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Pittsburgh TEQ®

What Happened to Westinghouse?

When the world worshiped steel, the altar was in Pittsburgh. And when the world first embraced technology, Pittsburgh offered a global icon in that arena too -- Westinghouse Electric Corp. Westinghouse not only pioneered the application of alternating current, but came to be responsible for 40 percent of the world's nuclear technology as well. It introduced the first fully electric range and developed the television cameras that made it possible to watch men land on the moon. It pioneered breakthrough research in batteries, materials, and invented countless new technologies. In fact, its technology made our nuclear Navy possible.

And it was huge. In its heyday, Westinghouse generated $12 billion in sales and employed 166,000 people worldwide. For more than a century, since its founding in 1886, it had been for Pittsburgh not only a source of significant employment and revenue, but also a point of pride.

And so, as Pittsburgh began its tortuous shift from an economy based on steel to one fueled by what at the time was called high technology, most assumed that Westinghouse would help lead the way. Instead, it was during this period that Westinghouse found itself sinking under the weight of bad real estate loans and struggling desperately for survival.

In the end, the name survived, but the institution did not. Beginning in the mid-1980s, Westinghouse began to divest itself of its many businesses in an attempt to service billions of dollars in debt. The end of its role as an industrial icon was sealed in 1995 when it acquired CBS Corp., and moved its principal operations headquarters to New York. Buyers were quickly found for its remaining industrial operations.

The loss of Westinghouse during a period when Pittsburgh was fighting to achieve national recognition as a technology center made the sell-off of its many operating companies especially painful. But what may have been obscured by the head-shaking and hand-wringing is that the sell-off of Westinghouse has seeded the region with more than a dozen mid-sized, high-potential companies -- some free standing and others operating as divisions of larger corporations. Most are technology companies, and almost without exception, they are in promising sectors and enjoying rapid growth. For many, getting out from under the bureaucracy of such a large parent has bred a clearer focus and enhanced management's appetite for profits.

As a group, these companies are already having a significant positive impact on the region. Operating as stand alone companies or divisions of larger companies, they employ more than 8,600 locally and generate billions in revenues. The industries they represent run the gamut from semi-conductors to transportation systems. In many cases they are built on technology developed with the formidable resources and research budget of their former parent. This article takes a look at the legacy of Westinghouse in the new Pittsburgh economy.

ADTRANZ

In 1988, the transportation division of Westinghouse formed a joint venture with Daimler-Benz AG of Germany. In 1992, Westinghouse sold its interest in the division to Asea Brown Boveria, a Swiss-Swedish company, which now owns Adtranz jointly with Daimler-Benz. What was a division under Westinghouse with an estimated 550 employees is now the North American Headquarters for Adtranz. Located in West Mifflin, it employs 1,200 people who design and assemble rail systems and propulsion equipment.

Worldwide, Adtranz employs 25,000. Adtranz describes itself as the "world's most complete provider of railway systems," though it designs and assembles all types of transportation systems, including subways, people movers, electric and diesel locomotives and light rail systems.

Though Adtranz operates facilities in Elmira, N.Y. and Pittsburg, Calif., its local operations appear to be secure. Allegheny County recently awarded $1 million in loans to Adtranz for the development of property on Lebanon Church Road that will help to ease crowding at their current location. And although there are no immediate plans to hire more employees, the company has orders that will take it well into the next decade.

Cutler-Hammer

Cutler-Hammer relocated its headquarters from Milwaukee to Pittsburgh in 1994, after buying Westinghouse's former Distribution and Control Unit. Cutler-Hammer, the largest division of the Eaton Corp., with sales of $600 million - $700 million, manufacturers transformers, light switches and circuit breakers. Westinghouse's distribution and control business was complementary.

Combining the strengths of the two companies has given Cutler-Hammer the ability to manufacture electrical control systems and integrate them into distribution systems, such as power plants, many of which were built by Westinghouse. The combination has proved profitable, as revenues have topped $100 million and employment is now more than 1,500, up to 200.

Cutler-Hammer, which kept all Westinghouse employees, now operates out of new headquarters at Cherrington in Moon Township and five other facilities in the region. The Cherrington headquarters was constructed to house state-of-the-art equipment and serve as a marketing and service center.

Cutler-Hammer sees its growth tied to advancements in technology. As its products come to rely on sophisticated technologies, customers require greater levels of service. "The reason we are growing so fast is a desire (on the part of the customer) for high tech service endorsed by the manufacturer of the product," says Dave Wathen, Senior Vice President at Cutler Hammer.

Cutler-Hammer was recently named one of the top-five automation companies in the world by Managing Automation Technology Magazine. Wathen feels neither Westinghouse nor Cutler-Hammer could have made that cut alone, but their combined resources have created a global player.

SOURCE W

Source W is a design firm created from Westinghouse's former corporate communications and printing division. For the past five years, its achievement has been maintaining sales of $17 million while it replaced the in-house Westinghouse work, which formerly represented 95 percent of its revenue, with business from other non-related customers.

In December, Liberty Associates purchased Source W, which describes itself as a management company working exclusively with technology clients.

Source W, which employs 100, is hanging its future growth on expertise in interactive technology.

"Westinghouse was a pioneer in the use of computers in graphic design," says Terri Marts, President of Source W. "What we do is seek out the best technology and apply it to printing and publication. We take digital information and turn it into the media of choice, be it CDs, interactive technology, or projections."

Interactive technology, though, may provide the greatest boost to its growth. Do you want to go to a trade show in Chicago, but can't physically get there? Source W hopes to make it commonplace for people to still attend via the Internet. Its cameras, for instance, located at the trade show, but controlled by interactive participants, provide new levels of access and realism.

Corporations and technical societies from across the United States frequently come to Source W for assistance in learning how to use emerging technology to achieve their business goals.

Powerex, Inc.

In December of 1985 the Westinghouse Semiconductor Division formed a joint venture with General Electric Semiconductor in Auburn, N.Y., and minority partner Mitsubishi, to create Powerex, Inc. In 1994, Westinghouse sold its interest in the joint venture. Today, 92 percent of the Youngwood-based company is owned equally by GE and Mitsubishi. Powerex employs 330 people, half of which are former Westinghouse employees.

The company makes semiconductors based on Westinghouse and General Electric technology and also sells semiconductors made by Mitsubishi. They are used in uninterruptable power supplies, such as battery chargers, computers, and welding equipment.

"Seventy percent of the products on the market utilize solid state semiconductors to control the speed of motors," explains Stanley Hunt, Powerex President. "These motors can be found in industrial fans, cars, mass transit systems, or locomotives."

As Hunt explains, "all sources of energy need control for changing the frequency," and that's what Powerex's semiconductors do. As long as that need exists, Powerex sees steady demand for their product.

Siemens-Westinghouse

Siemens-Westinghouse Technical Services, located in Oakdale, provides technical assistance to industrial customers of Siemens A.G. and houses the staff that provides technical support to 27 Siemens offices nationwide. Dan Ellis, Manager of Power Systems Services at the new operation feels it is a very positive development for all involved.

Ellis expects the association with Siemens, a 150-year-old company with annual revenues of $70 billion, to have a growing impact on the region. Currently, the Oakdale facility employs 100 - all former employees of Westinghouse's Electrical Systems Service Division.

Siemens-Westinghouse, which was created last August, provides what are called "up time systems" for customers. "Up time systems" are so named because they keep industrial machinery on-line longer than systems, which shut down for periodic maintenance based on fixed schedules. It achieves this through a sophisticated continuous performance analysis.

Ranbar Electrical Materials, Inc.

Ranbar, located in Manor, Pa., has been in business of making resins that are used in insulating electrical products since 1984. In 1993, when rumor began circulating that Westinghouse's electrical insulation plant in Manor might be for sale, Ranbar was interested.

After two years, Westinghouse agreed to sell the Manor plant to Ranbar. "Although Westinghouse had given us a good base, good products, and the reputation of Westinghouse, we re-energized research and development, sales, and marketing. It was our intention to focus on Ranbar rather than Westinghouse," says Ranbar President Randy Russell, Sr.

Russell credits the experienced former Westinghouse employees with adding significantly to his R&D capability, which quickly developed Ranbar 2000, a coating used to insulate and protect machinery from corrosion. The new coating uses less volatile compounds than its predecessor, and so it is more environmentally friendly.

To more effectively market Ranbar 2000 and other new products, Ranbar entered into an agreement with EIS, a distribution company headquartered in Atlanta. "The purpose of the agreement is to improve the supply chain by improving distribution," says Russell. "One of the areas where Westinghouse was weak was in marketing the products from this division."

Since the buy-out, the combined revenues of Ranbar have topped $30 million, a 20-percent increase over the pre-Westinghouse days.

Other Companies

Other companies that have emerged from the Westinghouse sell-off, and which have remained in the area include ABB Power T&D Inc., a Greensburg manufacturer and distributor of transformers and capacitors that employs 200; Cegelac Automation, a Pittsburgh repair facility for continuous casters that employs 180; GeoCenters of West Mifflin, a 20-employee firm, which performs research for the Navy; and McMullen & Associates of Large, a 75-employee firm, which does engineering for the Navy.

In many ways, Westinghouse Electric Corp. shaped what Pittsburgh became in the 20th Century. With its passing, its influence might have ended. Instead, through the rich feed stock of promising companies that have sprung from its technology and talent, it will clearly play an important role in the region's continuing economic evolution in the next century as well.

Westinghouse Businesses, Services Retain "Welco" Moniker

When the dust settles and the deals are done, the Westinghouse Electric name will survive and refer to the holdings of a joint venture between Morrison Knudsen Corp. and a U.S. subsidiary of British Nuclear Fuels Ltd.

The pair put up $1.2 billion to buy Westinghouse's Commercial Nuclear Power Business and its Government and Environmental Services Business.

When complete, the new Westinghouse Electric Corp. will consist of operations both in this region and elsewhere. Locally, the Commercial Nuclear Power operations include the Energy Center complex in Monroeville and the Instrumentation and Control Unit, which designs and installs software and hardware for nuclear plants.

Those operations together employ 1,400. Also continuing operations locally will be the Waltz Mills facility in Madison, which provides training for power plant workers and employs 500; and the Blairsville Specialty Metal plant, which employs 300 and processes zirconium for use in nuclear fuel rods.

Out-of-state operations that are included in the Commercial Nuclear Power Business are PCI Energy of Chicago, Western Zirconium of Ogden, Utah, and Nuclear Services of Spartansburg, S.C.

On the Government and Environmental services side, the only local operation that will survive is the Electro Mechanical Division in Cheswick, which employs 700. Facilities outside the region include the Savannah River project in Savannah, Ga. This is a weapons disposal site for the Department of Energy, which employs 14,000. Also, the Waste Isolation Division in Carlsbad, N.M., a repository for nuclear weapons waste which employs 604. West Valley Nuclear Services of Buffalo, N.Y., is an ongoing cleanup of a former nuclear site and employs 813. A facility in Annistan, Ala., is used for the destruction of nerve gas and employs 125.