Sunday, March 29, 2015

Pittsburgh's Pickle

There was an article out recently about how cities suffer a persistence of memory. (NextCity: How a City's Collective Memory May Predict Its Future) You have to wonder about that given the glaring example of the great Ketchup story this week past.

Of course the big business news of last week was the announcement that the food conglomerates Heinz and Kraft were merging. The news sent everyone in Pittsburgh into a tizzy, with both city and county struggling to respond to the publicity, though I wonder if any local politicians were consulted before any of this happened, or what local policies really have any impact on big business decisions like this.

Times change, dude!

The reaction to the news really is curious.  Given all the talk of new Pittsburgh and all the various catalysts talked about: eds and meds, high tech, Marcellus (and related) Shale... etc, etc, there rarely is ever any mention of food manufacturing.  Granted it was a big part of history here, but we are talking some ancient history at this point. Pittsburgh's Heinz roots date back long into the 19th century (talk about memory) and for a long time ketchup has been.. well, just ketchup.  In fact some say Ketchup has suffered from an innovation problem for years (New Yorker: The Ketchup Conundrum).

Even Big news jumped into the fray over what this all means for Pittsburgh.  No less than the WSJ asked: In Kraft Deal, Will Pittsburgh or Chicago lose more jobs? But how many jobs are here? WSJ mentioned a number that 800 Heinz jobs remain in Pittsburgh.  I wonder if the number is that high?  To start, the venerable producer of Ketchup has not actually produced any condiment, or any other product for that matter, locally in at least a dozen years. (as noted by the NYT years ago: Pittsburgh's Time of Transition) So really no manufacturing employment at all. Saving jobs at Heinz is mostly about whether the remaining headquarters staff will remain here in Pittsburgh. But again, has anyone asked what is remaining?

Seems like a recurring story in that just two years ago we went through this all when Warren Buffet and his Brazilian partners bought Heinz outright. Everyone wondered what would happen to what was left of Heinz back then. One of the stories that followed that transaction was some layoffs and focused buyout offers the new management apparently offered just to its Pittsburgh employees. Those past stories said that Pittsburgh based employment at Heinz was coming down pretty drastically from 1,200 to 800 workers here. That # I am guessing is the source of the 800 number recently quoted in the WSJ article this week. Is that # still valid given all the changes going on down there? Sure sounds like a lot of staff has been leaving from those news stories. I really have to believe the current employment numbers, at least in the city, are really more like half the lower number.

There are also some folks working at Heinz's Food Innovation Center in Warrendale, jobs that they have also been cutting back on in recent years according to the news. Though outside the city of Pittsburgh proper, I presume there still are test batches of ketchup made there, so yes, Heinz still does make Ketchup here. Kraft has it's own research programs as well, which they appear to have been focusing on improving in recent years, so there will be an impact there of this merger for sure. Hopefully this link is not a premonition of the division's future.

Whether the current employment count is 400, 800 or something in between, how big is that to Pittsburgh? Are all of those jobs at risk? Of course, every job matters to the person employed, but how much is at stake in any future reorganizations at the new Kraft/Heinz. The current numbers are that roughly 40,000 folks in Pittsburgh are employed in industry categorized as Management of Companies and Enterprises. That in itself is just over 3% of all jobs in the MSA. Then the entirety of Heinz's footprint here works out to maybe 1% -2%, at the very most, of that.

But whether the merger of the two firms brings more jobs to Pittsburgh, or further eviscerates what was once here, only time will tell.  To quote the great Carly Simon, and tomorrow we might not be together.