Laser weapon gets $5.2 million boost

In the not too distant future, the military expects to have the capability to use a laser beam to shoot down incoming missiles or even artillery shells.

Thanks to $5.2 million in federal funding announced Wednesday, II-VI Inc., a Butler County-based laser-optics manufacturer, hopes to move forward development of that Star Wars-sounding technology.

It will use the money to produce the materials used in high-powered, solid-state lasers needed by the Department of Defense, said CEO Francis J. Kramer at the company's Clinton headquarters.

"II-VI has a long history of developing advanced materials, and we look forward to the challenges of developing these laser materials," Kramer said.

The company's ceramic Yttrium Aluminum Garnet materials, know as YAG for short, can be configured to produce a high-powered laser light, he explained.

"The Department of Defense is trying to develop a 100-kilowatt laser that can be used to shoot down a shoulder-launched missile," he said. "This material that's being worked on right now is designed to produce a 25-kilowatt laser. When that's done it will be developed into a 100-kilowatt laser in the next phase."

The technology is desirable because it can be used to destroy targets with minimum "collateral damage" in populated areas, said II-VI officials.

"When fighting insurgents and in closely packed areas, you really can't use other ways to try to knock down missiles," Kramer said. "So you need to have something that just knocks down the missile and destroys it. A laser weapon can do that."

There are a number of other so-called "laser-host" materials being developed by others, according to Kramer. However, II-VI believes its ceramic equivalent materials hold the most promise.

"The ceramic process we use is very similar to ceramic processes used throughout the industry to make other items -- anything from porcelain to more technical products," said John Q. Dumm, process development and research engineer. "The difference with our materials is that it is so low in defect count that there is nothing to block the light from coming through."

The company, which employs about 2,500 people, including 550 at its Clinton location, expects about 25 jobs will be created with the help of the federal funding, said James Martinelli, vice president, government and military affairs.

About half of those jobs likely will be added at its Clinton headquarters, with others added at another II-VI facility in the Tampa, Fla., area, he said.

Officials estimated it will take about five years to complete process development.

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Airport area to hatch business incubator

The Airport Area Chamber of Commerce's long-awaited business incubator will soon become reality.

The chamber has partnered with DiCicco Development Inc. to build a one-story, 50,000-square-foot building in the Cherrington Commerce Park in Moon, officials with DiCicco and the chamber said Wednesday. Construction of the facility, near the intersection of Beaver Grade and Ewing roads, will begin in the spring.

Chamber President Sally Haas said she has been trying to secure funding and a partner for the project for several years and had to turn away businesses seeking such space. Previously discussed locations included the Imperial Business Park in North Fayette.

"This is a key initiative in growing and retaining business in the airport corridor," Haas said. "Statistics show that 87 percent of businesses that begin in an incubator stay in business well beyond five years."

A business incubator rents ready-to-use office space to fledgling enterprises, allowing them to focus on building their business rather than shopping around for affordable office space.

"Especially with the downturn in the economy, people need an environment that provides them with a lot of the things that otherwise they'd have to be investing in on the front end," Haas said. "This gives them that infrastructure."

Haas and DiCicco principal Sam DiCicco Jr. presented tentative plans for the building to the Allegheny County Redevelopment Authority's board of directors. The board approved authorization to pass through a $1 million Redevelopment Assistance Capital Program construction grant for the project. The grant comes from Gov. Ed Rendell's Office of the Budget.

DiCicco will match the grant, Haas said.

The incubator also might be used by out-of-town or international businesses scoping out the region for possible expansion, she said. The incubator will be in a state-designated Keystone Innovation Zone, which offers new businesses operating there up to $100,000 in tax credits and eligibility for certain state grants.

DiCicco said the incubator can be configured for one or several tenants, as needed.

Randy Forister, senior development director of the Allegheny County Airport Authority, which manages the Imperial Business Park, said he is excited about the deal.

"It's a forward-thinking project with a lot of elements that will help bring new businesses to Southwest Pennsylvania," he said.

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American Eagle 'down-sizing' into kidswear

Today's kids have a lot to say about what they wear.

A core team of 22 people at American Eagle Outfitters Inc. found that out as they spent a year studying the children's clothing market.

"We went across the country and talked to hundreds of moms, and hundreds of 8-, 9- and 10-year-old girls and boys," Chris Fiore of the South Side-based company said Wednesday.

"We went to their homes and to their schools, and picked their brains about what they like and don't like."

American Eagle will find out, starting today, whether it has hit on the right combination -- the first collection in its new 77kids by american eagle brand debuts for sale online only.

The first 150 designs for toddler boys and girls and older children are pioneers of sorts for the company's fourth clothing brand. The collection is American Eagle's first step into the $10.4 billion-a-year children's clothing-store market.

As 77kids gets rolling, American Eagle's year-old headquarters at SouthSide Works will be a center of activity.

While design and production work are run from a New York office, all marketing, merchandising and electronic commerce operations come out of the Hot Metal Street buildings. That even includes photography for the Web site, said Fiore, senior vice president for the brand.

American Eagle announced 77kids in January, just as most retailers were starting to hit on hard times.

The weak economy likely will dampen sales at first, said George Van Horn, senior analyst at IBISWorld Inc., a Los Angeles-based market research firm. Still, "the outlook over the next five years shows there are a lot of good reasons to get into this sector that they hasn't been exposed to before."

The 77kids brand targets ages 2 to 10, within a population segment that's projected to grow by at least 0.8 percent a year for the short term.

"We expect the share of first-born children to go up -- those are the kids who tend to get the stuff, and aren't prone to hand-me-downs," Van Horn said.

Fiore said he realizes the challenges of convincing parents and kids through computer screens to buy merchandise that will be judged by touch and fit. That's why, he said, the fashions come with trademarked guarantees for durability and softness.

"We did wash every item 77 times, and we photographed it and stand behind it. It's not just marketing gibberish," Fiore said, adding the results are documented on the site. Free shipping and returns are offered to spur sales, and an online "size wizard" and printable footwear chart ensure a good fit.

The brand name is a reference to American Eagle's 1977 founding date, and 7s are sprinkled throughout its promotions.

Seven "gotta have" outfits for boys and girls are modeled on the site, and the company is sending seven boys and seven girls who win a sweepstakes to Los Angeles with family members for a Nov. 14 Jonas Brothers concert. The 77kids site will play the concert two days later.

The clothing is priced for value, Fiore said. Although it differs substantially from American Eagle styles for teens and early 20s customers, "the basic DNA of the AE designs has been infused into the 77kids assortment."

That means lots of denim, with jeans for older kids priced at $19.50 to $39.50. Hoodies, T-shirts, jackets and cargo pants are in the mix, but so are sparkly dresses.

It's all designed to land in the common ground between the durable, safe, good-quality and value-priced clothing that parents want, and the cool, soft and stylish items -- sometimes based on their older siblings' or celebrities' fashions -- that children crave, he said.

Retail analyst Seth Jayson said the 77kids styles that he has seen resemble AE items. "That's a formula that has worked well for them, with AE and aerie," he said, referring to the company's dormwear and underwear brand.

The Martin + Osa brand for older customers has struggled, partly because prices were too high at first, said Jayson of The Motley Fool, which owns American Eagle stock through its Million Dollar Portfolio. He owns shares as well.

With the children's brand, "they really need to make sure they deliver the right value proposition to people who come in right now," Jayson said. "If you scare them now, it might end up choking the concept off."

Top retailers, such as Gymboree and Tween brands, have struggled in recent times, Jayson noted. And Talbots closed its children's stores this year.

American Eagle has said its online launch for 77kids is a way to gauge customers' tastes and to tweak styles before the first stores open late in 2009. Orders will be shipped from a distribution center in Ottawa, Kan.

The company's sales, like those of most retailers, have declined in the past year. American Eagle's stock has lost about half its value this year and closed at $10.26 yesterday, down 80 cents.

September same-store sales were down 6 percent compared to a year ago, although e-commerce sales were up 33 percent.

"The good news is, they are still making a lot of cash," Jayson said, "and I don't worry that a recession will sink them."

ATI profits down 26 percent for quarter

Specialty metals producer Allegheny Technologies Inc. on Wednesday reported third-quarter profit fell 26 percent because of lower metals prices and demand, and warned that fourth-quarter earnings will be well below a year ago.

Allegheny Technologies, parent firm of ATI Allegheny Ludlum, said profit for the quarter was $144.1 million, or $1.45 a share, on sales of $1.39 billion, compared to $193.9 million, or $1.88 a share, on sales of $1.33 billion, a year ago.

ATI's stock fell to $22.81 a share in trading yesterday, down $1.92, or 7.76 percent.

Pittsburgh-based ATI said pricing was more competitive in the third quarter and the company was caught in a situation where it purchased raw materials when prices were higher, but was selling those products when those prices had dropped, CEO L. Patrick Hassey said yesterday in a conference call. The company also suffered from a decreased demand for standard stainless sheet and plate products.

Hassey said the problem of dropping raw materials prices was a "double-edged sword" because ATI benefited from the fact that lower raw materials prices make it less likely that customers would buy imports when domestic prices are falling.

ATI "is not immune to the economic fallout from the global credit crisis," Hassey said. Demand and pricing for some of its major products are clearly being hurt by uncertainties in the U.S. and global economies, along with a machinist strike at aircraft maker Boeing Co. and a delay in its 787 Dreamliner airplane.

Sales for the quarter were 4.3 percent higher than in 2007 because international sales increased to a record $402.1 million, representing almost 30 percent of the total sales. Shipments of titanium products exceeded 12.5 million pounds, an increase of 19 percent compared to the third quarter of 2007.

ATI is anticipating growth in its defense armor products, based on the very large global armor market and the volume of customer inquiries, Hassey said. The oil and gas and chemical markets have been strong, as has been the electrical energy market, he noted.

ATI is expecting fourth-quarter results to be in the range of $1.00 to $1.10 per share, resulting in 2008 earnings ranging from $5.51 per share to $5.61 a share. Fourth-quarter 2007 earnings were $1.45 per diluted share.

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Tech toys bring game home - to game-goers

Pittsburgh sports fans who get bored during commercial timeouts and other stoppages in play are getting high-tech options at Heinz Field and Mellon Arena to keep themselves entertained.

Songwhale debuted without fanfare this season at Steelers games as a short-range, digital content service that allows ticket-holders to watch player interviews, music and videos, download ringtones and wallpapers and even get electronic gift cards and concession stand coupons.

"It's another way for the fans to interact with the Steelers, through a service that's so simple to use," said Ty Morse, president of Lawrenceville-based Songwhale, as the company formally announced and further explained its product Tuesday.

Everything is free and available via cell phones, smartphones or PDAs -- before and during games at the North Shore stadium.

Songwhale is trying to interest other sports teams and concert and event promoters in its product.

The Penguins, meanwhile, are testing a similar but more live action-oriented service for Mellon Arena.

Priya Narasimhan, an associate professor of electrical and computer engineering, said the Yinzcam service she's developing with other researchers at Carnegie Mellon University could debut within weeks at the Uptown arena.

Anyone who has a phone with Wi-Fi network access at a game will be able to watch replays from a few minutes ago or from a prior game. They can check live scores from National Hockey League games and even choose camera angles, to focus on one section of the ice or on certain players.

"Hockey moves so fast," Narasimhan said yesterday, "and this is a way to make the game experience better for the fan."

There's more: Yinzcam is designed to allow ticket-holders to view the nearest concession stand or restroom line from their seats, so they can better time their trips.

Both services work through software applications downloaded to a phone or other device that link to limited-range, wireless networks. Tailgaters in the parking lots just outside Heinz Field, as well as fans in their seats, can access Songwhale, Morse said.

Steelers and Penguins representatives couldn't be reached for comment. National Football League spokesman Brian McCarthy declined to comment.

While he's unfamiliar with Songwhale and Yinzcam, Mark Foster of Mitsubishi Electric's Diamond Vision unit -- which builds giant video scoreboards -- said teams are using technology in new ways to meet fans' expectations and increase sponsors' access to them in non-intrusive ways.

"Teams realize that today's fans expect an experience that is much more interactive and provides more than they can get at home," said Foster, general manager at Diamond Vision's plant in Marshall.

Morse, 26, said Nike, Gatorade, Miller and other companies are Songwhale sponsors, along with Virgin Records, where he worked in promotions. The Virgin and Capitol record labels offer songs on the service to Steelers game-goers, he said.

Songwhale's availability this season was not widely known until now, but usage has been high in the three hours before games, he said, as well as at halftime and even during timeouts and TV commercial breaks.

Morse said Songwhale likely will be expanded at next season's Steelers games to include special camera angles and other features.

"We wanted to get the fans used to it this year," he said. "We know that Wi-Fi is the future. I think we will see a lot more companies doing this."

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Billions in plant improvements solidify metals here

If the metal industry wants to survive in Western Pennsylvania, it must think long-term and continue with big-ticket projects in the face of a shaky economy, business analysts say.

U.S. Steel plans to break ground today on $1.2 billion in improvements at its Clairton Coke Works -- the company's largest capital project anywhere.

Last month, Allegheny Technologies Inc. said it would pump the same amount of money into its Brackenridge metal-rolling plant over the next four years.

Neither company has hinted at changing its plans in light of global economic problems.

"The economic downturn isn't going to last forever. Economic downturns usually last less than a year, and these projects take a couple of years," said Charles Bradford, a metals analyst based in New York City. "And, in the case of U.S. Steel, they're very vulnerable to being closed down if they don't clean up Clairton. They can't afford to buy coke internationally; that would put them in the red, and there isn't any available anyway.

"So they have to do it here," Bradford said.

And that means the industry Pittsburgh was built on -- for which it is still known worldwide -- will continue its presence in Western Pennsylvania.

"This solidifies steel-making operations in Allegheny County for years and years to come," said Dennis Davin, director of economic development for the county. "The fact that they are making these kinds of investments shows how competitive we are -- not only in the country but the world."

Leaving the region to build likely would have been more expensive.

"It stands to reason that if you've got the real estate and a community accepting of the industrial facility, and the infrastructure to get raw materials to your plant and the customer base, you'll want to stay and expand in the existing facilities," said Bruce Steiner, president of American Coke and Coal Chemicals Institute in Washington. "So I think that's what Allegheny Technologies and U.S. Steel are doing."

Coke is produced by baking coal. By improving coke-making operations, U.S. Steel is staying ahead of environmental laws that eventually would shut down Clairton Coke Works.

"It's a no-brainer to improve the Coke Works," said Marc Liebman, president of AIM Market Research in Ross.

"No time is ever a good time to spend a billion dollars," he said. "But coke is an essential raw material in making steel, in making iron. When you're talking about the essential raw materials, you have to look at the long-term. You can't look at short-term ups and downs."

U.S. Steel is following a market trend of returning to "vertical integration" -- or securing raw materials by buying or investing in the companies that make them. Recently, Koppers Holdings Inc.'s Monessen coke plant, PBS Coals of Somerset County, and Shenango Inc.'s coke plant on Neville Island were bought by steel or energy companies looking to secure coke supplies.

"This is a complete about-face from the strategy followed by steelmakers for most of the last 30 years, where they were divesting all of their raw-materials assets -- iron ore, metallurgical coal and coke," said Christopher Plummer, managing director at Metal Strategies Inc. of West Chester.

"It was because those materials were so relatively cheap until about four or five years ago, and it was better suited to buy it on the open market."

The "relative scarcity of these raw materials ... is really compelling companies to acquire, own and operate these assets," Plummer said.

A benchmark price for coke imported from China, the world's largest producer, averaged about $268 per metric ton in 2007 and spiked to a peak of about $755 per ton in August before retreating more recently, Plummer said. He estimated the price for mid-October is about $600 per metric ton, excluding transportation costs.

"When you have your own capacity, you can transfer the product -- whether it be coke, or metallurgical coal or iron ore -- at a fraction of what you would have to pay on the world market," he said.

Even with the economic downturn affecting the automotive and construction industries -- both of which consume steel -- worldwide demand is expected to keep growing, said Nancy Gravatt, spokeswoman for American Iron and Steel Institute.

"The World Steel Group just met here in Washington, and their forecast for world steel demand over the next several years is continued growth," she said. "For the short-term, they said they couldn't forecast because of the market volatility, but they were still anticipating some growth in 2009."

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Comcast to boost cable TV rates Dec. 1

Comcast cable prices in the Pittsburgh region are increasing for the second time this year.

The Philadelphia-based company, the dominant cable TV provider in the Pittsburgh region, said Tuesday it will raise prices by an average 3.7 percent starting Dec. 1.

While it has worked to control costs, the company said it must charge more because of increased gasoline and employee health-care costs, plus higher charges for programming, technology and service improvements.

Comcast last raised its prices on Feb. 1, by an average 4.5 percent. Standard cable TV service with 72 channels rose at that time from $51.51 a month to $54.48.

Spokeswoman Jody W. Doherty said quoting an example of a typical price increase is increasingly difficult, because many customers have bundled services with Internet and phone. Comcast's digital voice and high speed Internet rates remain the same, as long as the customer has at least one other service, and most do, she said.

Also, Doherty said, customers who have promotional bundles -- which cost $99 or $129 a month for all three services, generally for one year -- won't pay more.

"The company spends about $6 billion a year on programming to give our customers the best content and the most video choices," she said. Customers will be notified soon about the change.

Comcast has about 850,000 customers in its Three Rivers region, which includes Southwest Pennsylvania and parts of Ohio, West Virginia and Maryland. The company announced a price increase this week in the Philadelphia area.

Comcast has faced tougher competition in recent years, but cable TV remains dominant in Western Pennsylvania and parts of nearby states, according to The Nielsen Co.

Figures for this month show wired cable holds 72.5 percent of the market, down almost 1 percent from early 2008, satellite has grown slightly to 19.4 percent and other services such as Verizon's FiOS TV represent 0.3 percent.

FiOS debuted here a year ago and is available in 70 Pittsburgh-area communities, although Verizon holds 89 local TV franchises and is negotiating with Pittsburgh and other local governments.

The company doesn't release customer figures, although spokesman Lee Gierczynski said yesterday that FiOS TV is available in areas that include 210,000 households. Verizon is continuing to build its local fiber-optic network.

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