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Pittsburgh Business 2001: The Leaders, 1-10
Sunday, March 25, 2001 By the Pittsburgh Post-Gazette
No. 1 -- PAUL H. O'NEILL
U. S. Treasury secretary, former Alcoa chairman and chief executive officer
Making Alcoa the world's premier metals producer is one way to get yourself named Pittsburgh's most influential business executive. Being named U.S. Treasury secretary is another.
As impressive as those achievements are, they tell only part of the story of how O'Neill has shaped life in the Steel City. The son of an Army master sergeant, O'Neill came to Pittsburgh with impressive public and corporate service credentials, then burnished his resume after being elected Alcoa's chairman and chief executive officer in June 1987.
O'Neill's relentless attention to doing things right, no matter how wildly aluminum prices fluctuated, was a major reason the aluminum maker's profits quadrupled during his years at the helm. Acquisitions of Alumax, Reynolds Metals and producers in Spain, Italy and elsewhere helped.
"He is truly a CEO who is not accustomed to letting grass grow under his feet," one analyst said when O'Neill announced his retirement in 1998.
While making Alcoa a much bigger player enamored stockholders and Wall Street analysts, the accomplishment O'Neill always listed first was making Alcoa a much safer company for which to work. His devotion to the cause was highlighted by an incident in 1996, when O'Neill learned that the Alcoa executive in charge of a Mexican joint venture had failed to report three accidents that occurred at the plant two years earlier. Even though the executive had increased the unit's sales from $100 million to $1.4 billion, he was forced to resign, as O'Neill told employees, "because of the effect of these matters on our values and the possible misperception that there can be tradeoffs in these areas."
"Paul could not have left us with a better legacy than this one. It has changed the company in many, many ways," Alain Belda, O'Neill's successor as chairman and CEO, told shareholders in May.
During O'Neill's tenure, Alcoa contributed its former Sixth Avenue headquarters to regional development agencies and moved across the Allegheny River to the Alcoa Corporate Center, a crown jewel a stone's throw from PNC Park, another riverfront showcase. As co-chairman of the Pittsburgh Riverlife Task Force with Post-Gazette Editor John G. Craig Jr., O'Neill lent his considerable credibility to the private group's efforts to revitalize Pittsburgh's rivers and the land adjacent to them.
As chairman of the RAND Corp., O'Neill persuaded the influential think tank to select Pittsburgh as the location for its fourth major global office, cementing the region's reputation as an up-and-coming high-tech hub.
O'Neill applied the same rigorous analysis that streamlined Alcoa's operations to the challenge of providing higher quality health care to Western Pennsylvanians. As chairman of the Pittsburgh Regional Healthcare Initiative, he led a coalition of civic, corporate and health care leaders in examining why mistakes occur in medical care and how to prevent them.
Despite his long record of public service before joining the corporate world, some doubted O'Neill would accept a job in Washington. After all, it is a much more cutthroat town than the capital O'Neill left two decades ago, something O'Neill has already found out. Misinterpretations of his remarks about the strong dollar raised a ruckus, and there's been some sniping about his decision to hold onto more than $90 million in Alcoa stock.
But James Lynn, his old boss at the Office of Management & Budget in the Ford administration, said O'Neill was bound to answer Bush's call.
"He will do it first of all because the guy is a patriot. And secondly, Paul really believes in giving a portion of your life to your country."
No. 2 -- GLEN MEAKEM
Chief executive officer, FreeMarkets Inc.
Business, Glen Meakem has said, "is a never-ending war."
Shortly after his Internet auction company went public, the former Army combat engineer and Harvard MBA compared FreeMarkets Inc. to "an elite Marine attack unit," and said of his employees: "They took their palm, and they cut their flesh. And I did, too, and we all mixed blood together."
Talking about the company's rapid growth, he said, "It's like you're sailing the fleet into combat on the open seas at the same time you're building it and increasing it."
A year later, Meakem, 37, is still on the attack. FreeMarkets, the company he founded with Sam Kinney, had the highest revenue growth of any local company in 2000. The company now employs more than 1,000, about 700 of whom work in a Downtown office tower named FreeMarkets Center. Last year, the landlord put FreeMarkets' red-and-black logo atop the building.
In the past 16 months, it's arguable that no company attracted more attention to Pittsburgh than the online auction company, which helps corporations cut the costs of their industrial supplies. On the day FreeMarkets went public, its shares rocketed 483 percent to $280 per share, making instant millionaires of investors who backed the company and a paper billionaire of Meakem. The enthusiasm for FreeMarkets' Wall Street debut, albeit ephemeral, raised Pittsburgh's profile as a burgeoning high-technology community. While a number of local companies continue to toy with Web-based technology, FreeMarkets became the first to garner so much national attention -- and money.
But FreeMarkets hasn't been immune to the market slowdown, either. Its shares eventually dropped below the original asking price of $48. It now trades around $12. Also, FreeMarkets is not yet profitable as a public company, despite more than $90 million in revenue. Still, FreeMarkets has been beating Wall Street estimates lately. It also appears to be weathering the economic slowdown nicely, with no layoffs at a time when other local technology companies are letting employees go.
Meakem, meanwhile, has become one of the region's leading business figures. He created Cool Tech, a networking night for local technology employees. He contributed money to the building of the O'Reilly Theater, and he and his wife Diane funded the majority of a new $600,000 Omnimax film on Pittsburgh.
Still, he remains the impatient, aggressive and military-minded person who launched the business six years ago. Meakem, after all, named one of his conference rooms after George Washington, his hero. He also keeps his hands in every part of the company, down to the smallest news release. "I live to work," Meakem once said. "I could work seven days a week as many hours as I could stay awake on this business because I want to win."
No. 3. -- MARIO LEMIEUX
Owner, center iceman, Pittsburgh Penguins
In his first year as owner and less than a year removed from team bankruptcy proceedings, Mario Lemieux said on May 15 that the Pittsburgh Penguins had broken even for the 1999-2000 season, despite expectations of losses of up to $3 million.
That came after the retired center iceman from French-speaking Montreal, one of the best hockey players ever, kept NHL hockey in Pittsburgh and led the team to two Stanley Cups in the early '90s. The Penguins lost $15 million the year before Lemieux and his partners took over in September 1999.
Nicknamed Le Magnifique, Lemieux had made the enormous transition from the rink boards to the boardroom, but he had another ace up his sleeve: himself. After a three-year absence, Lemieux, 35, retook the ice Dec. 27 on the Penguins' high-scoring first line with Jaromir Jagr, and immediately started scoring points in a home victory over the Toronto Maple Leafs.
Local businesses reported increased sales of meals and Penguins paraphernalia -- particularly the stuff with "Lemieux" on it. Penguins ticket sales soared by scores of thousands in December after his return was made public, and Mellon Arena game sellouts were recorded. Sales of tickets around the league also rose for games featuring the Lemieux-led Penguins, who are now on track to make the 2000-01 NHL playoffs.
With Lemieux himself no stranger to either health problems, the Mario Lemieux Foundation announced on Feb. 8 its largest donation, a $5 million gift to UPMC's Cancer Institute, Magee-Womens Hospital and McGowan Center for Artificial Organ Development, to advance patient care and research.
Donations and a highly successful annual summer golf tournament fund the foundation. Lemieux was treated in 1993 for Hodgkin's disease, a form of lymph cancer, and has had recurring back ailments.
In what might result in another addition to the city skyline, a development firm headed by Lemieux agreed in November to buy land next to Mellon Arena for $8 million, and the hockey club has its eye on building an arena or upgrading Mellon Arena.
Lemieux and his partners consider a new arena vital to the team's long-term survival.
No. 4 -- STEVE LEEPER
Executive director, Sports & Exhibition Authority
Steve Leeper, 43, does not work for a company. But few executives have more impact on local business than Leeper, who oversees work on the new Pirates ballpark, the new Steelers stadium, the expanded David L. Lawrence Convention Center and a new park along the Allegheny River's North Shore.
That puts Leeper in charge of nearly $1 billion in local development.
For years, Leeper has played a critical, behind-the-scenes role in shaping the city. When Pittsburgh Mayor Tom Murphy took office in 1994, making new real estate development his top priority, he tapped Leeper as his development director. Leeper became Murphy's negotiator on new projects, including a new Lazarus department store, a Lord & Taylor department store and a new Home Depot in East Liberty. He represented the city in negotiations with the Pirates and the Steelers when both expressed a desire for new stadiums. He also represented the city in negotiations with the Penguins for a new lease at the Mellon Arena.
Leeper became known for his financial acumen. When the Penguins ran into problems in early 1997, "Steve looked at the Penguins' books and said, 'We don't need a negotiator -- we need a bankruptcy attorney,' " Murphy once said.
That was long before the Penguins filed for bankruptcy in October 1998.
He also became known for his fiery temper and his aggressive, demanding style. At staff meetings, "He just pounded you and pounded you," with questions, Pittsburgh Parking Authority Director Ralph Horgan once said. "It was brutal the way he beat you up. Finally at one meeting I started screaming at him. We're there swearing at each other. The rest of the staff is looking at us like we're crazy. I stomped out of the room. But I wasn't back at my desk for 30 seconds when he called and asked me if I was all right, if I was mad at him."
In 1998, when Leeper became Sports & Exhibition Authority director, he emerged as point man on three of the most high-profile construction projects ever attempted in Pittsburgh. He began buying properties, razing old buildings, grading land and installing utility lines.
But he also found himself at the center of a controversy. A Post-Gazette investigation found widespread problems in the way minority and women contractors were used on the two stadiums. Two legislators called for Leeper's ouster, but in the end, the Sports & Exhibition Authority board supported him.
No. 5. -- Charles M. O'Brien Jr.
Chief executive officer, West Penn Allegheny Health System
The deal was two years in the making and often looked as if it might unravel.
But last summer, the merger that kept Allegheny General Hospital and its three suburban affiliates from sliding into their parent foundation's bankruptcy finally came together.
If the architect of the agreement, Charles M. O'Brien Jr., ever had any doubt that it would, he didn't let on.
Still, no one would disagree that O'Brien, chief executive of the newly formed West Penn Allegheny Health System, faced daunting odds.
The merger was born in controversy. To take the ailing hospitals under its wing, West Penn needed a $125 million loan from the region's largest insurer. That raised questions about whether Highmark Blue Cross Blue Shield subscribers might ultimately be paying for the bailout and whether it would steer patients to the new system to protect its loan.
Despite those misgivings, many in the region's business community favored any solution that would mean continued competition for the region's largest hospital network, UPMC Health System.
Rival UPMC mounted a rancorous campaign to block the Highmark financing and tried to undermine the merger by recruiting away key Allegheny General physicians.
There also were creditors of the North Side hospital's parent to be appeased. That took months of tough negotiations and a $25 million payment. And there was $465 million in bond financing to be raised at a time when interest rates were rising and Wall Street was bearish on health care investments.
O'Brien, 57, tied the deal up in August.
Making it work, however, is hardly a sure thing.
Physician defections have already pushed revenue below projections and losses at West Penn Allegheny are running a little higher than the system's targets. Not counting a one-time loss of $13.3 million associated with the bond refinancing, West Penn Allegheny reported a net deficit of $20.4 million during the first half of the fiscal year that ends June 30. That was $409,000 more than it projected, according to its most recent public financial disclosure.
No. 6. -- Thomas O'Brien and James Rohr
Chairman and chief executive officer, respectively, PNC Financial Services Group.
These two PNC veterans have been together for so long, it only seems fitting that they share the spotlight here, too.
O'Brien, 64, who retires at the end of April, has been the guiding force at what has become Pittsburgh's largest bank since being named chief executive officer in 1985.
Rohr, 52, who took the CEO reins in May, previously spent nearly a decade as O'Brien's top lieutenant. The two have worked closely for nearly 30 years.
This past year, PNC saw its name stamped across the Pirates new home -- PNC Park -- in a $30 million, 20-year naming-rights deal that capped O'Brien's instrumental role in galvanizing support for the stadium and keeping the ball club in Pittsburgh.
The financial services concern also has remained in the forefront shaping compromise proposals to the controversial revitalization effort for the Fifth and Forbes corridor, Downtown, where the bank owns a string of properties.
As you might expect, Rohr and O'Brien take a keen interest in the vitality of the region, spending considerable time on community, cultural and charitable boards such as the Pittsburgh Cultural Trust, Pittsburgh Riverlife Task Force, Allegheny Conference on Community Development and the Extra Mile Foundation.
Last fall, PNC opened PNC Firstside Center, its new $120 million, five-story Downtown operations center on First Avenue.
The distinctive, airy structure -- containing the city's first contingency child day-care center, which employees use when their normal day-care arrangements fall through -- raises hopes for further development in this largely forsaken section of Downtown.
And bucking a trend among large banks nationwide, PNC took steps last year to make its accounts more consumer-friendly. Among the bank's moves: cutting the time it takes to clear a check and dropping the charge for getting bank statements at its ATMs.
Considering PNC shareholders have been treated to four straight years of record profits of $1 billion or more, who could argue with cutting loyal customers a break or two?
7. Marty McGuinn
Chairman, chief executive officer, Mellon Financial Corp.
Since taking the helm in January 1999, McGuinn has guided this venerable Pittsburgh institution through two straight years of record profits, while rewarding employees with a bevy of new benefits -- from stock options to the right to buy extra time off.
Workers seem to appreciate the affable 58-year-old chief executive officer's efforts.
"He seems to really care about employees," said one grateful Mellon veteran. "And I can buy an extra week of vacation. Yee-ha!"
Despite his duties running Mellon, McGuinn finds time for a host of civic and charitable work, including his chairmanship of the Historical Society of Western Pennsylvania, and membership with the Allegheny Conference on Community Development, Pittsburgh Riverlife Task Force, Extra Mile Foundation and University of Pittsburgh Cancer Institute, to name a few.
In December, employees began moving into Mellon's new 14-story Client Service Center, a $150 million Downtown building next to the company's skyscraper headquarters.
The structure, complete with a five-story parking garage, both underscored the financial services giant's commitment to Pittsburgh and eliminated a Downtown eyesore by developing a prominent tract of long-vacant land.
Earlier in the year, Mellon's name went up on the old Civic Arena as part of an $18 million, 10-year deal that helped solidify the finances of the reborn Penguins hockey franchise.
Still, with the economy in retreat, some employees can't help but worry about a dark cloud on the horizon.
Will it be long before the tightfisted ways of McGuinn's predecessor Frank Cahouet -- the man who engineered the rescue of Mellon during its darkest days -- return?
Many employees under the Cahouet regime complained of low morale and comparatively low pay.
But McGuinn has vowed to keep Mellon competitive as an "employer of choice" in a tight market for workers.
No. 8. -- Chris Allison
Chairman, chief executive officer, Tollgrade Communications Inc.
Chris Allison, 40, has taken a road less traveled by those who become telecommunications executives -- he's a former English major who worked in public relations and marketing before taking over Tollgrade, a company his father founded in 1988. Nonetheless, Allison tends to take the company to its destinations ahead of schedule.
He has grown the Cheswick-based company, which makes testing equipment for the telecommunications industry, from $22 million in revenue in 1995 to more than $114 million in revenue in 2000. During that same period, he has overseen the outgrowth of two new product lines and a professional services business from what was a single product line in 1995, the year he took Tollgrade public. Allison has overseen the development of these new products -- which capitalize on changes in fiber optics, high-speed Internet access and cable television, among others -- in order to stay competitive in a rapidly-changing telecommunications industry.
He has maintained a Pittsburgh base for the 200-plus employee company as it has added field offices for sales and marketing throughout the country. Due in part to his emphasis on marketing, Tollgrade's customer base has swelled to include Verizon, Sprint, Qwest and BellSouth. And the company has formed partnerships with companies such as Nortel, Lucent, Alcatel, Fujitsu and Marconi.
Its rapid growth has garnered much attention: This year, Tollgrade is the overall winner in the Post-Gazette's annual ranking of top public companies (see page G-6). And over the past four years, it has made its way three times onto Forbes Magazine's list of The 200 Best Small Companies in America.
Allison has taken Tollgrade to new heights by staying focused on the bottom line: Long before Pittsburgh's technology community felt the chill of a cooling economy, Allison wrote an editorial warning local technology players to ratchet down their egos as well as their heavy reliance on venture-capital funding. And he has made Tollgrade's business strategy an example, saying, "You've got to make more than you spend, and you've got to grow."
No. 9. -- Mark Nordenberg
Chancellor, University of Pittsburgh
University of Pittsburgh Chancellor Mark Nordenberg is one of three university heads on this year's list of top business leaders. The others are Carnegie Mellon University President Jared Cohon and Duquesne University President John Murray.
Their selection is a testament not only to their personal accomplishments but also to the increasingly important role universities play in the economic development of the region.
When Nordenberg's predecessor J. Dennis O'Connor left in 1995, Pitt was an institution dead in the water. At a rapid pace and in a few short years, Nordenberg has changed the tone, momentum and ambition of the educational giant.
In the fall, Nordenberg went public with a $500 million capital campaign that now has pledges of more than $400 million. The largest campaign in the university's history, it is expected to exceed its goal by a healthy margin by the time it ends in June 2003.
Construction and cooperation also have marked his tenure with the university agreeing to play football at the new Steelers stadium rather than spend funds constructing its own. Instead, Pitt is building a 12,500-seat convocation center on the site of its old football stadium.
Nordenberg, 53, a lawyer, is chairman of the board of the Pittsburgh Digital Greenhouse -- a public-private partnership designed to stimulate the computer-chip industry in southwestern Pennsylvania. And he is on the boards of the Pittsburgh Regional Alliance and the Allegheny Conference.
Recognizing that the availability of skilled workers is crucial for the region's growth, Nordenberg headed a task force that identified the skills workers will need for jobs in the New Economy.
And in contrast with his predecessors, he has forged a strong working relationship with CMU and Cohon. Both appear committed to harnessing the complementary strengths of Pitt and CMU toward the economic revitalization of the Pittsburgh area.
Last fall, Nordenberg and Cohon proposed a $500 million joint venture in biotechnology research. The proposal is still in the "conversation phase," with Nordenberg, Cohon and Pitt's vice chancellor for health sciences, Dr. Arthur Levine, leading the conversation.
The two schools could collaborate in several areas of biotechnology, from creating images of the brain's cognitive functions to growing organs for transplantation.
No. 10. William Johnson
Chairman and chief executive officer, H.J. Heinz Co.
Since taking over as Heinz chief executive officer three years ago, Bill Johnson has substantially beefed up the food giant's hometown presence -- relocating the far-flung headquarters for its leading U.S. divisions to Pittsburgh and embarking on a major expansion on the North Side.
The biggest influx came last summer, with the transfer of Heinz's pet food and StarKist tuna divisions from Newport, Ky., bringing about 200 new jobs to the city.
A year earlier, about 150 positions were shipped in with the transfer of the Ore-Ida Foods division from Boise, Idaho.
And late last year, following a protracted battle over land that included a sparring match with a wool-puller, Heinz broke ground for a warehouse and distribution center next to its North Side soup and baby food plant. The $40 million project, which includes upgrades to the factory, should be finished in September.
In May, Heinz plans to start moving its expanded staff into renovated digs in the old Gimbels building, Downtown, to be renamed the H.J. Heinz Co. building. The global food giant has a 15-year lease for more than six floors in the landmark structure, making it one of the largest office lease deals of the last decade.
Though he's energized Heinz's local profile, Johnson, who added the chairman's title in September upon the retirement of his flamboyant billionaire predecessor, Anthony O'Reilly, has had a tougher time pulling the company out of its growth slump.
As he struggles for fixes, Johnson, 52, who came to Pittsburgh from Heinz's StarKist unit near Cincinnati, has embraced his new home.
He's joined the boards at PNC Financial Services, University of Pittsburgh and Extra Mile Foundation, and is serving as this year's fund-raising chairman for the local United Way.
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