CHATTANOOGA, TN (WRCB) -- Approximately 80 employees at one of Chattanooga's largest employers were notified during factory meeting on Friday morning they will no longer have a job in this city. French power company, Alstom, says it is restructuring operations at the turbomachines factory in order to adapt to market conditions.
The downsizing comes less than three years after an elaborate dedication ceremony. That ceremony in June 2010 brought dignitaries and the most senior leaders of the company. The company built the factory to meet demand for new and refurbished power in the U.S. The 2011 Fukushima disaster and a process called "fracking" that unearths shale gas have stunted the growth potential for nuclear.
"Tremendous availability of shale gas has tilted the market away from other fuel sources like nuclear, going toward natural gas," Alstom Spokesperson Tim Brown said.
Originally, the company promised 350 new jobs.
"We plan to continue to work with local officials to make sure the factory is as competitive as possible so we can continue to be in compliance and obviously we'll honor the terms and conditions," Brown said.
Chattanooga Mayor Ron Littlefield said the city's sorry to hear of the cuts but, "are pleased that Alstom has continued its commitment to Chattanooga and is restructuring their business to take greater advantage of the shift from nuclear to natural gas."
Employees will reportedly be offered severance packages, career assistance services, and some will have the opportunity to relocate to other Alstom facilities. The layoffs will begin in May and occur in phases over the next several months while the company completes existing project orders.
"First of all we would say thank you for a job well done. Everything that was decided was a business decision dictated by the conditions beyond the control of anybody that worked here in this factory," Brown said.
Approximately 50 factory employees will keep their jobs in Chattanooga and the company is not ruling out a return to full capacity if the nuclear industry rebounds.
"We're an equipment manufacturer, so we manufacture the equipment our customers want to buy," Brown said.
Alstom employs nearly 4,500 people in the U.S. at 26 locations. Worldwide, it employs 65,000 people in 70 countries. The company says it has equipment operating in one of every two power plants in America.
Beginning with an announcement in 2007, Alstom began to invest $300 million to build the most advanced turbine engineering manufacturing facility in the world right on the banks of the Tennessee River.
The project was billed as a new chapter in a long-standing history with the city of Chattanooga. The 350,000-square-foot facility is in exactly the same place where first steam boilers were produced in 1897. The plant was scaled to manufacture the world's largest nuclear steam turbines, retrofits for nuclear and fossil applications as well as gas turbines and generators.
The tsunami and nuclear meltdown in Japan changed the landscape for Chattanooga's plant, which was built with hopes of cashing in on the nuclear renaissance. It chose Chattanooga based on its position on the map in relation to existing or potential power plants. The nuclear disaster caused cancellations or delays of several nuclear plants across the world.
"Turned the market away from what we originally anticipated in a different direction and we need to adapt," Brown said.
Alstom shifted to making gas turbines to keep the Chattanooga plant busy. Nuclear industry officials expect just five new reactors to enter service by 2020 in this country: Southern Company's two Vogtle reactors, two reactors at Summer, South Carolina and one at Watts Bar in Tennessee.
Alstom also runs a 600,000-square-foot boiler production plant next door with approximately 400 employees. It is not affected by these layoffs. It is possible that some of the turbine group employees could be relocated to that plant.
The boiler plant used to be run by Combustion Engineering and employed approximately 6,000 people in the 1970s. At that time it was Chattanooga's largest employer, more than Volkswagen has today. The boiler plant primarily builds replacement components for coal-fired power plants. It also retrofits steam equipment for gas and oil power plants. It does not service the nuclear industry. The boiler plant employed more than 500 people a few years ago but reduced headcount by about 100 people over a gradual attrition process. The company had said it needed a smaller work force because it did not have enough customer orders.