ML18025A681

Applicant'S Answer to Citizens Against Nuclear Dangers' Supplemental Appeal Regarding Discovery Request Number 18

ML18025A681
Person / Time
Site:	Susquehanna
Issue date:	09/17/1979
From:	Silberg J, Yuspeh A Pennsylvania Power & Light Co, Shaw, Pittman, Potts & Trowbridge
To:	Atomic Safety and Licensing Board Panel
References
Download: ML18025A681 (16)

Text

UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION Before the Atomic Safet and Licensin Board In the Matter of )

)

PENNSYLVANIA POWER 6 LIGHT COMPANY )

and ) Docket Nos. 50-387 ALLEGHENY ELECTRIC COOPERATIVE, INC. ) 50-388

)

(Susquehanna Steam Electric Station, )

Units 1 and 2) )

APPLICANTS'NSWER TO CITIZENS AGAINST NUCLEAR DANGERS'SUPPLEMENTAL APPEAL" REGARDING DISCOVERY. REQUEST NUMBER 18 On May 22, 1979, intervenor Citizens Against Nuclear Dangers (CAND) filed interrogatories and requests for documents directed to Applicants and the Commonwealth of Pennsylvania. On June'9, 1979, Applicants answered certain CAND discovery requests and ob-jected to other discovery requests. On August 24, 1979, the Board issued a Memorandum and Order granting Applicants a protective order with regard to the discovery requests to which they had ob-jected. See Memorandum and Order at 11. This included CAND dis-covery request Number 18, dealing with the fabrication of the Susquehanna reactor pressure vessels. However, the Board also indicated in its Order that CAND would be permitted to file a response to Applicants'bjections within five days of service og the August 24 order. On September 1, 1979, CAND filed a "Supple-mental Appeal with Particular Objections, Before the Atomic 'Safety and Licensing Appeal Board Panel." In this submission, CAND in-dicated the basis. for its prior discovery request Number 18, and

asked that the information described in that request be provided by the Applicants. Although this submission was directed to the Appeal Board, Applicants treat it as the response called for by the Licensing Board's August 24 Order.

In discovery request Number 18, CAND has requested detailed information about the manufacture of the reactor pressure vessels fabricated for the Susquehanna plant. In its September 1 filing, CAND indicates that this interrogatory was propounded in order to determine whether or not the reactor pressure vessels at Susquehanna could be among those mentioned in a November, 1969 article discussing the problems confronted by Babcock and Wilcox (BGW) in the start-up of a manufacturing facility in. Mt. Vernon, Indiana. See Fortune, November 1969 at 123 et. sect. The article states that three pres sure vessels which were being fabricated for General Electric by B&W were transferred to Chicago Bridge 6 Iron (CBGI) for completion in 1969. Id. at 172. For the convenience of the Licensing Board, a copy of the Fortune article is attached.

The two reactor pressure vessels for the Susquehanna facility are not among those referred to in the Fortune article. The Susquehanna pressure vessels were shop fabricated in sections, and the sections then field erected at the Susquehanna site, by CBaI and CBGI Nuclear Co. (a joint venture of CBGI and C

General Electric).

BGW had no role in the design, ~ shop fabrication, or field erection of the Susquehanna pressure vessels. See FSAR, 55.3.3.

Applicants believe that, this response provides the information which CAND seeks about the origin of reactor pressure vessels at Susquehanna. To the extent that CAND would continue to request the information called for in its discovery request Number 18, Applicants would renew their objections to this interrogatory as stated in their June 29, 1979 filing with the Board.

Respectfully submitted, SHAN g P ITTMANg POTTS 6 TROWBRIDGE By Ja . ilbe g Al n R. Yuspeh 1800 M Street, North West Washington, D. C. 20036 (202) 331-4100 Dated: September -17, 1979

UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION Before the Atomic Safet and Licensing Board Xn the Matter of PENNSYLVANIA POWER 6'XGHT COMPANY and Docket Nos. 50-387 ALLEGHENY ELECTRIC COOPERATIVE, INC. 50-388 (Susquehanna Steam Electric Station, Units 1 and 2)

CERTIFICATE OF SERVICE This is to certify that copies of the foregoing "Applicants'nswer to Citizens Against Nuclear Dangers'Supplemental Discovery Request Number 18" were served by deposit in Appeal'egarding the U. S. Mail, first class, postage prepaid, this 17th day of 1979, to all those on the attached Service List. 'eptember,

'E. ilberg Dated: September 17, 1979

UNITED STATES OF AMERICA NUCLEAR REGUZATORY COMMISSION BEFORE THE ATOMIC SAFETY AND LICENSING BOARD Zn the Matter of PENNSYLVANIA POWER 6 LIGHT COMPANY Docket Nos. 50-387 and 50-388 ALLGEHENY ELECTRIC COOPERATIVE, ZNC (Susquehanna Steam Electric Station, Uni,ts 1 and 2)

SERVICE LIST Secretary of the Commission U. S. Nuclear Regulatory Commission Washington, D. C.

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Docketing and Service Section Office of Secretary U. S. Nuclear Regulatory Commission 20555'harles Washington, D. C. 20555 Bechhoefer, Esquire Chairman Dr.:Judith H. Johnsrud '

Atomic Safety and Licensing Co-Director Board Panel Environmental Coalition on U. S. Nuclear Regulatory Commission Nuclear Power Washington, D. C. 20555. 433 Orlando Avenue State College, Pennsylvania 16801 Mr. Glenn O. Bright Atomic Safety and Licensing Susquehanna Environmental Advocates Board Panel c/o Gerald Schultz, Esquire U. S. Nuclear Regulatory Commission 500 South River street Washington, D. C. 20555 Wilkes-Barre, Pennsylvania 18702 I 'I Dr. Oscar H. Paris Mrs. Irene Lemanowicz, Chairman Atomic Safety and Licensing The Citizens Against Nuclear Danger Board Panel Post Office Box 377 U. S. Nuclear Regulatory Commission R. D. 1 Washington, D. C. 20555 Bezwick, Pennsylvania 18603 Atomic Safety and Licensing Ms. Colleen Marsh Board Panel 558 A, R. D. 04 U. S. Nuclear Regulatory Commission Mt. Top, Pennsylvania 18707 Washington, D. C. 20555 Mr. Thomas M. Gerusky, Director Atomic Safety and Licensing Appeal Bureau of Radiation Protection Board Panel Department of Environmental Resource U. S. Nuclear Regulatory Commission Commonwealth of Pennsylvania Washington, D. C. 20555 P. O. Box 2063 Harrisburg, Pennsylvania- 17120 James M. Cutchin, ZV, Esquire.

Office of the Executive Legal Director U. S. Nuclear Regulatozy Commission Washington, D. C. 20555

-'The r'eat NUcmeeII. Fmzzme

'-At Id B.R~. F Everything went wrong when r-'

.the. venerable boilermakers

.:.turned to building pressure vessels ~ y for atomic reactors. The whole v'

.= electric-power industry felt

-the consequences.

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The long-awaited transition of the U.S. electric-yower vice president responsible for the Mount Vernon opera-industry into the nuclear age has been slowed by a num- . tion committed suicide in a bizarre fashion.

ber of factors, including technological difiiculties and yub- Last May, B. & W. was forced to make a humiliating

'ic resistance. But' syecial and unexpected cause for disclosure. Every one of the twentywight nuclear pressure

delay has been one company's crucial failure to deliver a vessels then in the Mount Vernon Works was behind sched-

..single vital component of nuclear power plants. The fail- ule, by as much as seventeen months. For the utility in-

ure, basically, was a management failure, and on a scale dustry, the nevrs from B. & W. meant intolerable delays in that would be cause for concern even in a fly-by-night bringing twenty~ght badly needed nuclear plants into newcomer to the nuclear industry. The company, hovrever, service, vrith sll the added expense and yroblems that no nevrcomer. It was yroud old Babcock & Wilcox Co.,

'as would be entailed. Philadelphia Electric Co; estimated a pioneer of the steam generating business whose boilers that it vrould have to spend an extra $ 50,000 a dsy just were used in one of the first central power plants ever to yrovi'de from other sources, such as high-cost gas tur-.

(in Philadelphia, in 1881) . Babcock & Wilcox had an 'uilt bines, the, power that it had counted on getting from its impressive $ 648 million in sales last year, making it 157th delayed nuclear units.,

on F0RTUNE's list of the 500 largest industrials, and it has .

.been engaged in nuclear work in a major way for fifteen Creating its own competition years, producing, among other things, atomic power sys- With so much at stake, B. & W,'s customers could not tems for Navy submarines. well'fFord to be patient. Twentywne',of the pressure ves-Moreover, the corporation is one of only five that are sels tied up in the Mount Vernon Works were there on

'engaged in building nuclear. power ylants in the U.S. With subcontracts from the two giants of the nuclear industry, consumption of electricity growing by nearly 10 percent General Electric and Westinghouse Electric. Both com-a year, the utilities are counting heavily on the nevr nu-yanies swiftly took the almost unprecedented step of forc-clear stations to avoid brownouts and yovrer failures in ing B. & W. to turn most of their ysrtially eomyleted the years ahead. Poor performance at Babcock & Wilcox vessels over to other manufacturers. When B. & W., in an is thus one of those problems that could send ripples ill-conceived gambit, tried to hang onto two of the trans-through the whole economy. ferred vessels, Westinghouse took the case to court and

'.All of B. & W.'s troubles involve a single product: nu-

. won. In all, fourteen G.E. and Westinghouse vessels per-clear pressure vessels. These are the huge steel yots some are more than seventy feet long and weigh more haps $ 40 million vrorth were taken outof B. &W.'s shoys.

Some of the firms that got the business had never made 700 tons that contain atomic reactions. They must 'han

.a pressure vessel before for use in a U.S. reactor; B. & W.

meet rigid specifications set by the Atomic Energy Com- . had managed to create hungry nevr competitors in its ovrn" mission, and B. & W. built a $ 25-million plant at Mount line of work Only four G.E. and three Westinghouse ves-Vernon, Indiana, just to fabricate them. Cockily sure that sels remain at Mount Vernon.

the Mount Vernon plant would oyerate as planned, B. & The company itself hss barely begun to pay the high W. sold its entire projected output of pressure vessels for - price of. failure. Its earnings last year were still a robust years ahead. But nothing seemed to go right at Mount.

$ 2.04 a share. In the first six months of this year, losses Vernon. Plagued by labor shortages and ma!functioning associated vrith nuclear work pushed earnings down to machines, the plant yroduced just three pressure vessels in its first three years of operation. Late in 1968, after 22 cents a share not even enough to cover the 34-cent quarterly dividend. From a 1969 high of 40% last January,

he production snarl reached horrendous proportions, a Babcock & Wilcox stock hss sagged into the lovr 20's.

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'I +f trouble down by the Ohio- %4, "All.areas of the company were profitable in 1968 with the ex-ception of atomic energy," President George G. Zlpf told Babcock 8 Wilcox stockholders after taking over as chief executive offfcer from Chairman Morris Nielsen in September, 1968. Up to then, losses on nuclear work had never seemed particularly trouble-some. They were regards'd simply as the price of B. 8 W.'s ticket into the atomic age and B. 8 W. has been getting into, and prospering ln, new technologies for a hundred years.

But'.ane segment of its nuclear venture has driven B. 8 W. into deep troubfe. The plant (right) that lt built along the Ohio River at Mount Vernon, Indiana, to produce huge steel pressure vessels for atomic reactors failed to function as expected, with all kinds p of dire results. One especially unhappy result was that B. ft W. PC had to give up some partfagy completed pressure vessels to com-petitors. At far tight ls cne.section of a B. 8 W. vessel arriving J I

for completion at the Chattanooga shops of Combustion Engi-neering, inc., B. 4 W,'s arch rival..

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At that price the stock is hovering around book value. a goddamn syphilitic the rest of your life.'Iyold man useB'.""."='o The man in the middle of all these troubles is President tell me that there were two steps ahead of me first re-" "",,

i George G. Zipf (pronounced Ziff), forty-nine, a low-key form school and then the pen."

executive who started with.B. & W; in 1942 as a metal- 'nstead, Young Doc became a steeplejack and irott-*~==.

lurgical engineer. But the man who bears the main onus,: worker, and in 1924 joined the corporation he was i~==,;'.-'. '~g,l; of responsibility is Zipf's predecessor, Chairman Morris Nielsen, sixty-five, vrho chose Zipf for his present job a ~

to head. "I came to B. & W. by accident," Nielsen has called. "I was vrorking at American Bridge as an iro~:~:=:;

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year ago and handed him his present problems. monger on a job in Chicago, and another fellow and E'if9tp,".'runk, rVe got on the train and got ofF at Des Moines-Bad boy from Blair, Nebraska ~<<'~='ere walking past this construction job, and a fello~~~;=;

Nielsen is a flamboyant leader, a big, bluff man vrith, slid down a column and said, 'You looking for vrork1'Ã<:t'-";

bright blue eyes and a full head of gray-blond hair, who vre vrere." It was a B. & W. ob, erecting 'figured has a gift for salty language. More than one secretary, boil~'-'.;--'or central-station povrer plants, and from the start D. '";:"'.

quit "Doc" Nielsen's employ because of his profanity, and ¹ielsen felt at home in the bvo-fisted company. 'Th+

more',than one 'executive sufFered a colorful, tongue-lash- ',

construction workers were goddamn rough people ~"="=~:

ing in the chairman's office. l were hard drinkers, fighters, and lived by their wits- ';.-,~~;

Nielsen got his nickname by virtue of being a doctor's By the time World War II came along, Nielsen-~-",'-'...

son in Blair, Nebraska, where he was known as "Young; superintendent of marine erection. He supervised the m""'

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Doc." That vras as close to earning an academic degree as stallation of B. & W. boilers in 4,100 Navy and march Niielsen came. As a boy, he himself has said, he was "in- marine ships during the war. Later he headed the <~'.".-',"-;

corrigible" and was kicked out of school "for being a bad boiler division, including manufacturing, and i>>9o.',

infiuence on the rest of the students." He then enrolled in, came president and chief executive ofBcer.

a Lincoln, Nebraska, high school and vrorked part-time as When Nielsen took charge pf B. & W. the compatiy ~".-:".":

embalmer. "I got into trouble in Lincoln, too," ¹ielsen j already deeply involved in nuclear vork. Nielsen's P~>..~-

'n told an interviewer a few years ago. "One night I came, cessor, Alfred Iddles, had recognized early that B +-.~ "-

home with my nose over under my eye. I'd been in a to prepar~ for the day when the got hit with a pair of pliers. I woke up my old man and. challenge fossil fuels as a source of energy fo<<e"~"~~

fight,'nd he looked at my nose and said, 'You'e going to look like generating plants. Under Iddles B. & >V. attracte..'.~%"'1

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'ioi tanding stable of nuclear scientists and engineers and the fat sometimes "had the effect of cutting into good re meat," says a former B. & W. executive. Experience

-;;.ia'2956 set up an extensive research facilityat Lynchburg,

~Lirginia. One of B. & W.'s first important nuclear jobs managers found themselves stretched too thin to cove

~-;~ build Consolidated Edison's Indian Point ylant. all their areas of responsibility. Worse, they did not a i~other early project was the reactor for the nuclear ship mays feel that their authority matched their responsibili

~~~>nazi; B. & W. lost'money on these jogs, but it gained i.e.,'en in the field were held'responsible for resul

>pe~~experience needed to secure a corporate toehold in I that they did not have the power to bring about.

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w&eeuciear era; -. "

'ucjear losses continued under Nielsen,'but he '

The most biting criticism of Nielsen's, regime corn from men charged mith nuclear assignments. In the

~eg-"B.'r& W.'s.over-all profitability dramatically. Id- eyes, Nielsen's lack of formal education yroved a serio

~~" .~>had run the company as a loose-knit grouping og handicap. Explains one former B. & W. executive "Nie

-.Ieuu~utonomous subsidiaries. Nielsen centralized and sen created an atmosphere in which engineers and tec

~~niatized management. Every executive's areas of re- nical people just didn't feel at home. Their ideas we

':gPJnsibility and.authority mere carefully spelled out in

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not treated with respect. They felt that top manageme

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didn't understand technical yroblems and didn't'tru

.. rs of the business. Although sales stayed near or be- those who could understand them."

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...o2@>e.1958;figure of $ 866 million until 1968 this was

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A touch of corporate arrogance

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in the utility buying cycle earnings climbed '-¹.lomyeriod

~'bv..:year. Profits went from $ 13 million in 1958 to From the start,'3. &.W. had foreseen a long wait befo

".B:mii>>on in 1968. At that point, sales also began to go its nuclear work became yrofitable. Developing the nec

.-'.p..~>>g.71 percent in the next five years. Profits peaked sary skills and technologies to compete in the nuclear i

.;-~<<-at $ 33 million, or $ 2.69 a share (compared to dustry has proved to be a slom and expensive process f Ka share in Nielsen's first full year). every comyany that has tried it, including G.E. and Wes 4,n.';the view of his critics, who have lately become nu-'-

inghouse. But what B. & W. had not expected mas to lo

..ous;-the seeds of B. & W.'s present yroblems were money on its Mount Vernon Works. When the plant m in the years of Nielsen's rich harvests. It can be planned in the early 1960's, Nielsen appeared to belie>

'+-.'..~ retrospect, that he may have been too successful that he had found a niche in the'nuclear industry th m, ~>'ng B. & W. lean. His determination to keep down offered a quick return. A nuclear pressure vessel, thou confinued page X

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fabrication of heav eel products had not protected the com-The Frustrations of the . pany from some grievous errors. A principal one was the site it-Acquired Executive coniinrccd self a cornfield near the little farm town of Mount Vernon (population: 6,200) in southwestern Indiana. The location had when he sold his highly successful company, Wilkens Instru- been chosen mainly because of its position on the Ohio River, ment & Research, Inc., to Varian Associates in 1965. Al- safely above any known flood level, and yet reliably acces-though nominally retained as president, Dimick found him- sible for deepwater barges. This was an important advan-self in a cubbyhole office with no secretary and scarcely any tage because nuclear pressure vessels are so immense that they entree to Varian's president. A chemist and introvert, Dimick can best be transported by water. B.&W. had owned the land had never had the stomach for the "people problems" of for a number of years and had set up a small plant there for management and somehow had convinced himself that a making boiler parts.

merger would free him of running controversies with his What Mount Vernon did not have was a pool of skilled general manager and other problems. Instead, Varian put labor. This was a serious drawback, because the AEC, for safe-the more able general manager in charge of Wilkens and ty reasons, sets rigid standards for machine work and weld-hoped Dimick would leave. Wealthy as a result of the sale, ing on nuclear projects. Late last year a company memoran-Dimick resigned and has now set up a new company to pro- dum reviewing the Mount Vernon fiasco observed: "Produc-duce an invention of his own, an elaborate exercise bicycle tion workers required a new level of knowledge, intelligence, called the Lifecycle. As long as the firm remains small, I and judgment to operate the machinery, perform operation~,

I and maintain the very high quality standards." At the out Dimick will probably remain its chief executive. But an-other merger may someday be his only escape if the Life- set, however, B.&W. took an optimistic view of its prospects

': choosing, according to that 1968 memorandum, to regard cycle becomes successful..

For most executives a merger has a benign effect, even

'ount Vernon as "an unspoiled labor market." Presumably, though it may not always seem obvious during the difFicult the company expected to find a more tractable group of work-transition period. When a company president wakes up one ers there than it had at Barberton, Ohio, where B.&W.'s day in his new and larger universe, what he is really con- ,, power-generation division has had its headquarters and prin-fronting is a hard but useful. choice about the future of his cipal manufacturing facilities for many years.

career. Whether he elects to resign and pursue his accus-The company planned to overcome the obvious shortcom-

'ings of Mount Vernon's labor. pool in two ways. First, through tomed ways, or to break out of an old mold and achieve greater professional competence, is not so important as that automation using that sophisticated machining center and second, through a massive training program that would en-he is obliged to make the conscious choice. Whatever his tice farmers away from their cornfields and quickly turn them decision, it is an act of self-renewal. END into skilled welders and machinists. In one year B.&W. spent

$ 1 million just to train welders. But almost as fast as men reached the levels of skill required, they left B.&W. for jobs The Great Nuclear Fizzle elsewhere. On September 30, 1968, only 514 of the 1,606 hour-at Old B. 8 W. continmdfrmn papc185 ly employees hired in the preceding three years were still work-I ing for.B.&W.; in other words, the company had hired three men for each one it retained. "Turnover, of the Mount Ver-huge and manufactured to demanding technical standards, is non work force has been a particularly frustratirig problem essentially just the kind of heavy steel unit that B.&W. was and'a major reason why B.&W. has been unable to bring its accustomed to fabricating with ease.

While the Mount Vernon plant was under construction, full manufacturing capability to bear on the situation," the 1968 memorandum concluded. Some potential workers proved U.S. utilities went ori a n'uclear-plant buying spree, starting to be untrainable, others had a "general negative attitude" to-in 1965. At the time, the surge in orders seemed like a lucky ward heavy industry, and "some were not able to adjust and break for B.&W. The Mount Vernon plant was designed to therefore returned to their farms."

produce one completed pressure vessel a month, once it was in full operation, and,there had been considerable doubt dur- "It drove us out of our minds" ing the planning stages "ifwe'd ever get enough work to flll ~

Workers who remained with B.&W. did not prove to be as the place," a former B.&W. executive recalls. Orders for pres-unspoiled as the company had hoped. Even before the pres-sure vessels poured in, faster than anyone had predicted, and sure-vessel plant opened, it was organized by the Boilermai'-

the Mount Vernon plant soon got loaded up with work. is It ers Union (which also represents B.&W. workers at Barber-now clear that management made too little provision for the time it would take to get the new plant operating at full ca-

. ton) amid charges of unfair. labor practices against the man-pacity. Says one B.&W. customer: "I think you have to s'ay agement. The plant was closed by labor disputes on several occasions. The most serious occurred when the three-year con-that corporate arrogance was involved."

The first delays at Mount Vernon were caused by suppli-tract expired in 1967, while equipment was still being in-stalled. The Boilermakers went on strike over wages and work ers falling far behind schedule in providing vital equipment.

A linear accelerator, used to detect welding flaws, was not de-rules, and the plant was down for forty days unnecessarily livered until August, 1966, eleven months late. Even worse, long, in the view of President Thomas Ayers of Chicago' a highly automated, tap~ontrolled machining 'center the Commonwealth Edison, who had pressure vessels tied up at heait of the plant as originally conceived amved a full year . Mount Vernon. From the standpoint of production, Nielsen won a victory that amounted to overkill. Under the new con-behind schedule, in September, 1967.

tract, wages remained too low to stem the Row of workers The lure of unspoiled labor away from B.&W. or to attract qualified workers from other By then, the plant had been operating on a makeshift ba-arear'he B.&W. memo cites the "nonwompetitiveness of our wage scale" as a reason for the high turnover rate in the sis for almost two years. And it had already become appar-ent that B.&W.'s century of demonstrated competence in the Mount Vernon work force.

continued page 155

$ 64 FOATUNE November 1969

I

'I The Great Nuclear Fizzle sen stepped aside as chief executive in favor of George Zipf.

at Old B. & W. For a man destined for the top at B. & W., Zipf had an un continued'ven usual background. Allof his predecessors had been identifi with boilers, but Zipf came from B. & W.'s tubular-produc for experienced workers, welding two'pieces of eight- division at Beaver Falls, Pennsylvania, near Pittsburgh. Thi inch steel together is a demanding task, particularly in nu- division, whose work is more akin to steel manufacturing tha clear work, in which each weld is examined by x-ray. When to boilermaking, produces tubing for B. & W.'s own use an an imperfection is found, the weld must be "mined out" and for sale to other industrial customers; it accounts for roughly done over again. In most plants, less than 10 percent of the 30 percent of B. & W.'s total'sales and more than half its prof welds must be reworked, and a rework rate of less than 1 per- its. When he transferred to New York as executive vice pr cent is sometimes achieved. But at Mount Vernon 70 percent ident in 1966, Zipf had been at Beaver Falls for twenty-fo or more of the welds were rejected on being inspected. "It years, ever since graduating from Lehigh University. He wa.

drove us out of our damned minds," recalls Ayers. "So cost- a stranger to the problems of the power-generation division, ly! So tim~onsuming!" Ayers and other B. & W. customers and to that division's big corporate customers.

say that they urged the company to increase the supervisory Less than a month after taking over as chief executive fro force which regularly worked one and a half to two shifts Nielsen, Zipf scheduled a meeting at the Mount Vernon plan daily so that a closer match could be kept on the welds as with Craven and Austin Fragomen, vice president for man they were built up. ufacturing. The meeting was set for a Monday morning. Dur In addition to its labor problems, B. & W. ran into un- ing the preceding weekend Craven told friends that for th expected trouble with equipment. The linear accelerator for x- first time in his life he thought his job was getting beyond raying welds was installed in mid-1966 but did not go into 'im. Sometime on the Sunday afternoon or evening befor full operation until a year later. The tape-controlled machin- his scheduled meeting with Zipf, Craven took oK his cloth ing center was even more of a headache, and began func- and climbed into a dry bathtub in his $ 250-a-month apart tioning as planned only a few months ago. In this center, ment in Akron's luxurious Carlton House. Then he slash huge vessel segments are positioned on optically aligned ways, his ankles, cut his throat, and -stabbed himself in the hear and then moved a distance of 250 feet while a series of pre- with the serrated eight-inch blade of a butcher knife.

cise machining operations are performed simultaneously, con- After Craven's death, George.Zipf took. personal charge o trolled by computer-prepared tape. The concept was a good the power-generation'ivision, and of the Mount Verno one, since nuclear pressure vessels are custom jobs, each tai- works in particular. Before long, both Austin Fragomen and lored to a customer's specifications. But "debugging" of the the Mount Vernon plant manager, Norman Wagner, resigned.

machinery proved unexpectedly difficult. One problem was That left Zipf free to put a whole new team to work on th that the plant mas not air-conditioned, and temperature company's pressure-vessel

,changes threw oE the many delicate adjustments that had to debacle.'he be made. In addition, an earthquake fairly rare in Indiana chairman sells some stock shook up the plant last year and it took nearly a week to Beginning in 1967, both G.E. and Westinghouse, along wit reset the machine t:ools. Other start-up difiiculties were sim- many of the utilities that were the ultimate customers for B.

ply incomprehensible. For example, a vital boring mill was & W. pressure vessels, repeatedly expressed worry over th put out of operation for several weeks when a tool broke. Mount Vernon plant's faltering operations. In the fall of 1968, There was no spare on hand. B. & W. pacified G.E. to some extent by setting up a tern Death in a dry bathtub porary melding shop on barges anchored at Madison, Indi ana, where expert welders from the Louisville, Kentucky, The man directly responsible for the Mount Vernon plant labor pool could be obtained. But for the most part B. & W.

was John Paul Craven, vice president in charge of the pomer- brushed aside its customers'orries wit;h assurances that generation division at Barberton. As head of B. & W.'s larg- things at Mount Vernon mere not really as bad as they seemed.

est division, Craven was No. 3 man in the company, and was Even after Craven's death, the B. & W. management con-paid $ 87,000 a year. At one time there had been speculation tinued to maintain that its optimistic scheduling, with some in the company that Craven might someday become pres- minor'changes, would prove to be realistic. Some utility ex-ident. A gentle, upright bachelor of sixty, Craven mas tall ecutives who met with Zipf to express their concern mere left and distinguished looking. An engineer by training, he had with the conviction that he did not appreciate just how se-been with B. & W. all his working life, and he had no in- rious the pressure-vessel delays had become. On some occa-terests outside his job. For a while, Craven had raised roses as a hobby, but after he was made a vice president he gave up roses in order to devote himself more fully to B. & W

'e lions he seemed to regard his callers as bothersome intruders just sat there like a damned Buddha," reported one cus-

'iromer after such a meeting.

"His mork was his whole life," says an old friend. Faced with such frustrations, G.E. and W'estinghouse be-As the bottleneck at Mount Vernon grew morse, Craven gan to consider the drastic step of pulling some of their de-came to feel that neither his customers nor corporate head- layed pressure vessels out of the overloaded Mount Vernon quarters in Nem York fully appreciated the difiiculties of shops. Both companies assigned teams to scout for other man-bringing a new plant into operation, particularly one with ufacturers that might be able to take over B. & W. vessels Mount Vernon's advanced machine tools. Nor did he believe and complete them. There were not many potential candi-that he was given the authority, the budget, or the personne1 dates. Up to then, B.'& W. and Combustion Engineering, Inc.

that he needed to fulfillthe plant's commitments. Says an- had pretty much divided the U.S. pressure-vessel business be-other of Craven's old friends: "Paul couldn' bear to sit in Bar- tween them. Combustion Engineering had managed to keep berton and have all the shots called from New York and close to schedule on its deliveries and had been expanding its

'then be expected to take responsibility for not producing." Chattanooga machine shops. It had unused capacity. In'ad-In September, 1968, before the seriousness of the pressure- dition, Chicago Bridge & Iron Co., which had previously done vessel crisis at Mount Vernon became generally knoim, Niel- only on-site fabrication of nuclear vessels, mas setting up a continued page 178 168 FORTUNE November f969

fo The Great Nuclear Fizz)e JUDGE GOURLEY: ... on this contract for $8,542,000, ivhat woui at Old B. & W. corri>nu'ca you say that you expect to make on this?

BLACK: This specific contract?

pressure-vessel plant in Memphis. (On-site fabrication is a JUDGE GOURLEY: Yes.

more expensive method of constructing pressure vessels, used I BLACK: don't expect to make a profit.

JUDGE GOURLEY: You don't expect to make a profit?

only when it is extremely difficult to transport the massive BL'ACK: No, sir.

units to a site intact.) The G.E; and Westinghouse teams also looked abroad for companies that might be able to take I JUDGE G0URLEY: don't knmo why ymr uould want the materir over some of the work. .to work on. You are not in business to lose money for your stocl In April, while B. & W.'s biggest customers vrere searching. holders..

for other suppliers, Doc Nielsen who was retiring on May 1 BLACK: We do not expect to make it.

as an ofiicer of the company but.keeping the title of chairman JUDGE GQURLEY: In other words, on this contract tfor) $8,542, quietly sold 15,000 of his 20,000 shares'of B. & W. stock. 000, you don't expect to make a penny projit for your corpc The price at the time was about $ 33 a share. A couple rationif you went ahead and finished it?

laCer B. & W stockholders got their first ofiicial hint of BLACK:No, sir.

of'eeks

~

serious trouble ahead. George Zipf revealed at the annual JUDGE GOURLEY: Hmo much on this other"one, $8,804,t'89, who meeting that Ire expected earnings to drop by 20 Co 30 per- profit could'you be reasonably expected to make on this contrac cent in 1969 because of the company's losses on nuclear busi- ifyou jiniehed it?

ness. (The actual dechne, of course, has since proved to be BLACK: I would think that one probabLy tis) in the same con much greater than Zipf predicted.) Before long the price of dition.

B. &W. stock sank into the 20's. JUDGE GOURLEY: If you ment ahead and jiniehed thie,.ym

• .. wouldn't make a cent?

A quick trip to court

=

BLACK: I think on direct cost, Labor and shop expense.

ure would cover our direct cost t On May 14, less than a month after the annual meeting, B. &W. sent out telegrams brusquely letting customers know JUDGE GOURLEY: meantI after everything, would you or wouk that the situation at Mount Vernon was even vrorse than they had suspected. Zipf and his nevr team had completed a BLACK: ¹.

you not make any money on this?

~,

I JUDGE GoURLEY: tvouldn't think your stockholders mould ivan gloomy revaluation of the plant's capabilities, and B. &

W.

was adding two to twelve months to earlier delivery sched- I you to finis. certainly mouldn't.

ules, some of which had already been stretched past the dates Back on the track called for in B. & W.'s original contracts.

On receiving this nevrs, both G.E. and Westinghouse sought After Westmghouse won possession of the two pressure ves B. &W.'s cooperation in transferring vessels to the other shops sels and sent them off to Rotterdam, B. & W. raised no fur-that they had scouted out.B. &W. agreed to subcontract some ther objections to transferring vrork out of its shop. Indeed it of its vrork to these plants. But an unexpected difiicultysoon actively cooperated with its customers to get the job done.

arose. Westinghouse had deteimined that Rotterdam Dock- Westinghouse sent five vessels to Combustion Engineering's yard Co.,' major shipbuilding and steel fabricating firm in Chattanooga shops and two to a French firm,.Soci6th des the Netherlands, could take two vessels and improve on the Forges et Ateliers du Creusot. General Electric Curned three B. &W. schedule provided that the vessels were transferred vessels over to Chicago Bridge & Iron and had B. & W. send promptly. Westinghouse located space on a'ship that would two others to Japan's Ishikawajima-Harima Heavy Indus-be calling at New Orleans on the desired date and, by paying tries. In every case, these firms are expected to equal or bet-a premium, was able to arrange for the ship to cancel calls at ter the delivery dates set in May by B. & W.

other ports and proceed directly to the Netherlands. B. & W. With the load at Mount Vernon lightened, prospects look, agreed to put the two pressure vessels on barges and start better for the fourteen pressure vessels that remain there, in-them on their way to Nevr Orleans.vrhile it negotiated a sub- cluding seven for nucIear plants that B. & W itself is buiM-contract with Rotterdam Dockyard. But negotiations broke ing. For example, the Sacramento Municipal UtilityDistrict dovrn vrhen B. &W. and Rotterdam could not come to terms. has been notified that the vessel for its Rancho Seco nuclear To the horror of Westinghouse ofiicials, B. &W. ordered the plant, a B. & W. project, will be only a couple of months barges back to Mount Vernon. late, instead of the year that seemed likely in May. That Westinghouse then decided to pay B. & W. for the vrork it means that the vessel for Sacramento is essentially on sched-had already done and take over the vessels itself. But speed ule again, since the delays now expected are no more than was required. If the barges did not continue down the river could be accounted for by the labor disputes and earthquake while these new arrangements were made, they would miss that Mount Vernon suÃered.

the ship to Rotterdam. Now Westinghouse found itself at a To his utilitycustomers, George Zipf,remains ver~ much a strange impasse it could not reach anyone at B. & W.

who man on trial. But novr that their pressure vessels are moving could rescind the order for the barges to return to Mount Ver- along again, some utility executives are convinced that he has quietly managed to put B. & W. back on the Crack. One non. Nielsen was "not available." Zipf was "out of the coun-try." Frustrated in its eKort to reach top management and move that has met their approval ivas the appointment in Sep-work out an amicable settlement, Westinghouse reluctantly tember of an experienced Westinghouse man as vice presi-went into U.S. district court in Pittsburgh and won a tem-.

dent in charge of the power-generation division John Paul the Craven's old job. Bringing in an outsider at such a level is porary restraining order to prevent B.' W. from taking vessels back to Mount Vernon.

something new for B. & W, and one B. & W. customer be-During the hearing Federal Judge Wallace S. Gourley had lieves that he knows what it means: "I think George Zipf is a revealing exchange with John T. Black, B. &

W.'s manager really in command noiv." If this is so, he will have a lot to do t;o restore the honored old name of Babcock & Wilcox to its for commercial nuclear components.

former luster. END