Energy-hungry China could mean big business for Pittsburgh
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Dan Fitzpatrick, Post-Gazette photosWestinghouse executive William Poirier, the man chasing an $8 billion nuclear-power contract, stands outside a Beijing hotel where a series of meetings was held last January with the Chinese.
BEIJING -- It is January 2006, and a light snow is falling as dozens of Chinese government officials and Westinghouse Electric executives walk into a hotel far from the smog and noise of central Beijing, the spot surrounded instead by mountains and imperial gardens.
A pin on Mr. Poirier's lapel illustrates the larger issues at stake in Westinghouse's efforts in China.
Li Runtang, 60, is a resident of Datong, one of China's most polluted cities. He said it is "hard to breathe" sometimes and that the environment is not ideal for children.
Leading the Westinghouse team is an amiable, gray-haired William Poirier. He knows what is at stake. "This is the biggest opportunity we have had in many, many years," said the 59-year-old who runs Westinghouse's office in Beijing.
A fixture in China since the 1920s and one of the first to re-enter the country after President Nixon's historic visit in 1972, Monroeville-based Westinghouse is fighting to build four nuclear power plants in a country that for decades turned away foreign investment. If it lands the $8 billion deal, it would prove the marketability of its new 1,100-megawatt AP1000 reactor; spawn demand for 5,000 new U.S. jobs, many in the Pittsburgh region; and grab the lead for an additional 20 or so nuclear plants China hopes to build by 2020 to reduce its dependence on cheap, dirty coal.
With a French company still in the running for the highly prized contract, national pride also is on the line -- as is the future of diplomatic relations between the United States and China. The Westinghouse talks involve the highest reaches of government in both countries, with Vice President Dick Cheney having discussed China's power plant strategy with Chinese Vice President Zeng Qinghong in April 2004 and the White House solidly behind the Westinghouse bid that was formally made in February 2005.
There are even bigger global concerns. While the United States wants companies to do business with the world's largest nation and fastest-growing economy, it also wants to be certain Westinghouse does not export any nuclear technology that could be used for military purposes or passed to other nations. The United States is very much aware that the agency responsible for implementing one-half of the proposed power plant contract, the China National Nuclear Corp., is a successor to the ministry that developed China's initial nuclear arsenal.
It is precisely because of this weighty backdrop that Mr. Poirier sees Westinghouse's China bid almost as a much as a diplomatic as an economic mission -- as an opportunity to show "how China and the U.S. can work together."
So there he and his colleagues sat in January, for a week and a half, nine hours a day, snow dusting the hills around them. Every so often, the conference-room meetings would break up, and the Westinghouse guys would retreat to smaller rooms, dining on shrimp-fried rice and discussing what they learned.
Each night, at the direction of the Chinese, the Westinghouse negotiators had to leave the Fragrant Hills Golden Resources Commerce Hotel -- while the Chinese stayed -- and spread out across Beijing, returning to the same mountainside the next morning.
The guys on the Westinghouse side of the table (Mr. Poirier often sits in the middle, according to Chinese custom) were confident they could win the bid, that their technology was better, and that their company should benefit from decades of building goodwill here and training hundreds of Chinese engineers back in the United States.
But after a week and a half, Westinghouse still had no clue what the Chinese might do.
THE MAN IN CHARGE
Nine months later, on a warm, bright day in late September, Westinghouse's Mr. Poirier is careening through Beijing in the back seat of a black Audi, his driver and assistant in front. On his suit lapel is a small pin showing the American and Chinese flags sown together with the "W" Westinghouse logo.
The longtime executive, who has been in Beijing for more than a year and a half now, is learning what it really means to do business here -- what it means to be patient.
"It has taken a lot longer than we thought," he admitted.
"I wouldn't say the Chinese are slow. I would say they are very careful, very thorough, very detailed. This is a big decision." In the United States, "we are used to a little more rapid decision-making. Here, things are ... "
He pauses, searching for the right words. " ... more measured."
For the calm and cautious Mr. Poirier, the stint in China could be his last big assignment.
He joined Westinghouse in 1974 after graduating from the U.S. Naval Academy and serving as an officer on a fast-attack nuclear sub. He moved around the world for Westinghouse, serving power plants in Minnesota, Alabama, Illinois, New Mexico, Taiwan and Paris and spending 11 years at the company's Monroeville headquarters.
In February 2005, the company asked him to pack his bags again, for China's capital, where the company had an office since 1981. He would head up an 8-person team. He and his wife signed a one-year lease for an apartment on Beijing's east side, only blocks from Westinghouse's office. The next year, they signed another 12-month lease.
Now, who knows where Mr. Poirier will be in a year -- or three months.
Either he leaves Beijing at the end of 2006 if Westinghouse loses the bid to the French, or, if Westinghouse wins, he may have to stay here through 2012 to oversee construction of the four new plants -- two of which would be built 150 miles south of Shanghai, along the eastern coast of China, and the other two 150 miles west of Hong Kong, near the South China Sea.
Mr. Poirier sounds settled here. He knows a little bit of the language, what he likes to eat (shrimp-fried rice), local customs (it's not polite to eat everything on your plate), where visitors can buy the best pearls, and the letter-by-letter differences between the many Chinese government agencies (SNPTC, CNCC, NSSA).
Asked about the status of the nuclear power plant contract, Mr. Poirier said a U.S. official predicted a decision would be made by the end of the year. With a deal still in the balance, there is not much Mr. Poirier can talk about, but he concedes that there were challenges along the way.
One, perhaps, was the $5.4 billion purchase of Westinghouse by Japanese conglomerate Toshiba Corp., a deal that closed last month. China and Japan are longtime foes and a strong anti-Japanese sentiment still exists in this country -- which Mr. Poirier knows from his wife, an American citizen born in Japan.
While he claims the Toshiba purchase was not a "major setback," he did have to provide the Chinese with "reassurances in the form of letters and meetings."
His other big challenge is to convince the Chinese that Westinghouse's new AP1000 pressurized water reactor, which has never been built anywhere in the world, is indeed safer and worth the cost -- ranging from $1.4 billion to $1.9 billion apiece. He calls that task "an exercise in change management" -- some will see his point of view "very quickly" while with others "more explanation is needed."
LIKE PITTSBURGH OF OLD
For China, the need for more nuclear power is a response to the country's rapid industrialization over the last 30 years, its endless need for more energy, frequent power outages in highly populated area, and an alarming pollution problem that, if not solved, could spread to other parts of the world.
China produces and consumes more coal than any other country, relying on it for 70 percent of its energy needs, compared with 50 percent in the United States. Much of the coal is unearthed in the northern part of the country and trucked to the coasts, where most of the heavy industry and population are concentrated.
But not only is coal mining a dangerous and often-unregulated profession -- 5,000 Chinese died in mining accidents last year -- but the sulfur and carbon produced by the process are highly toxic to rivers, water supplies, crops and the air, contributing to 400,000 premature deaths a year and making China's the world's second-highest producer of global-warming greenhouse gases, behind the United States.
China, after a quarter century of freewheeling capitalism, is now the world's most polluted nation.
Proof of that can be found 160 miles west of Beijing in the city of Datong, advertised at the border as the "top tourist city of China" due to its 1,500-year-old Buddhist structures. Datong also is one of the world's most polluted cities, cracking a top 20 list put out by The World Bank, and one of 16 Chinese cities in the top 20.
It is in a province, Shanxi, that produces much of the coal for this country, so much that some of the land is literally sinking and much of the groundwater is contaminated.
In Datong, the air is so black during the winters that people use their headlights during the day and are warned to stay inside if pollution levels are too high. The roads and buildings are black, while donkeys and trucks drag carts of coals through the streets, all driven by men with soot-stained faces.
It is a dry, bleak landscape reminiscent of what Pittsburgh looked like more than 100 years ago. And like Pittsburgh then, many here deny that the ever-present smoke will be harmful to their health, arguing that the economic benefits outweigh any environmental concerns.
"I don't care," said Xiu Aijun, 38, a Datong tire salesman, his fingers and nails caked in dirt.
Another 32-year-old man, who declined to give his name, said his father is ill from working in a local coal mine. But the job pays well -- about $125 a month in a country where the average monthly pay for migrant workers is $66, where poverty is rampant, and where life expectancy is 72.5 years, well below most developed countries.
Li Runtang, 60, admits the "air here is not very good," that it is "hard to breathe" sometimes and that the environment is not ideal for children. His daughter, for example, is forbidden from working in a mine when she gets older.
But he also believes coal is good for Datong, that it will bring prosperity to his town. "The coal resources are very rich here."
Back in Beijing, Westinghouse's Mr. Poirier is on his way back to the central office on one of the city's many traffic-choked roads when he passes the $500 million stadium being built for the 2008 Olympic Games, a cross-hatched structure that looks remarkably like a bird's nest.
Seeing the stadium, thinking about an event that will place China squarely in the international spotlight, Mr. Poirier hints at how confident he really is about the power plant bid, about Westinghouse's chances, about his future plans: He turns to his assistant and asks how difficult it would be to get tickets for the opening ceremony in the summer of 2008 -- a date still almost two years away.
"We might," he said, "have some people here."
He drops hint No. 2 as the black Audi stops outside the office building where Westinghouse keeps space on the 20th floor. The space is nearly empty on this day, with only four people working and plenty of empty cubicles in view. Stepping out of the car, Mr. Poirier admits that "we are a relatively small operation right now."
"We hope to get bigger."
First Published November 21, 2006 12:00 am