Times of E’s series: Deep Dives into Secondary Cities was sponsored by Armory Square Ventures (ASV). ASV is a returns-oriented, mission-focused technology venture capital firm based primarily in the Finger Lakes region of New York State. It is an optimism engine for secondary cities and a community catalyst for regions outside Silicon Valley. You can read other articles in the project here.
Iin 1998, a photographer for the Pittsburgh Post-Gazette astutely snapped a photo of one of the last shifts at the Hazelwood coke works, the final remnant of the city’s once-mighty steel industry. “That day was memorable for its grayness,” photographer Steve Mellon reported to the newspaper.
In the coke-making process, integral to steel production, bituminous coal is burned into coke, which is added to iron ore to purify it. Hazelwood coke works had spewed smoke over the city for more than a century, but it had also been part of the steel industry that powered the economy.
The story of manufacturing’s decline, and they gray cloud that descended across the prospects of working class America, has been well-told. Automation took a toll on the jobs, and then globalization sent factories to China and Mexico, where goods could be produced for less money. It seemed a foregone conclusion that manufacturing, with its wealth of middle-class jobs, could never come back. But in October, I visited Pittsburgh on a reporting trip. I left wondering if the city is again at a turning point. After 40 years of retooling, Pittsburgh may be poised to become a hub of a different kind of manufacturing: It’s not coke and steel at the center of this revolution, it’s cells.
The sprawling Hazelwood grounds, 178 acres along the Monongahela River, is being transformed into Hazelwood Green over the next 10 years. Two buildings are already opened: One of them, Mill 19, a former munitions site, includes a robotics manufacturing center. Research facilities, startup spaces, shops and affordable housing are planned. One of the first developments is a $250 million facility called BioForge. One of its first tenants is ElevateBio, which will — among other things — manufacture billions of cells that will be delivered straight into people’s bloodstreams to potentially cure diseases like multiple sclerosis or cancer.
ElevateBio CEO David Hallal says he wants this generation of manufacturing to be different. “Can we do it the right way from the start, so biomanufacturing not only grows in the United States, but stays in the United States?” he asked.
There are signs that Pittsburgh (like other old manufacturing cities) could emerge as a center of new, cutting-edge manufacturing, which includes robotics and biotechnology. Until lately, this has seemed more of a pipe-dream than a reality, but developments at the national level and the developments on the ground at places like Hazelwood Green are giving the pipe dream a concrete shape. Hazelwood Green is not the only evidence in Pittsburgh, either. There’s a new vision tower being built by the University of Pittsburgh Medical Center on the hill above downtown, to house vision research and treatment, and an office building for biotech companies alongside it. And Innovation Works, Pittsburgh’s state-funded accelerator, has a long track record of funding biotech and robotics startups.
“The greatest progress is being made in the most important areas of science and technology: Robotics. Advanced and additive manufacturing. Bio manufacturing,” said Sam Reiman, the director of the $3.1 billion Richard King Mellon Foundation. We spoke in Reiman’s office and in a follow-up email conversation. But there are challenges remaining: “There continue to be class divides, across our nation, between those who go to college and those who do not. Those who win manufacturing jobs should be celebrated just as much as college graduates.”
The Richard King Mellon Foundation, the Heinz Endowments and the Benedum Foundation own the Hazelwood Green site and are financing its development. Carnegie Mellon and the University of Pittsburgh are anchor tenants.
Cell and gene therapy could be a $80 billion market by the middle of this decade. ElevateBio, headquartered in Waltham, Massachusetts, is opening its first facility outside its home state at Hazelwood Green. Including all its rounds, the latest being a C round of $525 million on March 2021, the company has raised $875 million. That gives it cash to use for its own operations as well as money to invest in therapies it wants to develop, and companies it works with.
Hallal chose to locate the company’s facility in Pittsburgh because of the financial aid from the foundations and the presence of big universities. The University of Pittsburgh Medical Center is an enormous health care system that includes 40 hospitals; Carnegie Mellon started the first robotics graduate program in the United States.
Sharing the Wealth
New manufacturing can generate high wages. The Pittsburgh Technology Council reported that there were 2,911 advanced manufacturing firms in the region, employing 62,831 people, with a $5.26 billion payroll. That’s an average pay of nearly $85,000 a year. The open question is whether new manufacturing can generate a lot of jobs. Where the United States can find jobs to restore its dwindling middle class is one of the most important questions facing the country.
The decline of manufacturing from the 1970s until the 2000s hit Pittsburgh, among other cities, like a tornado. As the coke ovens went cold and the giant companies of the past shrank to bankrupt shells, the population in the Greater Pittsburgh area shrank by almost a third between 1970 and today, to 1.7 million. Pittsburgh proper has 300,000 residents, just a little larger than half of what it was in 1970.
The decline of manufacturing in Pittsburgh and beyond has caused a whole generation of high-school educated workers to live without well-paying manufacturing jobs, unlike their older relatives. Across the country, suicide, opiod addiction and alcohol abuse among this demographic are now at rates so high that American life expectancy overall is falling. Pennsylvania has almost twice the national rate of drug overdoses.
These facts shed some light on why I saw so many Trump signs on my drive in. The “Make America Great Again” campaign makes a lot more sense when your family has been struggling for decades to climb back to where your grandparents started.
ElevateBio committed to creating 170 high-paying jobs at Hazelwood Green; the overall BioForge facility is expected to create 900 construction jobs and 360 facility-support jobs. Hallal said he is already working with community colleges in Massachusetts to hire and train workers for its facility there, a strategy it could use in Pittsburgh, too.
“We want to make a commitment to hire and train our own people,” said Hallal, including in high-paying blue collar jobs. “We want to start to identify a pipeline of talent that can operate the facility.”
The Case for New Manufacturing
There are three dynamics at play that could drive the change towards reshoring, bringing manufacturing back to the US.
• A more realistic view of globalization. The idea of “globalization” was supposed to offer a solution to those high-paying manufacturing jobs lost in the 1980s to automation, but instead worsened the damage, as manufacturing was shipped off to other countries.
“Nobody wanted to listen to Ross Perot because he had big ears, but in a lot of ways he was right,” said Gurumurthi Ravishankar, a teaching professor in the Strategy, Entrepreneurship and Operations Division at the Leeds School of Business at the University of Colorado Boulder.
There’s a growing anger towards China, which entered the World Trade Organization in 2001, but is seen as not living up to its obligations. According to Ben Buchanan’s book The Hacker and the State, Chinese state-backed hackers played a role in the downfall and ultimate bankruptcy of Pittsburgh-based Westinghouse Electric.
• National security concerns. The Biden Administration announced $52.7 billion of funding for the
semiconductor chips industry. Intel announced a $20 billion factory in Youngstown, Ohio, and Micron announced it would build a plant and make a $100 billion investment in Syracuse, N.Y. (Biomanufacturing is getting a much smaller federal boost of $2 billion.)
• The business case for U.S. manufacturing makes sense. The balance between labor, capital and equipment is different today, notes Ravishankar. There are supply chain concerns and doing business with China is rising in cost because of Trump-era tariffs that Biden left in place. There are benefits of manufacturing close to the consumers. Those, combined with the recent emotional fallout from the pandemic and a world that seems less friendly to the ideals of openness, could push manufacturing forcefully back to the United States, said Ravishankar. “It’s like this light bulb went off,” he added, “It would be a heck of a lot easier if this were made here.”
It won’t, however, be easy or quick, he said. “Talking about reshoring sounds good. It makes for political theater,” he said. “The practical reality of doing this is hard.”
What’s happening in Pittsburgh is part of a larger national picture. Manufacturing–whether it’s a biotech device maker or a widget factory, has rebounded since the pandemic. The New York Times wrote a headline this fall that said, “Factory Jobs Are Booming Like It’s the 1970s.”
Story of Innovation Works
Pittsburgh is poised in part because foundations and the government stepped in when manufacturing collapsed. “Never waste a good tragedy,” Rich Lunak, the CEO of Innovation Works, said to me wryly, looking back to the carnage of the early 80s.
In 1983, an initiative by former Gov. Dick Thornburgh created Innovation Works. The 75 investments Innovation Works makes a year range from $50,000 to $800,000, with an average of $248,000, he said. Its investments are all in Pittsburgh – but it’s one of the most active seed stage investors in the country.
Pittsburgh hasn’t grown a big software industry or venture capital community (DuoLingo is an exception), but there are hubs of artificial intelligence, robotics and medical device companies. Many of them owe their beginnings to Innovation Works. It’s made 456 investments over the years, and had 100 exits, according to Pitchbook. Among them were RE2 Robotics, acquired by Sarcos Technology and Robotics, and Cognition Therapeutics, which had an IPO in 2021. In my visit, two people pointed me toward up-and-coming startup AbiliLife, which is developing a smart brace to improve stability for Parkinson’s patients. Meter Feeder is an prominent Internet of Things company.
Lunak (who just announced his retirement) grew up in a steel town and watched the previous economy unravel. In 1990, Lunak started a robotics company in Pittsburgh, Automated Health Care, which had 1,000 workers when he left there in 2004. The city’s history of making things is part of what drives his hope for the future.
“Advanced manufacturing can be responsible for reshoring,” said Lunak, as he gave me a quick tour of a former shopping mall that now houses a handful of robotics companies.
Pittsburgh’s burgeoning biomanufacturing scene, writ large, has been growing outside Hazelwood Green. In the city’s Uptown neighborhood, the University of Pittsburgh Medical Center is building a 410,000-square-foot vision and rehabilitation hospital, part of the system’s $2 billion investment in specialty care. Experts including Ravishankar say proximity to the end users — in the case of biomanfaucturing, that means doctors, patients and hospitals — is crucial to maintaining an area’s primacy in manufacturing.
Behind The Tower
But a booming sector doesn’t necessarily lift a whole city, by any means. That foundations that own Hazelwood Green are making a big effort to include the community and create jobs. But when I waked beyond the buzz of construction of UPMC’s new vision tower, the Uptown neighborhood made a jarring change: Though there are many signs of life in the street art and the small businesses, there were also dilapidated houses and one I passed with a condemned sign on the window.
Uptown has historically been home to working class Jewish and Italian immigrants, and Black migrants, and like many of those neighborhoods in American cities, became the site for redevelopments that were more about razing than rebuilding. The neighborhood, also close to Duquesne University, includes the Pittsburgh Penguins arena and the Allegheny County jail. Outside of Duquesne and the jail, there are only about 1,550 people living in Uptown now, many in aging row homes and some in a handful of new apartment developments.
A tiny organization called Uptown Partners, with a $399,742 budget, is trying to save homes of historic significance and create maps of the dynamic street art and murals, in hopes of sustaining the neighborhood. Brittany McDonald, Uptown Partners’ executive director, saved a historic house from demolition that had been owned by the Tito family, bootleggers who were the founders of Rolling Rock beer and financiers of the city’s Negro League stadium, Greenlee Field.
There shouldn’t be willy-nilly demolition here anymore, she said, even in the name of creating apartments for professionals. If there is progress, it should come for the benefit of everyone, including the mixed-income community that Uptown is becoming. “Behind the main streets, there are homes, and community gardens,” she said. “There are all the things that make people want to live here.”
The hope and development of Hazelwood Green or even the vision tower feels a long distance from here. There are plans, interrupted by the pandemic, to turn Uptown into an eco innovation district. But biomanufacturing or biotech? “I don’t feel like the majority of Uptown residents feel included in that push, since it hasn’t been widely communicated on the community level,” she said.
This story and others on New Builders Dispatch are made possible by a sponsorship from the Ewing Marion Kauffman Foundation. The Ewing Marion Kauffman Foundation is a private, nonpartisan foundation that provides access to opportunities that help people achieve financial stability, upward mobility, and economic prosperity – regardless of race, gender, or geography. The Kansas City, Mo.-based foundation uses its grantmaking, research, programs, and initiatives to support the start and growth of new businesses, a more prepared workforce, and stronger communities. For more information, visit www.kauffman.org and connect with www.twitter.com/kauffmanfdn and www.facebook.com/kauffmanfdn.