From The Business Journals
Westinghouse’s deal with CB&I Tuesday will put thousands of new employees into the company. It’s also likely to settle a longstanding federal lawsuit.
As part of a $229 million deal with CB&I Stone & Webster (NYSE: CBI) to acquire the its nuclear construction and engineering business, Westinghouse Electric Co. will take charge of as many as 8,000 additional employees, according to a company spokeswoman. Those include professional technical employees and construction craft workers.
Westinghouse is based in Cranberry, but company President and Chief Executive Officer Danny Roderick told the Pittsburgh Business Times that a significant majority of those workers — nearly 7,000 of them — will be stationed in Georgia and South Carolina, at two nuclear projects that are the first in the United States to be licensed by the Nuclear Regulatory Commission since 1978. Roderick forecasts that the number of employees at those sites will increase.
“We want to be able to accelerate those projects,” Roderick said. “We want to get these projects done as quickly and most efficiently as we can.”
There’s a good reason for that.
The Summer project in South Carolina has been delayed. The Vogtle project in Georgia is tied to billions in cost overruns alone.
In 2012, those overruns and related delays became the focal point of federal lawsuits filed in Georgia district court. Those lawsuits were merged into one — Georgia Power Co. et al v. Westinghouse Electric Co. LLC — and have slogged forward since 2012. Provided that the deal with CB&I goes through, that lawsuit will be settled. The settlement includes heavy penalties if Westinghouse doesn’t get the projects done on time, and limits Westinghouse’s ability to seek price increases.
MORE: Five things to know about Westinghouse’s deal with CB&I
“This whole settlement isn’t about some big windfall profit coming back to contractors,” Roderick said. “It’s about resetting where we are and finishing these projects strong.”
In a statement issued Wednesday, Georgia Power calls the deal a win for everyone.
“This settlement is extremely positive for the Vogtle project and now the contractors can focus 100 percent on project execution,” said Buzz Miller, executive vice president of nuclear development for Georgia Power, in a statement. “The agreement resolves current and pending disputes, reaffirms the current schedule and increases efficiencies by streamlining resource deployment with Westinghouse and its affiliates as the prime contractor over the Vogtle expansion.”
James Conca, who writes about the ” Geopolitics of Energy” for Forbes and is a chief technical officer for UFA Ventures specializing in nuclear waste disposal, said the deal will help to solidify Toshiba’s role in the nuclear industry.
“It should shore up the Vogtle and Summer projects,” he said. “It should also strengthen Toshiba in the nuclear arena, especially in China where the real nuclear market is.”
It’s also going to make life easier for people working on the projects.
The Pittsburgh Business Times spoke with a former Westinghouse employee who’s done risk assessment work on the U.S. nuclear construction sites in South Carolina and Georgia. The former employee asked not to be identified because this person provides consulting services with one of the companies involved in the Westinghouse deal.
The Westinghouse deal with CB&I allows Westinghouse’s projects in the U.S. to be more “vertically integrated” — to own its own supply chain and communicate internally.
“In the past,” the former employee said, “Westinghouse and CB&I have tried to guard information from each other. The more you hide the information, it ends up affecting the project negatively. Since they’re now one and the same, they can share without stepping on each other’s toes.”
“I see this as a good thing for everyone involved,” he said.