PPG Industries cuts profit forecast for fourth quarter

PPG Industries Inc. of Pittsburgh today lowered its forecast of fourth quarter earnings about 50 percent to a range of 35 cents to 45 cents a share because of the "accelerating rate of decline in the global economy that has emerged."

A consensus of analysts had projected that PPG earnings would be about 73 cents a share, Bloomberg News reported.

PPG, a global supplier of paints, coatings, chemicals, optical products and glass, said that its industrial coatings and glass segments are expected to report losses in the fourth quarter. The fourth quarter results will reflect the benefit from falling raw material and energy costs.

The market softness initially seen in the U.S. industrial markets now is prevalent on a global basis, PPG Chief Financial Officer William H. Hernandez said today.

The business serving the industrial-end markets are experiencing significant loss of volume because customers are responding to lower consumer demand and tighter credit by cutting production and reducing inventory, Hernandez said.

PPG's commodity chemicals, performance coatings and architectural coatings segments continue to perform solidly and the company's optical products business continues to show growing volumes, Hernandez said.

The company plans to release fourth quarter results on Jan. 16.

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Economic crisis kills Beaver County ethanol plant plans

Plans to build a multimillion dollar ethanol plant in Beaver County have apparently been ditched.

Pittsburgh-based Sunnyside Ethanol LLC had proposed building the ethanol plant and waste coal electrical facility on about 80 acres in Aliquippa. The plant was to be on land that once housed a sprawling steel facility.

Chuck Betters is one of the property owners. He says the credit crisis and the drop in gasoline prices apparently played a role in Sunnyside's decision to halt its plans.

Betters says Sunnyside had a sales option for the property, but it expired.

Sunnyside officials have said they are having difficulty securing funding for the Aliquippa plant, which would have been built on land along the Ohio River that once hosted a sprawling J&L Steel plant.

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Smaller banks inking bigger business deals

When an investment banker tried to line up money to buy Boscov's stores out of bankruptcy early this fall, he ran into the credit crisis.

"The big banks, including money center banks, just blew us off," said Joseph Harenza, CEO of Griffin Financial Group in Reading.

But he got around that wall when a group of smaller, regional banks coalesced to back a nearly $300 million deal that enabled two of the retailer's top former executives to rescue Boscov's from oblivion last month.

The deal illustrates a wider trend, say bankers and other industry experts. While many large banks are freezing up these days, smaller banks are often filling the financing void for businesses.

"Some of the bigger banks are distracted, either by selling or buying (banks) or by more national issues," said David Lazare, managing director of Stifel Nicolaus & Co., Philadelphia.

"But community banks are seeing business opportunities in loan and deposit relationships that they hadn't gotten access to in the past several years," the analyst said.

Several second-tier banks around Pittsburgh are enjoying a higher profile these days, especially among business customers hungry for credit.

First Commonwealth Bank, for instance, posted its busiest quarter for new business loans over the summer that it's recorded in the past three to four years, said Mike Price, president of the Indiana, Pa.-based bank.

"Times may be tough, but not all businesses are struggling," Price said. "Their business may not be as good as last year, but they can still be profitable and pay good wages and give out a Christmas turkey each year."

Dick's Sporting Goods Inc., for instance, is forging ahead with a new, $107 million headquarters in Findlay, near Pittsburgh International Airport, which should be completed in about a year. The building is being financed by a consortium of mostly Western Pennsylvania regional banks led by First Commonwealth.

"They have been our go-to banking partners in this region," said Rodney Piatt, CEO of project developer Horizon Properties. "They clearly understand the markets they serve and understand the economics of the markets they're in."

Larger banks are still providing project financing, "but it's a lot more challenging because they are pulling in their horns," Piatt said.

"If we get a deal, we have no problem working on it with other lenders, depending on the circumstance," said Rob Jorgenson, senior vice president of marketing for S&T Bank, Indiana, which helped finance the Dick's headquarters project.

Regulators limit the size loan a bank may extend according to the institution's asset size. S&T loans, for instance, can not exceed about $20 million, Jorgenson said. So, construction of the sporting goods company headquarters required that several smaller banks band together their resources.

"Smaller banks are still staying within their strategy, however," Lazare said. "They're not being overly aggressive, or relaxing their underwriting standards or going outside their markets."

First National Bank has about $3.2 billion in outstanding business loans across Western and Central Pennsylvania, with one-third of that in the Pittsburgh region. The Mercer County-based bank added eight branches in Allegheny County to its previous 15 here with the acquisition of Iron & Glass Bank in August.

"We bring the sophistication of a bigger bank in a community bank wrapper," said Vincent Delie Jr., banking group president of First National. "Our (loan) decisions are local, and our credit officers are engaged with the companies."

Since the bank hired commercial bankers dedicated to the Pittsburgh market in 2005, First National has grown its outstanding business loans about 15 percent a year, Delie said.

First Commonwealth CEO Price attributes much of his bank's business loan growth to monthly "blitz days" this year. That's when branch managers, commercial lenders and even "the top brass" call on companies probing for business, he said.

"This is not rocket science. If you want a company's business, you go inside and ask if there's anything you can do for them," Price said.

"Our customers know who to call if they need to," he said. "They're not calling a different area code or a different state."

Smaller banks seemed to get an added chance to grow their businesses in early December. The Justice Department ordered PNC Financial Services Group to divest 61 Western Pennsylvania branches before it can complete its acquisition of National City Corp., expected by Dec. 31.

"We would love to purchase some of the National City branches that PNC has agreed to sell," said Robert McCarthy Jr., CEO of Parkvale Financial Corp., which helped finance the Dick's project. "That would be a good way to grow, with mature offices and nice deposit bases."

But as McCarthy and other local banks later discovered, antitrust authorities are requiring PNC to sell the National City branches in chunks by market. That means, all 50 offices in Allegheny County must be sold to one buyer -- a transaction too big for smaller banks to swallow, analysts say.

Extra branches or not, Parkvale has expanded its business loans more than 15 percent this year to date over last year, said chief lending officer Bob Stephens.

"It's having our loan officers be more proactive," he said.

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Nissan operation 'a great opportunity'

Pittsburgh businessman David Scaife has expanded his car sales activities in the region, recently taking over operations of a Nissan dealership near Johnstown in Cambria County.

Scaife, the owner of Auto Palace Porche on Baum Boulevard in North Oakland, is operating the Nissan franchise on Scalp Avenue in Richland under the name Auto Palace Nissan. He purchased the franchise and started operations Sept. 1, said Aaron Comstock, general manager of his dealership operations.

"We saw this as a great opportunity," Comstock said. The previous franchisee for the Nissan dealership was Team Motors, a business that owns Chevrolet and Kia dealerships in the Johnstown area.

The franchise Internet site lists just under 100 vehicles for sale, including 2008 and 2009 models, ranging in price from $15,000-plus Nissan Versa sedans and hatchbacks to Nissan SUVs running at more than $40,000.

State records show the business is owned by DNS Nissan LLC, on Baum, with Scaife shown as manager. A purchase price was not disclosed.

Despite the economic downturn and its impact on domestic automakers Chrysler, General Motors and Ford, Scaife's team is optimistic about prospects for both the new venture and its existing business in Pittsburgh, Comstock said.

Japanese automakers are in far better financial state than their American counterparts, but they are getting battered in the shrinking market.

In November, when auto sales plunged 37 percent to their worst level in more than 26 years, Toyota's sank 34 percent, Nissan's were down 42 percent and Honda Motor Co.'s fell 32 percent.

In Western Pennsylvania, Nissan has been among the Japanese brands gaining market share -- with a 1.1 percent increase over the last nine months, according to figures from the Greater Pittsburgh Automobile Dealers Association, which includes some dealers in the Johnstown area.

The brand is projected to increase new car and light truck registrations by 7.1 percent this year, the association said in its 2008 third-quarter Pittsburgh Auto Outlook report.

"The economy is causing everyone concern, and there is a downturn in auto sales across the board," Comstock said. "But we're looking forward to making it through the downturn and moving forward."

Plans are to continue to operate the Richland Nissan dealership at its location under a lease agreement until sometime next year when Scaife hopes to have a brand new complex built at a nearby site.

Comstock did not disclose the location because the purchase of the property isn't completed and plans still are being developed.

"We want to build a state-of-the-art facility. We think it will be exciting and will create a lot of customer traffic in that area," he said.

While Scaife expanded his business in Johnstown, in November he finished renovation of his existing dealership on Baum Boulevard. Comstock declined to disclose the cost of the renovation, which was completed Thanksgiving week, but said the investment was "substantial."

"We completely gutted and remodeled the showroom, and added drive-in service, he said. "It was a complete renovation."

Scaife, who is the son of Tribune-Review owner Richard M. Scaife, has owned the Baum Boulevard site since 2000 and operated the Porche franchise since 2002, said Comstock. Based there is his Spyker of Pittsburgh, a business that sells hand-built luxury vehicles.

Also located there is Scaife's Race Car Museum, a private collection of about 15 classic cars, including such makes as Porsche, Jaguar and Ferrari, that is not open to the public.

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Government officials worked to keep strip mill in Valley

Landing the $1.2 billion hot strip mill at ATI-Allegheny Ludlum's Brackenridge Works required the cooperation of state and local elected officials, who took key steps to set the stage for the project.

It happened with a sense of urgency as ATI considered putting the new mill in Kentucky, which was offering an incentive package that included cheap electricity, or on its property in Midland, Beaver County, which already had the state designation of a Keystone Opportunity Zone.

Either scenario posed the likelihood of Ludlum eventually leaving the Valley.

State legislators, including state Rep. Frank Dermody of Oakmont, state Rep. Jeff Pyle of Ford City, and state Sen. Sean Logan of Monroeville, went to work pushing legislation on two fronts. One was passing a bill that allowed businesses such as Ludlum, which uses huge amounts of electricity, to cut their long-term deal with power companies and thus lower costs.

A second bill allowed for expansion of the Keystone Opportunity Zones (KOZ) to include the ATI-Ludlum project. It will provide 10 years worth of tax abatement from the counties, municipalities and school districts on new construction related to economic development. In return, ATI-Ludlum will pledge to invest at least $750 million into new development and create or preserve 1,400 jobs, which happens to be the normal size of the work force at the Brackenridge Works.

Once the legislation was approved, it was the local officials' turn to step up and keep the relationship with Ludlum from going on the rocks.

Brackenridge Council, Harrison Township Commissioners and the Highlands School Board approved the tax abatements for the KOZ.

"It's a no-brainer," George Conroy, Harrison commissioners' chairman said at the time. "Basically, it means getting that or not getting anything because, if they don't build it here, I think they'll close Brackenridge."

Brackenridge Council was called to go beyond that.

The Brackenridge Works belongs to that borough in name only. The mill is located in Harrison, but on its western end it abuts Mile Lock Lane in Brackenridge. ATI officials told the borough it would need to expand the mill property's footprint to fit the new project. To do that, Brackenridge Council vacated Mile Lock Lane and will reconfigure the street to allow the mill to move over about 20 feet.

After some behind-the-scenes wrangling with company officials, borough council approved the action on Sept. 9.

On Sept. 17, ATI announced that the hot strip mill would be built at Brackenridge.

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The ATI-Allegheny Ludlum Corporation's relationship with the Alle-Kiski Valley, like many marriages, isn't a match made in heaven but has weathered stormy times to forge something of value.

Looking back through the stainless steel producer's history marked by high profits and low profits, strikes, acquisitions, environmental problems, corporate restructuring and challenges from subsidized foreign steel producers, Ludlum and the Valley have stayed true to each other for each other's benefit.

There is no better example of that than the September decision by Ludlum's parent company, Allegheny Technologies Inc., to invest between $1.2 billion and $1.5 billion in a new hot strip mill at its Brackenridge Works.

"I think it is a long-term thing," said Dennis Davin, Allegheny County's economic development director. "What it does for us in Allegheny County and Western Pennsylvania is solidify that manufacturing presence for the future.

"Companies don't do this kind of thing lightly. They don't do it unless it is the right business model. These guys were convinced that this is the right place to do it, the right work force and it really keeps 1,400 manufacturing jobs going in the Valley."

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Nursing-home ratings called inconsistent

Area nursing home owners say the federal government's new rating system is a good first step but, by itself, could mislead the public.

The Centers for Medicare and Medicaid Services on Thursday released its first-ever nursing home rating system, which gives each home a rating of from one to five stars. About 22 percent of the nation's nearly 16,000 nursing homes received one star, the lowest rating, and 12 percent received five stars, the top grade.

In an eight-county region of Western Pennsylvania, 133 nursing homes were rated.

Stars were given based on criteria such as staffing and how well the nursing homes fared in state inspections.

Owners of two or more nursing homes particularly were perplexed with the ratings. Some of their properties received a single star, while others were awarded five stars.

"We own three care communities and operate another two in the region, and all operate under the same standards of care," said Pat Kornick, spokeswoman for Presbyterian SeniorCare, based in Oakmont.

One of Presbyterian SeniorCare's facilities -- the Willows of Presbyterian SeniorCare in Oakmont -- received a single star. But Longwood at Oakmont in Verona garnered a five-star rating.

"We fully support quality-of-care measurements, but we also believe that quality of life is important -- and this star system doesn't address quality of life," Kornick said. "To us, the truest indication of how we're doing is the daily report card that we get from our residents and their families."

In Allegheny County, 25 percent -- or 16 or 64 nursing homes -- received single-star ratings, or much-below-average performance. Two of the poorest-performing facilities within the county are owned by the University of Pittsburgh Medical Center -- Canterbury Place in Lawrenceville and UPMC Heritage Place in Squirrel Hill.

"Some of the data in this rating system is both older and unclear, with questionable methodology that may cause fear in the public," said UPMC spokeswoman Gloria Kreps. "Our concern is that this may also cause unnecessary fear among our patients and their families."

For-profit and nonprofit facilities are included in the federal rating, as were government-owned nursing homes.

Allegheny County's four John J. Kane centers received varied ratings -- a five-star rating for the nursing home in Scott, three stars for the Kanes in Ross and Glen Hazel, and two stars for the McKeesport facility.

"It's too early to make a determination as to how the criteria plays into such a complex area," said Dennis Blondo, executive director of the Kane facilities. "It's very difficult to understand how you can place a rating on something as personal as where somebody lives. There is much more that goes into quality of life for a nursing-home resident.

"Having said that, we're very pleased at the five-star ranking for our Scott facility, and I feel all our centers deserve a five-star ranking," Blondo added.

In Westmoreland County, three of 22 nursing homes were awarded one star, while two received five stars. Of Washington County's 12 nursing homes, three were given a single star, while no facilities garnered a five-star rating. In Butler County, one of 13 nursing homes received a single-star rating, while three were given five stars.

Two of Fayette County's eight nursing homes earned one-star ratings, while one facility garnered a five-star grade. Two of Beaver County's seven facilities received single stars, while none garnered five stars. None of Indiana County's five homes or Greene County's two nursing facilities were given one or five stars.

Kerry Weems, acting administrator for the Centers for Medicare and Medicaid Services in Washington, D.C., said the agency's ratings were based on data already on its Web site and were aimed at making it easier for patients and families to choose a nursing home. He said it can be difficult for people to understand all the aspects of an inspection.

Lyn Manns, administrator at Sycamore Creek Nursing Center in Kennedy, said the data used in determining her facility's one-star rating were old. Mann said the nursing home's owner, Cleveland-based Sabre Healthcare Group, has been making improvements -- the latest of which is a new name. Effective Friday, the facility now is known as Caring Heights Community Care and Rehabilitation Center.

"We invite people to come out, take a look at what we're doing," said Manns.

Even five-star facilities are somewhat cautious in acknowledging the top-notch rating.

"We really weren't surprised at this. We know our staff and leadership team does a great job, and this ranking took notice of that," said Chris Newport, administrator at Covenant at South Hills in Mt. Lebanon, a five-star awardee.

"We're ecstatic we were awarded five stars, we work hard at what we do, but all nursing homes strive to do the best they can do," said Sister Bernice Fiedor, administrator at St. Anne Home in Greensburg.

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