1 When Westinghouse Electric Corp. shuttered its massive steam turbine plant in Lester, Pa., three years ago, it seemed like the company had pulled the plug on its century-old power generation business.
2 But now Westinghouse is enjoying a resurgence in demand for both steam and combustion turbines and may even join the growing legion of independent electric producers.
3 And with its new venture with Japan's Mitsubishi Heavy Industries Ltd., announced last week, it is poised to penetrate growing markets overseas.
4 For the first time since the mid-1970s, Westinghouse this year has seen a significant increase in orders for power plants.
5 Most are from independent producers instead of regulated utilities, and Westinghouse believes it will ride a wave of demand stretching over the next six years.
6 Analysts agree, predicting that the revived market could significantly boost Westinghouse's bottom line in coming years. 'Westinghouse's earnings could be materially enhanced in the mid-1990s or sooner,' says Russell L. Leavitt, of Salomon Brothers Inc.
7 The company expects a need for 140,000 megawatts of new generation in the U.S. over the next decade.
8 Already this year, it has received orders for four 150-megawatt advanced combustion turbines from Florida Power & Light Co. and for two 300-megawatt plants from Intercontinental Energy Corp., among others.
9 Westinghouse's own role as a supplier also is changing.
10 In the past, the company usually took token equity positions in power plants it supplied as a 'kicker' to close deals.
11 But last June's annnouncement that Westinghouse would put up all of the $70 million to build a new 55-megawatt plant could herald a new age.
12 Westinghouse's plant will provide electrical power to the Southern California Edison Co. and backup power and steam to the U.S. Borax & Chemical Co.
13 'We haven't decided on a strategy yet, but we could become an independent producer depending on whether we're the developer or just the supplier,' says Theodore Stern, executive vice president of the company's energy and utility systems group.
14 At the same time, Westinghouse hopes its venture with Mitsubishi will help fend off growing competition, particularly in the U.S., from such European competitors as Asea Brown Boveri AG, Siemens AG, and British General Electric Co.
15 Under the agreement, Westinghouse will be able to purchase smaller combustion turbines from its Japanese partner, and package and sell them with its own generators and other equipment.
16 Westinghouse also jointly will bid on projects with Misubishi, giving it an edge in developing Asian markets.
17 In addition, the two companies will develop new steam turbine technology, such as the plants ordered by Florida Power, and even utilize each other's plants at times to take advantage of currency fluctuations.
18 'Even though we'll still compete against Mitsubishi, we can also work jointly on some projects, and we'll gain a lot of sourcing flexibility,' Mr. Stern contends.
19 The Westinghouse-Mitsubishi venture was designed as a non-equity transaction, circumventing any possible antitrust concerns.
20 Westinghouse carefully crafted the agreement because the Justice Department earlier this year successfully challenged a proposed steam turbine joint venture with Asea Brown Boveri.
21 It is expected that the current surge in demand for new power will be filled primarily by independent producers which, unlike utilities, aren't regulated and therefore don't need government approval to construct new plants.
22 Westinghouse expects about half of its new orders for turbines to come from independent producers for at least the next six years.
23 Despite shutdowns of the company's Lester and East Pittsburgh plants, the company believes it has sufficient capacity to meet near-term demand with its much smaller and more efficient manufacturing facilities in North Carolina.
24 Still, Westinghouse acknowledges that demand from independent producers could evaporate if prices for fuel such as natural gas or oil rise sharply or if utilities, which have been pressured by regulators to keep down rates, are suddenly freed to add significant generating capacity.
25 Even if that scenario occurs, Westinghouse figures it is prepared.
26 The company already is gearing up for a renaissance of nuclear power even though it hasn't received an order for a domestic nuclear plant in a decade.
27 John C. Marous, chairman and chief executive officer, says he expects a commercial order by 1995 for the company's AP600 nuclear power plant, which is under development. 'Once we see an order, we expect it'll be on line by 2000.'

And with its new venture with Japan ' s Mitsubishi Heavy Industries Ltd . , announced last week , it is poised to penetrate growing markets overseas .
markets
What markets are expected to use steam and combustion turbines?