Beaver County business incubator plans to grow

Doug Campbell has been so successful in attracting new startup companies at his "incubator" building in Chippewa Township that he needs a new, larger building.

That's why he is seeking proposals from developers on building StartingGate Proving Grounds, a $6 million, 75,000-square-foot building on an 11-acre site he owns in that Beaver County community. It would more than double the size of his 31,500-square-foot location. Bids are due by Nov. 7.

Demand for and the number of incubators -- locations that offer inexpensive space and startup services to fledgling companies -- continues to grow nationally and in the region.

Last week, the Airport Area Chamber of Commerce, partnering with DiCicco Development Inc., announced plans to build a one-story 50,000-square-foot business incubator in the Cherrington Commerce Park in Moon. Construction will begin in the spring.

Last summer, pair Networks announced plans to offer an incubator program that will provide space at its offices in Riverpark Commons, South Side, along with equipment and advice to teams who will work on their ideas for three months. It will set up a corporation for them and, at the end of the process, may help find venture capital. In return, pair Networks gets an ownership stake of usually no more than 10 percent, said spokesman Scott Hallam.

The National Business Incubator Association in Athens, Ohio, says there are 49 incubators in Pennsylvania and 1,100 nationally. About 31 percent are sponsored by economic development organizations, 21 percent are sponsored by governments, 20 percent are by academic institutions, and the rest are privately run.

"A true incubator operation includes offering startup or small companies not only space within a larger building, but mentoring options, such as helping the company develop a business plan, help in financing, providing legal services and other services -- all for a fee," said Robert Stevenson, president, Regional Industrial Development Corp. of Southwestern Pennsylvania.

For Dave Beier and his partner Darrell Martin of Instrument Calibration Solutions, tenants at StartingGate building, a larger facility will work just fine.

Using the facilities at the current Progress Center for Business building at 2750 Constitution Blvd. in Chippewa the two-ex Marines have found success in providing calibration services on materials used in a variety of industries.

"Most of our business is with tool and die companies, manufacturers and materials used in the aviation industry, such as for US Airways," Brier said.

Since StartingGate opened in 1994, at least 10 start-up companies have grown to the extent they needed to relocate into larger quarters elsewhere, Campbell said.

And as quickly as their space became available, a new company or individual moved in.

Paul Orlando started Nitor Technologies Inc. in Campbell's current building.

"I chose them because they help small businesses to develop. They helped Nitro resolve business problems and because of their connection with state officials and other resources, they proved valuable help for my business," he said.

Nitor has been at its location for the past six years where it developed and refined it services of helping detect leaks and vapors in underground pipelines, particularly those carrying gasoline, natural gas, ethanol and methane -- but not water.

"We have a system, called the Prowler, which when we place our system above the pipeline, it can cover up to five miles and within 10 feet locate any leaks or vapors," he said. The system works best when it is placed over lines being installed.

The largest employer is Amptech, with over 30 employees. The company is based in Michigan but has a unit that has been doing business at StartingGate since its opening in 1994, said Larry Alway, general manager. The firm is a contract manager for development of electronics for companies.

Alway said no decision has been made on whether to relocate into the new building, but noted that his firm occupies five of the 10 "bays" in the current building.

There are 11 companies in the building with 59 employees and Campbell estimates his new building, to be located at 2835 Darlington Road, near the Chippewa Township municipal building, will be able to house about 25.

"I expect we will have initial occupancy of about 55 to 65 percent when we open in November 2009, many of the tenants relocating from our existing building," he said.

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Strong profit lifts Mylan shares 17 percent

Shares of Mylan Inc., the biggest U.S. maker of generic drugs, rose 17 percent Thursday after profits beat expectations, sales tripled from acquisitions and the company reaffirmed its access to cash.

Mylan, which had lost half its value this year as investors fretted over debt from the purchase of Merck KGaA's generics business, leaped $1.19 to $8.17.

Mylan paid $6.7 billion, more than its own market value, for Merck KGaA's generics business last year to increase manufacturing capacity and reach fast-growing European markets. The unit contributed 40 percent of Mylan's revenue in the quarter, the Canonsburg company said today in a statement.

"The new Mylan has clearly demonstrated that it can execute and it has solidly done so for the past three quarters," said Corey Davis, an analyst at Natixis Bleichroeder in New York, in a note to clients yesterday. "The stock should react very positively."

Mylan has more than $1 billion in cash and untapped credit and won't need access to capital markets again "in the foreseeable future," Chief Financial Officer Ed Borkowski said in the statement. The company can pay its debt and compliance with loan covenants "will not be an issue for the foreseeable future," he said.

"Liquidity concerns are unfounded," said Ronny Gal, an analyst at Sanford Bernstein & Co. in New York, in a note to investors. He recommended buying the stock, with a price target of $12.

Third-quarter net income grew to $172 million, or 45 cents a share, from $150 million, or 60 cents, in the year-earlier period, the company said. Profit adjusted for one-time items beat by 12 cents the 11-cent average estimate of analysts surveyed by Bloomberg.

Revenue was $1.66 billion, including $687 million from the former Merck KGaA unit. The sale of rights to the blood pressure drug Bystolic added $455 million. Without acquisitions, sales volume was "consistent" with the year-earlier period, Mylan said.

The Merck KGaA deal made Mylan the world's third-biggest maker of copied medicines with the size and low costs it needs to survive in the competitive industry, said CEO Robert J. Coury on Oct. 9. Acquisitions have helped makers of generic drugs offset low prices as more copies of brand-name medicines become available.

Mylan increased its forecast for 2008 earnings to the range of 64 cents to 67 cents, excluding certain items, from 47 cents to 53 cents. That reflects an additional $75 million to $100 million the company expects to save as it digests the Merck KGaA business.

Mylan sold rights to Bystolic to Forest Laboratories Inc. in February and completed the transfer last month, the company said. Mylan retains royalty rights to the drug through 2010, it said.

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Boscov's sites get caretaker

The fate of closed Boscov's stores at Monroeville Mall and South Hills Village now is in the hands of a court-appointed receiver.

Gregory T. Malony, CEO of Jones Lang LaSalle Americas Inc., a Chicago-based commercial real estate company, was named caretaker of the two anchor store sites closed and left vacant in the wake of Boscov's bankruptcy filing on Aug. 8.

"We will be coming to the sites in the next few days to get a better feel for their conditions and what's left there," said Malony, whose appointment was approved Thursday by Allegheny Common Pleas Court Judge Paul F. Lutty Jr.

Malony said his role will include making sure utility and other necessary bills are paid and the properties kept in good condition.

After "assessing the condition of the property," he will recommend a course of action to the court, which could include hiring a real estate company to market the property to new tenants.

Court documents say CWCapital Asset Management LLC, of Washington D.C., asked the court to appoint a receiver after H&R Real Estate Investment Trust of Toronto defaulted on a $19.8 million mortgage.

H&R owned the properties and leased them to Boscov's, the documents say. H&R won't make any future payments to CWCapital and will continue to be indefinitely in default, the documents say. H&R officials cound not be reached for comment.

The Monroeville and Upper St. Clair stores, both former Kaufmann's, reopened in 2006 as Boscov's.

Both stores were closed after liquidation sales conducted by restructuring firm Gordon Brothers Group and Hilco Merchant Resources LLC. The South Hills Village Boscov's closed on Sept. 28, and the Monroeville location was shuttered on Oct. 13, according to spokesmen for the two malls.

Despite weakening economic conditions in the U.S., there is reason to believe both the Monroeville and South Hills locations won't stay vacant for long, said Doug German, a retail real estate broker with Hanna Commercial.

"I think this will create opportunity for other retailers," said German. "I am sure there would be a number of companies who aren't yet in this market who would look at the locations," he said.

One potential department store replacement could be Nordstrom, the upscale Seattle-based retailer that just opened a new store in Ross Park Mall in Ross, German theorized.

"It's not unusual for retailers to seek sites for more than one store in a new market, and Nordstrom's has two stores in Indianapolis, which is a smaller market than Pittsburgh," he said.

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Financiers to reap billions in bonuses

Five straight quarters of losses and a 70 percent slide in its stock this year haven't stopped Merrill Lynch & Co. from allocating about $6.7 billion to pay bonuses.

Goldman Sachs Group Inc. and Morgan Stanley, still on track for profitable years, set aside a combined $13 billion for bonuses during the first three quarters of the year, 28 percent less than in the same period in 2007. Even at Lehman Brothers Holdings Inc., which declared the biggest bankruptcy in U.S. history last month, some employees will get the same bonus they received a year ago.

The worst financial crisis since the Great Depression, a $700 billion taxpayer bailout, public outcry over excessive pay and the demise of three of the biggest securities firms won't deter Wall Street from offering year-end rewards to employees on top of their salaries, compensation experts say.

"Critical producers and critical managers will be retained with the same bonus they had last year," said Robert Sloan, head of U.S. financial-services recruiting at Egon Zehnder International, a New York-based executive-search firm. "The others will see sharp cuts."

The figures are based on estimates that about 60 percent of the companies' reported expense for compensation and benefits will be paid in year-end bonuses, as occurred in past years. Average bonuses aren't an indication of how much any employee will receive, since payments range widely from assistants to top traders. Bonuses aren't paid until the end of the fiscal year, so firms could choose to reallocate the funds.

"We are in the process of determining appropriate levels of year-end compensation, and no decisions have been made," said Mark Lake, a spokesman at Morgan Stanley. Ed Canaday, a spokesman for Goldman in New York, declined to comment.

Merrill spokeswoman Jessica Oppenheim said the firm's accrued bonuses aren't down as much as those at Goldman and Morgan Stanley because the firm reduced expenses last year, when it also had a loss. Compensation costs are down 18 percent this year, compared with the first nine months of 2006, Merrill's last profitable year.

Goldman, the biggest and most profitable Wall Street firm until it opted to become a bank holding company last month, has set aside about $6.85 billion for bonuses, or an average of $210,300 for each employee, down 32 percent from $339,400 a year ago. Morgan Stanley, the second-biggest securities firm until it also converted to a bank, has $6.44 billion for bonuses, or $138,700 per person, down 20 percent from last year. Both firms accrue a fixed percentage of their revenue for compensation, so the decline in bonus pools matches the drop in revenue.

The money Merrill has set aside for bonuses equates to an average $110,000 for each of its 60,900 people. That's up from $108,000 a year ago because more than 3,000 jobs have been cut.

A worldwide economic slowdown, caused in part by the financial industry's losses, and a Treasury plan to spend $250 billion of taxpayer money buying stakes in banks, have made pay a political issue this year.

"There should be a moratorium on bonuses," Barney Frank, chairman of the House Financial Services Committee, told reporters last week. "If nobody gave them, there wouldn't be a competitive aspect."

Wall Street workers flee to small-town security

LeNature's trustee files first round of lawsuits

The trustee overseeing the dismantling of former LeNature's Inc. in Latrobe filed two dozen lawsuits in U.S. Bankruptcy Court to recover more than $4 million in payments the company made while it was insolvent.

The lawsuits are the first in a spate of legal actions expected this week against individuals, accounting firms and financial institutions alleged to be involved in the 2006 collapse of the bottling and beverage company whose former executives are the subject of a federal criminal investigation.

Trustee Marc Kirschner has until Friday -- when the two-year statute of limitations expires -- to file legal actions to recover money and other assets.

LeNature's Inc. was forced into bankruptcy on Nov. 1, 2006. The bankruptcy ended earlier this year with the appointment of Kirschner in July. He was authorized to investigate allegations of fraud and mismanagement and to pursue claims to recover money for creditors who are owed hundreds of millions of dollars.

In his lawsuits, he alleges that LeNature's officials made payments to some companies while teetering on the brink of bankruptcy. The actions seek to void these "preferential transfers" and recover the money so it can be distributed to creditors.

Among the largest recoveries sought is more than $1.1 million paid to Owens-Illinois Inc., which makes glass bottles and containers. The other companies sued include equipment makers, packaging companies and a temporary employment company, according to the filings.

The financial collapse of LeNature's triggered a federal grand jury investigation by the U.S. Attorney in Pittsburgh, U.S. postal inspectors and criminal agents from the IRS into money laundering, bank, wire and mail fraud, according to court records.

The grand jury has been hearing testimony, and one former employee has pleaded guilty and is cooperating with prosecutors.

LeNature's executives borrowed millions of dollars based on allegedly fraudulent financial records that made the company appear to be thriving and profitable. The alleged fraud unraveled in mid-2006 when investors began to question the management of CEO Gregory Podlucky, and the company was the subject of lawsuits by investors.

In a related matter, a lawsuit filed in Los Angeles in May against Wachovia Capital Markets and the accounting firms of Ernst & Young and BDO Seidman was transferred earlier this month to U.S. District Court in Pittsburgh.

A group of 75 plaintiffs, led by CalPERS -- the California Public Employees Retirement System -- are alleging the firms misled investors and auditors about missing and bogus financial records. Other plaintiffs include union pension and retirement funds.

Wall Street’s Perfect Storm

Recession 'won't be pleasant,' but hope abounds

Ashley Seitz faces the possibility of getting her MBA from Carnegie Mellon University's Tepper School of Business and walking straight into a recession.

The corporate finance major says it could be worse.

"At least I'm not going into banking," said Seitz, 25, of Shadyside.

Seitz, who will graduate in the spring, said she was encouraged Wednesday night by a panel of economists who explained the crisis on Wall Street to about 200 Tepper School alumni and students at The Rivers Club, Downtown.

They used "plain English," she said, stripping at least some of the mystery and fear surrounding the deepening recession.

"This is not like the Great Depression," said Allan Meltzer, the Allan H. Meltzer University Professor of Political Economy and Public Policy at Carnegie Mellon University.

"It's probably going to be a garden-variety recession, with unemployment going up to around 8 percent," which would be about 2 percentage points higher than it is now, Meltzer said.

"It won't be nice. It won't be pleasant. And it probably will go on for awhile."

Stuart G. Hoffman, senior vice president and chief economist at PNC Financial Services, predicted a recovery will begin in six to nine months.

One major reason he sees a recovery coming is the drop in gas prices.

"If you spend a year at $3 a gallon rather than $4 a gallon, American motorists would spend $100 billion less per year filling up their cars," said Hoffman. Noting that the average gallon of gas costs less than $3, he said, "that will put some purchasing power back in the economy."

Pittsburgh, which missed the housing and economic boom experienced in places like Southern California, likely won't be hurt as much by the bust that's going to continue in the meantime, Hoffman said.

"The tortoise has finally pulled ahead of the hare," he said.

Signs of the downturn have begun creeping into the Tepper School, said the school's dean, Ken Dunn. Alumni have increasingly turned to the school's job network, he said.

"I think fundraising is going to be down for awhile. We'll live through that," Dunn said. "It's going to be a tough job market for our students."

Many students are steering their career paths away from the stock trading floor, where as many as one-quarter of Tepper's graduates used to go, Dunn said.

"The glamour of Wall Street is gone," he said.

Andy Vicen, 23, of Shadyside, who just began studies for a master's degree in computational finance at Tepper, says the stock exchange retains some of its allure despite the crisis.

"I think people still gravitate toward it," said Vicen, whose classes will teach him the inner workings of the complex financial instruments that, in the last few months, have confounded experienced traders and knocked the wind out of some of the world's biggest banks. "People still believe if you're good enough, you can do well."

Robert Ostrowski, senior vice president and senior portfolio manager at Federated Investors, said the crisis will be transformative -- for good or ill.

"It's going to change Wall Street as we know it. There are going to be fewer players" as firms shut their doors, he said.

The $700 billion bailout passed by Congress this month, and the Federal Reserve's consecutive interest rate cuts -- including the half-point cut yesterday, which left the federal funds rate at a four-year low of 1 percent -- are starting to have an effect, Ostrowski said.

"The good news is, I think we're beginning to see some signs of this clogged credit market beginning to be unclogged," he said.

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TSA to relax rules on liquids

The federal Transportation Security Administration will ease restrictions on liquid carry-on items at major U.S. airports next year and lift them altogether by 2010, according to the agency's top executive.

Writing at www.tsa.gov/blog, TSA Administrator Kip Hawley said that new advanced technology, or "AT," X-ray equipment should be in major airports by next fall. That will allow size restrictions on carry-on liquids to be lifted, although passengers will still have to place them in a separate bin.

By late 2010, travelers will be able to keep non-hazardous fluids in any size container enclosed in their carry-on bags while passing through security.

"When it comes to liquids, everybody involved with checkpoint operations -- passengers, airlines, airports and TSA employees -- agrees there has to be a better way," Hawley wrote.

TSA in August 2006 imposed restrictions on fluids in airline carry-on luggage after authorities thwarted a plot to bomb trans-Atlantic passenger fights with liquid explosives. Since then U.S. passengers have been limited to 3.4-ounce or smaller vials of liquids that can fit into a single, one-quart plastic Ziploc bag.

TSA spokeswoman Ann Davis said the new AT equipment was being deployed first to the nation's busiest airports. She did not know when it would come to Pittsburgh International Airport, which last year ranked 45th in terms of passenger traffic.

JoAnn Jenny, spokeswoman for Pittsburgh International Airport, said local passengers would welcome the change.

"It would definitely assist those who chose not to check their bags, especially with the fees for checked baggage," Jenny said. "It would give people more options when packing, and allow them to save some money."

Area business frees time for employees to vote

Joshua Noweck plans to leave work a few minutes early Tuesday to vote near his home in Pitcairn -- then collect four hours of paid time off.

It's all fine with his employer, circuit board maker Compunetics. President and founder Giorgio Coraluppi offered the voting incentive to his workers during the last presidential election and in 2006, and will do so again this year.

While it appears few area companies provide time off for visits to the polls, "I thought it was important since Election Day is on a working day," said Coraluppi, a native of Milan, Italy, who became a naturalized American citizen in 1969. "I did recognize that for some working in the company, it was not very convenient."

The 400 area employees of Monroeville-based Compunetics and two related firms -- Compunetix, which makes teleconferencing equipment, and Chorus Call, which sells teleconferencing and meeting services -- must show voter ticket stubs to qualify. The time off can be used on Election Day, or later.

Pennsylvania isn't one of the 30 states with laws that address time off to vote. In 20 of those states, employees must be paid for time spent voting, said the Business Owner's Toolkit Web site for small businesses.

Mark Wolosik, elections division manager for Allegheny County, said he knows of no other area employers with policies like Coraluppi's. A few large employers said they encourage their staffs to vote, but provide no time or other perks.

Because the polls operate from 7 a.m. to 8 p.m., there's "an opportunity to do this before or after work, depending on the time of their shifts or business hours," U.S. Steel Corp. spokesman John Armstrong said.

Coraluppi, who started his three companies in 1968, said more companies should follow Compunetics' policy, especially because Pennsylvania doesn't offer the opportunity to vote early.

"So this is a good way to remove barriers against them exercising that right," he said. Two years ago, 77 percent of his workers voted and got the four hours off.

Voters indeed may spend more time in line this year. Wolosik is projecting a 75 percent voter turnout Tuesday in Allegheny County, up from the 69.8 percent who voted in the 2004 presidential election.

Barack Obama's campaign asked supporters this week to "take the day off" to vote, in part to prevent long lines at busy times. But PNC Financial Services Chief Economist Stuart Hoffman said if widely followed, that could disrupt the economy here and abroad.

"There are too many professions you just can't walk away from," he said, adding he hopes the suggestion by the Democratic presidential nominee's staff wasn't meant literally.

Noweck is an automated assembly operator at Compunetics who programs machinery to mount parts on circuit boards. Because he lives close to the plant he doesn't need four hours off to vote, but he appreciates the time off.

"I have always voted, no matter what," he said.

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O'Neil recommends mandatory down payment

LEXINGTON, Ky. -- President Bush's first treasury secretary says Congress should scrap plans for a new economic stimulus package and instead require that no future home mortgage be awarded without a 20 percent down payment.

Paul O'Neill said Tuesday it doesn't surprise him that neither presidential candidate has endorsed his position, but he insisted it is the best way to quickly improve the nation's economic footing.

"Unfortunately we've gotten to a point where people that want to run for president don't think they can tell the truth and still get elected," O'Neill told reporters before speaking at a conference. "I'm hopeful whichever person gets elected, they'll be better than what they've said. An awful lot of presidential campaigns now are pandering to the lowest common denominator. They promise people everything."

O'Neill, who hasn't endorsed a candidate in the race and says he wouldn't be interested in serving in either administration, made a personal pitch last month to Democratic nominee Barack Obama concerning his idea to mandate down payments. He declined to characterize Obama's response.

O'Neill, a former CEO of aluminum giant Alcoa Inc., served as treasury secretary for the first two years of Bush's presidency, including leading the financial response to the Sept. 11, 2001, terrorist attacks.

While he praised aspects of the recent $700 billion financial bailout, which he says has allowed world markets to take a "deep breath," O'Neill said there should have been government action to combat faulty home loans far earlier. In 2006, he says, 30 percent of mortgages had no down payment and a larger number of those buyers defaulted on their first payment.

"That was a strong enough signal we should have shut down this ... flagrant abuse of the principles of home finance," O'Neill said. "It was bound to crater. It was absolutely bound to come down around our ears, which it has."

If every mortgage was backed by a 20 percent down payment, O'Neill said, the financial system would be protected long-term, even if some individual investments or businesses failed.

"If you can't afford a home mortgage, we shouldn't give you one," he said.

O'Neill said he is disappointed that the political response from both parties includes wide support for another economic stimulus package rather than curbing additional bad mortgages. He estimates that only 20 percent of the money pumped into the last stimulus package actually stimulated the economy, with the rest being used to pay off bills or going into savings accounts.

Should there be another one, he fears much of it will be bogged down by pet projects from lawmakers.

"In a way it's a dangerous time because every politician can imagine some additional money that they could put into a package that they believe will help them get re-elected," O'Neill said. "It's like a feeding frenzy when it looks like they're going to have more stimulus programs. It's almost as though there's no connection and understanding that at the end of the day, we the American people are going to have to pay for this."

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Gadgets designed at CMU work off gestures, brain signals

Gestris is a cool game, but don't expect to see it on store shelves next to Nintendo Wii systems anytime soon.

Players use body gestures -- but no controller or special clothing -- to move pieces on a big screen in the Tetris-style game that researchers at the Intel Corp.'s Pittsburgh Research Lab developed.

"It's a little showcase," Intel's Padmananabhan "Babu" Pillai said Tuesday as the lab at Carnegie Mellon University's Collaborative Innovation Center showed off its latest futuristic work at an open house.

"In the future, we would like to enable much richer interfaces in the home. Imagine that you could point to the TV and say, 'Volume up,' " he said.

Computers and robots that read humans' wants and needs more easily than ever before -- making the mouse, game controller and other gadgets relics of the past -- were a common theme among the dozens of projects demonstrated.

Intel opened its local center eight years ago, and 23 researchers now collaborate with faculty from universities including CMU and the University of Pittsburgh, medical experts from the University of Pittsburgh Medical Center -- plus 20 to 25 students at any given time.

"Mostly, Intel research is engaged in trying to understand where computing is going. And where it is going is a combined enterprise of hardware and software and, ultimately, human beings," said Andrew A. Chien, vice president and director of research at the Santa Clara, Calif.-based company.

Intel, the world's biggest maker of microprocessors -- the brain in every computer -- has 11 research centers near universities.

Machines, in other words, must interact with people in more natural ways, reading their gestures and even brain signals. "That's where we see the future as being," said Rahul Sukthankar, senior principal research scientist at the Pittsburgh lab.

"It's no longer just spreadsheets and word processers. It's really interacting with humans in their environment."

Beyond gesture or voice recognition, computers might respond to facial expressions or realize when a person is thinking about airplanes, for example, just by reading brain activity patterns consistent with that topic.

"Long range, you might be able to think about an object and do a Web search, for example" without touching a keyboard, researcher Dean Pomerleau said.

Several projects center on health care. One tracks the growth of stem cells, while another compares images of a patient's suspicious-looking mole to thousands of other pictures in a large database to help detect skin cancer. "Doctors told us a lot of times, they are not quite sure about what they are seeing," researcher Mei Chen said.

Another, necklace-like device could help dieters. Most people eat more than they realize, said CMU computer scientist Jie Yang, who worked on the project.

But a tiny computer could recognize food items on a plate, compile calorie and fat data for every meal and factor in the wearer's activity for the day. Standard, fast-food fare from major restaurant chains is being used to test the system, he said.

Intel also is dabbling in home computer networks that transfer data faster, using the combined wireless capabilities of the devices in a whole neighborhood. Users could borrow capacity from neighbors when they need it to send large files.

"One of the things I cannot do very effectively today is show my baby to my mother in Greece," researcher Dina Papagiannaki said, adding she and partner Michael Kaminsky have talked with Verizon Communications Corp. and other Internet service providers and were surprised to find, "They liked this idea."

Intel's Jason Campbell described projects that could use millions of tiny sphere-like computers to build objects that change their shape upon command.

Rather than drawing an object on a screen, "it appears out of a vat on your desk," he said. And everyday objects such as a cell phone could change form to provide the user with a keyboard, or fit around his ear.

Lily Mummert keeps honeybees at her home in North Strabane in Washington County, and in her role with Intel, she's developing a video system that measures the activity of bee colonies without impeding their movement as current technologies that use infrared sensors might.

Given worldwide declines in bee populations, "With this, maybe we could catch a colony collapsing early enough to do something about it," she said.

U.S. Steel tempers optimism after record quarterly profit

U.S. Steel Corp. rode strong prices and demand to post the biggest quarterly profit in its 107-year history -- $919 million -- but executives warned Tuesday the world economic downturn will hurt the steelmaker in the fourth quarter.

"We expect a decline in fourth-quarter results, mainly due to softening demand and prices for flat-rolled products in North America and Europe, and we expect to continue to operate at reduced production levels," U.S. Steel CEO John P. Surma told analysts.

U.S. Steel's third-quarter net income, which calculates to $7.79 a share, increased sharply from the same three-month period in 2007, when it earned $269 million, or $2.27 a share.

The third-quarter profit outpaced second-quarter earnings of $668 million, or $5.65 a share.

Sales jumped to $7.31 billion, compared with $4.35 billion a year ago, and were higher than second-quarter sales of $6.74 billion.

The stock market reacted to U.S. Steel's earnings by boosting the share price by 14.2 percent to $35.20 a share, up $4.38.

U.S. Steel's performance was "tremendous," said steel analyst Charles Bradford of Bradford/Soleil Research of New York. But he issued a warning to expect lower earnings in the fourth quarter.

The price of spot steel -- product sold outside a long-term contract -- is down more than $100 a ton from the third quarter, Bradford said. He cut his fourth-quarter earnings estimate to $4.80 a share.

"The trend is not good," Bradford said. "They're going to get hit hard in Europe in the fourth quarter," and the company won't reach the operating profit of $835 million it generated from its flat-rolled steel operations in the third quarter, he said.

U.S. Steel has been anticipating a slower fourth quarter because of the normal seasonal downturns but "nothing as abrupt as has transpired," Surma said. The economic crisis has resulted in a lowering of inventory levels, and that may continue until the steel stockpiles fall another one million tons, he said.

The company shipped 6.43 million tons of steel products in the third quarter, up from 5.55 million tons a year ago.

It sold flat-rolled steel at an average price of $900 a ton for the quarter, compared to $648 a ton a year ago, and prices for tubular products for the oil and gas industry almost doubled --- to an average of $2,390 a ton compared to $1,292 a ton in the third quarter of 2007.

U.S. Steel's record earnings were announced one week after Allegheny Technologies Inc., a Pittsburgh-based specialty metals company, lowered its earnings guidance for the fourth quarter and the full year. U.S. Steel did not offer specific guidance for the fourth quarter.

Surma would not disclose operating rates for the company's mills at the end of the quarter but said they were well below the average operating rates for the entire quarter, when it operated at 86.5 percent of capacity. He said current operating rates are well below that level.

Shipments of flat-rolled steel are down because of the slowdown in the automotive industry and softening orders from steel service centers, Surma said. But orders of tubular products have been good.

Lower fuel prices have not translated into a drop in drilling activity, although Surma did not rule that out.

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2 National City shareholders file lawsuits over sale

Days after getting merger news about National City Corp., shareholders sued the bank in Pittsburgh and Delaware courts over its $5.6 billion deal with PNC Financial Services Group.

A lawsuit filed in federal court in Pittsburgh by shareholder Martin Sheerer on Monday accuses the Cleveland bank of fraud by misrepresenting its condition in the months prior to the deal with PNC last Friday. National City statements and omissions "induced" Sheerer and "thousands of unsuspecting shareholders" to buy or hold their stock, then were hurt by the stock's continued decline.

The lawsuit seeks damages it wants the court to determine at trial. It also seeks designation as a class action of shareholders who, such as Sheerer, bought the stock since May 1.

Sheerer claims National City misstated the adequacy of its loan-loss reserves, and failed to disclose the bank's exclusion from a government program to bolster capital and its key regulator's order that National City find a buyer instead.

A National City spokesman could not be reached for comment.

PNC will pay National City holders $2.23 a share in a deal expected to close by yearend. PNC is being assisted by selling $7.7 billion in preferred shares to the U.S. Treasury as part of the agency's bank recapitalization plan.

Another shareholder sued National City in federal court in Wilmington, Del., alleging it breached its fiduciary duty by failing to obtain a better deal. PNC's offer is "unfair and grossly inadequate," said the lawsuit. It also accuses CEO Peter Raskind of "self-dealing," and objects to golden parachutes totaling over $41 million for the banks top three executives.

PNC spokesman Brian Goerke declined to comment.

Meantime, U.S. Rep Steven LaTourette, a Republican in suburban Cleveland, asked the Treasury Department and a House committee to investigate the deal. He said John Dugan, comptroller of the currency, steered the $7.7 billion to PNC, noting that Dugan earlier served at a Washington law firm which represented PNC in 2005.

Comptroller spokesman Robert Garrson said Dugan also once represented National City. "I don''t know why anybody would suggest he'd favor one over the other," Garrson said.

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Plant to process natural gas

Five years and $700 million after Range Resources Corp. determined the Appalachian Basin, specifically Southwest Pennsylvania, could be the country's next natural gas production hot spot, "cool" processing of the fuel from local wells has begun.

Fort Worth, Texas-based Range has partnered with MarkWest Energy Partners LP of Denver to open a refrigerated processing plant in Chartiers, Washington County. Range is providing natural gas from some 30 drill sites located in the Marcellus Shale formation.

The plant can handle up to 30 million cubic feet per day of what's called "wet" natural gas. Wet gas includes a number of other gases that must be separated prior to shipping to homes through nearby interstate natural gas pipelines.

Both companies are trying to capitalize on what some natural gas industry experts believe could be the country's largest onshore natural gas field, Appalachia's Marcellus Shale formation.

Geologists have known about the Marcellus for years, but there never was an economical way to extract it commercially. Recent advances in drilling, specifically horizontal drilling, and well completion techniques being used in other shale areas, such as the highly successful Barnett Shale formation in Texas, allow explorers to crack the shale and extract what's believed to be huge potential.

"This plant enables us to really ramp up production," said Jeff Ventura, a Penn Hills native and Range's president and chief operating officer, Monday during a tour of the company's Marcellus Shale operation at the Southpointe office park in Cecil, Washington County.

MarkWest is spending $200 million to building this and two other plants off Route 519, three miles north of Houston to handle Range's production.

The plants will be dedicated to Range's natural gas production. Ventura said the company expects to be producing by the end of next year up to 100 million cubic feet of natural gas daily. One million cubic feet of natural gas is enough fuel to handle the needs of an average Pittsburgh-area home for more than 10 years.

"This plant makes the Marcellus Shale play real," said MarkWest CEO Frank Semple.

Range and MarkWest are among a number of local, regional and national companies probing the Marcellus formation. Marcellus Shale is a layer of shales typically 5,000 to 6,000 feet below the surface, running from the southern portion of New York, through much of Pennsylvania, into eastern Ohio and through most of West Virginia.

Estimates vary, but some surveys place recoverable natural gas from the entire Marcellus region in the 200 trillion cubic feet to 500 trillion cubic feet range, enough gas to handle all of America's natural gas needs for more than 10 years.

Range alone has control of 850,000 acres of land primarily in Pennsylvania.

In addition to processing Range Resources' natural gas, MarkWest looks forward to selling natural gas liquid products once the other facilities are completed. The company also is signing deals with other companies to offers its services elsewhere in Appalachia.

"Long-term, we're looking at processing 150,000 gallons per day of propane, and 50,000 to 60,000 gallons per day of other liquids, which we will move by truck, pipeline and eventually by rail," said Randy Nickerson, MarkWest's chief commercial officer.

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Combined bank may use less office space

PNC Financial Services Group's $5.6 billion acquisition of National City Corp. could result in the combined bank occupying less office space than it now does in the Pittsburgh market, real estate experts said Monday.

But the pendulum could swing the opposite way if PNC consolidates in Pittsburgh any of National City's operations from its base in Cleveland.

And it may take time to find new uses for bank branches that PNC closes, experts believe.

National City leases 162,000 square feet at the 20-story National City Center on Stanwix Street, Downtown, and an additional 275,000 square feet at Allegheny Center on the North Side.

But it recently put more than 50,000 square feet at the Downtown site and 100,000-square-feet at Allegheny Center on the market for sublease, said Jeremy Kronman, commercial broker with CB Richard Ellis/Pittsburgh.

"National City already has done some downsizing, so I'm not sure anything really will change with the merger," said Kronman, who is in charge of leasing at National City Center.

Reed Smith LP, one of the city's largest law firms, is said to be interested in subleasing all of the available National City Center space.

According to a report by Grubb & Ellis Co., Pittsburgh's office vacancy rate declined to 15.5 percent as of Sept. 30 from 16 percent at the end of June.

The Pittsburgh office market could benefit further if PNC consolidates office functions here, Kronman said. "I think moving operations of another bank to Pittsburgh could be very positive, although maybe not so for Cleveland," he said.

Many of National City's retail branches are in prime locations, said Ned Doran, of GVA Oxford, the commercial leasing arm of Oxford Development Co. He worked with National City in recent years to find sites, including offices in Shadyside and Squirrel Hill.

National City operates 158 retail branches in Allegheny, Armstrong, Beaver, Butler, Fayette, Washington and Westmoreland counties, and PNC has 96 offices.

Alternative uses could include professional offices, medical facilities and fast food or small retail stores, Doran said.

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Region bucks trend on jobs

Despite economic woes nationally, the Pittsburgh region showed signs of growth in September, with 7,000 more jobs compared with a year ago and a drop in the unemployment rate, the state said today.

"That means Pittsburgh is continuing to buck the national trend, since most major regions lost jobs in September. Many regions have lost literally tens of thousands of jobs in the past year, both in the Rust Belt and Sun Belt," said Harold D. Miller, president of Future Strategies LLC, a Downtown-based consulting firm.

The number of nonfarm jobs in the seven-county Pittsburgh region rose to 1,159,400 last month, according to the state Department of Labor and Industry. On a month-to-month basis, the region's jobs count in September increased by 10,400 from August.

"The real significant number is the 7,000-job increase from September 2007 to September 2008," Miller said, because the single-month increase is due to back-to-school employment.

The jobs data, however, was collected before the nation's economic crisis intensified, so figures may look different in October and November, Miller said.

The region's unemployment rate in September was 5.4 percent, a two-tenths of a percentage point decline from 5.6 percent in August. All seven counties in the region -- Allegheny, Armstrong, Beaver, Butler, Fayette, Washington and Westmoreland -- experienced a drop in the unemployment rate in September, the state said. In September, Pennsylvania's jobless rate was 5.7 percent and the nation's was 6.1 percent.

A separate survey found that employment among those living in the region rose by 6,000 to 1.157 million in September from August, and by 10,000 compared to year ago. The increase in residential employment could be an indication people from other regions are coming to the Pittsburgh area in search of work, Miller said.

The jump in September's job count can be traced to a rise in jobs at colleges and universities, which rose to 38,200 from 32,500 in August, and local government jobs, which include school districts, increased by 11,000 to 55,000 in September from August. Transportation and warehousing, which includes school bus drivers, jumped by 3,300 to 44,600 in September from August.

Without the seasonal bump of employment in schools and universities, the region's jobs count "would be relatively flat, or a small decrease," said Frank Gamrat, senior research associate at the Allegheny Institute for Public Policy, a think tank in Castle Shannon.

The monthly jobs increase shows how important education is to the region's economy, Gamrat said. From September 2000 to 2008, the region's goods-producing sector lost about 33,000 jobs, while the health care and education sectors gained a similar amount, he said.

"If it wasn't for education and health care, this area would be in trouble, We've turned ourselves into a medical center. It kind of helps to buffer the negative effects of the recession," Gamrat added.

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PNC must integrate National City, sell branches, realign work force

When PNC Financial Services Group combines with National City Corp. next year, the Pittsburgh area will still have about 9,000 jobs between them, analysts said Monday. They just won't all be the same jobs and the same people.

Many of their branches will be sold to other banks, which would likely hire National City or PNC workers, said the analysts. Other National City workers might transfer to Pittsburgh to process the transactions that will come with the acquisition.

PNC announced the buy of National City, the nation's eighth-largest bank, on Friday for about $5.6 billion in a government-assisted merger. Cleveland-based National City has about $98 billion in deposits, compared with $82 billion of PNC.

"Pittsburgh won't lose jobs in this," said PNC Chief Executive James Rohr after the deal was announced.

Rohr said PNC will not retain all of National City's 158 branches in the seven-county Pittsburgh market. But he declined to say how many would be added to PNC's 96 branches here.

"We will consolidate some branches and sell a few," said Rohr. "We'll have some time to do that."

PNC spokesman Fred Solomon said yesterday that the bank will spend the next 23 months evaluating National City branches and other assets, and then integrating the two organizations.

PNC can finance the deal from the $7.7 billion it's getting for selling preferred stock to the U.S. Treasury. It is part of the government's $250 billion program to stabilize the nation's banking system, including support for acquiring troubled banks such as National City.

The future is less clear for National City's non-branch workers. About 250 of the bank's area employees work at the regional headquarters on Stanwix Street, Downtown. Many others -- the bank won't say how many -- work at Allegheny Center on the North Side in mortgage, human resources, security and other bank operations.

PNC would not say whether, or to what degree, PNC might ramp up its mortgage business by adding National City's home-mortgage business. Currently, PNC only writes such loans for the customers in its branches.

Analysts believe PNC will need to sell branches because it would control too high a concentration of deposits -- nearly 53 percent -- in the seven-county region. According to the Federal Deposit Insurance Corp., PNC now has 37 percent, and National City, ranked second, holds 15.5 percent.

"That's a huge concentration to have that much pricing power," said Derek Ferber, a research analyst with SNL Securities, Charlottesville, Va. "To acquire the No. 2 bank and push it to almost 53 percent is going to set off an alarm to regulators that PNC is going to have to divest some deposits."

Federal Reserve rules say 35 percent is generally the limit for deposit concentration.

Several banks are interested in branches PNC will put on the block, said Robert Wagner, senior vice president of securities firm Ferris Baker Watts' office in Mt. Lebanon. He singled out Fifth Third Bank and First Commonwealth Bank, among others.

"That would be one of the alternatives we would consider for enhancing our presence in this market," said Fifth Third Bank's Western Pennsylvania market President James "Jay" Ferguson III. Based in Cincinnati, Fifth Third has 13 branches in this region.

"Our ideal structure would be 45 to 50 branch locations here over the next four years," said Ferguson.

First Commonwealth, based in Indiana, Pa., in fact, filed a shelf registration yesterday to sell $100 million in common stock. Proceeds will be used, in part, "to support the continued growth" of the bank, it said. A bank spokesperson could not comment, citing securities regulations.

Huntington Bancshares Inc. of Columbus, could buy branches from PNC. Huntington, which has nearly 30 branches in Allegheny, Washington and Westmoreland counties, "is always looking for ways to increase customer convenience," including addition of branches, said Vincent Locher, president of Huntington Bank's Pittsburgh market.

Other analysts wonder if bank regulators will enforce antitrust guidelines very much, given today's financial crisis, and instead allow higher deposit concentrations than in the past.

"I think some of the old guidelines of antitrust and market concentration have kind of taken a back burner," said Frank Barkocy, research director of Mendon Capital Advisors, N.Y.

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Wall Street workers flee to small-town security

ALBANY, N.Y. -- Bankers and brokers looking to escape the financial meltdown are scrambling to relocate their families, possessions and rarified talent far from Wall Street to places such as Florida, Chicago, Milwaukee, Virginia and Asia.

Travis Lacey left investment bank Jeffries & Co. and Wall Street behind in September to work for Baird in Chicago. He also left behind the nagging sense of worry that had plagued him since his company had started announcing layoffs earlier in the year.

"Anyone in that environment, you never know what's going to happen," Lacey said. "There are a lot of good bankers that unfortunately are at the wrong place at the wrong time, especially in New York."

Corporate headhunters say Wall Street's malaise will lead to a permanent talent loss for New York. It could help small boutique firms become bigger players with employees they would never have been able to lure from the city long-regarded as the world's financial capital.

Former Wall Streeters also tend to bring clients with larger net worth -- another potential long-term blow to firms trying to recover from the meltdown -- so boutiques and middle market firms stand to reap the profits. In turn they deliver something that's elusive on Wall Street: stability. Jobs in the financial sector can pay anywhere from $100,000 to well into the seven-figure range depending on location, experience and the size of a firm, said Kimberly Bishop, vice chairman of Slayton Search partners, a Chicago-based headhunting firm.

"There's some talent available to some companies that wasn't available before," she said.

Wall Street workers who are thinking about relocating need to be flexible about income, Bishop said. Some junior Wall Street workers may be able to get more senior positions in smaller firms, getting comparable or better pay. But many more will make less while benefiting from a cheaper cost of living outside of New York City.

New York is the top paying state for personal financial advisers, with an average salary of $131,660, according to the U.S. Bureau of Labor statistics. Colorado followed, paying an average of $119,590, then Massachusetts, with an average pay of $116,170, according to the 2007 occupational employment survey.

Idaho was the lowest paying state for financial advisers, paying an average of $50,980. West Virginia, North Dakota, Alaska, Nebraska and Kentucky all follow, paying an average below $60,000 a year for the same job.

Middle market and boutique firms are also appealing because they offer increased job responsibility and freedom, said Peter Kies, a managing director at Robert W. Baird, a Milwaukee-based middle market firm.

"As every round of cuts occurred, we got an increasing flow of resumes," Kies said. "You can have a Wall Street kind of experience and live in Richmond, Milwaukee or Chicago."

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Fed eyes another rate cut

WASHINGTON -- As the economic wreckage piles dangerously higher, the Federal Reserve is prepared to ratchet down interest rates -- perhaps to their lowest point in more than four years -- with the hope of relieving some of the pain felt by many Americans.

The convergence of a housing collapse and a lockup in lending has created the worst financial crisis in more than a half-century. Alan Greenspan, who ran the Fed for 18 1/2 years, called it a "once-in-a century credit tsunami," and conceded that he made mistakes that may have aggravated the economy's slump.

With a recession seen as inevitable, if not already under way, any Fed rate cut would be aimed at cushioning the fallout.

Vanishing jobs and shrinking paychecks have forced consumers to cut back sharply. Millions of ordinary Americans have watched their 401(k)s and other nest eggs shrink and the value of their homes drop, making them feel in even worse financial shape. In turn, businesses have cut back on hiring and other investments as customers hunker down and credit problems make it harder and more costly to get financing.

"These are sobering times," said Paul Kasriel, chief economist at Northern Trust Co.

All the problems have been feeding on each other. So far, Fed Chairman Ben Bernanke and his colleagues haven't been able to break the vicious cycle, despite hefty rate reductions and a flurry of unprecedented steps aimed at getting credit flowing more freely again.

Bernanke says he'll use all tools to battle the crisis.

To that end, Fed policymakers are widely expected to lower the central bank's key interest rate at the conclusion of a two-day meeting Wednesday -- their last session before the November elections.

Investors and some economists predict the central bank will drop the rate by half a percentage point to 1 percent. If that happens, it would mark the lowest rate since the summer of 2004. Others, however, think the rate will be cut by a smaller, quarter-point to 1.25 percent.

In turn, rates on home equity, certain credit cards and other floating-rate loans tied to commercial banks' prime rate should drop by a corresponding amount. A half point reduction would leave the prime rate at 4 percent; a quarter-point cut would drop the rate to 4.25 percent. Either way, the prime rate would be the lowest in more than four years.

The Fed hopes that lower rates will spur people and businesses to spend again, helping to brace the wobbly economy.

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Home, business owners harness solar power

Phillip N.H. Smith worked on an experimental solar-powered house when he was a student at the Massachusetts Institute of Technology in 1951.

Now, the retired Copperweld Corp. chief executive and his wife, Martha, want to use some of the sun's energy to power their Fox Chapel home. They plan to install solar panels on the roof of an attached garage, once a state subsidy for alternative energy equipment becomes available.

"This is a chance for us to see what we can do," he said.

Hundreds of home and business owners and even local governments have been pricing solar panels, small wind turbines and other energy-making systems in the three months since Gov. Ed Rendell signed into law a bill that, for solar equipment, would cut costs by 35 percent.

The federal renewable energy and energy efficiency tax credit program recently was expanded, meaning even more potential savings.

Homeowners like the Smiths are waiting for the state Department of Environmental Protection to write the rules for Pennsylvania's program, specifying what types of home and small-business systems are covered and how and where they can be installed, department spokesman Charlie Young said.

Similar incentives in other states, such as Maryland, have increased solar panel installations dramatically. So far, almost 2,300 people have signed up for DEP's e-mail notifications about the program, Young said, and the program could be running by early next year.

Contractors who install solar rooftop panels are seeing an uptick in inquiries. "We have 200 potential customers -- a lot are waiting to see what the rebates are," said Rich Foltz, president of Vox Energy Solutions in McCandless.

"We go out every week and do proposals. People are just starting now to get educated, and they say they're doing the research and waiting for the rebate. I compare it to buying a $60,000 car for $40,000 -- who wouldn't take the deal?"

About $100 million has been earmarked for state rebates for solar installations at residences and small businesses, Young said. Another $25 million is to be available for wind and geothermal equipment.

The recent renewal of federal investment tax credits for solar power, once capped at $2,000 for a residential system, could cover another big part of the costs. The new federal incentive is 30 percent of the project cost, Young said, though state officials are unsure at this point how the two programs might overlap.

Costs vary for home solar systems. Foltz said an average, 2,200-square-foot home with two adults and two children uses about 9,000 kilowatt hours each year.

A system that could "zero out" electricity bills for that home might cost $40,000 to $50,000, and involve as many as 24 solar panels. Foltz added the financial benefits of solar panels vary greatly, depending on the price of electricity in the region.

Steve O'Hare just bought four more 120-watt solar panels at around $600 each for his Shadyside home, adding to the two he installed a few years ago. They feed electricity to a battery that powers the garage and outdoor lights, plus his tools and a dehumidifier in the basement.

His family's electric bill was around $80 a month without the panels. "Now, it comes in at $50," said O'Hare, who owns rental properties and restores older homes. "I'm very pro-solar alternative and I'm trying to get all my neighbors interested. Even if they put a couple panels up, it would offset their electric bills."

Much of consumers' new interest in solar, wind and other systems, in fact, is rooted in worries about rising electric bills in the next two years.

State officials have warned some utilities could raise their rates by 40 percent or more as the capped prices imposed under the state's deregulation law in 1996 expire, and demand for power increases.

Most of Vox's solar installations have been in the center part of the state, but the company started servicing Western Pennsylvania early this year, Foltz said. So far, it's put about four systems online in the Pittsburgh region.

Conservation Consultants Inc. plans to double the solar panel array on the roof of its South Side building, said Ann Gerace, executive director. The nonprofit promotes environmental responsibility through programs such as home energy audits.

The expanded system should produce 10 percent of the energy used in the building, where 55 people work. And because utilities have to buy excess power produced by solar systems, Gerace said, "We figure when we're not here on the weekends, we might as well give it back and let Duquesne Light pay us for it."

The Smiths had been considering solar panels for their home for years. What convinced them was a four-day power outage last year that ruined all their refrigerated and frozen food, and forced them to replace an older refrigerator that never recovered, Martha Smith said.

The couple say they might put a small wind turbine on their three-acre lot on a hilltop, to help power the electric-heated house where they raised six children.

More immediately, Martha Smith intends to go solar on the local roads. She ordered a Solar Bug vehicle for $15,000 from Free Drive of Bozeman, Mont., that should be delivered in November.

Resembling a miniature golf cart with one seat in front and one in back, the electric-powered car has a roof full of solar panels.

Smith said she's been promised the second car the company produces, and she's ordered a vanity license plate: "Sunbug2."

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Airport authority raises airline fees

The Allegheny County Airport Authority Board on Friday unanimously approved an $88.9 million operating budget for 2009, which includes fee increases for airlines at Pittsburgh International Airport.

To accommodate the continued downsizing by US Airways, the authority said it raised landed-weight fees and terminal rents for all carriers by about 35 percent. The ramp fee rate -- a nominal part of airlines' charges -- has nearly tripled, from just under $200 per linear foot annually to $575.

That will increase the average cost for airlines to board a passenger at Pittsburgh International to $16.64 in 2009 -- a 44 percent increase from the current $11.57.

"Those numbers are concerning," said Steve Sisneros, property manager for Southwest Airlines, the second-busiest carrier in Pittsburgh after US Airways. Authority executives, however, will meet with the airlines next month to discuss trimming those costs. In addition, the authority re-evaluates costs throughout the year, and has cut fees in previous years.

The authority will pay $62.6 million in 2009 for debt service on construction of the 16-year-old airport in Findlay, which was built to US Airways' specifications. In 1997 the airline boarded nearly 19 million passengers here. Last year, that figure was just 5.2 million.

"Debt service stays the same if you run two people or 20 million through the airport," said authority Executive Director Brad Penrod. "With (fewer) passengers, the cost per unit goes up."

The 2009 operating budget, which also covers Allegheny County Airport in West Mifflin, will rise 1.7 percent from this year, mostly due to increased energy costs, Gill said. The capital budget is $120.9 million, all but $14.6 million of which will come from authority-generated funds. The rest comes from federal, state and other grants.

Board member Rich Stanizzo said yesterday a third party could be hired to review two proposals to improve energy efficiency at the airport, with a decision expected at November's meeting.

"There were still some items that were ambiguous to us," he said. " We really can't get a clear understanding if one was better than the other."

James Platz of Siemens Building Technologies Inc., a bidder for that contract, said the board had delayed a decision for five months, and changed bid procedures in the interim.

"We have $1.4 billion of airport experience across the United States. Our competitor ... replaced a few light bulbs here at this airport," Platz said. The competitor is "CLT, a Charles Zappala company."

Zappala is a Pittsburgh businessman and founding investor in CLT, as well as a brother of former state Supreme Court Chief Justice Stephen A. Zappala and uncle of Allegheny County District Attorney Stephen A. Zappala Jr. Neither Charles Zappala nor CLT President Troy Geanopulos returned a call for comment.

Platz later declined to say whether he thought Zappala's firm was getting preferential treatment.

"I would say there's a delay in the process and we'd like to know why," Platz said. "We're just asking questions. We don't have the answers."

Penrod said the contract is a new hybrid that combines design and bid aspects. The state government is sponsoring a workshop to educate stakeholders about it.

"We want to make the right decision the first time," he said.

Penrod, Stanizzo and board chair Glenn Mahone said the bidding process is proceeding in accordance with the law and airport policy, and that Zappala is exerting no influence over it.

Parkvale CEO optimistic despite earnings drop

Despite a drop in earnings and "near hysteria" in the financial markets, Parkvale Financial Corp. CEO Robert McCarthy Jr. says he's confident the Monroeville company's stock will rebound.

Shares of the savings institution have lost about half their value this year, dropping from about $28 in early January. The stock closed Friday at $14.60, down 40 cents from Thursday's close.

The parent of Parkvale Bank reported net income plunged to $1.1 million, or 20 cents a share, for the fiscal first quarter ended Sept. 30, compared with more than $3.6 million, or 65 cents a share the year earlier.

Results were mainly hurt by expenses from writing down the value of securities owned by Parkvale. It wrote down preferred stock holdings in troubled home mortgage giant Freddie Mac by $2.6 million, and debt securities of now-failed Washington Mutual, once the nation's largest savings institution, by $1.3 million. Parkvale had no such charges the year before.

David Lazar, bank analyst and managing director of Stifel Nicolaus & Co., Philadelphia, said Parkvale should not be "criticized" for its exposure to those two institutions, which were beset with subprime mortgages. He termed Parkvale's losses "relatively small," compared with many of its peers.

"I do believe our stock price will recover," McCarthy told shareholders at their annual meeting in Oakland on Thursday.

"We just have to get through these unprecedented times," he said, referring to the housing and financial crises, including the failure of several giant commercial and investment banks.

"Parkvale has not originated or purchased subprime loans and does not own any," said the CEO. "But unfortunately, our investment portfolio did include some companies that invested in subprime."

McCarthy also said Parkvale might want to acquire branches or institutions in Ohio, central Pennsylvania or western Maryland, if it can strike the "right price." But he's not interested until the housing and financial turmoil "hits bottom," which McCarthy expects to happen in the next six to 12 months.

Parkvale is the 10th-largest financial institution in the seven-county Pittsburgh region. It has 41 branches in the region (sixth-most) and seven in northern West Virginia and northeast Ohio.

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UPMC says operations OK despite need for layoffs

The University of Pittsburgh Medical Center on Friday reported solid operating gains and a healthy rise in admissions for the first three months of the fiscal year.

Just one day after it confirmed the layoffs of 500 workers, the health giant reported income from patient operations of $63 million from July through September, a slight improvement over the same period a year ago.

UPMC Chief Financial Officer Robert DeMichiei said the layoffs are a way of "addressing our cost structure to get ready for what we see is a worsening economy."

"Even though the results are strong now, we need to ensure they stay strong six months from now, a year from now, because we are committed to keeping a financially strong and viable organization," DeMichiei said in a meeting at UPMC headquarters, Downtown.

The layoffs have been concentrated in nonclinical, administrative jobs, DeMichiei said. Fewer than 50 clinical workers have been laid off, he said.

It isn't known if more layoffs will be forthcoming, but officials said other cost-cutting measures may include cuts to advertising and travel budgets.

DeMichiei invoked the wars in Iraq and Afghanistan and the stock market turmoil as examples of why UPMC next year expects cuts in its federal reimbursement. That could be a significant reduction in reimbursement because about 60 percent of UPMC's revenue comes from the federal Centers for Medicare and Medicaid Services, he said.

Job cuts in other industries can have an impact on health care providers such as UPMC because they may be forced to care for more uninsured patients, he said.

"Our economy is worse, and it's going to be much worse in the years ahead," DeMichiei said.

Indeed, the battered market has affected UPMC's sizable investment portfolio, which dropped to $2.8 billion during the first quarter, from $3.1 billion reported in fiscal year 2008.

"It's a big number but not a number that we're not anticipating," said UPMC Treasurer and Senior Vice President Talbot Heppenstall Jr.

The investment money in the bank is not used for day-to-day operations, Heppenstall said.

Officials expressed optimism about the coming year, based on a key measure of financial stability known as EBIDA, which stands for earnings before interest, depreciation and amortization. UPMC during the quarter realized $149 million in EBIDA, described by officials as the money used to run the business and fund capital expenditures. UPMC is on target to exceed $500 million in EBIDA by the end of the fiscal year.

Overall, operating revenue during the first quarter grew by 16 percent to $1.9 billion.

Officials yesterday reported a 11 percent increase in admissions across the network's 21 hospitals, to 47,470 from 42,724 during the same three-month period a year before. Most of the increase was attributed to the acquisition of UPMC Mercy, but even without Mercy, admissions would have shot up, officials said.

Other indicators of growth included a 6 percent jump in the number of employed physicians to 2,621 from 2,453, and a 7 percent jump in membership in the UPMC Health Plan, to 1,297,288 from 1,205,788.

UPMC is maintaining its "AA" credit rating, which officials said is another indicator of financial strength.

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PNC springs into elite with $5.6B National City buy

PNC Financial Services Group's deal to acquire troubled National City Corp. will give PNC control of more than half the banking deposits in Western Pennsylvania and will give other banks a chance to buy branches it is expected to discard, analysts said Friday.

National City, Ohio's biggest bank, agreed to be purchased by PNC, Pennsylvania's biggest bank, for about $5.6 billion in a government-assisted merger.

The transaction vaults PNC into the ranks of the nation's five largest banks -- which are being pushed to merge by the global financial crisis.

The new PNC will dominate Pittsburgh's and Pennsylvania's banking business. Operating mainly in the Mid-Atlantic states, PNC will push west into new markets from Cleveland to Chicago to St. Louis.

"This is a tremendous opportunity and will be viewed as a coup for PNC over the long term," said Gerard Cassidy, an analyst at RBC Capital Markets of Portland, Maine, who follows both banks.

PNC plans to eliminate $1.2 billion in expenses, equal to 10 percent of the combined banks' overhead. But not much will be cut in the Pittsburgh market, said CEO James Rohr in an interview.

"This is a terrific deal and a good thing for Pittsburgh, too," said Rohr, who returned from making the deal in Cleveland about 3 a.m. yesterday. "We're not going to lose jobs in Pittsburgh from this."

Rohr said the addition of National City, the nation's seventh-largest bank by deposits, will push more banking transactions through PNC's operations. That will produce jobs over time at PNC Firstside Center, the bank's operations base Downtown, "because we will be processing a lot of things in Pittsburgh," he said.

PNC has about 7,000 employees and National City about 1,800 employees in Western Pennsylvania.

A government infusion of money set up the deal, which came hours after the U.S. Treasury agreed to pay $7.7 billion in exchange for PNC preferred shares. The money is part of the U.S. government's program to stabilize financial institutions and adds significantly to PNC's capital strength.

Treasury officials turned down National City's request for money in exchange for preferred shares and directed National City to "find an acquirer," Cassidy said.

National City was essentially auctioned off Thursday night in Cleveland. The only other bid came from U.S. Bancorp, the fifth-largest bank by deposits. But its bid of $1.25 per National City share was much lower than PNC's $2.23 offer.

"PNC got a bargain. And they are doing it with cheap capital from the (government) program," said Frank Barkocy, research director at Mendon Capital Advisors of New York.

Three days ago, National City said it would cut 4,000 jobs over the next three years. The announcement coincided with the Cleveland bank posting a $729 million loss for the July-September quarter, mainly the result of its portfolio of problem loans.

"It's logical to set that (job-cutting plan) aside. The PNC transaction supersedes that," said National City spokeswoman Kristen Baird Adams. "It's now PNC's determination to make in terms of how they want to proceed."

Adams would not comment about regulators' involvement in the deal.

There will still be job cuts, mostly outside Pittsburgh. Rohr said duplication in businesses, such as information services and commercial mortgage servicing, would likely be eliminated.

"I think a good portion of that $1.2 billion, maybe about 30 percent, they could get out of the corporate headquarters in Cleveland," said Cassidy.

PNC will consolidate a number of branches where the two banks' offices overlap, said Rohr. He could not say how many might be closed or sold because PNC spent more time examining National City's troubled loan portfolio than its branches.

"They will consolidate branches that are close together," but retain their deposits, said Robert Wagner, senior vice president at Ferris Baker Watts, a securities firm in Mt. Lebanon.

"The most logical players to take advantage of a spinoff of branches would be FNB Corp., S&T Bank and First Commonwealth," he said. "They want a greater presence in the Pittsburgh region."

"Yes, we would have an interest, once PNC determines which branch offices it wants to divest," said Robert New Jr., CEO of FNB, based in Hermitage, Mercer County, which operates locally as First National Bank.

"Community banks like First Commonwealth have benefited from unprecedented changes in the financial services arena in the past year. This should be no different," said Ed Lipkus, First Commonwealth Financial's chief financial officer.

A spokesman for S&T said it was too early to comment.

The fortified PNC Bank would command 53 percent of the deposits in the seven-county Pittsburgh region, where PNC is largest and National City is second. The deal also gives PNC 254 branches -- twice as many as next-highest Citizens Bank.

Analyst Barkocy believes PNC will be able to digest the bad loans it gets from National City. PNC said it expects to lose $19.9 billion over time on National City's $113.4 billion in loans. But National City set aside nearly $4 billion to cover those losses.

"This was not overnight due diligence. PNC did a helluva lot of homework," said Barkocy. "Rohr said PNC examined virtually every credit."

National City stockholders will receive 0.0392 shares of PNC stock for each one of their own, equating to a price of $2.23 per share for National City. The deal is expected to be completed by Dec. 31.

"This is a tragic end for National City," said Cassidy. "This is a bank that was trading at $37 in spring 2007, and now it's selling out for $2.23 a share."

National City shares closed yesterday at $2.07, down 68 cents. PNC shares closed at $58.88, up $2.

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Consol profits hit 15-year high

Higher prices for coal and natural gas helped Consol Energy Inc. record its highest profits in 15 years, as total revenues jumped more than 35 percent, the Cecil, Washington County-based company said Thursday.

However, Consol's joint venture to construct an $800 million synthetic gasoline plant near Wheeling, W.Va., has fallen through, as partner Synthesis Energy Systems wasn't able to secure financing.

For the quarter ended Sept. 30, Consol's profits totalled $90.1 million, or 49 cents a share, compared to a loss of $5.4 million, or 3 cents a share, one year ago.

"The strength of coal and gas markets over the last 12 months has allowed us to continually and systematically lock in higher prices that drive the average price up as older contracts are replaced with newer, higher priced ones," CEO J. Brett Harvey said, in a statement. The record performance came despite coal production problems, the company said.

Total revenues were nearly $1.2 billion, up from $868.4 million in the year-earlier period. For the quarter, Consol's average price for natural gas rose year-over-year by 41.5 percent, while coal prices jumped 26.8 percent.

Analysts surveyed by Thomson Reuters, on average, expected earnings of 46 cents per share on revenue of $1.1 billion.

Houston-based Synthesis Energy said that "due to the difficult financial environment, SES and Consol Energy will cease funding the engineering design package for the Benwood synthetic gasoline project." Benwood, is located three miles south of Wheeling.

Consol remains committed to building a coal gasification plant in northern West Virginia, and is looking for a new partner, spokesman Tom Hoffman said.

"We're keenly interested in developing a coal conversion facility, in Northern West Virginia," Hoffman said. "With expiration of the joint venture agreement, we are now free to talk with other technology partners. We bring capital, coal and maybe land, but we don't have the technical expertise."

The new coal-to-gas plant was projected to annually convert a 1.2-million-ton mixture of newly mined coal, plus coal generally inseparable from rock, into 793,800 tons of methanol for chemical industry usage, or 100 million gallons of regular unleaded gasoline.

The new plant would use coal from Consol's Shoemaker Mine, which is undergoing modernization, including installation of a conveyor system, to be completed in 2010. The new coal gasification plant could have been on-line as early as 2012, Consol estimated.

The complete plant would employ 60 full-time workers.

"We're still committed and Consol is still committed, and they are the biggest piece in the project," West Virginia Gov. Joe Manchin's spokeswoman, Lara Ramsburg said.

The Manchin administration and the Regional Economic Development Partnership in the West Virginia counties of Ohio, Marshall and Wetzel had agreed to providing financing and tax incentives over a 10-year period for the project once jobs had been created.

Consol's shares closed yesterday at $26.31, down $1.52.

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CMU's 'Red' Whittaker dominates field

In the early 1980s, a young, newly minted Ph.D. at Carnegie Mellon University suggested freeing robots from the repetitiveness of manufacturing and the protection of university laboratories.

Robots that could work in the rugged, unpredictable world outside long were the talk of science fiction. But William "Red" Whittaker persuaded his university bosses to establish the Field Robotics Center and put the red-haired professor in charge.

"At the outset, it was fragile," Whittaker said. "Fragile, no chance, odds against it. It was like crawling out of the primeval ooze. Critics were saying: 'This isn't really science; it's not really a technology.' "

The naysayers, though, didn't get Whittaker down.

"There was too much to do," he said. "There was then, and there is now."

Today, the university celebrates the 25th anniversary of field robotics and its founder's 60th birthday. Roboticists from around the world are flying in for the occasion, and dozens more are posting congratulatory notes to an Internet guest book.

"The Field Robotics Center is the pioneer in the field and has a huge reputation," said Hugh Durrant-Whyte, research director at the Australian Centre for Field Robotics. "It is the benchmark to which we all aspire. They were the first in the field, and they're still the biggest and the best."

Field robotics means exactly that -- robots that work in the field, whether moving dirt at a construction site, collecting asteroids in Antarctica, racing across a desert or drilling for water on the moon.

They do the dull and dirty and dangerous work.

"Any time that work requires that a human would use special clothing or a suit, a protective suit, that's a pretty good indicator that there is a hazard that would motivate the use of a robot," Whittaker said.

That's what led to the center's first robot -- the Remote Reconnaissance Vehicle. In 1983, the six-wheeled buggy became the first to enter a flooded basement at Three Mile Island Nuclear Generating Station near Harrisburg. Four years earlier, the station's Unit 2 suffered a partial meltdown.

The robot returned video footage of the basement. A year later, the Remote Core Sampler brought back samples of the contaminated walls.

Nearly every year afterward produced another rugged robot or two from the Field Robotics Center -- ranging from dirt movers and diggers to rover prototypes meant to explore distant planets.

Field robots are subtly entering everyday life.

In vehicles, field robots are in electronic stability controls, which sense when a driver loses control and apply brakes to certain wheels to reduce the chance of a rollover. They work in the automatic parallel-parking features in luxury vehicles.

The Defense Advanced Research Projects Agency's Urban Challenge in 2007 pitted 11 driverless vehicles against one another. Carnegie Mellon's Chevrolet Tahoe won the $2 million prize.

The contest accelerated research in autonomous driving -- vehicles that can sense where they are, analyze conditions and decide the best course of action.

"For me, this is really a straight story about augmenting the driving productivity or quality or safety on the road and off the road -- lane-keeping cruise control, crashless pullout from intersections, emergency braking that is augmented beyond what human reaction or human force would do," Whittaker said.

Caterpillar Inc., which recently opened offices on Washington's Landing to work more closely with Carnegie Mellon roboticists, is developing driverless trucks that could haul material through underground mines. It's the latest project in a partnership that started while the Field Robotics Center was in its infancy.

"Let's face it," said Sam Kherat, manager of Caterpillar's Pittsburgh Automation Center -- Carnegie Mellon is recognized worldwide "as a hub of robotic technology."

Robots are working their way into agriculture, helping the 2 percent of the U.S. population involved in food-making increase their productivity, said John Reid, John Deere's director of product technology and innovation at Moline Technology Innovation Center in Illinois.

"Where we see robotics influencing agriculture today is in GPS navigation," he said. "We still have operators on machines, but they're steered automatically across the field. ... Maybe one day the technology can be worked out where operators won't be on the machines."

In about a decade, robots could help astronauts harvest water from the moon.

"The idea is to go to the moon and participate with human astronauts in the exploration of the moon," said Brian Wilcox, a roboticist and principal investigator at NASA's Jet Propulsion Laboratory. "The part that Red and his folks have been working on is designing and building a rover that can go down into the permanently shadowed craters of the moon and drill down for water-ice."

While the Field Robotics Center is working on a lunar rover for NASA, Whittaker has a team building one to enter the Google Lunar X Prize competition -- which offers up to $25 million to the first team that gets an autonomous rover moving on the moon and sending back video evidence -- by the end of 2010.

What comes afterward is anybody's guess, said Matt Mason, director of Carnegie Mellon's Robotics Institute.

"I don't try to speculate on what Red should or will do next," Mason said. "I simply wait and am amazed."

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Rostraver firm to add 1,500 workers

Solar Power Industries Inc., a Rostraver company that manufactures solar cells, plans to hire up to 1,500 employees by 2011, a company official said Thursday.

Business is booming, so the company says it will lease 500,000 square feet of space in Sony Corp.'s giant plant in East Huntingdon.

"It's a great story for our company and the region," said Robert L. Lazzari, vice president-resource management for Solar Power Industries.

Lazzari discussed the company's expansion plans at a news conference in Pittsburgh where state officials announced a $400,000 investment to help the 3 Rivers Clean Energy Partnership develop training programs for workers needed by alternative energy companies in the region.

Recently, German-owned Flabeg Corp. said it expects to eventually employ 300 at a $30 million plant to be built near Pittsburgh International Airport to make glass and mirror components for solar panels in large-scale solar power plants.

O'Hara-based Converteam, an independent supplier of power-conversion equipment for wind turbines, said it added 100 employees this year and plans to add another 130 through 2009.

Solar Power Industries is building two 30,000-square-foot buildings next to its headquarters in Rostraver so it can start hiring more employees, Lazzari said.

"We currently have about 200 workers at Rostraver, and I will need between 150 and 200 people in each one of those new buildings," he said. "By mid-next year I need a total of 500 people because of the business we are getting. We have long-term contracts that are just waiting for us to expand our production capabilities."

The first building should be open within about two weeks, he said. The second building will be open in December.

Lazzari said Solar Power has leased space that Sony is no longer using at its Westmoreland County television assembly plant.

"We need to expand. I will need another 1,000 people there by 2011," he said.

In February, the state announced $5.1 million in grants and loans for the company, which pledged to create 396 jobs within three years.

Sony spokesman Michael Koff said Lazzari's statements were "somewhat premature."

"We have been in discussions with them, but there is nothing definite concerning the available space we have here," said Koff. "We are not in a position to say whether an agreement has been finalized or not."

Employment at the Sony plant, once more than 3,000, is down to about 790 after downsizing last year, Koff said. About 1 million square feet of space is available at the complex on a 450-acre site in Hempfield and East Huntingdon. The manufacturing plant contains 2.8 million square feet of space -- 42 acres under roof.

"We've been working with Solar Power because we believe they have tremendous growth potential," said John A. Skiavo, CEO of Economic Growth Connection of Westmoreland. "We've been hoping they will be able to finalize negotiations although I don't think they are quite there yet."

In addition to business in the United States, Solar Power is getting orders from Germany, Spain and China, Lazzari said.

"We make solar panels that go on buildings, and we also make shingles that can go into homes," he said.

In 2007, Solar Power announced a partnership agreement with Open Energy Corp., a California renewable energy company, to develop a solar roof able to convert sunlight to electricity and run devices within a home.

The federal Energy Information Administration projects that renewable energy should grow significantly, said EIA analyst Chris Namovicz.

Through July, solar power production in the United States stood at about 80 trillion BTUs, compared to 72 trillion in the same period of 2007, he said.

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