December 1, 1999
USEC to decide on Russia warheads
By Joe Walker
The USEC Inc. Board of Directors planned to meet by telephone early today to decide whether to stop being the agent for $12 billion in uranium derived from dismantled Russian nuclear warheads.
USEC spokeswoman Elizabeth Stuckle declined to give the time of the meeting. She said a decision was pending on the Russian agreement, which automatically renews unless the board makes changes by midnight tonight.
"I think the announcement is going to be that they're continuing as executive agent for the Russian uranium," said David Fuller, president of the largest labor union at the USEC-operated Paducah Gaseous Diffusion Plant. "I think they've painted themselves into a corner."
Labor and elected officials have expressed fears of hundreds more job cuts at Paducah and its sister plant near Portsmouth, Ohio. Asked if the board would decide anything about layoffs, Stuckle said only that it "will review our current cost-reduction studies."
Fuller said he expects USEC to keep looking at its financial situation and the possibility of layoffs.
"I think they're going to continue to review their staffing levels and production strategies," he said, "which basically keeps the future of the plants and prospective layoffs on the table."
USEC has received a cool reception in Washington to a request for about $200 million in federal money to help offset losses related to the Russian deal, which USEC says is costing millions of dollars in uranium priced at about $8 per unit more than the cost for which the plants can produce it. The material roughly equals the production of one of the plants.
The union fears massive job cuts as early as next spring on top of 500 cuts already made but says the Russian deal has no direct correlation.
"Continued employment at the gaseous diffusion plants is not tied to the subsidy request," said Richard Miller, the union's policy analyst. "We've been briefed by a USEC lobbyist that there will be 850 layoffs whether or not they (USEC officials) get the subsidy."
USEC has 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.
Federal lawmakers from Kentucky and Ohio have criticized USEC for paying high dividends to stockholders amid financial problems bad enough to seek governmental help. They 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.
Although the union is sympathetic with USEC's financial burden under the Russian agreement, it worries that the firm is more concerned with short-term dividends than long-term plans to be competitive and protect jobs, Miller said.
"Without a clear, long-term viability plan, it's difficult to go to taxpayers and ask them to pay for a bailout," he said.
As Miller sees it, USEC has these options: (1) remain as agent and seek subsidies; (2) exit the agreement and risk that the government will introduce competitors for the Russian uranium; or (3) threaten "economic consequences" if it does not receive a bailout.
Miller stopped short of saying USEC would threaten layoffs. "So
far," he said, "that kind of sharp-edged sabre rattling has not
been well received politically on Capitol Hill."