Steel City: Forgotten But Not Gone

In the lead up to the G-20 Summit in Pittsburgh, mainstream media are telling half a story.

Everyone seems to agree that heavy industry is a thing of the past. The London Telegraph opens with the “long-gone steel industry [1]” and Business Week with the “rust-stained U.S. Steel tower [2].” Thankfully, Pittsburgh’s leaders "didn’t spend a lot of energy trying to save troubled steel companies [2].” They focused on “new opportunities [rather] than old standbys.”

After the funeral comes the turnaround. “Pittsburgh is an icon of economic transformation [1],” declares the Telegraph. Pittsburgh can be “hailed as a beacon [2] for communities that seem to have been left behind by history,” Business Week exults. And “Pittsburgh’s journey [3] from a symbol of urban decay to a high-tech and health-services center may offer some lessons,” counsels Bloomberg News.

It’s all good news and it’s all true. I can’t quarrel with it. Pittsburgh has indeed turned the corner on some bad times, and new industries like education and medicine are important. The University of Pittsburgh Medical Center did in fact replace U.S. Steel as the region’s largest employer.

It’s true but it’s only half the story.

The missing half of the story includes the persistent, insistent existence of manufacturing. Yes, manufacturing suffered setbacks, but it hasn’t disappeared. As we describe in our recent report, Pittsburgh, the Rest of the Story [4], “the manufacture of steel grew and transitioned into the manufacture of specialty metals and sophisticated alloys….”

Allegheny Technologies Incorporated manufactures titanium, hafnium, tungsten, and cobalt. With 9,600 full-time employees and $5.3 billion revenues in 2008, the company forges custom fittings for the defense, aerospace, and nuclear energy industries. Over 300 other metals technology service firms provide steel production equipment, engineering services, parts, and supplies.

In different sections of town, Aerotech manufactures motion-control products to nanometer accuracy, Acewire designs spring wires for customized applications, and Dawar Technologies creates transparent membrane sensors for touch-screen technologies. Medrad manufactures medical supplies ranging from MRI surface coils to disposable syringes. More than 30 robotics companies make Pittsburgh one of America’s major centers for robotic innovation. Carnegie Mellon’s Robotics Institute hosts the world’s only Ph.D. program in robotics.

The missing half matters because neither Pittsburgh nor the United States can thrive without producing goods.

Simply put, a country needs, things. From cars to shoes, computers to refrigerators, a country needs things. If we don’t make those things here, then someone else gets our money.

The mainstream media needs to stop fetishizing the new economy. We can’t eat electronic food or wear electronic clothes. We can’t all be consultants forever, and America can’t keep spending more than it earns.

In 2008, our trade deficit in goods reached $840 billion. We can’t make that up with high-end, specialty services. Indeed, our combined trade in education, finance and insurance, telecommunications, and all other business, professional, and technical services brought us an $80 billion surplus in that same year. That’s great, but it’s not enough to cover the difference. We ran an $84 billion deficit just in kitchen appliances [4].

While they’re in Pittsburgh, maybe mainstream media journalists should visit a steel plant. They’ll see that the trade deficit is not fundamentally about obsolete equipment or high-paid (spoiled?) American workers losing business to lower-paid (harder working?) Chinese. The hidden part of Pittsburgh’s economy is suffering from distortions in trade. Pittsburgh steel is competing against Chinese steel manufactured with devalued currency, government subsidies [5], suppressed labor rights, and lower environmental standards.

The question for America and the G-20 summit is how to reorganize [6] so America becomes more than just a consumer of other countries’ goods. Mainstream media can appreciate Pittsburgh’s transformation without worshipping “eds and meds” as the second coming. And it can talk about trade without degenerate accusations of “protectionism.”

The G-20 summit is an opportunity to talk like grown-ups about world trade. And the new economy most worth exploring is one that’s more balanced and less dependent on overstretched U.S. consumers.