Frank Giarratani

Intermediate Steel-Industry Suppliers in the Pittsburgh Region: A Cluster-Based Analysis of Regional Economic Resilience:

The experience of intermediate steel-industry suppliers in the Pittsburgh region offers valuable insight into how traditional industrial clusters can serve as a source of economic resilience in regions like Pittsburgh, where a “signature” industry contracts or relocates. The authors find that intermediate steel-industry suppliers in Pittsburgh remain an important part of the regions economic base, serving as a significant source of export income from national and international markets. Survey results offer a description of the clusters characteristics. An important subset of firms in this cluster relies on key contacts in the region such as suppliers, partners, and business networks for collaboration on product development or marketing. By recognizing and supporting local linkages of these kinds, policy initiatives can help to strengthen such clusters and contribute to a regions economic resilience.

Clusters, Agglomeration, and Economic Development Potential: Empirical Evidence Based on the Advent of Slab Casting by U.S. Steel Minimills

Ten new steel plants were constructed in the United States from 1989 to 2001, each taking advantage of new steel slab casting technologies that gave scrap-based minimills access to the flat-products market. This market had been served previously exclusively by ore-based integrated mills. Some of the new minimills were built in established steel industry agglomerations. Others were built in greenfield locations with little or no prior steelmaking activity. This research, based on direct observation and plant visits, brings new evidence to bear on the nature and importance of agglomeration economies associated with steel production by analyzing industry clusters related to the advent of slab casting by steel minimills. The authors find that industry clusters can play an important role in the process of market entry; however, certain product and firm characteristics can shape the nature of industry agglomerations and their effect on firms and regions.

Plant location and the advent of slab casting by U.S. steel minimills: An observation-based analysis ∗

Abstract The advent of slab casting for steel that is produced in electric furnaces resulted in a wave of new investments in the construction of steel minimills. From 1989 to 2001, 10 new plants were constructed in the United States on the basis of new technologies. Some were built in established steel industry agglomerations, while others were built in greenfield locations—regions that had little or no prior steelmaking activity. This research brings new evidence to bear on location decisions concerning modern steelmaking. The findings are based on direct observation and visits to the plants of all the new mills that were created by these investments. While the analysis reinforces the importance of transfer costs in decision making, it also argues that critical locational elements cannot be fully understood unless analyses take account of the characteristics of specific products, plants, and firms.

Spatial Aspects of Capacity Change by U.S. Integrated Steel Producers

This paper examines changes in the location of ore-based steel-making capacity in the U.S. over the period 1974 to 1991 using data on each of the 45 ore-based mills that were in operation in 1974. We find that the geographic distributions of demand and of competition from minimills and imports were important in determining where capacity reductions occurred and which plants were closed. Technology in use at the plant also affected capacity adjustment. However, we find that regional variation in prices of raw materials were not important factors in determining where steel-making capacity was reduced.

Structural Change and Economic Policy in a Declining Metropolitan Region: Implications of the Pittsburgh Experience

Public-private partnerships can play a valuable role in regional economic policy, but the nature and effectiveness of such alliances depends on the type of problems faced by a region. In the context of decline, partnerships may be oriented to economic renewal and the regeneration of lost economic rents. These objectives may be served while the opportunity costs of policy actions are ignored, and when growth prospects are poor, the risk is ever present that unintended and costly changes in the spatial distribution of activity within a region may occur as a result of government policy actions. Regional policy in the context of decline must focus also on the problems associated with economic adjustment, and partnerships seem ill suited to give full consideration to such objectives.

The US Regional Ferrous Scrap Model

The U.S. regional ferrous scrap model developed at the University of Pittsburgh is capable of simulating price interactions at a significant degree of geographic detail. In this model, estimates of the supply and demand for ferrous scrap in hundreds of local markets are used to estimate a set of equilibrium prices. The model can be used to simulate the impact of market changes such as new plant locations or transport rate adjustments on regional scrap prices. The analysis involved is based on realistic modeling of regional price interactions as well as careful attention to metallurgical relationships. The capability of the model provides a linkage between basic supply and demand conditions and an extensive network of regional scrap prices. Modeling simulations can be used to map price gradients across the United States based on very small county-based regions, providing useful information on spatial price differences.

Nurture the Symbiosis between Economics and Regional Science (It's Worth the Trouble)

Perhaps it is obvious, but it is worth re-stating: People are drawn to regional economics because of the people they meet who were drawn to it before them. It is not the inherent importance of the subject matter that captures ones first interest. Rather, the subject matter comes to life because the people who teach it make it come to life by exposing its importance to us. Once there, the ideas take on an importance of their own. The subject appealed to me because of its relevance to practical economic problems that mattered to me and the people around me. But, without the stimulation I received from the ideas of William Miemyk, my mentor, and Douglas Brown, formerly my teacher, now a colleague and friend, I would never have pursued this line of inquiry. The relevance of this for the future of regional science is not difficult to explain. Regional economics as a subdiscipline of economics really does not exist any longer. Courses in the area are offered in very few graduate programs, not at all in many of the most prestigious programs, and infrequently in a few programs where it used to matter very much. Economists cannot be drawn to regional economics unless they are first exposed to it. The vitality of regional science, too, is threatened by the absence of intellectual challenge from economists and by the diminished role that economists seem to play in shaping the core ideas of regional science. Both regional science and economics are the poorer for this development. For me, regional science has provided a crucial forum for the exchange of ideas. I am an economist who believes it is important to leam from indi-

Some spatial aspects of poverty in the USA

The social problem of poverty in the USA. has important spatial dimensions. The great migration of poor persons from the agricultural South to the industrial North shaped the nations process of urbanization in the period after World War II. Subsequent suburbanization in the nations cities was profoundly influenced by this movement and, in turn, had important implications for the urban poor. Also, the changing structure of employment opportunities within urban areas has had direct effects on the nature of the poverty problem in terms of spatial segregation and the persistence of poverty in urban areas. This paper offers a survey of the spatial aspects of poverty in the USA. and relates the problem of poverty to the forces of change that have contributed to the spatial transformation of the US economy.

Rejoinder to Scott Duke Kominers

Scott Duke Kominers challenges our awareness of the importance that should be attached to explaining determinants of agglomerations in traditional industries, even though this is the primary motivation for our research. His assertion appears to be based on the omission of citations in our article to the literature on agglomeration indexes and the findings from this literature concerning the relative importance of agglomeration in traditional industries. We certainly do not cite the index literature, and reference to it would have added to the weight of the rather long list of articles that we do cite concerning agglomeration in traditional industry clusters. We wish to emphasize, however, that the motivation for our article is clear, and it is unchallenged by Mr. Kominers: Understanding the basis for clustering related to new plants in traditional industries is important, and necessary explanation requires deep knowledge concerning the nature of products, management goals, and firm characteristics. In turn, we challenge whether the application of agglomeration indexes offers explanation at any level. These descriptive devices point to patterns of market outcomes that demand explanation, but they do not offer explanation, per se. Finally, we believe that it is more accurate to characterize our methodology as comparative rather than case study. We take advantage of a particular event, the advent of a breakthrough technology, but we draw insight from a comparison of circumstances across 10 plants that owe their existence to this technology.