Think tank: Region has high-tech talent but lacks jobs
Business leaders gathered in Pittsburgh Wednesday, a day after the Pennsylvania primary, to discuss how efforts to revitalize American industries will impact the 2024 election.
By design, there was no mention of individual candidates or parties.
“The vast majority of Americans want more policy over politics,” said Cecilia Reuse, president of Brookings Institution, a Washington-based nonpartisan think tank.
“Our election ’24 initiative is committed to focusing on substantive issues affecting Americans and not the horse race.”
To dive into that substance, local life sciences and robotics leaders shared updates on the impacts of public and private investment, which are helping to drive Pittsburgh’s success. The event at Carnegie Mellon University was jointly hosted by Brookings, the University of Pittsburgh and CMU.
It began with a sobering status update.
Despite Pittsburgh’s successful pivot from steel to science and tech, “the full promise of Pittsburgh’s next economy … remains unrealized,” said Alan Berube, director of Brookings Metro.
“The region’s top-flight research assets are not yet yielding top-flight job creation and inclusive growth,” he said.
The Pittsburgh region ranks 54th out of 56 large metro areas for overall job growth, 50th for increases in employment rate, and near the bottom for progress in closing economic disparities, Mr. Berube said.
The city has no shortage of talent, but struggles to bring new cutting-edge specializations to scale, he said, putting Pittsburgh more in league with Baltimore and Louisville, Ky., than Boston or Seattle.
“Between 2005 and 2017, just five metro areas accounted for more than 90% of the nation’s high tech innovation sector growth,” Mr. Berube said, describing associated pitfalls from the disparity: home prices spiral up in the superstar hubs, while less competitive regions erode.
“It will take more than local bootstrapping to build competitive industries and plentiful jobs at scale,” Mr. Berube said. “Central governments around the world are adopting more purposeful policies to catalyze local investment in business clusters.”
He outlined three potential paths for government action that voters can choose this election: direct spending on advanced industries and local clusters, broader tax and regulatory relief, or higher trade barriers for foreign advanced industry products and services.
“Voters’ choices this fall will determine which paths policymakers in Washington, Harrisburg and elsewhere are likely to pursue,” he said.
Although Gov. Josh Shapiro won’t be on ballots in November, his top economic development official made sure to tout the
administration’s plan for industrial growth.
“We want to create a really aggressive and hypercompetitive framework ... to recruit and retain companies,” said Rick Siger, the state’s Department of Community and Economic Development secretary, who planned to spend the afternoon with local robotics and automation company Neya Systems.
He said Mr. Shapiro’s proposed $500 million site development program will give Pennsylvania the real estate that is needed to attract outside manufacturing companies. Mostly positive on the role of federal funding, Mr. Siger said he “did not prepare” for a question about what federal policies have been harmful. Instead, he advocated for partnership.
The “melding of federal and state policy” is “especially important now because of the generational size and scale of these [federal] investments,” he said.
Pennsylvania is working to balance bids for outside investment with its own internal spending on support systems like schools, transportation, housing and main streets, Mr. Siger said.
In response to a question about broadening investment beyond metro centers, Mr. Siger talked about a recent visit to Williamsport, where the Pennsylvania College of Technology, an affiliate of Penn State, is training the next generation of welders.
They are “hyper-focused on serving industry, and they’ve had a ton of success doing it,” Mr. Siger said, saying the state needs to adopt a similar model.
“We’ve got to up our game in training, and we intend to do it — through funding models, through policy, through a whole set of interventions at the state level.”
Those interventions could also help the life sciences — a field Pittsburgh has been trying to mature for years.
The University of Pittsburgh is building a “Bioforge” manufacturing center in Hazelwood — a $250 million project backed by substantial philanthropic investment. And the Pittsburgh Life Sciences Alliance, which originally formed to compete for a federal “tech hub” designation and associated funding, officially launched this month as a “strategic advocate” for the sector.
Krystal Biotech moved to the city before either of those efforts were underway.
“It was very lonely,” recalled president of research and development Suma Krishnan.
She said the fledgling biotech company, whose first drug was approved by the Food and Drug Administration last year, originally moved to Pittsburgh’s South Side because lab space in San Francisco was too competitive.
Once arriving, they discovered an asset even better than cheap office space: local talent. Even FDA inspectors were surprised by the level of skill the startup had attracted in just a few years, Ms. Krishnan said. Krystal Biotech now has 250 employees, with 170 in Pittsburgh.
But the challenges to developing a product were still steep.
“It’s very expensive to be able to develop a drug and to get it to market through the FDA process,” said Sam Reiman, director of the Richard King Mellon Foundation. “The economics are broken; there’s a market failure. So creating the right incentives, and then allowing for things to play out over decades, is a very direct way where you can support the type of innovation that we’re describing.”
On robotics, the region received a boost and a challenge with the $63 million Build Back Better grant in 2022.
The federal funding allows for new mentorship programs and resources, and encourages groups to work together. But it also demands alignment between strategies tackling “some of the fastest moving technology in the country,” said Ben Pratt, an economic officer tasked with overseeing the grant.
If they can’t spend the money in four years, it disappears, he said.