Siemens Energy Inc. will pay the state $468,750 as part of an arrangement to return government funds granted almost a decade ago when the company decided to build a stationary fuel cell manufacturing plant in Munhall.

The refund to be sent to the Department of Community and Economic Development marks the quiet end of a very public project that drew interest from several states and, when announced in 2001, seemed primed to create hundreds of new jobs in the region.

But the market changed, the economy stumbled and those jobs didn't materialize.

Siemens never used the 180,000-square-foot plant in Munhall. After pulling back on expansion plans for the fuel cell project in 2004, the company last year restructured its existing operation in Churchill and eliminated dozens of jobs.

At this point, said there are 45 workers in Churchill, far fewer than the 300-plus jobs that Siemens had committed to creating as part of getting a $750,000 opportunity grant.

"We are asking for the majority of that original amount back from the company," said Luke Webber, deputy press secretary.

The state is not looking for the entire amount because of extenuating circumstances. "Sometimes these are evaluated on a case-by-case basis," said Mr. Webber.

Officials were excited about the project when it was announced. In October 2001, then-Gov. Tom Ridge's official release said, "We didn't beat out one site -- we didn't beat out a dozen sites -- we beat out 10 dozen sites nationwide for the privilege of hosting this plant."

Specifically, the subsidiary of German corporation Siemens AG agreed to create 330 jobs, retain 120 and invest $120 million, according to a spokesman for the Department of Community and Economic Development.

In a letter sent to the economic development department last spring, the president of the stationary fuel cells operation of Siemens Energy said conditions outside of the company's control made achieving the goals impossible.

He said the reliability and durability of fuel cells in comparison to traditional technologies, combined with the expense involved in using the cells, had made them a hard sell to potential customers. "Additionally, unfavorable market characteristics have compounded the effect of the overall global economic downturn," wrote Martin Tartibi. "... despite Siemens' substantial efforts, including the $105 million investment the company has made in fuel cells since 2001, we have been unable to grow and develop the business as originally envisioned at the time of the grant."

But, he said, Siemens has not abandoned the local business community or Pennsylvania. He said the company sold the Munhall plant in 2004 to U.S. Steel at a "significant loss of $7.2 million." He said that, in effect, subsidized U.S. Steel's use of the facility as a technology center that would house more than 100 scientists, engineers and support staff.

Mr. Tartibi said the decision last spring to restructure the remaining fuel cell business came as a last resort, following an unsuccessful nine-month effort to sell the business. Siemens plans to continue to evaluate the fuel cell business, he said.

In the bigger picture, Mr. Tartibi noted in his letter that the various Siemens operations employ more people in Pennsylvania than in any other state. A company spokeswoman recently said the corporation produces $1.8 billion in revenues in Pennsylvania, has 64 offices and employs almost 8,000 people earning wages totaling almost $800 million.

In the Pittsburgh region, Siemens has operations in places such as Downtown, Canonsburg, Churchill, Monroeville, New Kensington and Warrendale.

The company seemed satisfied with the compromise the two sides reached. "We appreciate the cooperation and consideration the commonwealth has given Siemens in this matter, and we look forward to continuing to successfully operate our various businesses in Pennsylvania," said spokeswoman Melanie Forbrick.

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