PVF Insights

Is A Nuclear Renaissance Underway?

Think of it as an irresistible object (nuclear power) meeting an immovable force (anti-nuclear activists). Signs are pointing to imminent triumph for the irresistible object.

With little publicity, over the past couple of years 16 energy companies and consortia have announced their intention to file license applications with the U.S. Nuclear Regulatory Commission to build as many as 30 new nuclear power plants. They would be the first nukes coming on stream in the U.S. since 1996.

At least seven years will pass before the first one comes on line, but momentum clearly has reversed for the nuclear power industry after public opinion turned thumbs down following the 1979 Three Mile Island accident and the more catastrophic 1986 Chernobyl disaster in the former Soviet Union. Global warming and geopolitics are trumping the potential dangers of nuclear energy in the eyes of even some formerly ardent anti-nuclear activists. No other fossil fuel alternative holds as much promise to strengthen energy security, meet future electricity needs and yet reduce greenhouse gas emissions.

The U.S. currently relies on nuclear power for about 20% of its electricity. The Department of Energy projects a 45% increase in U.S. electricity demand by 2030. Some 35 to 50 new nuclear power plants will be needed to maintain that market share by then, and the goal is to wean the U.S. power industry away from hostile fossil fuel suppliers and reduce greenhouse gas emissions.

“We are at long last moving to a time when generating companies will make business decisions to build new nuclear plants,” said Nuclear Energy Institute (NEI) Chairman John Rowe, also CEO of Exelon Corp., the nation’s largest operator of nuclear power plants. Speaking at NEI’s annual conference last May, Rowe added that “significant regulatory, financial and infrastructure challenges stand between where we are and where we need to be.” He identified those challenges as nuclear fuel waste management, financing of the enormously capital-intensive projects and assembling a future nuclear work force.

NEI expects that a wave of experienced personnel will be exiting the industry in the coming years – 27% through retirement and 13% for other reasons by 2011. Because the industry was widely regarded as a career wasteland for the past two decades, there is a shortage of mid-career engineers and new recruits to succeed them.

Industrial PVF suppliers have reasons to cheer a nuclear power renaissance, even though modern nuclear plant designs have somewhat less PVF content than previous generations. In response to the lessons of Three Mile Island, which was caused by workers misreading the amount of cooling water flowing through a valve, nuclear engineers have figured out ways to effect emergency shutdowns automatically via gravity rather than relying on electro-mechanical means. Nonetheless, a nuclear industry revival would still spell great news for our industry.

Breaking News

Hurricane Dean Batters Mexico's Oilfields
Read about it here.

Seminole To Close Houston Plant
The Seminole Tube Co. manufacturing plant in Houston will be shut down at the end of September as part of a larger consolidation plan that involves all of the various Wheatland Tube and Seminole facilities to eliminate production redundancies. The equipment and inventory will be relocated to a recently expanded Cambridge, OH facility.

Chaddick To Head U.S. Steel Tubular
United States Steel Corp . announced the appointment of Michael Chaddick to general manager-tubular services, joint ventures and president of Star Energy Group. Chaddick will be responsible for specialized tubular services and tubular joint ventures. He will oversee three subsidiaries that were formerly part of Lone Star’s Star Energy Group – Delta Tubular International, Delta Tubular Processing and Wheeling Machine Products.

Holfeld Named GM Of EFSI
Energy Maintenance Services Group I, LLC (EMS Group), announced the promotion of Kevin Holfeld to general manager of the firm’s recently acquired Energy Facility Services (EFSI) group . EFSI is a leak detection, mechanical repair and environmental services company headquartered out of Clear Lake, Texas, with operational centers in Lake Charles, LA, Port Neches, TX, Auburn, AL and Baton Rouge, LA. Before joining EFSI, Holfeld was vice president of business solutions for EMS Group and had subsequently launched the firm’s EMS Mechanical and Power Services Division.

Truck Drivers May Be Limited To 10 Hours
Two provisions of the Federal Motor Carrier Safety Administration’s (FMCSA) Hours-of-Service rules (HOS) for truck drivers have been struck down by a federal court. In a unanimous decision, a three-judge panel of the United States Court of Appeals for the District of Columbia Circuit ruled that truck drivers will be limited to 10 hours per day instead of the current 11 hours. The court said FMCSA ''failed to provide an adequate explanation for its decision to adopt the 11-hour daily driving limit,'' The court also eliminated the 34-hour restart provision of the HOS rule. The American Trucking Association (ATA) has asked the Department of Transportation (DOT) to seek a stay of the recent court ruling.  Unless the Court grants a stay of its decision, the new 10-hour limit and 34-hour restart rules take effect on September 14, 2007.

Victaulic Hires Dr. Kung To Head Fire Safety Research
Victaulic  announced the appointment of Dr. Hsiang-Cheng Kung as research director of engineering. In this new role, Dr. Kung will work to advance the level of Victaulic’s research programs in the fire safety market and will represent Victaulic in a global capacity on multiple committees and standards bodies. Prior to joining Victaulic, Dr. Kung worked as the director of business development, Fire Protection Division at Underwriters Laboratories. He also held several positions during his noteworthy 33-year career at Factory Mutual Research Corp.

You Really Should Read This ...

Over-simplifying Global Warming
It's not often that you find a journalist biting the hand that feeds him, but that's what Newsweek's talented economics columnist Robert Samuelson does in this article that slams the magazine for its recent misleading cover story about global warning.

 Good Idea File

Do You Want Fries With That?

Distribution consultant Scott Benfield told of performing an activity costing study finding that most counter sales lose substantial amounts of money. This is, sorry, counter-intuitive considering that pickups avoid a lot of sales and shipping overhead and frequently are cash transactions. Benfield said that even with gross margins upwards of 40%, counter sales consistently lose money.

“Why? The simple reason is their small transaction size,” he explained. “A counter sale of $50, at a 40% margin, only leaves $20 for the other processing that goes on inclusive of purchasing, receiving, put away, storage, picking, invoicing, and the counter seller.”

This meshes with information developed by the ASA Education Foundation finding that increasing order size is the single most important step distributors can take to improve profitability. It's even more important than increasing gross margin.

Lesson -- train your counter people to the art of upgrade and add-on selling. Take a cue from the fast food industry's mantra -- "Do you want fries with that?"

Just For The Heck Of It ...

Check out the new website of Houston's PVF Roundtable. It has been revamped and is being managed by the IT staff of BNP Media Co. and Supply House Times.

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