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Wednesday, September 23, 2009

Pitt small-business expert has lesson for G-20 leaders

When the steel industry collapsed in the late ’70s, there was no federal bailout to help Pittsburgh cope.

Mills closed, as did many companies that either supplied them or depended on their employees to buy their goods. But other small manufacturers adapted and found new markets, and entrepreneurs built new companies around the region’s energy, distribution, finance, robotics and health-care sectors.

Now, as the leaders of the Group of Twenty nations gather in the Steel City for their two-day summit, they’re being asked to envision a global economic renewal in the example of Pittsburgh.

Ann Dugan, dean of the Institute for Entrepreneurial Excellence at the University of Pittsburgh, hopes they understand that the region’s resilience came from its small businesses, not its Fortune 500 corporations.

Pittsburgh is a “big small town that’s been growing steadily through the years,” she said. But that growth hasn’t come from showering incentives to attract a big factory or transplant the latest “fad” industry sector.

Every area has lots of companies of between 20 and 150 workers where the real innovation and growth potential are, Dugan said.

Small businesses didn’t cause the financial crisis, the housing crisis and the economic crisis. But they were hurt just the same. Business dried up. Loans grew scarce.

As hard as the recession has been, it’s been a great time for existing small businesses, Dugan said. In general, they were quicker to react to the slowdown, cutting expenses and workers. They tend to be more efficient in their use of capital, she said.

“We’re so enamored with big companies with 30,000 employees,” she said. Often, they are less nimble to adjust to changing conditions.

Give Dugan 200 companies with 150 employees each, rather than one behemoth.

This week, politicians will fill the David L. Lawrence Convention Center debating big ideas to coordinate efforts to promote global economic recovery. The experts will parse what the proposals mean for General Electric and Microsoft as well as U.S. Steel and PPG Industries.

That’s fine, but Dugan worries that they’re all missing the message that small business holds the best hope for lasting recovery.
Posted by Mike Armstrong @ 2:05 AM  Permalink | File Under: Small Business | Post a comment
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About Mike Armstrong
Mike Armstrong, a business editor and writer for nearly two decades, is the Inquirer's business columnist and PhillyInc blog editor. Contact Mike via e-mail or at 215-854-2980
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