ML19273B325

Transcript of Testimony Before ASLB Re Const Application for Nuclear Site Adjacent to Present Facility Operated by Lehigh Portland Cement Co

ML19273B325
Person / Time
Site:	Green County
Issue date:	03/16/1979
From:	Hyland E, Schuhmacher P, Young W LEHIGH PORTLAND CEMENT CO.
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UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION BEFORE THE ATOMIC SAFETY AND LICENSING BOARD In the Matter of POWER AUTHORITY OF THE STATE OF NEW YORK (Greene County Nuclear Power Plant)

Docket No. 50-559 STATE OF NEW YORK DEPARTMENT OF PUBLIC SERVICE BOARD ON ELECTRIC GENERATION SITING AND THE ENVIRONMENT In the Matter of the Application of the POWER AUTHORITY OF THE STATE OF NEW YORK (Greene County Nuclear Generating Facility)

Case 80006 LEHIGH PORTLAND CEMENT COMPANY Testimony on Land Use and Socioeconomic Issues Prepared Joint Testimony of Peter Schuhmacher William Young Edward W. Hyland Ralf Bohman March 16, 1979 7004060l'57

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1 Q. Mr. Schuhmacher, please state your qualifications 2 for the record.

3 A. My name is Peter Schuhmacher. I completed my under-4 graduate education, high school and college in 1950.

5 During a portion of my undergraduate education, from 6 1947 through 1950, I simultaneously worked as a con-7 crete construction worker. In 1950, I joined what is 8 now Heidelberger Zement AG (Heidelberg) and served in 9 various technical, financial and commercial positions.

10 After joining Heidelberg, I received a number of pro-11 motions each of which brought additional responsibil-12 ities. During my employment at Heidelberg, I attended 13 the Mannheim University and studied business. I 14 received all academic diplomas from that institution 15 in 1957. In 1966, I became a member of the Managing 16 Board of Heidelberger Zement AG and in 1970, I became 17 President of the company, a position which I continue 18 to hold. Since early 1978, I have been Chairman 19 of the Board of Lehigh Portland Cement Company.

20 In addition, I am chairman or vice chairman of 'everal 21 European companies, Vice President of the Bundesver~oand

1 Steine und Erden (the West German association of 2 the rock products industries) and President 3 of the Portland Cement Association of the Federal 4 Republic of Germany.

5 Q. Mr. Young, please state your qualifications for the 6 record.

7 A. My name is William Young. I have been employed by 8 Lehigh Portland Cement Company (Lehigh) since 1954.

9 From 1958 to 1964, I held the position of vice presi-10 dent. I was elected to the Board of Directors of 11 Lehigh Portland Cement Company in 1961 and have served 12 on the Board through the present. From 1964 to the 13 present I have been oresident. I have served as a 14 director of the Portland Cement Association since 1964 15 and served as the chairman of the board of the Associa-16 tion from 1969 through 1972. I am a graduate of Prince-17 ton University and have a law degree from the University 18 of Virginia.

19 Q. Mr. Hyland, please state your qualifications for the 20 record.

21 A. My name is Edward W. Hyland. I am a graduate of Yale

1 University and its law school. From the date of my 2 graduation from law school to 1958, I was in private 3 practice in New York City. In 1959, I joined Lehigh 4 Portland Cement Company, becoming secretary to the 5 corporation in 1969. From 1969 to 1973, I served as 6 counsel to the corporation. In 1973, I became vice 7 president and general counsel. I am a member of the 8 American Bar Association, the American Society of 9 Corporate Secretaries and the American Arbitration 10 Association.

11 Q. Mr. Bohman, please state your qualifications for the 12 record.

13 A. My name is Ralf Bohman. I attended high school in 14 Germany, concluding my studies with a Bachelor's 15 Degree. I then attended the Technical University of 16 Darmstadt, Germany, receiving a diploma in mechanical 17 and process engineering. Immediately therea fter, I 18 attended the German Research Institute for the cement 19 industry. In 1966, I joined the Fuller Company, a 20 major producer cf equipment for the cement industry, 21 and came to the United States. At Fuller, I held

1 various positions in the engineering department and 2 in the project sales department. On January 1, 1970, 3 I returned to Germany and started with Heidelberger 4 Zement AG (Heidelberg). After j oining Heidelberg, I 5 worked for approximately 4 1/2 years in one of their 6 plants as e process engineer, primarily in the kiln 7 department. In May of 1974, I was transferred to 8 Heidelberg's Burglengenfe.1 plant as assistant plant 9 manager. At the end of September,1974, I joined the 10 staff at Heidelberg's main office where I stayed until 11 November, 1977. From the middle of 1976 until the 12 acquisition of Lehigh Portland Cement Company by 13 Heidelberg, I was virtually on permanent assignment 14 concerning Heidelberg's desire to e.ter the U.S. cement 15 market. From the date of our purchase of Lehigh 16 through September, 1978, I was Heidelberg's technical 17 coordinator stationed at Lehigh's headquarters in Allentown, Pennsylvania. Since October 1, 1978, I 18 19 have been Vice President - Manufacturing for the Lehigh 20 Portland Cement Company.

21 Q. Gentlemen, are you familiar with the application of

1 the Power Authority of the State of New York to con-2 struct a nuclear power plant in Greene County?

3 A. Yes, we are familiar with the application of the Power 4 Authority as that application affects the operations 5 of the Lehigh Portland Cement Company.

6 Q. Are you familiar with the stipulated contentions of 7 Lehigh Portland Cement Company in Docket No. 50-549?

8 A. Yes.

9 Q. Does this testimony address those stipulated conten-10 tions of Lehigh?

11 A. Yes.

12 Q. What is Lehigh's interest in these proceedings?

13 A. The Alsen cement plant of Lehigh is located at Cementon, 14 New York. The Power Authority of the State of New York 15 has decided to try to locate its proposed Greene County 16 Nuclear Power Plant on property owned by Lehigh immed-17 intely adjacent to Lehigh's currently operating cement 18 Pl ant. The Power Authority has maintained that its 19 siting of the Greene County Nuclear Power Plant adja-20 cent to the Lehigh cement plant will not have a 21 deleterious effect on Lehigh's ability to operate its

6-1 cement plant. Lehigh has maintained from the earliest 2 stages of PASNY's proposal that the location of the 3 Greene County Nuclear Power Plant at Cementon would 4 so interfere with its operations that it would re-5 quire Lehigh to close its present facility. Moreover, 6 the Power Authority's proposal to construct a nuclear 7 power plant on Lehigh's property preempts Lehigh's 8 plans for a modern expanded facility at Alsen. If 9 at all possible, Lehigh is detennined to continue and 10 to expand its presence in the Northeast. In light 11 of the Power Authority's apparent determination to 12 acquire Lehigh's preferred expansion site adjacent 13 to the Hudson River, Lehigh has continued to examine 14 its alternatives. It is apparent to Lehigh that if 15 the Greene County Nuclear Power Plant is sited at 16 Cementon, it cannot continue its operations in the 17 Northeast.

18 Q. Please give us some background information on the 19 United States cement industry.

20 A. The United States cement industry is highly frag-21 mented with 49 companies operating 159 plants in 40

1 states as of the beginning of this year. Cement is 2 a relatively small industry in the United States.

3 The total value of cement sold is only about $3 4 billion -- less than the sales of many individual 5 U.S. companies in other industries. Therefore, 6 capital formation is a major problem because of the 7 size of most of the companies. Since the 1930's, 8 the industry in the United States has had difficulty 9 generating earnings for reinvestment in cement pro-10 duction facilities. The magnitude of this problem 11 can be indicat ed by the fact that the replacement value 12 of the product. ion capacity of the U.S. cement industry 13 is approximately $8 billion to $10 billion. This 14 situation has resulted in the United States cement 15 industry not being nearly as efficient or technologi-16 cally up-to-date as the industry is in many other 17 parts of the world. Another notable characteristic 18 of the United States cement industry was the low price 19 of energy until 1978. As a consequence of this fact, 20 modernization resulting in energy efficient plants 21 usually brought insufficient returns to justify the

1 investment. For instance, the installation of a 2 modern, efficient four-stage preheater at Lehigh's 3 Mason City, Iowa plant was rejected prior to 1973 4 because it was not economically justified. However, 5 after the 1973 Arab oil embargo the project was re-6 evaluated and a $30 million plant modernization, in-7 cluding a four-stage preheater kiln, was undertaken 8 by Lehigh at Mason City. The recent onset of the 9 energy " crisis" in the United States has resulted in 10 most U.S. cement plants being less energy efficient 11 than cement plants in other countries which faced 12 similar problems earlier. For instance, the wet 13 process of manufacturing cement is still the predom-14 inant process and requires almost twice the energy of 15 a modern dry process cement plant. Even the existing 16 dry process cement plants in the United States are, 17 for the most part, not nearly as energy efficient as 18 they should be. Since October 3, 1973, the situation 19 with respect to the supply of energy and its price 20 has changed greatly. The situation has been worsened 21 by recent political events in Iran. The current

I circumstance is that the price and supply of energy 2 has come to the forefront of the concerns of the U.S.

3 cement industry. The need for extensive investment 4 in energy efficient plants utilizing modern technol-5 ogy is readily apparent. However, the small size 6 of most American cement producers and the fact that 7 they have had to pay out a substantial portion of 8 their earnings as dividends to gain access to capital 9 markets did not allow the necessary investments to be 10 made. Moreover, there is a significant lack of ex-11 perience in the United States with the most modern 12 cement production technology. Therefore, a number 13 of important U.S. cement producers have j oined ranks 14 with European producers either as partners or con-15 sultants. This need for new investment has become 16 even more urgent in light of shortages of cement 17 throughout the U.S., including the Northeast.

18 Q. Please describe Lehigh Portland Cement Company.

19 A. Lehigh Portland Cement Company is a major producer 20 of portland cement with five cement plants having 21 a total capacity of approximately three million tons

1 of cement per year located throughout the United 2 States. Since late 1977, Lehigh has been a wholly 3 owned subsidiary of Heidelberg Cement, Inc., which 4 is, in turn, owned by Heidelberger Zement AG. For 5 a number of years, Lehigh had observed the develop-6 ment of the cement industry in Europe and had in-7 vestigated the installation of fuel saving equipment 8

at its plants. In 1976, Lehigh commenced the instal-lation of one of the first four-stage preheater kilns 9

10 with a precalciner in the United States at its Mason 11 City, Iowa cement plant. Lehigh recognized the need 12 to make all of its plants as energy efficient as pos-13 sible as soon as possible. However, the massive 14 investment required to bring all of Lehigh's plants 15 to maximum efficiency levels was beyond the financial 16 abilities of the company. Because of this factor and 17 because Lehigh realized that it was an attractive 18 candidate for a take-over bid, Lehigh started to 19 evaluate potential partners. This evaluation led 20 to the merger with Heidelberg.

21 Q. What is Heidelberger Zement AG?

1 A. Heidelberger Zement AG, a West Gennan cement company, 2 is one of the two largest cement producers in the 3 Federal Republic of Germany and is well known through-4 out the industry for its aggressive and innovative 5 methods of producing cement. In terms of all costs 6 of production, including energy costs, Heidelberg's 7 plants are among the most efficient in the world as 8 a result of investments totaling approximately $440 9 million in the last decade. In today's dollars, this 10 investment would exceed $500 million.

11 Q. Why did Heidelberg seek to acquire Lehigh?

12 A. The substantial investment that Heidelberg made in 13 its cement plants was completed in 1975 and the depre-14 ciation taken as a result of this investment had to be 15 invested in capital assets if Heidelberg was to remain 16 a leader in the world-wide cement industry for the 17 long term. Since 1974, the investment required for 18 Heidelberg's West German plants was less than the 19 depreciation taken on the modernized plants. In 20 addition, Heidelberg had assembled a highly qualified 21 engineering department which had been occupied primarily

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1 in planning Feidelberg plants and those of its sub-2 sidiaries. This combination of financial ability 3 and the technical expertise to plan, design and 4 construct the moct efficient cement plants available 5 caused Heidelberg to seek an acquisition in the cement 6 industry outside Germany. A prerequisite for the in-7 vestment was that it be made in a country in the 8 Western Hemisphere which had a stable industrial, 9 political and free market backgrouad and therefore 10 possessed the prerequisites for a prosperous future, 11 Lehigh met all of the requirements of Heidelberg.

12 Lehigh, operating entirely within the United States, 13 had a base of five operating dry process cement plants 14 but wanted to finance a large investment program and 15 could utilize Heidelberg's technical assistance.

16 Q. Why did Lehigh find Heidelberg to be an attractive 17 partner for merger?

18 A. One of the reasons that Lehigh found Heidelberg 19 attractive was Heidelberg's reputation in the cement 20 industry as being technologically advanced. In addi-21 tion, Heidelberg's capital resources were substantial

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1 and its purchase of Lehigh created significant 2 opportunities for Lehigh to be among the most effi-3 cient cement companies in the world. Several of 4 Lehigh's competitors had entered into agreements with 5 foreign partners and had thereby strengthened their 6 competitive positions. These factors, coupled with 7

the fact that Lehigh's management and shareholders 8 thought the Heidelberg purchase of fer was fair led 9 to Lehigh's approval of a merger with Heidelberg.

10 Q. What is the status of the Alsen plant at Cementon in 11 the Lehigh organization?

12 A. The Alsen cement plant is an integral part of Lehigh's 13 operations in the United States. In several respects 14 it is typical of Lehigh's plants in the United States.

15 For instance, it has an excellent raw material situa-16 tion, with sufficient raw material reserves for any 17 major expansion and excellent land and good subsoil 18 conditions for a cement plant. The raw material 19 situation is particularly crucial to the location of 20 a cement plant, and the Alsen plant's raw materials 21 are of the highest quality and particularly well

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1 suited to the new energy conserving technology.

2 The method of operation of the Alsen plant vis-a-vis 3 its marketing region, the Northeast, is typical of 4 a Lehigh plant. The Alsen plant is the sole source 5 of Lehigh cement for the eastern New York and New 6 England market. These sales efforts are directed 7 from a sales office in the regional office in Hartford, 8 Connecticut, and shipments to customers emanate both 9 from the Alsen plant and from a terminal in Providence, 10 Rhode Island. The Alsen plant has one very important 11 attribute which is unique in the Lehigh system; that 12 is, its location on deep water. This deep water loca-13 tion (i) allows the Alsen plant to have the advantage 14 of shipping cement by water, an advantage which sig-15 nificantly enlarges the area which it can economically 16 serve, and (ii) allows significant flexibility for 17 future receipt of raw materials and fuel. Alsen is 18 the only plant in the Lehigh group which has these 19 attributes.

20 Q. What are Lehigh's goals for its Alsen plant?

21 A. Lehigh's goal for Alsen, as it is for each of its

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1 plants throughout the country, is to become the 2 low cost cement producer in its region -- the North-3 east. By so doing, Lehigh guarantees its survival and 4 assures that it will continue to be a viable factor 5 in the economy of Greene County. In order to achieve 6 this goal, Lehigh has to cope with the problems of 7 energy supply and cost and exploit the natural advan-8 tages of the Alsen site, particularly its access to 9 deep water transportation, its excellent quarry and 10 its availability for plant expansion. To achieve its 11 goal, Lehigh is proceeding with its plans to construct 12 a new cement plant with a capacity of approximately 13 730,000 tons at Alsen at a site immediately adjacent 14 to the Hudson River as shown on Exhibit . (See 15 plant layout attached to May 10, 1978 Lehigh answer to 16 PASNY Interrogatory No. 6.) Lehigh recognizes that 17 this plant cannot coexist with the Greene County Nuclear 18 Power Plant, but it has no alternative but to proceed.

19 Q. How will the new plant enable Lehigh to reach its goals?

20 A. The new plant has several attributes which will enable 21 Lehigh to reach its goals of reducing costs and thereby

1 allowing Lehigh to penetrate additional markets.

2 First, it is located on deep water which allows 3 advantage _to be taken of significant economics in 4 shipping cement and clinker and receiving raw materials 5 and fuel and which broadens the prospective market area.

6 Second, the Alsen site has substantial quarry reserves 7 which are particularly well-suited to the technology 8 planned for the new cement plant. Third, the parti-9 cular site selected for the new plant is of adequate 10 size for the planned plant and its contemplated ex-11 pansion in the future. These natural advantages are 12 supplemented by competitive and market conditions which make the new plant attractive. First, the North-13 14 east region receives substantial imports from outside 15 the United States. In 1977, 651,487 tons of cement 16 vere imported into the Northeast region from foreign 17 countries. From January through November, 1978, 18 495,887 tons of cement were imported into the North-19 east United States. These imports cannot be made 20 without incurring substantial transportation costs 21 because a substantial portion of the imports are

1 imported from overseas. A low cost cement plant 2 in the Northeast would effectively compete against 3 these imports. Second, with a low cost cement plant, 4 Lehigh has the opportunity to compete cost effectively 5 against domestic cement plants in the Northeast.

6 Third, the Northeast region market as a whole is a 7 stable market with a slightly upward growth rate, and 8 there are areas such as New York City and Boston where 9 Lehigh can market additional cement. Fourth, the 10 location of the Alsen plant on deep water allows the 11 Alsen plant to supplement the production of a Lehigh 12 plant located in Union Bridge, Maryland, and opens 13 potential new sales areas for Lehigh on the Eastern 14 Seaboard.

15 The new Lehigh plant is designed to efficiently 16 utilize electric power and fuel. These coces comprise 17 approximately forty percent of the operating costs of 18 a cement plant and will increase in the future. The 19 new plant will conserve approximately twenty-five 20 percent of the electrical power and ic_ty-five percent 21 of the fuel presently utilized. Moreover, the new

1 plant is designed with substantial excess raw and 2 finish grinding capacity to take advantage of time-3 of-day rates for electricity.

4 When one considers the fact that the present 5 Alsen plant sold its entire production during 1978 6 and expects to do so again in 1979 (and, in fact, 7 Lehigh has already had to purchase cement to meet 8 demand), the opportunities become obvious. When 9 coupled with a larger, modern, low-cost cement plant 10 which will be more energy efficient and which will be 11 able to receive raw materials such as slag and fly-12 ash by barge, the advantages of the Alsen site are 13 magnified. It should be noted that the Environmental 14 Protection Agency and the Federal Energy Department 15 hasa been studying the desirability of requiring the 16 use of slag in cement for proj ects financed by the 17 Federal Government. .

18 Q. Why has Lehigh opted for a new plant at Alsen as 19 opposed to a modernization and expansion of its present 20 plant?

21 A. Consideration was given by Lehigh, before its purchase

1 by Heidelberg, to the expansion of the present Alsen 2 plant. However, a modernization of the existing 3 plant will not achieve Heidelberg's goal of having 4 Lehigh become the low cost producer in the Northeast 5 region. This is particularly the case since the 6 Alsen plant has had repeated on-site modifications.

7 As is common in such a circumstance, the layout of 8 the plant typically becomes less and less optimal as 9 the in-place expansion process proceeds. This is 10 generally the case because an entire plant cannot be 11 shifted around during an expansion. The result is, 12 that over time, departments which should be close to-13 gether become more widely separated. This is particu-14 larly crucial in the cement manufacturing process 15 because costs are greatly influenced by the materials 16 handling process. In addition, on-site modification 17 of the Alsen plant would postpone the introduction of 18 new process technology. Some older equipment would 19 have to be kept in use and the advantages of new 20 equipment and techniques foregone with adverse conse-21 quences for both future costs and technical flexibility.

9 1 These flexibility deficiencies in on-site modlfica-2 tion are evident when one closely examines the options 3 for Lehigh at Alsen. One of the reasons for the 4 necessity of a new plant at Alsen is that the present 5 facility does not have enough production flexibility 6 to take advantage of seasonal variations in cement 7 shipping patterns. There is a need for increased 8 storage for finished and semi-finished products.

9 Particular bottlenecks also result from limited finish 10 grinding capacity. In addition, a major modification 11 of the kiln department to make it more efficient would 12 result in serious production delays and would not 13 achieve the fuel consumption savings which would result 14 from a new kiln. Moreover, the modified kiln would 15 not increase capacity significantly or improve flexi-16 bility. Considering the supply situation in the North-17 east and indeed throughout the United States, supple-18 mental supplies would not be available for purchase 19 by Lehigh to replace its inability to produce cement 20 for any extended period of time. Finally, the location 21 of the present plant is not optimal. To take advantage

1 of the deep water transportation of the Hudson 2 River, a new plant must be located at the river side.

3 After studying the matter carefully, we concluded 4 that the increased capacity, efficiencies and cost 5 savings necessary for the Alsen location to remain 6 competitively viable over the long term could not be 7 achieved by making piecemeal improvements to the 8 existing plant and that any gains resulting from such 9 improvements were not worth the considerable capital 10 cocts.

11 Q. When was it decided that a new plant was needed at 12 Alsen?

13 A. A new plant at Alsen had been considered by Lehigh 14 prior to its acquisition by Heidelberg, but the 15 limited resources of the company prevented Lehigh 16 from giving the proj ect priority. In June, 1977, 17 Fritz Toepel, a member of the Managing Board of 18 Heidelberg, and Ralf Bohman, then assigned by Heidel-19 berg to review prospective American cement plant 20 purchases, visited all cf Lehigh's plants except 21 Metaline Falls, Washington. At the conclusion of

1 their review, it was their opinion that if the 2 Lehigh Portland Cement Company were acquired by 3 Heidelberg, a new plant providing additional capac-4 ity would be needed at Alsen and that the existing 5 plant could be used in the interim and then as sup-6 plemental capacity. From August 23 through August 7 28, 1977, Mr. Toepel, Theodor Brenke, another member 8 of Heidelberg's Managing Board, and Dr. Eberhard 9 Schleicher, a member of Heidelberg's Supervisory 10 Board, visited all five Lehigh plants. After most of 11 the Lehigh stock was acquired , Heidelberg commenced 12 a detailed review of all Lehigh facilities. Commencing 13 in October, all available information on each of 14 Lehigh's plants, including maps, geological data, 15 photographs, drawings, site descriptions and other 16 information, was transmitted to Heidelberg's engineering 17 department for review. Heidelberg's attention was first 18 addressed to the Alsen situation because of Lahigh's 19 concern that a demonstration of its needs was neces-20 sary if they were to retain ownership of their property 21 at Alsen and remain a cement pr.nducer in the Northeast

1 region for the long term. In November, 1977, 2 Heidelberg engineers produced Exhibit ,

3 which was distributed to all parties to these pro-4 ceedings in May, 1978 in connection with an updated 5 answer to Interrogatory No. 6. Before the new plant 6 was laid out, additional visits were made to the 7 Alsen site by Mr. Toepel, by Ralf Bohman, by Oskar 8 Will, who is in charge of the process and engineering 9 department of Heidelberger Zement AG, by Hans Jochnk, 10 Chief of Design Engineering for Heidelberg, and by 11 Dr. Joachim Gawlik, Heidelberg's Chief Geologist. It 12 was concluded that a new plant at Alsen on property 13 owned by Lehigh must be located as shown on Exhibit 14 .

15 Q. Who performed the first layout work for the new Alsen 16 plant?

17 A. The layout work for the new Alsen plant was done by 18 Heidelberg's engineering department. This F.epart-19 ment, which is among the most highly respected in the 20 cement industry worldwide, includes approximacely 30 21 engineers and draftsmen headquartered in Heidelberg

1 and a number of additional people located in various 2 Heidelberg plants. Heidelberg does its own engin-3 eering and design work and does not use outside 4 consultants as is traditional in the U.S. cement 5 industry.

6 Q. What criteria were used in layout out the new plant?

7 A. Three basic criteria were utilized in the layout of 8 the new plant at Alsen. First, the plant would be 9 located as close as possible to the deep water trans-10 portation afforded by the Hudson River. Second, the 11 location of the plant would afford direct straight 12 line access to Lehigh's substantial quarry reserves.

13 Third, the plant layout would be designed to provide 14 for the most efficient handling of materials within 15 the plant and to provide maximum flexibility for 16 future expansions.

17 Q. How was the actual layout of the new plant produced?

18 A. The plant layout at Alsen is a combination of the 19 designs of a number of successful Heidelberg plants.

20 This method not only insures that the newest proven 21 ideas will be incorporated in a plant, but accelerates

1 the planning process. Once the var ;us components 2 are decided upon, various modules are then placed 3 on a Icyout of the proposed site which had been 4 selected as a result of the previcus site visits 5 and frcm documents forwarded to Heidelberg by Lehigh 6 to maximize the advantages inherent in this particu-7 lar site.

8 Q. What areas of the current property at Alsen were in-9 vestigated for the new plant?

10 A. The entire Alsen property was reviewed to determine 11 the best site for Lehigh's new plant. No other 12 acceptable site was found in the current Lehigh prop-13 erty.

14 Q. Why must the new cement plant be constructed at the 15 location shown on Exhibit  ?

16 A. It is necessary that the natural advantages of the 17 Alsen site be utilized if the new Lehigh ceaent plant 18 at Alsen is to be a low cost producer. First, advan-19 tage must be taken of the proximity to deep water 20 transportation. Second, direct access to the quarry must be maintained. In addition to these prerequisites, 21

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1 it is necessary that the site itself be large 2 enough to provide for future expansion. The pro-3 posed Alsen site meets the prerequisite of having 4 casy access to deep water with short and straight 5 connections to the dock. The significance of this 6 advantage to a cement producer cannot be overstated.

7 Water transportation of a bulk product such as cement 8 is much cheaper than any other form of transportation.

9 In Enr pa ; this advantage is exploited to a mueb 10 greater extent than it is in the United States where 11 approximately 1% of the total cement shipments are 12 made by water. In addition, as previously noted, this 13 advantage in cost allowc the Alsen plant to serve a 14 tucch broader area profitably. The proposed location 15 of the new plant also provides direct straight line 16 access to the quarry. This is a particular advan-17 tage in the Northeast region's climate where a 18 minimum of transfer points is useful to prevent ex-19 cessive maintencnce requirenants as a result of 20 adverse weather conditions. The Alsen site has, in 21 addition, the advantage of utilizini gravity in

1 transporting limestone from the quarry to the pro-2 posed plant. The proposed layout of the new Alsen 3 plant, wnich requires 77 acres, optimize.; ;he re-4 lationships between the various production components 5 and provides adequate opportunity for the addition 6 of capacity in the future. It also allows for 7 straight line conveyors, avoiding complicated and 8 expensive transfer points.

9 Q. Why is the capacity of the proposed plant approxi-10 mately 730,000 tons of cement atnually?

11 A. Lehigh believes there are substantial opportunities 12 for a low cost producer in the Northeast to gain a 13 greater share of the market, primarily by displacing 14 imports to the region, and to enter additional sales 15 ares.s by atilization of the deep water transportation 16 afforded by the Hudson River. (It should be noted that 17 Lehigh intends to utilize parts of its present plant 18 as " spare" capacity to handle expected demand and to 19 serve as a " bridge" to the contemplated expansion of 20 the new plant beyond 730,000 tons.) In addition, the 21 incremental cost of constructing a larger cement plant

1 (as opposed to one of approximately 495,000 tons, 2 which is the present capacity) is not proportional 3 to the additional capacity and the flexibility is 4 preserved. Moreover, the efficiency and flexibility 5 of the new plant located on deep water are such that 6 it can operate without Lathering a significantly 7 increased share of the market over and above that 8 currently held by Lchigh.

9 Q. Why was the " north" site rej ected as the proposed 10 location for Lehigh's new cement plant at Alsen?.

11 A. The optimum space requirement for a new cement plant Ic is 70 to 80 acres and additional property is needed 13 for the new Alsen plant to accommodate increased use 14 of the dock to receive fuel and raw materials and to 15 ship clinker and cement. In addition, a modern cement 16 plant must be designed to provide for easy access for 17 repair purposes . The north site is not suitable for 18 the proposed plant even without considering the fact 19 that an integral part of Lehigh's plan is to accom-20 modate additional expansion in the future. Even more 21 important is the fact that the north site provides no

4 1 direct, short access to the deep water transportation 2 provided by the Hudson River. This access is crucial 3 to achieving the lowest possible costs and to Lehigh's 4 plans to expand its market. Without this access to 5 the river, the only method by which raw materials 6 could be transported from the very limited dock lef t 7 to Lehigh would be by high speed conveyors. These 8 conveyors would have the additional disadvantage of 9 not being reversible and of having transfer points 10 because the location of the Greene County Nuclear 11 Power Plant would prevent them from running in a 12 straight line to the dock. The problem of access 13 from the north site also relates to the quarry. There 14 is neither short nor straight line access to the quarry 15 available from the north site. These deficiencies do 16 not even consider the fact that the Power Authority's 17 proposed preferred transmission corridor bisects the 18 north site and a number of its transportation alter-19 natives further intrude on this location. For all 20 these reasons, the north site was rej ected as the 21 appropriata location for a new cement plant involving

1 a large investment.

2 Q. What do you perceive to be the impact on Lehigh 3 Portland Cement Company of the location of the Power 4 Authority's Greene County Nuclear Power Plant in 5 Cementon?

6 A. It is expected that the massive construction program 7 attendant to the construction of the Greene County 8 Nuclear Power Plant and the associated access improve-9 ments will severely impact Lehigh's present facility 10 and will cause a number of production disruptions 11 during the six year construction of the Greene County 12 Nuclear Power Plant. Approximately 50% of Lehigh's 13 cement is shipped directly by truck to our customers.

14 The remainder is shipped to our Providence terminal 15 by barges which are loaded by our subcontracted truck 16 fleet. The Power Authority's proposal to reconstruct 17 Route 9W to the east of the present Lehigh Portland 18 Cement company plant significantly impinges on 19 Lehigh's truck loading operation by reducing the so-20 called " parking" area which is also an area used for 21 the maneuvering and queuing of trucks for loading

1 purpos es . Moreover, any relocation of Route 9W 2 significantly alters the ability of Lehigh Portland 3 Cement Company to maintain effective ingress and 4 egress to and from the plant, silos and dock areas.

5 Even if Route 9W is not reconstructed and alternative 6 III (park and ride) or van pooling is utilized, the 7 problems created by bringing at least 2,100 con-8 struction workers to the Cementon site will cause 9 serious disruptions in Lehigh's ability to schedule 10 its shipments of cement appropriately. These prob-11 lems are exacerbated by the fact that the truck ship-12 ments out of the plant are roughly coincident in time 13 with the arrival and departure of the large number 14 of construction workers associated with the proposed 15 Greene County Nuclear Power Plant. Cement is a fungi-16 ble product. Because our customers traditionally have 17 very limited storage facilities, any disrupticn in 18 our ability to supply them will shut down their oper-19 atione or, more likely, cause them to shift their 20 purchases to competitors who stand ready to supply 21 them with a substantially equivalent product. In

0 9 9 1 addition, it is clear that the proposed location 2 of the Greene County Nuclear Power Plant at Cementon 3 will require Lehigh, assuming that its present plant 4 can survive the construction process, to alter a num-5 ber of production operations. For instance, the 6 present spoils pile will be "off limits" to Lehigh 7 and will have to be moved. The most likely location 8 for a new spoils pile is in the quarry. At the very 9 least, this relocation will substantially alter the 10 methods by which Lehigh must dispose of this material 11 and result in increased expense connected with this 12 operation for the duration of the useful life of the 13 Alsen plant. In addition, the construction of the 14 Greene County Nuclear Power Plant between the present 15 Alsen plant and the Hudson River will significantly 16 affect Lehigh's barge loading operation and preclude 17 Lehigh from constructing its proposed new facility in 18 the Northeast.

19 Q. What effects will the proposed construction of the 20 Greene County Nuclear Power Plant have on Lehigh's 21 barge loading operations?

1 A. The location of the Greene County Nuclear Power 2 Plant between the present plant and the Hudson River 3 is of grave concern to Lehigh. The Alsen plant ships 4 almost 50% of its finished product, cement, by barge 5 from the Alsen facility to a terminal located in 6 Providence, Rhode Island. Lehigh's barge ir loaded 7 by trucks which travel from the silo area immediately 8 adj acent to the plant to Lehigh's dock area on a Lehigh 9 owned and controlled haul road. Eighty-eight truck-10 1oads (and, therefore, 176 trips to and from the barge) 11 are necessary to load the barge and it is imperative 12 that this " rolling pipeline" operate smootnly to avoid 13 delaying the barge. Delaying the barge not only causes 14 Lehigh Portland Cenent Company to incur demurrage char-15 ges, but j eopardizes the activities at Lehigh's Provi-16 dence terminal and thereby significantly interferes 17 with Lehigh's abilities to serve its customers in the 18 Rhode Island and eastern Massachusetts areas. Tba 19 construction of the Greene County Nuclear Power Plant 20 will also result in the exposure of Lehigh employees 21 to increased hazards during the barge loading operation.

1 Each tractor trailer going to the barge carries 2 25 tons of cement. Any accidents would result in 3 grievous injuries or death. Given the complexity 4 of constructing and operating a nuclear power plant, 5 Lehigh believes that no matter how sincere the Power 6 Authority may be in its desire to cooperate and to 7 try to coordinate its operations to accommodate 8 Lehigh's needs, there is no uay that Lehigh can con-9 tinue to operate its dock efficiently.

10 Q. Why will the proposed Greene County Nuclear Power Plant 11 preclude Lehigh from constructing its new cement plant 12 in the Northeast?

13 A. It is obvious that Lehigh's plant and the Greene County 14 Nuclear Power Plant cannot both occupy the same site.

15 Moreover, Lehigh cannot build its new ccment plant on 16 other property owned by Lehigh at Cementon. The 17 property which would remain "in possession" of Lehigh 18 is graphically illustrated in Figure 4.6 included in 19 the Final Environmental Statement prepared by the 20 Nuclear Regulatory Commiccion Staff in this proceeding.

21 The siting of a new cement plant in a location other

1 than Cementon would be extremely expensive if not 2 impossible. First, the location of a cement plant 3 must include an adequate reserve of the primary raw 4 material -- limestone. In the Northeast, this re-5 source is found primarily in the Hudson River Valley.

6 For that reason, all the cement plants serving New 7 England, with the exception of one, are located out-8 side the states of Massachusetts, Connecticut, Rhode 9 Island, Maine, New Hampshire and Vermont. Because of 10 the nature of the market and the distances of delivery 11 entailed, access to deep water transportation is a 12 virtual prerequisite for the construction of a cement 13 plant in the Northeast. The possibility of resolving 14 Lehigh's conflict with the proposal of the Power 15 Authority was recently discovered. Lehigh was pre-16 sented with the opportunity to purchase a site in the 17 Hudson River Valley on which the construction of a 18 new plant would be feasible. Lehigh evamined this 19 alternative and determined that the construction of 20 its new cement plant on that site would cause techni-21 cal and financial problems but would virtually

1 eliminate the socioeconomic problems created by 2 the construction of the Greene County Nuclear Power 3 Plant and its displacement of the Lehigh Portland 4 Cement Company and allow Lehigh's new plant and the 5 Greene County Nuclear Power Plant to coexist. Lehigh 6 is also of the opinion that this alternative would 7 be the least costly way for the Power Authority to 8 deal with Lehigh's problems. In recent weeks, this 9

alternative was discussed at length with representa-10 tives of the Power Authority in an effort to resolve 11 obvious technical and financial problems. However 3 12 despite extensive efforts by Lehigh and Heidelberg, 13 we have not been able to reach an agreement with the 14 Power Authority which would allow Lehigh to pursue ,

15 this alternative. Lehigh knows of no site where it 16 can build its proposed plant in the Northeast and has 17 determined that if it cannot build at Cementon, it will 18 be forced out of tne Northeast market.

19 Q. What will be the effect on employment at Lehigh when 20 the new plant is constructed?

21 A. Employment at Alsen vill remain at approximately the

1 same level as it is today after the new plant is 2 constructed and the old plant is shut down. Ar- Je-3 crease in the total employment will be by attrition.

4 It is expected that shifts of manpower will occur 5 and Lehigh will undertake to train its current en-6 ployees to insure that they can perform new duties if 7 required. The proposed plant with a capacity of ap-8 proximately 730,000 tons is expected to operate at 9 a level of approximately .45 manhours per ton which 10 is within the Heidelberg European experience. In 11 addition, of course, salaried personnel and other 12 non-production personnel would remain at current 13 levels or increase slightly because of the increased 14 size of the plant. It should be pointed out that be-15 cause of the demand projections for the Northeast 16 region for the foreseeable future, it is quite possibic 17 that Lehigh will continue to operate portions of its 18 present plant in conjunction with the new plant. This 19 situation would obviously result in an increase in 20 employment by Lehigh in Greene County.

21 Q. What are Lehigh's conclusions with respect to the

38 -

1 impact on Lehigh of a siting of the Greene County 2 Nuclear Power Plant at Cemeaton?

3 A. Lehigh and Heidelberg have the intention of invest-4 ing their capital and technology in a new platic in 5

the Northeast with a goal of becoming the low cost 6 producer and further penetrating and expanding the 7 market available to them. For these reasons, they 8 have started the process which will lead to the new 9 Alsen plant. It is Lehigh's conclusion that if the 10 Greene County Nuclear Power Plant is sited at Cementon, 11 the present Lehigh p] ant will not be able to survive 12 the period of construction because of interruptions 13 in its ability to economically produce cement and deliver the cement to its customers. These interrup-14 15 tions will result in the permanent loss of customers 16 to Lehigh. Even if the present Alsen facility could 17 survive the six-year construction period of the Greene 18 County Nuclear Power Plant, Lehigh's future in the 19 Northeast is elimin_.ed as the Power Authority's pro-20 posal precludes the construction by Lehigh of a new 21 larger and economically more efficient cement plant

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1 which Lehigh has determined is necessary to pre-2 serve its future in the Northeast.

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