Politicians put onus on USEC
Officials with the U.S. Department of Energy have repeatedly broken their promises to workers at the Paducah Gaseous Diffusion Plant, but give these federal bureaucrats credit for audacity. They have no qualms about telling the United States Enrichment Corp., the plant's operator, to take care of workers by dipping into its pension fund reserves to provide early retirement incentives.
In an effort to cut costs and improve the company's shaky financial position, USEC officials recently announced they are planning to eliminate 621 jobs at the uranium enrichment plants in Paducah and Portsmouth, Ohio.
Suddenly, USEC was besieged by amateur financial analysts, including members of Congress and Energy Secretary Bill Richardson, who offered their opinion that the company can afford to offer early retirement incentives to help reduce the number of forced layoffs.
USEC's managers disagree: They insist the company's pension fund cannot absorb the cost of early retirement benefits.
Ordinarily, this would be the end of the dispute. After all, USEC is now part of the private sector. USEC managers are accountable to their stockholders, not to politicians.
Secretary Richardson is entitled to his opinion about the pension fund, but he is not empowered to make decisions for USEC and its stockholders.
Unfortunately, this is not an ordinary business situation. Congress and the Clinton administration privatized USEC two years ago, but they didn't remove the political strings.
Washington keeps jerking those strings, making it more and more difficult for USEC to survive in a competitive world market for reactor fuel.
The pension fund dispute is only the latest example of political meddling that threatens the company's financial viability.
With former U.S. Sen. Wendell Ford leading the way, Congress endorsed privatization as the best strategy for keeping the U.S. uranium enrichment industry competitive. Congress and the Clinton administration accepted the theory of privatization, but it quickly became clear they weren't comfortable with the real world ramifications of it. As a result, the privatization agreement saddled USEC with a number of mandates, including one that forces it to keep the Paducah and Portsmouth plants open for seven years unless the company is nearing financial collapse.
The administration's Russian uranium deal, which produced a glut of enriched uranium on the world market, forcing prices down, virtually guaranteed that USEC would run into trouble.
We're not prepared to defend all the decisions of USEC's managers, but the fact is, they didn't put the company in this hole. Ironically, the people who are mainly responsible for USEC's difficulties now are demanding that the company come up with millions of dollars to fund early retirement incentives.
The position taken by Richardson and DOE officials on the retirement incentives is especially galling. Richardson says the incentives are needed, but USEC must pay for them through its pension fund. A top DOE official dismissed as too conservative actuarial reports on the pension fund that show USEC would have to put additional money in the fund if the company offers the early retirement plan.
Keep in mind that Paducah is littered with the broken promises of Richardson and DOE officials.
On a variety of issues ranging from funding for health screenings to the construction of congressionally mandated facilities to convert depleted uranium into a safer form, DOE has failed to take responsibility for the welfare of workers at the gaseous diffusion plants.
The conversion plants would provide jobs for displaced workers, but DOE has consistently refused to move the projects forward.
U.S. Sen. Mitch McConnell recently sent a letter to Secretary Richardson suggesting that funds be made available to cover early retirement incentives at the enrichment plants. Richardson's response was let USEC pay for it.
It's hypocritical for the energy secretary to put this monkey on USEC's weakened back. The federal government has done very little for the workers who once helped carry the nation's Cold War nuclear program. Still, federal officials have the gall to argue the struggling plant operator should assume the financial burden of early retirement for these workers.
An impression is that DOE officials and members of Congress would like USEC to manage its retirement fund in the same fraudulent way the government has managed Social Security. In other words, pay off workers today and reap the political benefits, but leave future retirees stranded.
If Congress and DOE are feeling generous toward the workers at the gaseous diffusion plants, they should come up with the funding for the early retirement package. In any event, they should stand aside and give USEC's management at least some chance to right their own ship.