-twisting Regional Economic Revitalization Initiative. Spurred by a "white paper" from Carnegie Mellon University President Robert Mehrabian concluding that the region's economic problems had reached "crisis proportions," a network of agencies, people and politicians called the Working Together Consortium formed to keep track of the goal with semi-annual public meetings and reports. The effort thrust several corporate leaders into the public spotlight, ending years of relative obscurity that some perceived as lack of interest and drift.

The consortium was a way, Mr. Miller said, to coordinate efforts among the region's many smaller economic development groups and avoid duplication -- something he believes is lacking today.

There is "not really a good mechanism for pulling all the diverse efforts together," he said. "While most of the pieces you would want are there, they are hard to find [and] they are not necessarily supporting each other."

"I think the [Allegheny] Conference has explicitly said it will not play that role."

So does that mean today's approach is less effective?

"I think so," he said.

Mr. Parks hopes to see a willingness again to take risks -- to set "aspirational goals." He added: "I don't get a sense that anyone that is not on the inside could put their hand on a clear vision of where we want to go and how we are going to get there."

But to Mr. Rohr, it's not a problem of vision. It's a problem of perception.

One of the biggest challenges facing the Pittsburgh area, he said, is for the region to acknowledge its many strengths, both to itself and to the outside world. These include employment that is near an all-time high (though still below its peak prior to the 2001 recession), housing prices that are affordable, commutes that are among the shortest of any major city, a nationally recognized health system and "arguably the best symphony in the world."

"It's pretty obvious people who live here take [Pittsburgh] for granted," he said.