BWXT will return in mid 2015ANS Nuclear CafeDecember 2, 2014, 7:11PM|ANS Nuclear CafeOn November 5, the day before a scheduled quarterly conference call with investors and analysts, Babcock & Wilcox (NYSE:BWC) announced that it was splitting into two separate publicly traded companies.One of the companies will retain the Babcock and Wilcox (B&W) brand and will include the business segment known as the Power Generation Group.That company will continue to manufacture large heat exchangers and specialty pollution control components for combustion steam plants heated by coal, waste, biomass, and gas turbine exhaust. B&W will have a projected 2015 revenue of approximately $1.7 billion. Jim Ferland, who came to B&W in April 2012 after a two-day stint as chief executive officer of Westinghouse, will continue to run that substantially smaller company.According to statements made during the November 6 quarterly conference call, B&W will be focusing on the international market for most of its new projects. It will continue earning about 50 percent of its revenue in the aftermarket servicing existing installations, much of which is in the United States.Ferland described how the new company expected to be able to increase its operating margins by making more of its products and performing more of its engineering via Thermax Babcock & Wilcox Energy Solutions, a joint venture that opened a new fabrication plant in India last January. He emphasized that the company sees growth opportunities but will not chase low margin contracts just to increase revenue.Though no layoffs have been announced for U.S. facilities, Ferland also mentioned that the company intended to maintain a relatively constant employee count of approximately 6,300 people. As work shifts to the new facility in India, its employee count will grow. There is only one way to keep the total constant: the number of U.S. employees will have to decrease.Pure play nuclearThe second company will include all of B&W's nuclear-focused business units and will revive a familiar name, BWX Technologies (BWXT). BWXT will establish its headquarters in Lynchburg, Va., home to facilities and offices that employ more than half of the company's 4,700 employees.Company spokeswoman Aimee Mills said that selecting a specific headquarters location will be part of the six-month planning process.John Fees, who is the current non-executive chairman of B&W and has worked for the company since before it was acquired by McDermott in 1978, will become the chairman of BWXT. Peyton (Sandy) Baker, also a long-time employee and current head of the government and nuclear operations group, will be the company CEO.From the outside, this new alignment looks a little like a divorce of a long-established marriage due to growing mutual incompatibilities.The activist investors who began taking large positions in B&W stock about a year ago have apparently determined that the company will be worth more by having two focused management teams working in areas of the energy industry that have some similar engineering needs-but function in entirely different regulatory environments and appeal to different types of investors.It should free up the BWXT marketing department to emphasize the clean energy advantages of atomic fission-both publicly and politically-without worrying about offending or disadvantaging a sister division that is still tied to coal.Each new company should appeal to investors with different goals for particular financial performance and product offerings. For example, an investor who believes that clean energy has better potential for growth than coal or biomass can now choose a pure play in nuclear instead of a mixed coal and nuclear company.Custody of mPowerDuring the conference call, there were several questions about the fate of the mPower small modular reactor project. Company leaders stated that they were still interested in the project, and that they were diligently working on a design certification application within the constraints of the current $15 million per year project budget.They are still working with the Department of Energy to determine how the matching funds it awarded to assist with the engineering and design certification effort will be best used and whether there will be additional funds provided.Only a portion of the initial award has actually been appropriated and distributed to the company.The mPower project will still be able to take advantage of the synergies provided by the existing manufacturing facilities and engineering skills associated with producing the specialized components required in nuclear power plants. All of those units of B&W are going to be a part of BWXT.The Nuclear Fuel Services subsidiary, as well as the various subsidiaries, joint ventures and limited liability companies created for Department of Energy cleanup work, will be housed within the new BWXT, too.Acquisition bait?Though Fees and Ferland repeatedly stated that neither company is for sale, it is apparent that each of the two new companies could be an attractive target for a certain type of conglomerate.BWXT might appeal to a major defense contractor seeking some commercial diversification and the growth potential of the mPower project if design certification can be completed, while B&W operates in the same market as Foster-Wheeler and Alstom, both of which are currently being acquired.Knowledgeable sources are optimistic about the prospects for BWXT to flourish under its new, focused management. The selected leaders are familiar and respected. Fees and Baker have deep expertise in creating and leading teams that provide the expected quality and level of service to both government and commercial nuclear customers.They recognize the future potential for the mPower project and for continued growth in providing nuclear-related technical services and exceptionally high-quality fuel and other components. They know that they are in a business that cannot succeed with a cost-reduction, outsource-to-India mindset. Unfortunately for the current employees of the mPower project, the cost-cutter mindset appears to have at least another six months of dominance.The road to success for BWXT will be growing revenue by meeting customer expectations and by providing differentiated products that can demand higher margins because they are more productive than the competition.Of course, like any divorce, there will be costs associated with the process of splitting.The lawyers will get their share, the auditors will get their share, and the branding companies that produce signs, sales literature, and stationary will get theirs. The company estimates that there will be a one time cost of $45 million-$55 million associated with the split.It also recognizes that there will be an ongoing cost associated with having two separate management teams, two separate auditors, a different kind of insurance program, and two separate headquarters.This split should be fairly equitable and non-contentious. There are few physical assets that are currently shared between groups that will end up in "the other" part of the company, and there already appears to be a mutual understanding of who will take care of each of the children.The market's reaction to the announcement has been cautiously positive.Note: A version of the above first appeared in the November 13, 2014, edition of Fuel Cycle Week. It is reprinted here with permission.Tags:pwrsreactor designssmall modular reactorsShare:LinkedInTwitterFacebook
Trump leaves space nuclear policy executive order for Biden teamA hot fire test of the core stage for NASA’s Space Launch System rocket at Stennis Space Center in Mississippi was not completed as planned. The SLS is the vehicle meant to propel a crewed mission to the moon in 2024. Source: NASA TelevisionAmong the executive orders President Trump issued during his last weeks in office was “Promoting Small Modular Reactors for National Defense and Space Exploration,” which builds on the Space Policy Directives published during his term. The order, issued on January 12, calls for actions within the next six months by NASA and the Department of Defense (DOD), together with the Department of Energy and other federal entities. Whether the Biden administration will retain some, all, or none of the specific goals of the Trump administration’s space nuclear policy remains to be seen, but one thing is very clear: If deep space exploration remains a priority, nuclear-powered and -propelled spacecraft will be needed.The prospects for near-term deployment of nuclear propulsion and power systems in space improved during Trump’s presidency. However, Trump left office days after a hot fire test of NASA’s Space Launch System (SLS) rocket did not go as planned. The SLS rocket is meant to propel crewed missions to the moon in 2024 and to enable a series of long-duration lunar missions that could be powered by small lunar reactor installations. The test on January 16 of four engines that were supposed to fire for over eight minutes was automatically aborted after one minute, casting some doubt that a planned November 2021 Artemis I mission can go ahead on schedule.Go to Article
Advanced reactors important for carbon-free power production in U.S., tweets Vice NewsA video posted to Twitter by Vice News discusses the prospect of advanced reactors being an important mix of carbon-free power production in the United States. Hosted by Gelareh Darabi, an award-winning Canadian-British-Iranian journalist and documentary filmmaker, the video provides quick and easy statistics for the general audience and pulls from social media influencer I_sodope. It also includes comments from nuclear experts.Go to Article
Nuclear scores point in U.K. green planThe United Kingdom, the first of the world’s major economies to adopt a legally binding commitment to achieve net-zero greenhouse gas emissions by 2050, has released a blueprint to help realize that goal—one that includes a substantial role for nuclear energyThe Ten Point Plan for a Green Industrial Revolution will mobilize a total of £12 billion (about $16 billion) of government investment to create and support up to 250,000 highly skilled green jobs in the United Kingdom and spur over three times as much private sector investment by 2030, according to the UK government on November 18.In addition to nuclear, offshore wind, hydrogen production, carbon capture, and vehicle electrification are also earmarked for significant investment in the 38-page document.Go to Article
Advanced nuclear to be a focus of reopened Arctic Energy OfficeThe Department of Energy has announced the reestablishment of the Arctic Energy Office (AEO), to be located on the campus of the University of Alaska Fairbanks. The AEO was originally established in 2001 but failed to receive sufficient funding. Energy Secretary Dan Brouillette had pledged to reopen the office by the close of the current federal fiscal year.The focus of the AEO, according to the DOE, will include international cooperation on Arctic issues, research on methane hydrates, and the development of advanced microgrids and nuclear power systems, such as small modular reactors.Go to Article
Statement from ANS Executive Director / CEO Craig Piercy on UAMPS’ Carbon Free Power ProjectAs the voice of American nuclear engineers and scientists, ANS congratulates NuScale Power for receiving the first-ever final safety evaluation report for a small modular reactor issued by the U.S. Nuclear Regulatory Commission.Go to Article
Sixty-day extension for comments on proposed SMR ruleThe Nuclear Regulatory Commission has extended the deadline for comments on its “Proposed Rule for Emergency Preparedness for Small Modular Reactors and Other New Technologies” to allow more time for members of the public and other stakeholders to develop and submit their comments. The proposed rule and associated draft regulatory guide apply to non-light-water reactors and certain nonpower facilities, and were originally published in the Federal Register on May 12 with a deadline of July 27. The new deadline is September 25.Go to Article
White House appointee sees advanced nuclear option for Puerto RicoAll energy sources, including small modular reactors, are being considered to meet Puerto Rico’s energy needs, U.S. Coast Guard Rear Admiral Peter J. Brown said on July 15 during the second day of PR-Grid Virtual, a three-day online conference on Puerto Rico’s energy grid. Brown’s comments were quickly circulated on Twitter by people who are already working to make nuclear power a reality for Puerto Rico, including members of the Nuclear Alternative Project (NAP), a non-profit organization of Puerto Rican engineers in the nuclear industry.Go to Article
Comments requested on proposed EP ruleThe Nuclear Regulatory Commission is taking comments on its “Proposed Rule for Emergency Preparedness for Small Modular Reactors and Other New Technologies,” published in the Federal Register on May 12. The proposed rule and associated draft regulatory guide apply to non–light-water reactors and certain nonpower facilities.Go to Article
RadioNuclear 22: HBO’s Chernobyl: A Setback or Opportunity? Episode 22 of RadioNuclear is now available. In this episode, we discuss the recent miniseries "Chernobyl", which recently concluded on HBO. We debunk some of the more egregious articles written in the wake of the show (see links to these articles below). We also discuss good ways to engage with individuals who are captivated with the show, and not necessarily familiar with nuclear technology.Go to Article
Advancing Nuclear: Paths to the Future"How do we move nuclear energy into the future?" was the question asked and answered in a variety of ways during a fascinating speakers' session that followed this morning's opening plenary. Several expert speakers in a variety of fields provided frank and illuminating commentary on the condition of nuclear now, and on the things that have to change for nuclear energy to be vibrant in the decades to come.Go to Article