US STEEL, once Pittsburgh's dominant employer, now has just 4,590 workers in the region. Universities and hospitals employ more than 10 times as many. The colleges are benefiting from partnerships with three of the biggest names in computing: Google, Intel and Microsoft.

The companies, which operate campus labs in Pittsburgh, are contributing to the city's transformation from symbol of 20th-century industrial decline to high-tech hub. Microsoft said in June that it would help fund a robotics centre at Carnegie Mellon University. Overall, technology companies and research employ 213,000 people in the region and generate a $10.8bn payroll, the Pittsburgh Technology Council says.

Last year, the research corridor near Carnegie Mellon and the University of Pittsburgh attracted about $1bn in public and private funding, twice the amount of five years ago.

"Pittsburgh was hit harder than any other American city in the change from an industrial economy to the new economy, " says Don Smith, vice president for economic development at Mellon Pitt, a partnership coordinating research at the schools. "And I think Pittsburgh accepted sooner than some other cities that it had to change, that we weren't going back."

The investments are paying off, with start-ups generating revenue for the schools from royalties, licensing fees and patents. In the 2006 fiscal year, the University of Pittsburgh earned $11.9m, partly from the sale of the Stentor medical-imaging technology company.

Carnegie Mellon helped spin off 14 companies in fiscal 2006, the university says.

Steel's collapse because of cheap imports almost took Pittsburgh with it, eliminating 230,000 jobs and prompting an exodus that cut the population in half . . . to 334,563 in 2000 from a peak of 676,806 in 1950, according to the US census bureau.

US Steel's employment in the region peaked at 340,498 in 1943, the company says.

Facing insolvency, the western Pennsylvania hub began relying more on its colleges and the University of Pittsburgh Medical Centre network. Today, the region's 7,000 technology companies fund almost 25% of its payroll, the technology council says.

"For the perception of Pittsburgh as a steel industry town, that is an almost incongruent thought, " council spokesman Kevin Lane says.

In 2004, the Seattle-based Bill & Melinda Gates Foundation donated $20m for a new computer science building at Carnegie Mellon, whose graduate programme tied with three others for top ranking in a 2006 US News and World Report survey. Apple Computer also occupies lab space there.

Craig Street, near the universities, has been dubbed Silicon Alley, says Andrew Moore, lab director for California-based Google. The former CMU professor says graduates used to leave Pittsburgh because it lacked good career opportunities.

"Having a Google office here is a great way of getting hold of great talent, " he says.

More than a dozen universities, plus area hospitals, spur growth in surrounding Allegheny County, accounting for more than 50,000 jobs. "Without the 'eds and meds', we would have lost more jobs, " Smith says.

Research at CMU has spawned more than 170 start-ups since 1995, including chipmaker Akustica and the Web portal Vivisimo. The school says it has earned $48m from selling stock in Lycos, the search engine developed in 1994 by graduate student Michael Mauldin.

The University of Pittsburgh had 10 start-ups in the year ending in June 2005, ranking it sixth nationally, says the Association of University Technology Managers in Illinois.

The four-story Collaborative Innovation Centre at CMU opened last year.

The 136,000 square-foot (12,635 squaremetre) facility was built for $27.9m in public funds to house computer- related, biomedical and life sciences labs.

Google, maker of the world's mostused search engine, occupies the first floor. Its projects include helping computers learn new tasks, such as blocking spam email, based on data patterns.

Intel Research Pittsburgh on the top floor employs about two dozen engineers, says Kevin Teixeira, spokesman for the California-based semiconductor maker.

"The campuses of universities have lots of smart people, " Teixeira says.

"You get a rich melting pot of perspectives."

Intel, which shares its floor with Apple, is developing information storage and retrieval software with the University of Pittsburgh. Officials at California-based Apple didn't return calls seeking comment.

Microsoft, based in Washington, is providing hundreds of thousands of dollars for CMU's Centre for Innovative Robotics, facility director Illah Nourbakhsh says. The lab will launch a website next year to make robotics more accessible and collaborative.

"The idea is to create a site that has a snowball effect, " he says. "It's designed for the expert and even somebody who's never built a robot, who'll say: 'Here's my idea. What can we do with it?'" Robotics could become a multibillion-dollar industry within a decade, says Tandy Trower, general manager of the Microsoft Robotics Group.

"If you lived through the PC revolution, get ready to watch it happen one more time, " Trower says.

Pittsburgh officials, whose city spurred one industrial revolution already, say they are poised for another.

"We've had so much to overcome in terms of the economy and also psychologically, " says Maxwell King, president of the $1.4bn Heinz Endowments philanthropy, which awarded $57.6m last year for regional economic, educational and cultural programmes. "It's remarkable to see how resilient the people are." (Bloomberg)