Thursday, December 11, 2008

Sony-less Burgh

Big news of course in how Sony is planning to close it's Westmoreland County site. What shocks me a bit is the news within the news that the plant shutdown will affect all of 560 total workers at the site. There was a time when the plant was responsible for 3,000 jobs in the region and hopefully expected to grow beyond that. There was even a brief period in the mid to late 1990's where you could have made a case that manufacturing employment in Pittsburgh was 'expanding', but if you dug into the numbers a bit what you found was that it was an expansion coming entirely related to the ramp up in employment at the Sony plant offsetting declines just about everywhere else. The expansion of the original assembly operation to include the glass operation there was once thought to be the beginnings of a new cluster of industries in the region.

The nominal reason being given for closing the plant is that it isn't needed with the switch to lower weight LCD televisions and thus less of a need to produce near demand in order to minimize. Not too long ago the switch to LCD production was said to be good for the future of the plant. The jobs were even expanding and were described as "jobs that last". Did anyone question that type of implied prediction? It sure sounded good. It wasn't long ago that I recall calls from journalists asking about a problem finding housing in Westmoreland County for an ever growing number of seasonal workers at the plant. I thought increasing transportation costs would have pushed up the importance of proximity if anything, but I doubt it really is at issue here at all. That type of location dependency for TV manufactuirng ended long ago I thought. Most TV's are made a long long way away and I believe the Westmoreland County plant was the it's last TV plant in the US. What is worth noting is that the plant went from growing faster than the region could sustain to just plain gone in a couple of years.

More interesting is how that site has been the focus of so much economic development effort. Some of the history of the site is discussed here. I also discussed some of the history of the Chrysler and Volkswagen plants at the site in this old oped. Suffice it to say, a lot of time, effort and money have been put into keeping employment going at that one site with successes for a period, but in the long run you can't make business do much different than it is going to do based on market conditions. Also, at one point a lot of effort was put into trying to create a chip-design cluster of industries in Pittsburgh. That was the original intent of the Pittsburgh Digital Greenhouse and Sony was a big part of that logic. It's biggest success may have been Sony's once had a small r&D operation at the Rubicon building in East Liberty. Though that didn't last long.

Lots more to say on the history of the Sony Plant here, especially its initial decision to locate here and the history of Volkswagen and even Chrysler before it on that one site. Maybe more later on. But as Sony's hardware biz looks as shaky as most manufacturing, they are also announcing new pushes into more ethereal software businesses and their new 3-D social networking site. Is the future of any Sony-Pittsburgh nexus focused more on that part of their business?

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http://www.cfed.org/focus.m?parentid=34&siteid=46&id=182

Here is a link to an article from CFED, an organization that has often used PA's VW deal as poster child for industrial recruitment reform.

PA, and particularly WPa, seems to be enamoured with big investments in very narrow business markets. Maybe rather than trying to pick winners, a more effective investment strategy would be build value broadly?

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