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Retirements, layoffs slash workforce at Westinghouse

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By Thomas Olson
Friday, May 18, 2012, 8:10 p.m.

Westinghouse Electric Co. laid off 25 employees across the country and another 152 accepted an early-retirement offer on Friday as the company moved to adjust its workforce to a slowdown in the nuclear power industry.

The Cranberry-based nuclear power company wants to reduce annual costs by $145 million to $250 million from job reductions and "process improvements, reductions in supply chain spending" and other steps, according to internal memos reviewed by the Tribune-Review.

Of the 177 people exiting the company, 133 are based in Western Pennsylvania, said spokesman Vaughn Gilbert.

The nuclear power industry was set back in March 2011 when a powerful tsunami caused by an earthquake wrecked the Fukushima Daiichi nuclear complex in northern Japan. The reactors there were not Westinghouse designs but were supplied by General Electric Co., Hitachi and Toshiba, which is Westinghouse's majority owner.

The "global economic situation" also contributed to some utilities and other customers delaying certain Westinghouse work, Gilbert said.

"Because of the uncertainty caused by the Fukushima accident, a number of our customers have put off making investments in their existing (power plant) fleet until they determine what types of upgrades they may be required to make," he said.

Westinghouse delivered "positive financial results" in 2011, but the performance "did not meet expectations," according to a memo to employees from Rick Gabbianelli, senior vice president of strategy.

"While we remain financially healthy, we also must be realistic that 2012 will continue to challenge us to meet performance and profitability objectives," Gabbianelli wrote, calling the downsizing a "mid-course correction."

The company employs about 14,000 people, including about 6,000 in Western Pennsylvania, mostly at its headquarters in Cranberry.

"Now, with post-Fukushima delays, price competition with other resources and newly emerging competitors, we need to adjust our infrastructure so that it better aligns with the relatively flat growth we are experiencing," according to a memo to employees from Tony Greco, senior vice president of human resources.

Construction of four new AP1000 reactor units -- with a simpler, passive cooling system than older reactors -- is under way in China. The first of those is expected to come on line in 2013. The three others are to be finished and come on line by the end of 2016.

Many other markets are pulling back. After the Fukushima disaster, for instance, the German government voted last May to shut its nuclear power plants by 2022. Last June, Italians voted overwhelmingly to ban nuclear energy there in a national referendum. Two weeks ago, Japan shut down the last of that nation's 50 operable nuclear power plants.

Utilities in Georgia, South Carolina and Florida have selected the AP1000 design for six reactor units they plan to build. But Progress Energy Florida Inc. said on May 3 that it would not place into service the first of two AP1000 reactors slated for northern Florida until 2024, instead of 2021. It cited lower-than-expected power demand, the slower economy and nuclear power's competition from low natural gas prices.

Westinghouse's cutbacks come shortly after the sudden departure of CEO-to-be James Ferland, who resigned on April 4 to become CEO of Babcock & Wilcox Co. right before he was to take over the same job at Westinghouse. A search for a new CEO continues, said spokesman Scott Shaw.

Employees laid off and leaving voluntarily are in communications, human resources, marketing, finance, legal, environmental health and safety, supply-chain management and other areas. The voluntary separations were offered to workers on April 23.

None of the cuts yesterday involved the design, engineering or production of AP1000 reactors.

"This was not aimed at the product lines or the engineering or manufacturing segments of the company," said Gilbert.

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