Coal vs gas - Redux

Great read in the February Monthly Labor Review: The Marcellus Shale gas boom in Pennsylvania: employment and wage trends

A punchline for Pennsylvania is that employment in oil and gas related industries is now greater than that of coal industries.  Something readers here might have noted last year in this old post: Coal vs. Gas.

Related is this in the latest of economic impact reports related to an ethane cracker. From West Virginia: Study: Cracker plant means billions in economic impact. What I find odd about the quest for a West Virginia ethane cracker is the recent history that the state lost the Shell ethane cracker to Pennsylvania because the land there was better occupied by a casino.So a mega-cracker is better than nothing, but less valuable than a casino??

A tale of two natural gas markets

In Ohio, where residential natural gas prices are significantly lower than in Pennsylvania already, the prices are falling further. Go figure. Something in that supply-demand thingy makes me wonder how that works given the glut of supply in Pennsylvania in recent years. I just can't figure a way to arbitrage natgas from just over the Ohio border all of a few miles away.Kind of a strange concept to try and bring natural gas into Pennsylvania these days, but there is some real money to be mad if you could figure out how to do it.

But if you missed it, note what is happening to some consumers who opted for (something a bit closer to) free market pricing in the electricity markets. Was a good deal in the short haul may not be working out in the long run. Again, be wary of the big shiny object. Why the big spike in electricity prices? It also comes back to what is happening in natural gas markets.

The explanation of course is that much of this is not about aggregate supply, but distribution. The development of pipeline infrastructure in Pennsylvania is soon to become a bigger issue than the actual fracking ever was.  That isn't a new issue either for Pittsburgh.  In the past, the issue of natural gas pipeline capacity to Pittsburgh was a bigger news item than today. There was once a time when a proposed diversion of natural gas capacity away from Pittsburgh prompted Mayor Lawrence to say "America's entire economy will be thrown out of line if Pittsburgh does not get the additional (natural) gas."  As goes Pittsburgh so goes the nation? 

Anyway, you can't have it both ways. Note the two big natural gas stories of late: Pa. firms expect natural-gas boom to help manufacturing and then this one of many: Price 'turbulence' in Appalachian shales to last through 2016: TPH official. Nobody connects the two stories?

A focus group too far

Don't let anyone say I am not a supporter of shale development in Pennsylvania. Below is some free earned pseudo-media. I am fascinated by this new advertisement with about as much youth, diversity, entrepreneurism and distilled urbanity as you can pack into 30 seconds. It is also the best film montage of Pittsburgh since Jack Reacher. I can just see this coming from the focus group results that narrowed down who needs to be persuaded to support more drilling activity in the city.  The obsessive apopheniac in me can read the tea leaves as to what motivated this.

Forget Galt... WHO IS MR. WINDLE?

addendum: PBT gives an update that may explain a bit why the Pittsburgh video was produced: Range 2014 plan to focus on Marcellus, southwestern Pennsylvania





Addendum: Now compare and contrast with this older Marcellus Shale promo video and the map at time 0:14 that had a big doughnut hole for Allegheny County. No doughnut hole any longer it seems. Also note the line comparing Pennsylvania to Cambodia or Syria and of course the iconic Gordon Gecko:

Tar without feathers

In Indianapolis the city (or city/county kinda hybrid) has started the municipal asphalt plant early this year to get a jump on pothole repair.   Has the city of Pittsburgh restarted its asphalt plant?

Well, no. That would be hard to do since there is no municipal asphalt plant here. BUT there used to be not very long ago. What I pointed out here some years ago was a bit of esoteric city government history. The city's first Act 47 plan all but mandated the city of Pittsburgh to shut down its municipal asphalt plant. It was one of the biggest specific cost savings recommendations to come out of the whole Act 47 process actually. It was a decision made of an excessive faith in efficiency.  Probably was the efficient thing to do and all. Close the asphalt plant and rely on the private market to supply the city with asphalt was the idea (no Galt jokes here. I'm pretty sure he was never into the mundanity of street repair.) I am sure from a sheer cost point of view that makes a lot of sense. Efficient markets I am sure provided a much cheaper $$/ton than the municipal plant could. A no brainer argument to some at the time.

But who was it efficient for in the end? What if you can't get the asphalt from the private market when you most need it. Thus the argument that has again resurfaced is for the city to buy an asphalt plant anew. I get a point for that pun. Ironically, the "cold patch" the city is using to less effect than "hot patch" asphalt is actually more expensive. So we are spending more to get some very temporary repairs. Again, it's efficient.

Closing the city's asphalt plant was quickly seen as an error. In fact the very next Act 47 plan which few people actually read (see first link above) recommended a study to reopening a city asphalt plant. It was pretty much an admission that the plant's closure was not the greatest idea. I am unclear if that study ever happened... Maybe we should ask the ICA if that was one of the dozens of studies they have financed over the years. Oh wait, can't find any library on their web site any longer, LIKE THEY USED TO HAVE.

OK.. I'm getting ornery. I'll just end with an asphalt joke.Only thing I've read worse than economist jokes.

Bad boys, bad boys

There is this news item of some properties being sold by the URA in Beechview. Might not be newsworthy at all except for the fact that the properties were once owned by former real estate micro-magnate Bernardo Katz.  What is the good Mr. Katz up to? Who knows since he fled for Brazil where an Interpol warrant is insufficient for begin any extradition process. He had a semi-active concert schedule up until recently, but the Intertubes do not divulge much beyond that.

The story of Mr. Katz is not really about some rogue real estate player.  Many an amateur real estate developer has gone bust. That is not why he is on the lam. The essence of capitalism is that failure in a business enterprise is not criminal. He is charged with wire fraud to begin with. But even being a fugitive to the American justice system is also not really the rub of it for me. Plenty of alleged criminals  out there, few ever mentioned here. What gets me is that folks forget that much of Mr. Katz's expanding portfolio was actively supported by a wide cast of characters in town and nontrivial public incentives. He acquired much of it with an aggressive legal strategy that was not inhibited by any public entity, in fact quite the opposite. Such was the state of reactionary planning that anyone appearing to be willing to invest was supported with less of a qualification check than we require of many a worker for the lowliest of public sector jobs. Would it be libelous to suggest some of that support came as a result of sizable donations made to selected pols?

Look up the definition of enabling.

Still, the recent news is progress, but consider how long it has taken. Katz has been in Brazil for how many years?  And the real estate he once owned is still tied up in legal pain.That gets to the enduring story still impacting communities across the board.

Deregulation then, deregulation now

There was not much notice of a little tweet last week that indeed PeopleXpress is (finally) hiring pilots.

Remember Peoplexpress? It was considered a baby of deregulation that was a fad in the airline industry early in the 1980s before being absorbed by 1986. New competition bred innovation for sure; Peoplexpress was the first airline to introduce a fee for baggage, charges for in-flight sodas and reportedly 200% overbooking. But if traveling stag, you were not thirsty and had a lot of flexibility the fares could be quite cheap. The airline also used general admission boarding and on-flight payments. I think that business model has long since been superseded by both history and tomes of TSA regulations. So the airline is long gone, but the baggage fees have remained.

But the name at least lives on and Pittsburgh has been part of the talk about the new airline since its rebirth. Indeed there has been talk of incentives to lure PeopleExpress here to Pittsburgh.  Flights were expected to begin almost two years ago, but have been  perpetually delayed. Even was once talk of making Pittsburgh a 'focus city' of the new airline, though I would suggest different marketing of that after our history with USAirways, or whatever it is called now. But now they may have pilots, so who knows what is next? Planes maybe even.

update:  ok, ok.  Though news coverage on this point is inconsistent, it appears the airline has acquired a few planes it is currently operating as charters. 

Move over Pittsburgh Dad

No reason, but for a Saturday morning just a blast from the past.  Pittsburgh Dad ain't got nothing on Uncle Gordy.

Taxis and their discontents

So I have to admit that before this week I did not think much, or know much, of this whole ride sharing enterprise that has jumped into the news here. Turns out the emergent transportation paradigm has been making a lot of news across the country.  While the issues seem simple, should individuals be allowed to compete against established taxi services, this gets to some very fundamental questions on the role of government. It is also not a new debate. The fundamental question is whether taxi service should be deregulated. Political arguments over deregulation have been percolating ever stronger since the early 1980s. 

But the issue at hand is taxi service. So just to get up to speed on the state of all such things here is what I found for a quick reading list:

BusinessWeek: Invasion of the Taxi Snatchers: Uber Leads an Industry's Disruption

Atlantic: Taxi Drivers Miffed Over Uber and Lyft Just Sued the City of Chicago

 GeekWire: With ride-sharing regulations, Lyft president says Seattle’s leaders will look bad on national stage

DailyBeast: Uber and its enemies

ConsumerReports: Don't risk your car insurance by operating your vehicle as a part-time taxi

LAMag: Car and Driver

Skift.com: Uber Takes Aim at Lyft in Facebook Ad Campaign

and here is a critique that is curious. Could this really result in fewer car sales? CBS: More car-sharing means fewer car sales


What is the deal here?  Most all agree that the state of taxi service in Pittsburgh is  just plain bad. Folks from out of town have long been befuddled by the inability to hail a taxi on the street, even though that is not that common a service in many cities. Thing is that there have been efforts to expand competition of taxi services over the decades, especially in underserved areas, but those efforts rarely had enough support to get off the ground. The recent startup of City Cab is barely a couple years old, but is just a geographic-constrained offshoot of Yellow Cab, so not really new competition. Most of the past competition to Yellow Cab (anyone remember People's Cab as an independent company) has faded away. The deeper question really is why has there been so little successful competition in local cab service?

Once taxis poached business from the railroads, and were successful despite legal efforts to prevent them from providing service between railroad stations. While a tempest, the debates today are much the same debate, just with new players. I really think the only way this has all gotten this far here is because the French now own Yellow Cab. The local Pittsburgh Transportation Group, which owns Yellow Cab, is itself a subsidiary of the conglomerate Veolia, another subsidiary of which is managing the Pittsburgh Water and Sewer Authority by the way. Back in the day this would have all been a nonstarter given the local political connections of Yellow Cab. This all may be our way of getting back at the recent French diplomatic warning on travel to Mount Oliver. I still want to know how folks in Paris even knew there was this place called Mount Oliver here. but I digress.

Anyway.  Legal machinations will ensue for sure, and others will have to opine how that will work itself out. For now it seems the new service is de facto in operation without any imprimatur of government. Who knew John Galt had a pink mustache?

Not all royalties are created equal

In some sense, the interest in all things Marcellus has abated. Not entirely, but just not the scale of discourse at one point. Still there news elsewhere in Pennsylvania even if little noticed here. See the Corbett and Republican senators ask Attorney General Kane to probe Marcellus Shale gas driller. The complaint is all about the fees a driller is deducting from gas sales before calculating royalty payments to landowners. I think I pointed out the disproportionate bite extraction costs would take from Marcellus Shale royalties in a post some time ago. See: Flaring Contango.

But I have to admit even I never thought it would be as this his the news today: Bradford County farmer gets gas royalty checks for $1.10 and 10 cent. Doesn't producing and mailing a check for 10 cents incur a cost an order of magnitude higher than that?  Must be some fee for executing a direct deposit even. 

Does all of this matter here? Anyone with a lease expecting royalty payments might want to take note. State law requires a minimum royalty assignment, but some have been able to negotiate higher royalty payments, possibly in lieu of smaller up front guarantees.  Any large landowners locally expecting future payments generated mostly by royalties? 


I presume royality checks are received with a lag from when the gas was produced and recent checks may represent production at some point in the past when natural gas prices really bottomed out. Right now, the extended cold of the winter has pushed natural gas prices up, but nowhere near peaks of the recent past and one question is for how long prices will stay even moderately inflated.

The industry fought hard for as nearly unconstrained development of shale gas as possible across Pennsylvania.  But who was hurt by that rapid drilling activity? Ironically I suggest it was the industry itself that was hurt most by the unabated rush to drill.  Not too many years ago natural gas prices spiked during periods of peak demand. Both in 2005 and 2008 prices were several times what they are now, even with the the deep and extended cold.  No reason not to expect similar if not worse peaks in the future and indeed the production of shale gas has kept prices low. Especially the deeper cold of the season would have made for a painful season for most consumers. If the industry had proceeded at a more deliberative pace, they might have recouped some of the profits they left on the table.  The low royalty payments in the news are coincident to some very low profit margins as well.  

Taunting the snow genie

I'm going to totally jinx us by saying we are now past the last big snow event of the season.

Forget the Olympics, remember what a real snow storm event here enables:

Age and Insulbrick

Just to follow up on a passing news item. A sad story was of a home which collapsed around an older homeowner in Baldwin recently. A follow up in the Trib had some demographics of the elderly here. So vanity warning, but see Trib: Check on neighbors, agency advices.

But what I point out on occasion is a demographic factoid that has been remarkably persistent here for decades.  If you benchmark how long Pittsburgh area homeowners have lived in their current homes, we almost always show up near the top, if not #1, in any comparison with other places.  Lots of ways to parse that, and to skip the regional benchmarking, here is a quick comparison of the county to the nation. We have a lot more folks who have lived in their current homes a remarkably long time compared to the nation. That is true for the region, the county and is invariably even more extreme in some of our municipalities. 1969 or earlier, the oldest category explicitly tabulated in the ACS, means you have been in your current home at least 4 decades, and likely longer. In more formal jargon, this is an extreme of what is otherwise called aging in place.

When you juxtapose that with the other factoid that defines us, namely that we have some of the oldest homes in the nation (linked map also known as the Insulbrick index of Pittsburgh), you can see the mix that gets you in trouble.  If you know any older neighbor needing assistance in repairing their home, there are programs in town to help. Just one I know of, check out what Rebuilding Together Pittsburgh does every day.

QUBE evermore

You may not have given as much thought as you should to the news that Comcast is buying Time Warner.  Rest assured, if the deal goes through it will impact you in one way or another if you are a cable, internet or electronic communications user of any kind. If you think you aren't such a user, you just don't realize it.

The deal is a culmination of decades of competition in the cable industry, if it can even be legitimately be called just the cable industry any longer. Where once there were a host of small regional, (the Rigas are still in jail by the way) in some cases hyper-local cable companies, the industry saw the power of controlling national market shares. Thus began the franchise wars which are culminating in the deal just announced.  

Where did that competition begin. Some will argue the point, but that competition to control cable systems took a big leap forward in the bids to bring cable to the city of Pittsburgh in 1982.  Pittsburgh was one of the last major cities to have an installed cable infrastructure in the early 1980s. Thus the joke that nothing ever happens in Pittsburgh until it has been used elsewhere for a quarter century.  But the economies of scale then in play meant that only a single provider would be licensed for a new cable system in Pittsburgh.  The competition between the major cable companies at the time marked a feeding frenzy of side deals and what would only later be called "community benefits agreements" as companies sought to build coalitions of public support for their bids. It was in the end the most political of processes with city council having say over who eventually was awarded the license. It was pretty cutthroat since unlike many of our tempests, there was real money at stake. I don't think we saw the same dynamic again until the awarding of the casino license decades later.

So Warner Communications bought a small company that had developed (built) a unique cable system in Columbus called QUBE and used the new technology as its selling point to eventually win the Pittsburgh license. The information infrastructure put into Pittsburgh had a much larger bandwidth than most cable systems of the day. The wider bandwidth allowed for more channels, but also an innovative interactive/two-way service (remember this was a decade before the WWW and the Internet was still considered a bridge between other networks such as Bitnet and Arpanet among others). So there was an upstream data capacity you could subscribe to. I really want to say the bandwidth was on the order of bits per minute, but that might be an exaggeration, but it was potentially revolutionary. The business model didn't work (and in Pittsburgh I suspect few frugal Pittsburghers in the mid 1980s were paying for the premium two-way cable service to play some rather rudimentary games and what-not). 

Some of the legacies of that competition remain in play today. If you are a city resident and still see two coaxial cables in your home (I think most are gone, but not all).. technology limitations of the time required the 2nd coax was to support the higher bandwidth of the original QUBE system. Also the city's community access cable channel (Channel 21??) was funded by the cable operator as part of the initial license agreement. Likely it would not exist if not for the competition that took place back in the 1980s.  Also the local service center for Comcast in the West End was part of the deal as many constituencies wanted some local jobs created out of the whole deal. Also the continuing existence of the city commission regulating cable services in the city (Pittsburgh Cable Advisory Committee_, they used to air their meetings, surprisingly enough, on the city's cable channel.  Hey, who is being appointed to those spots? (I think the seats are mostly, but not entirely, appointed city council district actually, but that is from memory)

Readers have heard that from me before in various forms. I've gone over in previous posts, but also in legacy modes (that would be the oped). See: PG (2004) Fade to black, QUBE had city on the cutting edge in the 1980s. Interesting to look back now that we are reaching a certain culmination of the consolidation trends long underway in the industry. Looking forward we will likely have more of the issues pop up as the industry redefines both its technology and business models.


Remarkably, and the more I think about it, the analogy between QUBE and the awarding of the casino license is pretty strong. In both cases the final award went to an unexpected bidder who failed soon after the business was up and running. Both fractured a lot of local politics and left legacies that persisted decades into the future.

Big trains

Just to go along with the news of a minor (minor as in nobody has been reported injured) train derailment I will just repost a youtube video someone took last year.

Some may not realize how big a deal the shipment of oil by rail has become. This is a big big train:

A Robot Too Far

Pittsburgh and Detroit. Seems like a new meme and maybe it is in a certain sense.  But the two industrial cities have long been linked in both industry and culture. So it goes in film. This comes to mind because it looks like they may have screwed up the remake to Robocop.  Pity. The move and the video game were personal favs. 

The original Robocop was set in a postmodern Detroit, but where was it filmed? The bright shiny vision of the future was filmed in Dallas, while the dystopian scenes needed a postindustrial landscape depicting utter destruction and despair. Where did they find such a pre-made set in 1986? Both the former Wheeling-Pittsburgh plant in Monessen and the Duquesne Works fit the bill to a tee.  If anything, both locations likely needed to be cleaned up before they were used. The use of Duquesne is more than symbolic. When it shut down in 1984, an historic effort was put together trying to "Save Dorothy," the primary blast furnace in operation at Duquesne. Many know that history well and it may be the seminal point in Pittsburgh's economic history. Dorothy was not saved and its last use was as backdrop for an unthinkable future, then Pittsburgh's present.

To crib from a previous post here...  and via the robocoparchive.com (talk about the long tail of the Internet) I found this image showing film location...

http://www.igorantunes.com.br/temp/duquesne.jpg

and finally, art imitates life imitating art. In Detroit they even have an active Kickstarter campaign to erect a Robocop statue there. I don't know what to say on that, but if the Stallone statue can become iconic in Philly, why not a Robocop statue in Detroit. Not sure what statue to erect here in Duquesne.

If you roll out a new web site and it generates no hits, does it make it into the Google?

H/t to Bram who points out that the Pittsburgh Intergovernmental Authority (ICA) has not only rolled out a new web site, but he also points out that the web site says the purpose of the whole ICA is mostly advisory. Or to be specific, the ICA's self-reported purpose is to provide "an objective, nonpartisan, and intellectually honest examination of the City’s fiscal health."  That mouthful does not even add up to "advising," as Bram paraphrases. Makes it sounds like they write an academic report here or there (nobody reads those right?) and moves on. No mention of the ability to withhold revenues from the city nor any other plenipotentiary powers over all things Pittsburgh public finance. I'll get back to that in a minute....

The new web site seems to also have excised an extensive library of documents that the ICA has produced over the (many) years. Lots of money has been spent on consultants and related writing all those reports. I thought in our open data era, we are supposed to be making information more accessible, not burying it further.  I stipulate that I have not made any attempt to ask the ICA if they would make available any of the documents they used to have online available by other means (like maybe snail mail), but that isn't the point.

But let's get back to this fundamental question.  What is the purpose of the ICA?

It is pretty much the same as asking the more recent question about whether the ICA should continue to exist into the future. So let's go back and read what the ICA was supposed to do when created. Since the ICA is a creature of the state legislature, there is clear legislation that purports to charter its existence. The founding document is INTERGOVERNMENTAL COOPERATION AUTHORITY ACT FOR CITIES OF THE SECOND CLASS - Feb.12, 2004, P.L. 73, No. 11

So is the ICA there merely to 'advise'? As you read the actual enabling statutes, realize that "2nd class city" is a euphemism for the city of Pittsburgh. There are no other 2nd class cities in the great Commonwealth of Pennsylvania. So read that and come to your own conclusion. The most concise section to address the raison d'etre for the ICA appears in 101.B.2:

The General Assembly further declares that this legislation is intended to remedy the apparent fiscal emergency confronting cities of the second class through the implementation of sovereign powers of the Commonwealth. To safeguard the rights of the citizens to the electoral process and home rule, the General Assembly intends to exercise its power in an appropriate manner with the elected officers of cities of the second class.

So the sovereign powers of the Commonwealth add up to no more than advising municipalities as the current web site implies. I think this may come as a bit of a surprise to more than a few municipal officials across Pennsylvania. But later on in the statute is a fairly extensive delineation of duties and powers. I am not sure all can be fairly circumscribed by the diminutive of 'advising.' 

But if all the lawyer-language is too convoluted to follow, I think it all goes back to that butter sculpture they have every year at the annual Pennsylvania Farm Show. You think I jest? Section 103(2) starts with "Because cities of the second class consume a substantial proportion of the products of Pennsylvania's farms...."   Who knew the legislators were such supporters of the local food movement?

And just an observation, but I was counting and it works out that the ICA is now on to its 4th mayor of the city of Pittsburgh (5 if you count Yarone I guess.)  Maybe it will just morph into a permanent institution. The ICA's older sister, Philadelphia's PICA is still around as well. They don't paraphrase their (continuing) mission out east.

PA Health Insurance(less)

Too cold to think, I will just pass on the map of the month from our colleagues at the Pennsylvania State Data Center. See their county-level map of those lacking health insurance coverage.

 

With infinite time one could make a municipal or tract level map locally. 

How bout them Steelers, товарищ?

PG has a story pointing out the connections between Pittsburgh and the Russian steel center of Magnitogorsk.See: A Russian tale with roots founded in ice and iron.   We talk about sister cities, but Pittsburgh really is of kindred spirit with the Magnetic Mountain and the steel center located near near it.

Beyond what the PG covered in its mostly sports-motivated piece, you can make the case that Pittsburgh helped build the steel center in the Urals. In 1931 the Koppers Corporation, still based in Pittsburgh, sent engineers to Magnitogorsk . The Pittsburgh engineers with their specialized expertise played a major role in setting up the monstrous coal batteries that were vital to completing the new integrated steel plant. The speed at which the monstrous plant was constructed remains an epic story. But Magnitogorsk probably had little opportunity to become an official sister city of Pittsburgh. Soon after the American engineers finished their work, the city was closed, forbidden to foreign visitors for most of the next half century.

Ze box, ze box!

Jim again is introducing Pittsburgh to the left coast. Pacific Standard: It’s Settled: Silicon Valley Is Dying. So What’s Next?

But his ship theme there reminds me of something I had started to write, but never finished. So this may be boring to some. Up in Cleveland they are working to build the first container port on the Great Lakes.  See the Cleveland PD: Port of Cleveland seals deal to bring container shipping to the Great Lakes

Boring? Or a transformative new global transportation node. I dunno, but see the PD's video there with a Dutch shipping executive.  

What does that have to do with Pittsburgh? More than a half century ago, Youngstown leaders wanted to build a canal that would connect them to the Ohio River. Pittsburgh leaders quite openly opposed the idea mostly because it would make Youngstown based mills more competitive, and thus potentially take away work from Pittsburgh area mills. So no Cleveburgh back then for sure.

Why did they want the canal? The lack of river access for mills near Youngstown made the transport costs of coal, coke and finished steel much higher than they were for Pittsburgh based Producers. Yet if the canal had been built, it would have connected us with an entirely waterborne route with the Great Lakes. Now not even the competitiveness of the steel industry is not tied to the rivers, but without the canal are we going to benefit as we might have from this new international transportation node opening up in Cleveland?

As with many things, economic logic when all prosperity came from (carbon) steel work out much the opposite later on.

Remember also that the Port of Pittsburgh has been trying for decades to build an inland multi-modal container facility here in Pittsburgh.  The idea goes back long before the disruptive technology known as the shipping container came around. There was even the plan to build a shipping facility right on what we now call the the North Shore. Something someone went so far as to make a model of. Of course, I don't know where the bike path would have gone through the site, if it had been built.

If there is one map that has changed over 30 years....

Not that I have the map from 30years ago, but trust me.  Just something from the Census Bureau's migration flow mapper tool.

Where is Dr. J. when you need him?

Yes, by now you have read, or at least heard of, the Politico series that is all things Pittsburgh. See: The Robots that saved Pittsburgh.

First off, kudos for the double, potentially triple, entendre.* I do hate to ask a simple question, but how many folks in Pittsburgh are actually employed in any industry or research related to robotics?  Which is not to quibble, but still worth pondering. The bigger question is whether Pittsburgh's success was due to robotics, other information technologies, Marcellus shale, eds and meds, financial services, airlines,  cupcakes, the G-20 summit here, or the rebirth of manufacturing?  The question itself implies a success that arguably is still a work in progress, at least for some areas, no matter the hype.

What is interesting is how the earned media compounds upon itself. Was not long ago such positive stories on Pittsburgh were few and far between, but not nonexistent, bien sûr. Probably not a coincidence many of the positive stories of the past came from authors with distant perspectives, since the local perspective until recently could best be characterized as nabobism run amok. Any positive sign was written off as a mythic artifact of data not to be believed.Such was (and remains for many) our cognitive dissonance with any idea Pittsburgh's economic trajectory was anything other than bad. Inflection happens. 

Failure is an orphan as they say, but success has many mothers. For me whatever success Pittsburgh has of late derives first and foremost by not being able to identify any one true success. For long the potential 'replacement' for steel was desperately sought, but never found. Maybe we have stopped looking, and as a result maybe we have found it? That or maybe we have just stopped pushing women out of the labor force.

The Politico story comes on the same day as the report of a 3/10ths of a percent drop in Pittsburgh's unemployment rate to 6.3% in December. Yes, some hypothesize, and it is just an hypothesis, that the drop is all due to folks dropping out of the labor force.  Hold that thought for now. If you can accept the radical idea that a drop in the unemployment rate is good news, I'll point out that it was not your average drop. Few month over month drops of 3/10ths of a percentage point have ever been recorded here in Pittsburgh. Ever as in ever. So if the 'dropping out' explanation is correct then we really are dropping out in droves.

Also, and apologies for vanity reference, but with another Politico story in the package I have to point out I was upstaged in large part by a reference to Josh Wander.  See: The Political Makeover of a Rust Belt City.

* Sentence modified because I earlier didn't see the explicit reference to the movie, see page 3. Just a great reference.  And note the Border Guard Bob reference. Bob is dead, long live Bob!

Dehubbing there, dehubbing here

Just more on the "dehubbing" of Cleveland announced by United Airlines.  You can read all about it in the ongoing and literally omnibus coverage from the Cleveland Plain Dealer. You really have to check out all the different angles they are covering, everything from the impact to vacation travelers, to the impact on the 'live concert' business. Of course the obligatory response from government to do all they can to alleviate the impact.


The thing that strikes me is the difference in what the United hub meant for Cleveland compared to what the USAirways hub once meant for Pittsburgh.  From an employment perspective, all the changes being talked about in Cleveland center around the loss of 470 jobs. We are talking a very different event than what happened here. USAirways alone likely peaked at over 12,000 jobs in Pittsburgh. I have to believe they are well under 2K local jobs today. Thus I'd bracket the job loss in Pittsburgh at 20 times the announced job loss in Cleveland. Consider that the recent news that the USAirways operations center is closing is, in itself, a bigger job loss event than all that is going on in Cleveland of late. The ~10K jobs lost here would not  not include a lot of non-USAirways jobs at the airport that went away as the flight count here dropped. 

470 jobs, for some perspective, is about the number of zinc workers who are losing their jobs in Beaver county as the Horseheads Corporation relocates its operation out of the region. 



Of course, there is the impact of the loss of flights beyond the direct employment being lost, but as a job loss event we are just not talking the same deal at all. Also, remember when USAirways wanted to merge with United back in 2000?  What would that have meant to Pittsburgh as a hub operation for the combined airline? Some say the events of 9/11 did USAirways in, but such was the sorry state of the company when the United merger failed that the news had to report on the offer by one Emil Bernard to 'buy' USAirways in August of 2001.  Like the dude was about to write an $1.8 billion personal check.

Air Cleveburgh

If you have not read it, required reading today from the Cleveland Plain-Dealer: United Airlines says it will cut departing flights from Cleveland by 60 percent starting in April. For them, as it is here, it is all a matter of great civic concern. It was a corporate decision that was apparently unswayed by all the boosterism they could muster up there.

Addendum. Cleveland realizes it is now following our lead. Cleveland Plain Dealer:Cutbacks at nearby Pittsburgh International Airport may supply a lesson for Cleveland Hopkins travelers


It is odd reading this along with the version locally also in the news today... Trib: Pittsburgh International struggling despite the region's robust economy. That is in some ways a follow up on news the other day that the county is actively pursuing the, "banned by law" in the United States, business of expanding a foreign airline at the airport here. See PG: Allegheny County wooing Emirates airline. Don't get me wrong, Emirates is a great airline if you have ever had a chance to fly it, but that is just another point altogether.

What does it all mean here? The airport here once tried to sell itself as an alternative market to folks flying out of Cleveland?  Whether the decrease in flights will hurt or help that endeavor is unclear, even if it is still being pursued.  Fewer flights means some may have to seek flights out of PIT, but just as happened here, the de-hubbing may mean lower costs out of Cleveland and thus stiffer competition for PIT. As with PIT you have to think the lower costs will bring in more local enplanements, which would have to come out of PIT's hide, but who knows?  Where is a CGE model when you need one?

But going back to the Trib article today.... It highlights this confusion of public officials going back a long way here of conflating economic potential at the airport with regional economic growth and competitiveness.  As much as some want to believe otherwise, I've never seen any research that ties regional competitiveness with investment, let alone public investment, in air transportation infrastructure. Is there more air service in regions that are bigger and faster growing? You bet, but don't confuse the correlation with causality both ways. Yet, it is one of those sacrosanct theories. Just imagine what would have been said about Pittsburgh's economic future if in 2000 you predicted the USAirways hub was about to evaporate rapidly.  Was not the region's economic future tied to airport generated growth? Nobody has ever really gone back to evaluate that whole strategy.

Speaking of looking back... just wondering what progress has been made of the big effort to expand flights from PIT to other Pennsylvania airports.  Any trends there of note?

More Musical Metrics Along the Mon

So now I am obsessed with this unbeknownst (to me at least), and most certainly understudied, musical instrument repair cluster here in Pittsburgh. It isn't just a location quotient thing, which measures a relative concentration, but shows up in absolute values as well.

From the same data used yesterday, here are the metro areas with highest number of Musical Instrument Repairers....   Pittsburgh is not #1, but when you realize how much smaller Pittsburgh is than either New York or LA this really is striking. Compare the location quotients (LQ), the employment per thousand jobs, which is pretty much the same metric with a different normalization, and you get a feel for how Pittsburgh jumps out.  Pittsburgh clearly has the highest LQ among all large metros.

Why this is a cluster I don't know. Hopefully not an artifact of sampling error. Some have suggested it is because of Philip Injeian Downtown. Maybe, but he specializes in just violin and cello repair. I understand there to be a busy bass violin repairer on the South Side with national business, and I have to tell you I am fascinated by the global resume of Dormont's Mr. Zhu. I am less clear what happens to injured brass, woodwinds or percussions. Such is mostly what Ms. Google tells me of the local business, my own string career ending before it started when I refused to go to violin class at age 6... or so I am told.