Pittsburgh’s Lessons for Detroit

January 13, 2009 by  

The New York Times has an interesting follow up to a post from my blog at the IC Knowledge Center here about how Pittsburgh has leveraged its intangible economy to build a stronger, more sustainable future following the collapse of the steel industry. The article‘s author, David Streitfeld, talks about whether the lessons from Pittsburgh could be applied to Detroit, another city/region heavily dependent on a tangible product, automobiles. He cautions:

Yet the semisweet spot that Pittsburgh finds itself in was never inevitable. As recently as 2000, it had a higher unemployment rate than Detroit or Cleveland. Just as Michigan has traditionally put all its chips on the auto industry, it took Pittsburgh a long time to come to terms with the end of the steel era.

The tough part here is that many of us–including the leaders in Detroit–do not think that the U.S. should give up on the “automobile era” but, rather, remake the industry. Although Steitfeld doesn’t put it this way, I would submit that the answer for Detroit is still a greater focus on intangibles.

It is not the tangible side of production that is going to get Detroit out of their crisis, but rather the intangible side: development of the workforce (human capital), development of innovative new designs and production methods (stuctural capital) and creation of new networks to support theses new approaches (relationship capital). In developing intangible capital, Detroit will be creating an economy built on skills and assets that are more transferable in the knowledge era. Only then can they move toward the education, health care and, yes, a new approach to automobile manufacturing. It’s a herculean task but what other choice do they–do we–have?

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