The Paducah Sun
The Paducah Sun
Sunday, January 21, 2001
Paducah, Kentucky

LOCAL STAKE
USEC still plays valuable role

Nick Timbers, the president and chief executive officer of USEC Inc., could not offer rosy guarantees for his company's future when he appeared in Paducah last week to speak to the Chamber of Commerce. But Timbers' remarks did provide some needed perspective for the gloom-and-doom scenarios of USEC's critics, including the union that represents workers at the Paducah plant.

Clearly, the USEC chief has become a specialist in crisis management since the nation's uranium enrichment industry was privatized in 1998.

The company's launch was burdened by a national security agreement that required it to purchase hundreds of metric tons of overpriced uranium from dismantled Russian nuclear warheads. At the same time USEC was importing the Russian stockpiles, the bottom fell out of the world uranium market, causing the price of enriched uranium to tumble.

Then came the demise of AVLIS, an experimental technology that was supposed to drastically reduce USEC's production costs.

Predictably, the dominoes began to fall: the value of USEC stock nose-dived, the company laid off hundreds of workers at its plants in Paducah and Portsmouth, Ohio; company officials decided to close the Portsmouth plant.

All of this has caused a great deal of anguish among plant workers and officials of the Paper, Allied-Industrial, Chemical and Energy Workers Union. USEC's woes also have worried people throughout this region of western Kentucky.

The uranium processing industry is a mainstay of the local economy, providing attractive technical jobs at relatively high rates of pay.

But despite all the turmoil, the Paducah plant is still up and running. In fact, as Timbers stressed during his recent Paducah visit, USEC is investing heavily in plant upgrades as it prepares to produce reactor-grade fuel here.

USEC also is attempting to branch out by moving into the waste conversion business. This is a promising move, considering that over a period of 10-to-20 years, hundreds of workers may be needed to deal with the legacy of contamination at the gaseous diffusion plant.

Unfortunately, the plant's workforce has been substantially reduced over the past three years, and future reductions are possible, if not likely.

No one welcomes layoffs, but Timbers made a point that needs emphasizing: USEC staked itself to this community. The company decided to invest here a decision that preserved hundreds of jobs and offered hope for the future.

"We have made substantial investments in upgrading the Paducah plant, and we see a productive future for it," Timbers said. "The decision to choose Paducah was mostly based on economics, but be assured that this community's support did not escape our attention."

Paducah has traditionally supported the uranium enrichment industry. Add to that the generally good labor relations that have prevailed at the Paducah plant and you have two major ingredients of the formula that produced a USEC decision to remain in Paducah.

In recent months, union leaders have adopted a hostile attitude toward USEC's management. To some extent, this is understandable, given the toll taken by the layoffs.

However, the charges that USEC is acting in bad faith, that it plans to shut down the enrichment operation and become a broker of Russian uranium, strike us as misguided and certainly unhelpful.

In all likelihood, Congress would step in and prevent any attempt to shut down domestic enrichment. Timbers is convincing when he insists that USEC's efforts to negotiate a better deal with the Russians are not designed to "supplant our domestic production."

From a business standpoint, USEC has been working to make the best of a bad situation.

USEC is a private company now and its managers must deal with the competitive realities of the market. USEC cannot force customers to buy high-priced U.S. uranium.

It's not clear what the future holds for USEC. It's possible that the company could be acquired by a larger firm. Also, USEC could develop gas centrifuge technology and shift its operation to an existing facility in Portsmouth. Or it could deploy a centrifuge in Paducah.

However, the overriding point is that USEC has chosen to make a stand in Paducah. With that it preserved hundreds of good jobs and the economic base of the area. The struggling company's critics need to keep that in mind.