Wednesday, December 06, 2006

Westinghouse on the board

According to the PG Westinghouse has chosen Pittsburgh over competing regions to locate their anticipated business expansion. I will stand by my prediction that this could be the biggest economic story of coming years as these jobs actually grow here.

The thing is that I have heard the job numbers being thrown out are actually quite conservative. 1,000-2,000 new jobs are common numbers bantered about in the press. These may be the number of new jobs Westinghouse needs if they actually do not get some of the big new contracts out there such as China, India, Russia and even new reactors on the board for US sites. If they actually do get any of these contracts it may be 1,000 a year for some time to come. One key thing is that these jobs all represent net new income into the region.

If true, where would these jobs go within the region? The choices are supposedly Monroeville or Cranberry. If I were to guess it may be Cranberry solely because of better access to the airport. Remember, these are jobs to support a national and worldwide industry and may generate a fair bit of travel in and of themselves.

Why did they build here? It is likely a workforce story more than anything else. Years ago the local Siemens division, another former division of Westinghouse, was going to build a Fuel Cell plant in Munhall. That plan did not work out but they had chosen a site in Munhall at the edge of the Waterfront to implement this. They did so despite some fairly excessive public incentives being offered in Texas to put the plant there. As I hear, Ross Perot himself had a pointed interest in bringing the project to Texas. Yet they chose Pittsburgh because they assessed that their core workforce would not move out of region and relocate down there. The same may be true for Westinghouse which is going to be hard pressed to find the workforce needed to expand. They need their experienced workforce more than ever to bring on and train all these new workers. It will be a challenge because the national nuclear industry has had such anemic growth in recent decades that the training pipeline for the industry has atrophied.

Yet before people get carried away with extending the workforce argument too far. There are a lot of interconnections in the economy, let alone some important history that helped build up that specialized workforce here. For more I will defer to my old oped on Energy-Burgh. Lot's of things helped build that workforce here.

Its worth bringing up that Westinghouse, and in particular its R+D operation here for decades, has had a huge impact on the region. Even more than is really noticed today. There are more than a few high tech companies that are here in one way or another because of Westinghouse. Either the business or technology spun out of work going on there or it was just because entrepreneurial engineers were originally brought to the region because of earlier employment at Westinghouse. And for those who look at local diversity issues here, I am pretty sure Westinghouse is in itself responsible for a sizable part of recent international immigrants who were brought to the region in recent decades and who stayed.

But for those who do not realize the importance of the local nuclear power industry. Pittsburgh has been for decades one of the largest concentrations of nuclear power engineers in the country if not the world. Nuclear engineers are also the best paid engineers in the region. International trade gives some insight into the role of the nuclear power industry here. If you remember just a few years ago the US put international tariffs on imported steel. Europeans did not like these tariffs as it impacted their own steel producers. At one point they proposed countervailing tariffs on goods produced in the US. The question was what products to put opposing tariffs on. The goal is typically to focus countervailing tariffs on products that affect the same regions that were benefiting from the offending tariffs. Some uber-wonk in the EU bureaucracy came up with the idea of putting some of these countervailing tariffs on nuclear power plant parts. Why? While I can not say for sure, someone must have figured out that that is the one product that is concentrated here more than elsewhere. It didn't really go over well. One reason is that the public perception of steel here still outweighs most everything else. So the perceived benefit here of protecting steel was high, while I am not sure anyone even noticed the plan to tax nuclear power plant parts. So it didn't go very much as a political exercise. Then there was this irony in that Westinghouse was then owned by BNFL, a European company, which understandably got a bit upset at EU countervailing tariffs that just wound up hurting them.


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