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New $122 million facility will build large fuel cells

Wednesday, September 26, 2001

By Dan Fitzpatrick, Post-Gazette Staff Writer

Ending a three-state economic development derby, Siemens Westinghouse Power Corp. has decided to build a $122 million fuel cell factory in Munhall, fill it with as many as 500 employees and use it to provide an alternative source of energy for utilities, hospitals and office buildings.

	Map: Site of proposed Siemens factory

A $6.6 million incentive package cobbled together by state and local officials sealed the deal, which is scheduled to be announced today.

"It would be a great coup for us," Allegheny County Executive Jim Roddey said yesterday. "It would be the best news we have had in a very, very long time."

In landing the new plant, local economic development officials beat Orlando, Fla., home to Siemens Westinghouse, and Ft. Worth, Texas, the two other finalists.

Initially, more than 100 machine operators, engineers and electrical assemblers are scheduled to work at the 215,000-square-foot Siemens factory, at an average salary of $60,000. Within four years, the factory could employ as many as 500 and more than double in size.

The plant will bring large-scale manufacturing back to the eastern end of what once was one of the region's major steelmaking centers, the former USX Homestead Works. The site has been transformed in recent years into The Waterfront, a string of large stores, shops, restaurants and office buildings.

Siemens hopes to occupy its new plant by July. The facility will use solid oxide fuel cell technology first developed by scientists at Westinghouse Electric, a once-powerful Pittsburgh conglomerate that broke apart in the 1990s.

Siemens, a German electronics giant with interests in energy, communications, transportation and auto parts, acquired Westinghouse's non-nuclear power generation business in 1998 for $1.53 billion.

It wanted a new plant to produce greater quantities of the massive fuel cells, which are size of a rail car and the shape of a battery. The cells squeeze electricity from a combination of oxygen and hydrogen, providing power more efficiently and with far less pollution than the burning of oil, gasoline or coal. The only by-products are hot water and heat.

It's anticipated that the fuel cells will be sold to industrial parks, hospitals, office buildings and military installations. The same technology also is being touted as a low-cost, clean way of powering homes and cars.

Fuel cells are still relatively expensive, which has limited their use. To change that, the U.S. Department of Energy is funding a 10-year, $500 million research program designed to make them smaller, more efficient and less costly. Siemens was one of the companies asked to take part in the program.

The types of fuel cells to be made at the Munhall plant represent "the tip of the iceberg" of the potential market for the technology, said Wayne Surdoval, a project manager at the National Energy Technology Lab in South Park.

Because of fuel cells' potential, Siemens' proposed plant became a hot economic development commodity across the country. The company initially considered eight cities, and it whittled its choices in September to the final three.

"This is one of those brass rings that come around from time to time," said Frank Brooks Robinson Jr., of the Regional Industrial Development Corp. of Southwestern Pennsylvania.

"It is a very substantial project. This is one you go after."

The fight for Siemens was competitive within the region, too.

Among the other sites under consideration was Armstrong County's Northpointe Industrial Development Park, in South Buffalo. In early September, Armstrong County Commissioner Jim Scahill said a Siemens representative told him Northpointe was "the best site in Western Pennsylvania" and that no Allegheny County sites were under consideration.

A few weeks later, though, he got a call from the Pittsburgh Regional Alliance informing him that the company decided to locate closer to Pittsburgh.

"Who are they to make that call?" Scahill said.

Scahill remains "very disappointed" by the communication between his office and the PRA, which is a marketing and job-creation agency for the region.

Tom Balya, a commissioner from Westmoreland County, agreed.

"They failed to communicate what was going on," he said. "If we are going to build relationships, there has to be effective communication."

Ronnie Bryant, president of the PRA, declined to talk about the hunt for Siemens. Referring to Scahill's comments, he said, "I look forward to discussing with him the process and finding out how we might improve it."

Roddey said he feels "badly" that Scahill was led to believe Siemens had made the decision to build in Armstrong County. But he also said, "Allegheny County did not try to steal a deal away from Armtrong County."

Siemens, he said, came to him three weeks ago and asked to look at sites in Allegheny County. County development officials showed the company several parcels near Pittsburgh International Airport, in the Mon Valley and in Hazelwood. They put together a loan and grant package of $2 million, and paired it with $4.6 million in credits, grants and loans from the state.

"We just accommodated them," Roddey said.

While the new fuels cell plant will bring more manufacturing to The Waterfront, where RedZone Robotics already operates a small facility, another phase of the project's ongoing retail development has begun rolling out.

By mid-October, many of the 400,000-square-foot Town Center group of specialty shops will open within walking distance of each other under the Homestead High-Level Bridge. Among those coming are Barnes & Noble book store, Gordon's Euro Comfort, Gap, Ann Taylor Loft, American Eagle Outfitters, Abercrombie & Fitch, Pacific Sunwear, Victoria's Secret, Skechers USA, New Balance, Limited Too, The Children's Place, Journeys and Omaha Steaks.

The stores, which will hold staggered openings, will be grouped around a public space with a water fountain, garden and benches. Several restaurants have already opened around the edges of the Town Center area.

Staff writer Teresa F. Lindeman contributed to this story.