Keystone Edge

An historic pillar of Pennsylvania industry, manufacturing remains an important part of the state's economy, making up $64 billion annually of the Gross State Product and employing nearly 640,000 Pennsylvanians. Food processing giants such as H. J. Heinz Company and Herr Foods Inc. headquarter in Pennsylvania, and numerous tool and plastics manufacturers maintain strong operations in Erie and the Northwest.

Pennsylvania's geographic location makes it a natural manufacturer; six of 10 major U.S. markets are within a 500-mile radius of Harrisburg, reducing transportation costs. With a robust infrastructure--120,000-mile road system, 134 airports, 3 major ports, more than 5,100 miles of railways and 69 railroads--heavy manufactured goods such as powdered metals and prefab housing can be easily shipped to markets across the country and overseas.

Add to these advantages the intellectual capital coming from the state’s colleges and universities, and it's no wonder that Pennsylvania has adapted its historic manufacturing industry to remain competitive in key industries of the future.

As industries and companies scramble to adapt to the global and technological realities of commerce in the 21st century, the business of business services is big in Pennsylvania, where behemoths like Comcast and Aramark thrive alongside smaller, niche business services companies like eCedent and I-Site. With major concentrations of creative, financial and technology services companies in Philadelphia, Pittsburgh and Harrisburg, the Commonwealth's emerging industries are well equipped to handle the challenges of the future.

While the game might be changing, Pennsylvania is still leading the pack in the energy industry. PA is investing $650 million to expand the state's sector with a focus on alternative fuels, clean energy sources, new technologies and energy efficiency. PA also ranks among the national leaders in job creation and capital investment produced by energy projects. There are 5,000 manufacturers across the Commonwealth contributing to the sector, including a burgeoning class of biofuels companies.

As the video game industry continues its exponential growth, software and game platform developers like Sim Ops Studios, a startup by former Carnegie Mellon students, are thriving in Pennsylvania. In fact, the state's thriving entertainment technology industry is manifest in CMU's Entertainment Technology Center, where faculty and students are working on projects ranging from Wii-centered workout games for children, to virtual reality interfaces and social networks in science centers, to helping the Australian National Railway Museum develop interactive exhibits. In the capitol city, the newly created Center for Advanced Entertainment & Learning Technologies at Harrisburg University is working with CMU on a patented speech recognition software project.

In September 2008, the ETC hosted the prestigious 7th International Conference on Entertainment Computing at CMU, where the industry's top researchers and developers gathered from across the globe to commiserate on the future of entertainment technology--a future that is indeed looking bright in Pennsylvania.

The huge flow of research dollars into universities in Pennsylvania guarantees one part of the equation of successful entrepreneurship: creation of bright ideas to answer life's many challenges. However, the other part of that equation--business skill to turn ideas into profitable enterprises--has been sometimes wanting, at least among professors and technologists who manage the research.   

Well, not anymore. Over the last decade and more, Pennsylvania has cultivated a business landscape where seeds of enterprise enjoy a chance to grow. Peruse the Entrepreneur's Guide of the Pennsylvania Department of Community and Economic Development. Anyone with a halfway decent idea, and ambition to see it through, ought to be able to find help with a business plan in Pennsylvania. There’s an abundance of state agencies that have evolved with the task, and the skill building networks that entrepreneurs need have become branded enterprises of their own.  

Technology associations across the state have become increasingly focused on members who need to learn what to do. And between the professor's lab and the cold, cruel world outside, the state's major research universities have installed an increasingly sophisticated structure for preparing the startup. Perhaps most important of all, along with help in preparing the business case, the flow of money to finance promising new enterprises looks a whole lot more attractive, too.

With a gross state product near $500-billion a year, the sixth largest in the U. S., plenty of money flows inside Pennsylvania's borders. That pool of capital attracts financial services, an industry that has experienced much internal growth in this sector during the last two years as commercial banks have evolved into diversified financial service companies; PNCBank in Pittsburgh and Beneficial Mutual Bancorp in Philadelphia are two examples. Now part of Bank of New York Mellon, Mellon Financial Services is among the oldest and largest financial enterprises in Pennsylvania and maintains operations in Pittsburgh. Several foreign banks also have North American headquarters in Philadelphia.

The insurance industry has a large Pennsylvania presence; CIGNA, Colonial Penn and Penn Mutual have headquarters in the Southeast. Regional insurers like Erie Insurance in Erie and the Mutual Benefit Group in Huntingdon have grown into successful multi-line franchises. For investment services, Vanguard Group in Malvern manages over $1 trillion and Federated Investors in Pittsburgh handles some $300 billion for customers. Venture capital investors have increased their presence in Pennsylvania as technology investment has grown. Northeast Pennsylvania, situated less than 100 miles from New York City, offers an attractive location for backup office services. State and federal funding of a broadband communication network will allow Wall Street financial firms to backup data and locate secondary operations in Pennsylvania. The program, called Wall Street West, has seen a number of Wall Street firms establish backup operations in Northeastern Pennsylvania.

Between Pennsylvania's robust business incubation and development programs, world-famous university talent, and progressive energy and electronics companies, the high technology industry in the Commonwealth is growing quickly. International offices abound in the state, with major alternative energy companies like Gamesa Wind establishing large operations here, and like Lake Erie Biofuels emerging as a true industry innovator; in December 2007 the company shipped the first-ever load of biodiesel on the Great Lakes Waterway.

Across the hi-tech industry, from electronic component manufacturers like Greenray Industries and CyOptics, to educational firms like DynaVox Technologies, leading companies call Pennsylvania home. And with assistance from Ben Franklin Technology Partners, more tech companies like mVisum, Inc. and Nayatek are relocating to the Commonwealth.

It's no secret that some of the most innovative, profitable technologies coming to market nowadays are incubating in colleges and universities. This is especially true for Pennsylvania, where research and development programs abound and set the bar for schools nationwide. With 159 colleges and universities and 92 private licensed schools, Pennsylvania's institutions of higher education are the driving force in the state's new economy, constantly producing new businesses, technologies and some of the best-educated workers in the country.

Tech transfer programs are thriving at schools across the state and rolling out robust companies that are developing innovative products. From the University of Pennsylvania's upcoming Roberts Proton Therapy Center--set to open in 2009 as the largest center of its kind in the world--to Harrisburg University's new, hi-tech, $73-million Academic Center, to Penn State's Institutes of Energy and the Environment, Pennsylvania schools are on the cutting edge of new technologies and emerging industries.

Pennsylvania enjoys a climate for life science enterprises that extends across the state. Its vitality is visible in companies participating in many stages of development of biotech products and life sustaining services--from mature, globally active enterprises to emerging companies launching first-to-market technologies. Throughout Pennsylvania there are 125 bio-pharma companies and more than 2,000 life sciences related-enterprises. Eight of the largest U.S. pharmaceutical companies are within a 50-mile radius of Philadelphia.

Biotech companies that run the gamut of product and technology life cycles represent a vital part of the Keystone State's economy--with important concentrations of this entrepreneurial sector in Philadelphia, Pittsburgh, and Central Pennsylvania. In those regions and others, Pennsylvania's internationally competitive, university-affiliated research hospitals provide a catalyst for life-science ventures.     

Add to these assets of medical knowledge and clinical skill the alignment of Commonwealth policies and practices that promote enterprise creation. That factor is most visible through the Life Sciences Greenhouses for Central, Southeastern, and Western Pennsylvania established with a $100-million investment from Pennsylvania's settlement with the tobacco industry. Through Pennsylvania Bio, an industry group, biotech firms have been speaking with a more united voice about the issues they want to see addressed within the state.

Devices that make complicated, self-directed decisions receive a lot of attention in Pennsylvania. All the research universities in the state study the appearance of thought in the behavior of machines. Through a large number of robotics clubs, machines that think are capturing the imaginations of Commonwealth high school students, too.  

However, the hub of robotics in Pennsylvania--and the United States--is located in Pittsburgh, where Carnegie Mellon University's Robotics Institute more or less invented the science of field robotics. Atop its umbrella rides the standard of CMU's School of Computer Science. The interaction of CMU's outstanding faculties in electrical and mechanical engineering with the scientists who populate the world's number one school for computing make the Robotics Institute a place where most conceivable applications of robotics are being either developed, studied, or talked about.  

More than its name suggests, the Robotics Institute appears to operate like a consortium of many paths along which the $8 billion world robotics market is likely to evolve. As demand for mobile robots in non-industrial applications grows, the centers within the Institute suggest in their names some of the most promising directions: The Center for the Foundation of Robotics, The Center for Integrated Manufacturing and Decision Systems, The Center for Healthcare Robotics, the Field Robotics Center, the Vision & Autonomous Systems Center, and the National Robotics Engineering Consortium. Pittsburgh is robot country, says the Christian Science Monitor, and it's easy to see why.

Pennsylvania's goal is to create a partnership between economic growth and environmental conservation--activities once thought to be polar opposites. To find a synergy between those goals today, the concept of sustainability provides direction for all state agencies. The job is to make smart use of existing assets in order to recapitalize Pennsylvania's economy and boost state revitalization.  

This approach to government has promoted new partnerships all over the state, as the Keystone Principles of sustainability must be tailored to Pennsylvania's public lands, rural areas, small towns, and big cities. Over a vast and varied landscape, sustainable use emphasizes one key idea: reuse. And, for this priority, Pennsylvania offers countless opportunities because of its large inventory of abandoned industrial sites. The ethos of sustainability also aims to hem sprawl, by reclaiming abandoned urban areas while protecting undeveloped lands as open space for agriculture, tourism, and recreation. Better housing for those who don’t have adequate dwellings is part of the plan, too.

The wisdom of sustainability becomes more widely accepted as energy prices rise. Emphasis goes to efficient infrastructure and development that concentrates rather than scatters traffic. Likewise, in growing jobs for Pennsylvanians, the policy encourages businesses that have a better chance of lasting a while and controlling the footprint they leave on the environment. That goal goes hand in hand with planning for environmental restoration and conservation, protecting the states' heritage, and encouraging people to get out and enjoy Pennsylvania's many attractions.   

Still, while leading the effort across the state, the Commonwealth knows it can't run the whole show. Plan regionally and implement locally is the idea, and many cities and communities are already taking the initiative.

Innovation starts with venture capital, and in Pennsylvania an increasing number of firms are choosing to invest in early- and expansion-stage technology companies. With firms such as Edison Venture Fund, which specializes in information technology and has made more investments in the New York to Washington DC corridor than any other private equity firm, and EnerTech Capital, which has been investing in companies that reduce the cost of producing and consuming energy and clean energy since 1996, Pennsylvania is home to the leading drivers of new and emerging industries.

Working with venture capital firms statewide is Ben Franklin Technology Partners, a state-funded economic development corporation, focusing on entrepreneurial development and technological innovation. In 2007, more than $500 million in venture capital investment went to biotechnology and medical equipment companies throughout the Commonwealth to bolster this rising industry. By increasing investment capital in emerging technology-based enterprises, BFTP and myriad private equity firms are helping to position Pennsylvania as a leader in the 21st century marketplace.