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Friday, October 24, 2008

540 jobs, $363 million in nuclear reactor deal

[Note that the forgings will be assembled at this new facility, but the large forgings themselves will be made elsewhere. This will still ease the bottleneck, as Korea, China, UK, and India have all discussed plans to expand forging capability.]


The next generation of commercial nuclear reactors will be built in Newport News.
By Chris Flores and Hugh Lessig
757-247-4738 804-225-7345
October 24, 2008

-->A deal announced Thursday that two major global companies plan on building nuclear power plants at a new facility in Newport News will put the city at the forefront of an industry that is likely to grow for decades.Northrop Grumman Shipbuilding and French nuclear giant AREVA announced they will invest $363 million and create 540 jobs at a new 368,000-square-foot nuclear reactor manufacturing facility. The presence of the new industry will add an important layer of diversity to the shipyard and the city."It enables, on the footprint of the shipyard, a new technology, a new form of production," said Gov. Timothy M. Kaine. "Shipbuilding is a massive industry. It has some cycles associated with it. But to have this technology at the shipyard location ... is a great thing for that shipyard."The building where the joint venture will do the work will be constructed in the north end of the shipyard where there is currently a large parking lot. The companies make the large components, but not handle any radioactive nuclear materials, that will be used to construct a wave of planned reactors nationwide.The move will further strengthen Virginia's position as a leader in nuclear technology and bring high-paying engineering and advanced manufacturing jobs to Newport News. Construction of the facility, which will help Northrop Grumman be less dependent on federal spending cycles that can lead to the loss of skilled employees, will start in March 2009."This gives us a chance to diversify a little bit and allow us to smooth more of that out," said Mike Petters, president of Northrop Grumman Shipbuilding. "We don't see this as interfering with anything we do on the Navy side. In fact, we think it compliments it very well."The partnership between the companies stemmed from the shipyard's expertise in engineering and managing the construction of large naval vessels over long time horizons. The companies believe it will take three years to get the new building ready to begin operating, with production starting by December 2012.There has not been a single new nuclear plant built since the Three Mile Island accident in 1979. The new manufacturing facility will be the first of its kind built in 35 years in the United States. The new venture, called AREVA Newport News, will make reactor parts that weigh as much as 500 tons.AREVA's subsidiary in the United States is based in Lynchburg, the central part of Virginia, where it employs 2,000 workers. From that base, AREVA NP has a facility that makes the uranium-filled fuel rods that run nuclear plants. The company also does engineering and dispatches experts to do maintenance at plants nationwide.While the AREVA operations have revolved around harnessing its expertise to serve existing nuclear plants, the company is now ramping up to construct new ones. There are at least 20 companies currently going through the federal regulatory process to build 35 new plants.
IncentivesTo attract the project, the state and local governments are putting up more than $23 million of incentives. The state will put up $4.5 million of performance-based funding, and will offer up to $1.3 million in tax credits and job training assistance.Newport News will offer an investment grant over four years estimated at $6.5 million, one-half of 1 percent of the taxable investment. It will also get a 50 percent break on business license fees over 10 years, valued at almost $2.2 million. The city will also provide a $1.2 million discount on a lease of three floors of office space in the city-owned Rouse Tower building at the corner of Mercury Boulevard and Jefferson Avenue.The employees in the Rouse building will work for Newport News Energy, a new Northrop Grumman subsidiary formed to work with the new venture. About 190 engineers, designers and field support positions will work for Newport News Energy. Those jobs will offer average salaries of $70,000. AREVA Newport News will hire 180 engineers and managers and 170 manufacturing employees in "skilled crafts" for the new facility. They will be paid $50,000 annually on average.The new building will specifically be used to manufacture the parts for the AREVA Evolutionary Power Reactor design. Seven utilities planning new plants have already committed to using the EPR reactor, and the new plant will give AREVA the option of building them in Newport News. Petters said Thursday that the facility does already have a backlog of orders.AREVA has been making these nuclear components for more than 30 years at a large plant in France, which has embraced nuclear power as its main source of electricity. AREVA says it is the leader in the nuclear industry in the United States both in numbers of employees and revenue.
New processAs interest has grown in the United States to build more nuclear plants, which generate concerns about waste but do not emit pollutants, a new process has been put into place to make them easier to build. A key part of the process is approval for standardized designs that can be matched easily to plans for a specific site and utility operator.AREVA has already spent $200 million on the design and certification of the EPR reactor.The main players vying to get their designs approved are AREVA, General Electric, Westinghouse and Mitsubishi. Dominion Virginia Power, which runs a nuclear plant in Surry County, is far along toward building a new reactor at North Anna outside Richmond. Dominion has chosen the design and is buying parts for its reactor from GE Energy, which will be a major competitor for AREVA Newport News.The AREVA plant in Lynchburg is one of four in the country that manufacture nuclear fuel rods, and AREVA operates another one in Richland, Wash.
A coupThe deal is a coup for Newport News, which finds itself in the enviable position of adding large numbers of engineering and advanced manufacturing jobs amid a troubled economy. Canon announced in May that it was investing in a $625 million expansion of its Newport News plant and adding over 1,000 high-paying jobs."It's yet another example that advanced manufacturing is able to survive and grow in the United States," said Florence Kingston, economic development director of Newport News.The waterfront location of the new facility, which will enable transportation of the large components by barge on the James River, also played a role in the decision to locate here. Kingston said the recent years' improvements such as City Center have helped make the city a more attractive place for businesses.The new industry, which will now involve the city's largest, long-standing employer at the shipyard, is another step toward stepping away from the local economy's reliance on government spending. It gives Northrop Grumman a new field that compliments its existing strengths."You're seeing our companies re-make themselves so they can survive," said Kingston.Petters said that when his company saw the re-emergence of the nuclear industry occurring, they realized that the shipyard's work building the nuclear reactors for the Navy could be an asset to private industry."One of the things we saw is that there are not too many people out there who do what we do – the manufacturing side of it," said Petters.The announcement from Kaine was heavy on symbolism, as the press conference was moved to the ornate Jefferson Room at the Virginia Capitol. Thomas Jefferson designed the Capitol while in Paris, basing it on an ancient Roman temple in Nimes, France. Just down the hall from the press conference stands the life-size likeness of George Washington by French sculpture Jean-Antoine Houdoun."The relations between France and Virginia are strong, and those relations are accelerated today," said Kaine.
What will the new facility do? Workers will build the huge components weighing as much as 500 tons that go into a nuclear reactor. There will not be any work with radioactive materials, which are added to reactors after they are fully assembled at a site.
About the companies Northrop Grumman Corp.Headquarters: Los AngelesWhat it does: Global defense contractor in services, aerospace, electronics and shipbuildingNumber of employees: 120,000Number of Newport News employees: About 21,000AREVAHeadquarters: ParisWhat it does: Maker of nuclear components and key player in electricity distributionNumber of employees: 71,000Number of employees at AREVA's Lynchburg subsidiary: 2,000
Copyright © 2008, Newport News, Va., Daily Press

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