Pittsburgh’s economic history forged in the steel mill

For many years, people associated the city of Pittsburgh with the steel industry and…For many years, people associated the city of Pittsburgh with the steel industry and entrepreneurs such as Andrew Carnegie and Henry Clay Frick.

But recently, the economy in Pittsburgh has become more modernized, and experts say it has allowed the economy to thrive in the 21st century. Anne Madarasz, museum division director at the Heinz History Center in the Strip District, said that during the 1930s and 1940s, regional leaders accounted for the eventual decline of the steel industry by working with local business owners to address structural economy issues.

“As early as the ’30s and ’40s, you began to see leadership in the region seeing diversification of the economy as a good thing,” Madarasz said. She also said philanthropic contributions from benefactors like Carnegie put into place the origin of things that eventually grew into the economy we have today by providing an intellectual hub in the city through numerous museums, libraries and other academic facilities.

But that doesn’t mean Pittsburgh’s status as the “Steel City” is completely gone. Pitt economics professor Frank Giarratani, who specializes in steel-industry economics, said southwestern Pennsylvania still has 15 steel mills that employ 15,000 employees in high-paying jobs. He added that manufacturers of steel mill equipment still operate in the city.

But, he said, the main sources of Pittsburgh’s resurgence reside in Pitt’s biomedical research and Carnegie Mellon University’s work in the field of engineering.

Pittsburgh’s transition to a modern economy reflects a long history of innovation around the confluence of the three rivers. Madarasz said that prior to the 1870s, Pittsburgh’s economy revolved around the production of glass, iron and textiles because of southwestern Pennsylvania’s abundance of natural resources.

But because of Pittsburgh’s location at the junction of the Allegheny, Monongahela and Ohio rivers, Madarasz said, trade dominated the city’s economy before steel baron Andrew Carnegie’s arrival.

“Pittsburgh’s earliest economy was largely a commercial economy,” Madarasz said. “It was the gateway to the West and a major trading center.”

Madarasz said Pittsburgh’s reputation as the “Steel City” began in 1872, when Carnegie returned from Europe after learning the Bessemer process of creating steel, which uses oxidation to remove impurities from iron that is used in the steel-making process.

With a goal of creating a streamlined steel mill operation that produces a higher-quality metal, Madarasz said Carnegie opened the Edgar S. Thompson Steel Works in North Braddock — the building still stands today.

“By the 1870s and 1880s, you have a viable steel industry producing a large amount of steel each day,” Madarasz said.

Giarratani called the impact of the steel industry on southwestern Pennsylvania “enormous” and said it contributed to the rise of companies such as Westinghouse in the field of electronics and Heinz in the food industry. Because of the steel industry’s lucrativeness, Giarratani said it also attracted a large amount of human capital to the region, contributing to Pittsburgh’s modern-day economic success.

Madarasz said Pittsburgh’s status as an economic giant carried over until around 1910, when broadening technology allowed for competition within the steel industry. She added that the decline in demand lasted until 1940, when World War II caused a massive increase in the value of steel.

“Historians argue that it’s really war that saved the [steel] industry in Pittsburgh,” Madarasz said.

After the war, Madarasz said, the “suburbanization” of the country, or the collective move toward the suburbs from U.S. cities, increased the demand for automobiles, which were built with steel. But Giarratani said poor management and labor relations within the steel industry led to its decline during the 1960s.

“In the 1960s, when [management and labor relations] problems were ripe, the U.S. faced foreign competition for the first time,” Giarratani said.

Giarratani also said “steel recyclers,” or companies that purchase used cars and other items and melt them down for their steel, provided domestic competition for an industry already plagued by foreign competitors who paid workers less.

Madarasz said Pittsburgh, like other cities in the “Rust Belt” — an area stretching from Pittsburgh to the Midwest — suffered during an economic downturn in the 1990s. But beginning in the early 2000s, Madarasz said, the work of regional leaders earlier in the century came to fruition.

“There has been a concerted effort to diversify [the economy] and put in place the seed of things that grow into the economy we have today,” Madarasz said.