Publication date: 20-Feb-2004
Source: The Business Journals

The plant was to begin production last fall, but Mr. Bodnar now expects it will be several years, at best, before it opens.

The opening had been delayed several times when, at the end of January, the Orlando-based power giant said it wasn't going to occupy the 185,000-square-foot building for at least several years. It asked the building owner, Continental Real Estate Cos. of Columbus, Ohio, to find a tenant to sublease the space. Siemens is in the second year of a 13-year lease agreement there. It blamed the decision not to open on the economy and a soft market for the new technology.

"It's a big disappointment," said Betty Esper, mayor of Homestead, where a third of the 260-acre Waterfront development is located. "A decision like this affects the whole region. We have another empty building."

Mr. Bodnar said he feels like he has been kicked in the teeth. Money from the real estate taxes the plant would have generated, plus the jobs it would have created, would have helped the borough that has been struggling financially since the 1980s when the domestic steel industry collapsed.

"This project would have been a giant step forward for us," said Mr. Bodnar, who learned of Siemens' decision earlier this month upon return from vacation.

Instead of occupying the Waterfront property, Siemens said it will invest $2 million in its Churchill facility, where the technology is being developed and where 140 people work.

"I'm upset and disappointed," said Mr. Bodnar, who has served as mayor since 1987. "The intentions were there. And I thought we would be the ones who benefit."
PROJECT HISTORY

A lot of other people thought the region would benefit from the plant as well. When the project -- initially dubbed Project Navy -- was first announced in fall 2001, it was learned that Pittsburgh beat out Forth Worth, Texas, and Orlando. It was expected the plant would eventually generate 500 jobs, many of which would pay in excess of $50,000 a year.

Locally, 68 sites were considered, including Northpointe, a mixed-use development in Slate Lick, Armstrong County. Ultimately, the Waterfront won out because of its proximity to Siemens' Churchill facility, which is less than four miles away. Also, Continental had a site that was ready to go, something that appealed to Siemens officials who wanted to fast-track the project.

What made the victory especially sweet for Western Pennsylvania is that the Waterfront sits on the site of U.S. Steel's former Homestead Works. That mill closed in 1987, putting 15,000 people out of work.

WHAT'S NEXT?

Siemens Westinghouse is a subsidiary of Munich-based Siemens AG. The German company bought Westinghouse Electric Corp.'s power generation business in 1998 for $1.52 billion. The original technology for the fuel cells was developed by Westinghouse in the 1970s. To date, 17 demonstration units have been sent to various locations in the United States, Canada and Europe, the company said.

Fuel cells are used by companies as alternatives to conventional electric facilities. They often operate on natural gas, have few emissions and no mechanical moving parts.

"We remain committed to this promising technology and to the Greater Pittsburgh area," said Thomas Flower, president of Siemens Westinghouse Power's stationary fuel cell division. "Our Churchill facility is a suitable location to do this work. It has the people, resources and space we need for this important product."

Siemens has left the door open for a return to Munhall and the $20 million building. In fact, the company said it has set a three-year timetable to bring fuel cells to the commercial market -- meaning that the Munhall facility could still be used.

On the other hand, it may never be occupied. "The next steps are to reduce the cost of our products and to validate the designs of our first planned commercial products. We're encouraged by the results so far," Mr. Flower said.

Continental -- the building owner -- has hired Lou Oliva and Gerry McLaughlin of the Pittsburgh office of Grubb & Ellis Co., a Downtown commercial real estate brokerage, to find an interim tenant. Mr. Oliva and Mr. McLaughlin are the brokers who brought the Siemens deal to Continental three years ago. Barry Ford, Continental's president of development for its Pittsburgh office, said its building has sat empty a year longer than expected. It has 150,000 square feet of manufacturing space and 35,000 square feet of office space. "Right now we're working with Grubb & Ellis," Mr. Ford said. "Their assignment is to find something in the interim."

Meanwhile, Mon Valley communities are working with the Allegheny County Department of Economic Development on a new comprehensive development plan.

"It is a disappointment given what was projected to be down there," said Chuck Starrett, a consultant who works under contract to various development groups in the valley.

"I don't know if it is all bad," said Mr. Starrett, who is also working on the development plan as well. "We have a facility that is ready to go, which has a competitive advantage over someplace else."
© 2004 The Business Journals