Both companies hope that an export market will sustain some of their design and manufacturing capability. The likely export market (described later in this chapter), however, has shrunk to only a fraction of what was projected 5 years ago and is currently substantially less than what can fully use worldwide manufacturing and design capability.

For U.S. companies to compete successfully requires not only continued technical success (as is being attempted in these joint ventures) but also possible modifications in U.S. export financing and nonproliferation policies (25). There is evi

dence that some orders have already been lost because U.S. vendors are losing their reputation for up-to-date technology. As a Finnish source told Nucleonics Week: "Why should Westinghouse put in millions (of dollars) for R&D if they don't have business prospects. That is one reason why we are not studying their (U.S.) reactors in a [plant-purchase] feasibility study'' (29).

Moreover, future export orders are likely to involve reduced U.S. manufacturing demand since many of the countries most likely to pursue nuclear programs have nuclear import policies designed to promote domestic industries. Other ad

vanced countries with nuclear programs, especially Japan, are also likely to bid successfully for component manufacturing business (25,37).

The current backlog of NSSS manufacturing work is scheduled for completion in 1984. All U.S. vendors have taken steps to close or mothball many of their manufacturing facilities, or to convert them for other uses. It has been estimated that announced facilities closings and consolidations have already reduced by two-thirds the U.S. capacity to supply nuclear powerplants. Some vendors are maintaining their technical capability with nuclear work for the U.S. Navy, DOE, or research and development (R&D) sponsored by the Electric Power Research Institute (EPRI) (37).

Vendors are already feeling the effects of a shrinkage in nuclear component suppliers on which they base future standardized NSSS designs. Currently, each vendor purchases components from about 200 qualified nuclear suppliers. Several vendors estimate that the number of suppliers will drop by two-thirds in 3 to 5 years, leaving the vendors dealing with a much higher proportion of sole source suppliers (37). Vendors faced with this situation are considering various responses, such as manufacturing their own components, encouraging less qualified suppliers to upgrade their products and get them certified, and developing new sources of foreign supply.

Nuclear Component Suppliers

The impact of the shrinkage in new orders is most dramatic on component suppliers. Some companies supply components used both for new plants and for backfit and spare parts for plants in operation. These companies expect to keep their businesses going. Many companies, however, supply only components for new plants. Some of these produce nuclear components that are identical or very similar to nonnuclear components except for quality-control documentation. These companies can be expected to maintain their nuclear supply lines. Others, however, produce very specialized nuclear components that require separate testing and manufacturing facilities. Many of these facilities are now closed or mothballed (37).

At present the number of component suppliers appears to be declining slowly. One clear sign is the decision by suppliers not to renew the "'Nstamp," a certificate issued by the American Society of Mechanical Engineers (ASME) for the manufacturer of nuclear plant components. N-stamps are not specifically required by the NRC for the manufacture of safety-related nuclear-plant components. However, they are required by some States, and their use certifies that certain NRC quality-assurance requirements have been met.

The number of domestic firms holding Nstamps has dropped by about 15 to 20 percent since 1979, the year of the accident at Three Mile Island, and the drop would probably be greater if the renewal were annual instead of triennial (21). By contrast, foreign N-stamp registration has held steady. By the end of 1982, some 400 companies in the United States and Canada held about 900 N-stamps, according to ASME. An additional 50 companies held about 100 certificates for Q-system accreditation on nuclear-grade materials. Overseas, about 70 companies held about 100 N-stamps, and about 20 companies held about 50 Q-system certificates (21).

Maintaining an N-stamp requires both personnel and money. Thus, in the absence of new nuclear business, many smaller companies have decided they cannot justify the costs. In addition to the $5,000 to $10,000 that must be spent for ASME certification (renewable at the same cost every 3 years), there is also the need to dedicate part of the plant and at least one or two employees to the intricate paperwork that accompanies each N-stamp component. In total, cost estimates for maintaining a stamp range from $25,000 to $150,000 a year (21). Suppliers say that no other work, including contracts for the National Aeronautics and Space Administration (NASA) and the U.S. Navy nuclear program, requires such a detailed paper trail. "I make a valve that sells for about $300" one supplier said. "If it has an N-stamp I have to charge $4,000 for the same valve. And with low volume, I suppose I should charge even more" (21).

So far, the reduction in N-stamps has not been as rapid as the lack of new orders might suggest. Part of the reason may be a habit of looking to the future that has been characteristic of the

nuclear industry since the beginning. Some suppliers evidently believe that the N-stamp imparts a certain status to a nuclear supplier's operations, and those who must consider letting their certification expire say they would do so reluctantly. "It's a nice marketing tool," one supplier said, "even when you're selling non-nuclear items. And it's good discipline for a company to have it'' (21). Some suppliers and utilities report that they must persuade their subcontractors to keep the stamp. "We're giving companies [with Nstamps] our nonnuclear business, just to help them along," one utility executive said. Another challenge is to prevent market entry by foreign companies. "If equipment from overseas becomes standard," one supplier said, "we'll never get that business back" (21).

For many suppliers it will be almost impossible to obtain nuclear qualification for new product lines. For some product lines, 1 to 5 years would be needed to carry out the necessary tests. Maintaining an older nuclear-qualified product line alongside a newer nonnuclear product line will be difficult for those suppliers with a preponderance of nonnuclear business. Since nonnuclear business is likely to respond more quickly to an increase in general business investment of the recession than is nuclear business, there may be pressure to drop the nuclear product lines. The existence of nuclear components in 35 gigawatts (GW)* of partially completed but canceled nuclear plants is viewed as a further damper on the nuclear component business even though only some of this equipment is expected to be sufficiently maintained and documented enough to be usable (see advertisement). For all these reasons, there may be a far more rapid decrease in suppliers over the next 3 to 5 years than over the past 3 years, possibly down to a third of the present number (37).

Architect-Engineering Firms

AE firms have substantial work for the next few years finishing the plants under construction, installing backfits and dealing with special problems such as steam generators. One promising con

*One GW = 1 GWe = 1,000 MWe (1,000,000 kWe) or slightly less than the typical large nuclear powerplant of 1,100 to 1,300 MW.

cept for interim survival involves "recommissioning" nuclear stations-installing some new components to extend their operating lives by 10 to 20 years. Like the reactor vendors, AE firms complain of reduced sources of supply for nuclear-grade components and materials. And, like the reactor vendors, they are moving outside their specialties to bid on nuclear services (e.g., emergency planning) and rework proposals.

Most AE firms also have large amounts of business stemming from major construction projects other than nuclear: cogeneration, geothermal, and coal technologies; petrochemical plants; industrial process heat applications; and conventional fossil powerplants. During the 1981-83 recession, business in these areas was no more robust than the firms' nuclear work. One AE executive said, "As it is now, we can't move our nuclear people to nonnuclear projects just to keep them in-house. There isn't much nonnuclear work around either" (21). Several firms reported they expected their nonnuclear work to pick up long before their nuclear work (21).

Much of the project management and construction skills used on other types of large construction projects are also required for nuclear projects. These skills will be available as long as the AE firms have experience in major construction projects. The design and project management skills unique to nuclear projects are a small proportion of the total work force.

Some firms are taking losses to keep their skilled nuclear people employed because they estimate that retraining would ultimately cost more. Architects are working as draftsmen, for example, and skilled machinists are cutting and stacking sheet metal. Layoffs have not been necessary, one AE executive said, because employees are retiring early or quitting to move to fields with more growth potential and less regulation, such as military R&D (21).

The Impact on Nuclear
Plant Operation

The halt in nuclear plant orders and uncertain prospects for new orders have had discernible

effects on the utilities' experience in keeping their existing nuclear plants staffed and maintained. The effects are most noticeable in two areas: obtaining component parts and services, and filling certain key jobs.

Component Costs and Delays.-With the decrease in nuclear component suppliers described above, utilities report an increase in the number of sole source suppliers and a resulting upward pressure on prices. One utility reported that sole source suppliers received 40 to 50 percent of 1982 contract dollars. A more typical range reported by utilities was 25 to 30 percent, an increase from 15 to 20 percent a decade ago (21).

In a few cases, utilities report that prices of services and components are falling because of increased competition. Generally, however, prices are expected to rise partly because of lack of competitive pressures on the increased number of sole source suppliers and partly because the fixed cost of nuclear quality assurance must be spread over dwindling sales.

Delays are also expected to be more of a problem for similar reasons. With less nuclear work to do, suppliers are more likely to arrange production schedules to use qualified craftsmen and their special machinery only when a number of orders are in hand, postponing work on some projects for months. Or they could require premiums for deadlines that are more convenient for the utilities. "He'd get the part for you, when you wanted it," one utility executive said of a supplier, "but you'd have to pay for a whole shift to go on overtime" (21). Suppliers report that utilities are placing more "unpriced" orders, for which the supplier alone sets the costs, and choosing other than the lowest bid to get the schedule and quality they need (21).

In addition to possible increased prices and delays, utilities are also experiencing some greater confusion in the bidding process for rework and nuclear services as more and more firms attempt to diversify in the face of falling profits. "Anything in an RFP [request for proposal], that's at all related to our business, we'll bid on it," one nuclear

consultant said. "We've got to try for anything out there, just to survive" (21).

Skill Shortages.-Utilities are also having trouble recruiting certain categories of employees and this may get worse in the future. According to a personnel study by the Institute of Nuclear Power Operations (INPO), the overall vacancy rate was 12.5 percent of all nuclear-related positions. However, for nuclear and reactor engineers, for radiation protection engineers, and health physicists (technical specialists in health effects of radiation), the vacancy rate was more than 20 percent (see app. table 7A). The average turnover rate for engineers is almost 7 percent a year, and, for most categories of engineers, quitting their jobs in utilities means leaving the industry altogether (16). For the nuclear utilities as a group, an estimated 6,000 additional engineers will be needed between now and 1991. Almost 5,000 of these will be needed to replace those that leave the industry (see fig. 35). About 3,000 technical level health physicists will be needed, about 2,000 of these for replacement (18).

Despite the availability of ample jobs for nuclear specialists, degrees and enrollment in nuclearrelated fields are stable or declining (see fig. 36 for nuclear engineering degrees). There is some evidence that students are being discouraged from enrolling in programs leading to employment in nuclear power by a perception that the industry is declining and by parental concern and some peer pressure against nuclear power careers. A recent DOE study of personnel for the nuclear industry contrasted steadily increasing enrollment in medical radiation physics programs with declining enrollments in technically similar health physics and radiobiology programs aimed at work in the field of nuclear electricity generation (9).

INPO which has developed demanding training requirements for utility personnel has also taken some modest steps to help with recruiting by setting up a fund for graduate nuclear training (see ch. 5). Individual utilities have also taken steps to fund nuclear programs at local community colleges. More, however, may be needed if