Industrial Construction Renaissance

Wednesday’s long awaited announcement from Allegheny Technologies that it had decided to put a new $1.2 billion rolling mill in Brackenridge adds another mega project to the list of industrial construction projects scheduled to get underway in the region during the next 12 months. ATI’s investment in northeastern Allegheny County matches the $1 billion that U. S. Steel is investing in upgrading their Clairton Coke Works, where preliminary work is underway. Another $1 billion project has begun the preliminary bidding cycle in western Washington County, Robinson Power’s Beech Hollow Coal-fired Power Plant.

You can undertand why Allegheny County Executive Dan Onorato fairly bristles at talk of the steel industry in the past tense. For a region with a “manufacturing past” $3 billion in construction is sure a lot of investment.

Add to that the rush to explore the Marcellus Shale formation for natural gas and you have quite a nice boom in the industrial segment of the economy in western PA. Already there are three different projects being planned for natural gas exploration companies, totaling around $50 million in new construction in Westmoreland and Allegheny County. Some of the existing energy companies in western PA (Atlas Energy, Consol) have already invested more than $100 million in the past couple of years. This may be all that’s out there but it says here that this is the tip of the iceberg.

Anecdotal evidence is all that we have right now to judge the staying power of this industrial renaissance. An interesting tidbit is that the national construction giant Barton Malow opened an office in Southpointe this summer for its industrial group, not the institutional group (which is building Children’s Hospital and UPMC Monroeville East with P. J. Dick).

One of the long-term benefits of all this investment is that it secures thousands of jobs that most of the region’s pundits thought were dying off. Both ATI & USS are creating better processes without eliminating jobs. The construction jobs alone will be in the thousands over the next three years, and the energy jobs may eventually be seen as the start of a new industrial boom in the region. I realize that sounds like a sunshine pump but the need for natural gas and alternative eletrical generation to reduce dependancy on oil imports is at least as great as the need to drill more oil domestically, and it’s a whole lot more certain. Some of the first land leases have been windfalls for the landowners, many of whom are farmers. There’s even been talk of a coal-to liquid gas facility near Midland, PA. That western Beaver County town is the prototypical post-industrial municipality in our region (even though there is still steel made there).

As one who regularly speaks about the folly of trying to attract “well paid” manufacturing jobs, I’m happy to have not seen this one coming. It is probably more realistic to expect a renewed industrial economy here to attract modest job increases, and provide mostly short-term benefits for the construction industry. It’s possible, though, that renewed industrial investment in a region that has industrial infrastructure could be a home run.

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