Has Pittsburgh’s focus on ‘whiz-bang tech startups’ left manufacturing companies out of the big picture? | News | Pittsburgh | Pittsburgh City Paper

Has Pittsburgh’s focus on ‘whiz-bang tech startups’ left manufacturing companies out of the big picture?

“The options get very narrow.”

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In summer 2014, Pittsburgh Magazine demanded that Pittsburgh “needs to be more braggy” in terms of its emerging tech market. Less than two years later, it is hard to imagine that sentiment ever needed to be uttered. 

National publications have featured Pittsburgh as one of the next tech-boom cities, and companies like Apple, Facebook and Google get press coverage when they announce just about anything here. Uber, the ride-hailing giant, received a headline recently in the Pittsburgh Post-Gazette just for considering moving onto the Almono site in Hazelwood. 

When Uber was looking to expand in December, it reached out to the Regional Industrial Development Corporation for help, according to Uber’s Dan Beaven. Within two months, Uber announced plans to become the first tenant at the Almono site, which is owned by the RIDC. “I can’t tell you how great our relationship with … the mayor is,” said Beaven at the February announcement.

Jeh Kazimi of Breezie, a company that makes senior-friendly tablet software, also highlighted the close relationship of tech companies and municipal head honchos during Innovation Week, a city-sponsored event in April to highlight the work of tech companies in the region in April.

Kazimi says he heard about the tech growth in Pittsburgh from a private-equity partner who was a Pittsburgh native. Kazimi started visiting in March 2015. During one visit he met with representatives from the Urban Redevelopment Authority, and briefly ran into Mayor Bill Peduto. When he flew back to his home, in London, a couple days later, there was already a letter from Peduto waiting for him. “Who does that?!” Kazimi told City Paper at the Innovation Week event in the Strip District. Breezie moved to Oakland in August 2015 and will eventually employ 14 to 20 people, according to Kazimi.

URA spokesperson Gigi Saladna says manufacturing expansion can be more complex and expensive than expansion of tech companies, but doesn’t agree with some criticisms of the URA’s involvement.

“The URA and city reject the claim that we do not prioritize manufacturing companies in our economic development strategy,” Saldana says. She cites the recent successful expansions of Penn Brewery, J Harris & Sons, Chris’ Candies, the Proud Company, Thread and many others.

Saladna also cites the recent announcement of the URA’s sale of the former Detective’s Building in East Liberty to Schoolhouse Electric, a Portland, Ore.-based light-fixture company. Schoolhouse plans to use the building as its mid-Atlantic headquarters, and Saladna says that the company “noted Pittsburgh’s access to robust manufacturing supply chains and skilled workforce as critical to their attraction to Pittsburgh for expansion.” However, the role the URA played in bringing Schoolhouse to Pittsburgh was limited. At a recent URA meeting, the company’s founder, Brian Faherty, told CP that he discovered the Detective Building on his own while visiting the Ace Hotel, one of his clients.   

But not all tech companies looking to move into the city get extra attention from city officials. Avishai Geller of Maven Machines, which creates smart Bluetooth earbuds, said he found space for his company on his own by applying to AlphaLab, a tech incubator in East Liberty.

Pittsburgh has at least seven incubators that can provide spaces for tech companies to start and grow. (One of the city’s few quasi food-incubators, the Pittsburgh Public Market, closed in February and whether it will relocate remains unclear.)

Kenny Chen, a board member at philanthropy firm Social Venture Partners, says many tech companies get their start at incubator spaces. He adds that burgeoning tech companies can find temporary space at incubators in as little as one day, and that successful companies bred in incubators take two or three months to find permanent locations.

“As a whole, Pittsburgh is driving itself for companies to grow,” says Chen of the tech industry. “We are absolutely on an upswing.” 

And while the upswing is good for improving Pittsburgh’s reputation as a tech hub, the growth of tech companies doesn’t always contribute to a rising tide for the local economy. Some of the tech companies garnering the most attention don’t create that many jobs. For example, Facebook acquired virtual-reality company Oculus (which announced plans to move to Oakland this year) for $2 billion. At the time, Oculus had only 75 employees. 

A 2015 study from the University of Oxford highlights some of the problems of over-prioritizing tech: “Because digital businesses require only limited capital investment, employment opportunities created by technological change may continue to stagnate as the U.S. economy is becoming increasingly digitized.”

The study’s author, Carl Benedikt Frey, said in an interview with Forbes magazine last year that tech growth can have harsh implications for regional inequality. He cites the catch-22 that the San Francisco Bay Area is currently experiencing. “[Tech growth] drives up housing prices and makes it more and more difficult for workers to move to San Francisco, where the jobs are emerging,” said Frey.

Grelli, of Wigle, is concerned about this issue as well. Wigle currently employs nearly 60 part- and full-time workers, and will grow that when its new facility is completed. Grelli says it makes sense for manufacturers to be located in the city because workers can commute via public transportation and companies can develop positive relationships with the community. Because of these positive effects, Grelli would like to see the city set aside more spaces for light manufacturers. She cites the Strip District as an example of how manufacturing districts are changing.

Since moving to the Strip in 2010, Grelli has seen a “huge transformation” of the neighborhood, including the development of luxury housing, boutique restaurants and hotels. 

“If we were looking for a space here now, this [distillery] couldn’t happen,” she says. Last June, Apple signed a lease at a newly constructed building next door to Wigle. The tech giant should be moving in soon.

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