Piketon plant to close

["Jim Hardeman" <Jim_Hardeman@mail.dnr.state.ga.us>]

Article can be found at http://www.dispatch.com/news/newsfea00/jun00/323222.html 

Jim Hardeman
Jim_Hardeman@dnr.state.ga.us 

============

Piketon plant to close
2,000 workers will lose jobs because of shutdown 

Thursday, June 22, 2000

Jonathan Riskind
Dispatch Staff Reporter 

WASHINGTON -- Rebuffing pressure from Congress members and top Clinton administration officials, the company that runs a uranium- enrichment plant in southern Ohio yesterday unveiled plans to shut down the facility a year from now. 

About 2,000 workers stand to lose their jobs at the Portsmouth Gaseous Diffusion Plant in Piketon, Ohio. By June 2002, just a few hundred workers will be running transfer and shipping operations. Those jobs then will be phased out. 

After a daylong meeting behind closed doors near Washington, the board of USEC, a privatized federal corporation, announced it will cease operations at the plant next June and begin a series of layoffs. USEC will turn the sprawling facility that it leases over to the federal government. 

It will keep a sister plant open in Paducah, Ky. 

Rep. Ted Strickland and others vowed a fight, but it was unclear whether the closing could be derailed. 

"The thousands of working families in our part of Ohio who depend on this industry for their livelihood deserve much better,'' said the Lucasville Democrat, whose district includes the plant. "For generations, these brave, hard-working men and women have sacrificed for national security. Now they are being abandoned by a USEC management that is driven more by short-term profit and self-preservation than by common sense.'' 

Secretary of Energy Bill Richardson pledged to try to shift as many workers as possible into federally funded jobs cleaning up the Piketon site and to otherwise "mitigate the impacts of USEC's management failures.'' 

Richardson added that he will recommend changes in the government's relationship with USEC, including "serious consideration'' of replacing the company as the government's agent in a key Russian arms-control deal. 

The financially ailing company said it will save about $55 million in "fixed production costs'' in the fiscal year after the plant closes. 

Wall Street analysts have been urging USEC to close a plant to help prop up its stock price. It had fallen to about $4.50 a share at its lowest point from $14.25 when the company was privatized in July 1998. 

This year, USEC's credit rating also was downgraded to below investment grade, triggering a clause in the privatization agreement that allowed closing of a plant before 2005. 

Strickland and Sens. George V. Voinovich and Mike DeWine question whether USEC deliberately damaged its credit rating by implementing a multimillion-dollar stock buyback. 

That was one of the reasons they asked Treasury Department officials to seek a court injunction delaying the closure announcement. There was no indication last night whether federal officials would take such a step. 

Gov. Bob Taft joined the call for an investigation of whether USEC manipulated its bond ratings. 

"I am going to press the (U.S.) Treasury to enforce this contract, investigate if this company dealt in good faith and explore other legal options for protecting Piketon,'' he said. 

Taft also instructed Lee Johnson, state director of development, to create a rapid-response team to meet with local officials and community leaders to determine how to help affected families -- and ways to attract new businesses to the area. 

Less than two years ago, USEC promised to keep both the Piketon and Paducah plants open until at least 2005 as a condition of the privatization of the United States Enrichment Corp., which began running the plants for the government in 1993. 

During the Cold War, both plants produced weapons-grade uranium for the nation's atomic-defense program. They now produce material for commercial nuclear-power-plant fuel. 

Ohio's senators, both Republicans, reacted to the company's flip-flop with anger and suspicion. 

"There were far too many signs that USEC was looking to weasel out of its contract with the Treasury Department and bleed the Piketon plant dry,'' DeWine said. 

Voinovich said he is "outraged'' that USEC board members refused to delay the decision while state officials tried to make it more attractive for USEC to keep the Piketon plant open. 

"We deeply regret having to take this action, but we clearly could not continue to operate two production plants,'' said William H. Timbers, president and chief executive officer of USEC. 

USEC said in a press release that the Paducah plant gets a better price on electricity for the power-intensive enrichment process and has a "history of reliable operations.'' 

USEC also said it hoped many Piketon workers would be shifted into federal cleanup jobs. It will take years and hundreds of millions -- if not billions -- of dollars to clean up the entire 3,700-acre plant site, but it isn't clear how much money Congress will appropriate for the task in the near future. Some cleanup work already is proceeding on parts of the site not used for enrichment operations. 

If USEC follows through on its decision, it would need to upgrade the Paducah plant, which now carries out half of the enrichment process. 

And it would leave the United States with only one plant capable of producing the fuel used by the nuclear plants to provide more than 20 percent of the United States' electricity and capable of generating weapons-grade uranium if it were ever needed again. 

Here's how the plant shutdown will proceed, according to company officials: 

Beginning next month, USEC will lay off more than 300 workers. Similar layoffs will occur at the Paducah plant, which employs about 1,700 people. 

In June 2001, enrichment operations will cease at Piketon. More workers will be laid off in the next 12 months. 

After June 2002, 250-300 employees will run transfer and shipping operations for about three years. 
Richardson and other government officials kept up pressure on USEC in the hours before the decision was announced. 

"It is deeply disturbing that the USEC board is even considering the precipitous step of initiating a plant closing less than two years after USEC privatization,'' Undersecretary of the Treasury Gary Gensler wrote in a letter to USEC. 

But Timbers told Richardson in a letter Tuesday that USEC is trying in good faith to renegotiate the Russian arms- control deal that has been a test of its privatization. 

The $12 billion, 20-year deal involves USEC buying 500 tons of enriched uranium culled from thousands of Russian nuclear warheads. 

USEC has complained that one of the reasons it is faltering is that its contract requires it to pay above-market prices for the Russian material. 

Meanwhile, its two plants each have been operating at 25 percent of capacity. 

"That is no way to run a business,'' Timbers wrote Richardson. 

But Richardson said in a return letter that USEC management had pushed hard for privatization. Before that move was made, USEC declared it was confident it could carry out the Russian deal and operate both plants until at least 2005 while developing new, less-expensive technology. 

Richardson also referred to USEC requests for federal assistance as part of a joint Energy Department-USEC project to develop technology for uranium enrichment that uses less electricity. 

"USEC's list of 'wants' from the federal government is a long one and is not backed up by a reasoned plan to justify such a significant investment of the public's money,'' he said. 


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