November 25, 1999
USEC job cuts still up in air
By Joe Walker
About 1,600 Paducah Gaseous Diffusion Plant employees will observe Thanksgiving today not knowing if they will have jobs at this time next year.
As the plant made plans to maintain its usual holiday skeleton crew, the board of directors of USEC Inc., which operates the plant, met for several hours Wednesday at company headquarters in Bethesda, Md. The board reached no decision on employment levels or whether the company will back out of its role as agent for $12 billion in uranium blended down from Russian nuclear warheads.
USEC has received a cool reception in Washington to its request for about $200 million in federal money to help offset losses related to the Russian agreement. The pact is costing millions of dollars in uranium priced at about $8 per unit more than Paducah and its sister plant near Portsmouth, Ohio, can produce it for, USEC says. The material roughly equals the production of one of the plants.
Administration officials dispute the losses and have proposed other options.
"They (board members) had a full discussion of all relevant issues," USEC spokeswoman Elizabeth Stuckle said. "The board has taken the matter under advisement and will make an appropriate decision by Dec. 1."
The meeting was an extension of a meeting earlier this month on the Russian matter, she said.
Stuckle said the board will meet next week, although no decision had been made as to when, or whether the meeting will be in person or by phone. Directors have until midnight Wednesday to decide whether to change or pull out of the Russian agreement, which otherwise will renew itself.
The board discussed a range of cost-cutting measures but decided nothing about employment levels, Stuckle said.
Richard Miller, policy analyst for the atomic workers' union at the two gaseous diffusion plants, said Wednesday he sensed a hesitation by USEC's board. "If they didn't decide anything, it's likely that they blinked. ...
"The board apparently came out of the meeting with neither a package to say, 'We'll stay on with the Russian agreement and meet the commitments to our stockholders' nor a way to stay in the agreement and gracefully exit the predicament they essentially painted themselves into by overplaying their hand with the government."
Union and elected officials fear as many as 850 layoffs at the two plants as early as next spring on top of 500 cuts already made.
Earlier this month, USEC lobbyist Thomas Hale Boggs Jr. wrote the White House saying there will be "several hundred" layoffs at the plants because the firm is losing huge amounts of money as the agent for Russian uranium. Stuckle said Boggs' wording was unfortunate and no decision on jobs has been made.
Boggs' memo asked for administration support for money to help offset losses in the Russian deal through 2001. It also asked for accelerated spending of $175 million in a Department of Energy fund to hire laid-off USEC employees for cleanup work.
U.S. Rep. Ed Whitfield, R-Hopkinsville, said last week that he was concerned that USEC was paying high dividends to stockholders despite having financial problems severe enough to warrant governmental help. He said he anticipates job cuts by next July, which is why he has been trying to get more environmental cleanup money to create jobs for displaced workers.
Whitfield and counterpart Rep. Ted Strickland, D-Ohio, want an enforceable agreement between USEC and its landlord, the Energy Department, to maintain plant employment through Dec. 31, 2004, except for early retirement, attrition or re-employment as DOE environmental workers. They also want enhanced severance packages for workers.
Strickland wrote Vice President Al Gore saying he disliked using public resources to help USEC when it is paying dividends exceeding profits and stock buybacks of $100 million. He also said that an announcement of "significant layoffs" at the two plants was expected as early as March, regardless of government aid.
The two U.S. representatives of the districts with USEC plants - Ed Whitfield, R-Ky., and Ted Strickland, D-Ohio - want to force USEC to reinvest 75 percent of its net cash flow to modernize the plants to be internationally competitive and stay eligible for any governmental relief for the Russian burden.
They also want to waive a restriction that no one may own more than 10 percent of USEC stock within the first three years of USEC privatization in July 1998. The provision was to guard against a hostile takeover, but now DOE reportedly is talking with at least three nuclear firms as alternative agents for the Russian uranium.
Miller identified the three firms as Cameco of Canada, Nukem of Germany
and New York Nuclear. He said that the nationality of the broker isn't crucial,
except that having that status generally allows the broker a "privileged
market position" in selling part of the uranium processed in Paducah