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Business Observer Friday, Apr. 23, 2004 14 years ago

Bias or Poor Marketing?

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A Sarasota chemical engineer says he has found a way to greatly reduce pollutants at power plants. But no one is buying.

Bias or Poor Marketing?

A Sarasota chemical engineer says he has found a way to greatly reduce pollutants at power plants. But no one is buying.

Something smells awkward at U.S. power companies.

The utility giants are taking a very passive approach to adopting new environmental control technologies, to say the least. Inventors apparently must invest a couple of million dollars in product-hyping dog-and-pony shows before anybody in the industry will listen. And one inventor says you can forget about it if you don't carry the right passport.

Consider Dr. Hans-Joachim Hamel, a Bradenton-based chemical engineer. His company, Process Engineering Associates (PEA), says it has found a cheaper way to eliminate nearly all damaging emissions from the smokestacks of coal-fired power plants. The NOx, SOx and mercury released by those plants have and will continue to cause a major stink among the citizenry.

So, by all accounts, the PEA process should awaken at least a bit of interest among the operators of such power plants.

Problem is, Hamel, in his efforts to open doors in the United States, has limited himself to a low-cost, common-sense approach - writing at least 50 letters and cold-calling executives over the past two years. He hasn't hired a public relations firm to produce beautiful press releases. The result: Not a single U.S. utility executive will listen. And U.S. trade publications haven't written a single word about the technology.

To be sure, Hamel and his two partners are not alone. There are another half-dozen or so players in the emerging U.S. market for multi-pollutant reduction technologies at fossil-fuel power plants. But the performance and cost of the PEA process - if you believe its inventors - has yet to be matched by PEA's competitors.

The process, a combination of two existing technologies, is the brainchild of two German engineers and a Swiss colleague. It is patented in Germany and South Africa. And although Hamel has been living year-round in Bradenton for the past one-and-half decades, the former Siemens employee is identifiable as a German. So, he blames xenophobia for his lack of success, for which he coined the term 'NIH Syndrome.' NIH stands for "Not Invented Here."

Hamel, who came to Southwest Florida when Siemens opened its now-defunct turbine plant on the Manatee River in 1987, says that PEA is giving up the U.S. market for now and turning its attention to sales efforts in Europe.

There are major weak spots in Hamel's U.S. marketing efforts, all right.

For one, he hasn't submitted a formal project proposal to EPRI, the U.S. power generation industry's research institute. EPRI helps tie up inventors with its member power companies to establish research and pilot projects at existing power plants. (An EPRI employee says that foreign entities are among the beneficiaries of EPRI's research program. All technologies, though, must adhere to U.S. regulations.)

What's more, it's difficult for PEA to prove its technology actually works in a real-world environment. Anglo American Platinum Ltd., the South African company that operates the so far only large real-world application of the PEA process isn't exactly forthcoming with access to its premises. While Hamel says Anglo Platinum executives told him the system's operation has been "very positive," he also admits that he and his partners had problems even getting a photo of the $80 million facility in South Africa. (Anglo Platinum spokespeople wouldn't respond to repeated information requests. So, what could potentially serve as a demonstration project is largely off-limits.

Finally, Hamel, who retired from a long-time career with Siemens more than a decade ago, leaves the impression of being quite relaxed about his efforts. "My participation with PEA gives me an opportunity to work in cutting-edge research, as I did earlier in my career," Hamel says. "And it allows me to get upset about ignorant people," he adds with a laugh.

In summary, it may be easy to discard Hamel as a European snob.

But he certainly doesn't come across as one when you meet him. The engineer has a predilection for charts and technical details, and a clear aversion to hype. And he's disarmingly open about problems and challenges.

Rather than being distracted by Hamel's character, though, the spotlight should be on the receiving end of his pitch. Hamel's uphill struggle in getting people to listen begs the following question: Why don't corporate R&D bigwigs have their ear on the ground for new environmental technologies?

Consider what PEA's leading competitor in the United States had to do to capture the closest-to-market spot. EnviroScrub Technologies Corp., a 6-year-old Minneapolis startup, has invested millions of dollars in an effort to systematically market its multi-pollutant cleanup technology to the power industry. That includes the use of a public relations firm, and a million-dollar mobile demonstration unit mounted on a big-rig trailer. Also, the company cultivated close ties to its home-state utility, Minnesota Power Corp. These efforts finally paid off when the utility agreed become a major investor.

EnviroScrub's performance is sensational, but not as good as what PEA has developed. Hamel starts breathing a little faster when he pulls his charts showing how the PEA process eliminates more pollutants than EnviroScrub's Pahlman technology. EnviroScrub says it has developed a process that removes 99% of NOx and SOx, but only 60% to 70% of mercury. (The elimination of mercury is topping the agenda of federal regulators right now.) The PEA process gets out 99% of all three pollutants - at a lower cost, if you believe PEA.

Nevertheless, the competitor is closer to bringing its invention to market here. EnviroScrub's technology is now at use at two power plants in Minnesota and Michigan. Minnesota Power Corp. has actually become a major shareholder in the company.

So, I'd prefer to swap Hamel's complaint about the 'NIH' syndrome with one about the 'NEH' syndrome. That stands for 'Not Enough Hype.'

More than ever in the history of capitalism, hype - commonly known as advertising and public relations - is a major requirement to bringing consumer products to market. There seems to be a general consensus that - since producing high-quality hot air is costly - the final price must be passed on to the consumer. Some would call that waste, but I guess it's necessary to sell more of your detergent than the competition.

But it boggles my mind to see how executives at a handful of large corporations get the same treatment as millions of consumers. As a power company shareholder, I'd expect a more proactive attitude from 'my' executives.

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At 80 Euro-cents for the dollar, U.S. travel is at the lowest level in six years for Europeans. This year, Euro-wielding visitors have to pay 28% less than last year for hotels, rental cars, meals, and consumer goods. Indeed, many Europe-U.S. flights have been fully booked during this winter season. Although that has to do with the still-reduced capacities of airlines in the post 9/11 world, the carriers may increase the number of transatlantic flights this year.

However, there hasn't been a significant uptick of European tourism to Southwest Florida in the first two months of the year. So what's keeping German and French tourists from flooding Sarasota and Bradenton? Angst.

Here's what German newsmagazine Der Spiegel wrote on March 22 on German tourism to the United States:

"Airlines are bringing their planes back from desert storage with caution. That's because bureaucrats have placed higher hurdles before foreign tourists, due to higher terror alert. More thorough checks are part of the routine now. German tourists, because they enjoy a visa waiver, are exempt from fingerprinting and picture-taking. But the thorough checking still leads to tense situations at arrival in the United States. Reports about hour-long waits and controls perceived as harassment are a daily occurrence."

Plus, many Germans have an aversion against Big Brother sniffing out their personal data. The French have rejected U.S. requests to share flight booking data with Homeland Security agencies, but the German government now agreed to comply with a controversial European Union-United States agreement about providing all traveler data to U.S. authorities.

Maybe European tourists will eventually get used to the new downsides of travel to the United States. Or maybe they'll prefer to vacation on Spain's shores.

Johannes Werner is a Sarasota-based business journalist. He carries a German passport and publishes a trade monthly, Cuba Trade & Investment News. He can be reached at [email protected].

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