ABB Alstom plans more cuts

Global power generation group ABB Alstom Power has announced plans to shed 10,000 jobs over the next two years in a worldwide restructuring programme. The recently announced programme is aimed mainly at reducing the group’s overcapacity in the declining international steam generator market.

The company has already reduced the work force by 4000 to 54 000 since it was established last year from the merger of ABB and Alstom. The additional 10 000 job cuts will mean that it will have reduced its work force by 24 per cent in total. The latest cuts will see jobs lost at 25 manufacturing facilities around the world.

The restructuring programme will cut ABB Alstom’s production costs by around $585m annually and help it counter fierce competition in a market with massive over capacity.

Around 1500 job cuts are expected in France – at the Lys-lex-Lannoy site in the north of the country, the Courneuve site in the Seine-Saint Denis area and at its Belfort site – to which the company is likely to encounter fierce union opposition. A further 1300 cuts are planned for Germany and 1655 in India.

BNFL dealt blow after blow

In the latest of a series of knocks for UK nuclear fuel waste reprocessor, BNFL, US energy secretary Bill Richardson has ordered a full review of work being performed by the company for the US government. The news threatens billions of dollars-worth of contracts with the US government.

The UK government was planning to sell 49 per cent of the state-owned firm, but has now conceded that the recent international safety concerns will prevent this happening before the next election.

BNFL contracts around the world have been under scrutiny since the Japanese government placed an indefinite ban on imports of mixed oxide fuel after it was discovered last December that BNFL workers had falsified quality control data on a batch of fuel shipped to Japan. The UK Nuclear Installations Inspectorate also revealed ‘systematic management failures’ at BNFL’s Sellafield plant in February this year.

The UK government was hoping to raise up to £1.5bn ($2.4bn) from the partial sale. The company recently said that it had suspended uranium deliveries to British Energy, and has had fuel contracts in Germany called into question.

B&W seeks protection against liability claims

Babcock & Wilcox, a subsidiary of energy services company McDermott International, has filed for Chapter 11 reorganization under the US Bankruptcy Code to help it resolve the growing financial burden of asbestos liability claims.

The company says that its business remains strong and that it has taken this step to reduce the threat of the liability claims to its long-term health. B&W has traditionally settled asbestos claims out of court but says that there has been an increase in settlement demands from individual claimants that has forced it to re-examine its approach. “In recent months, settlement demands … have spiked to levels dramatically above the historical pattern”, said the company in a statement.

B&W began to settle claims for asbestos exposure in 1982 and by the end of 1999 had settled over 340 000 cases at a total cost of $1.6bn. It used the material in industrial and utility boilers until the early 1970s.

Fortum dismisses Marttinen

The board of Finnish Energy company Fortum has demanded that the group’s supervisory board dismiss the company’s president, Heiki Marttinen. The board said that there was a “mutual lack of confidence”.

Marttinen headed the electricity group IVO before it merged with oil and gas group Neste to form Fortum. His role will be taken over by the financial director, Eero Aittola, until a replacement is found.

Problems within the board are thought to have arisen after market analysts pressed Fortum to focus on its electricity business and sell off its petroleum arm.

R-R reports losses in energy

UK engineering group Rolls- Royce has reported a £39m ($63m) loss in its energy business units on sales of £482m. Its overall results for the year ending December 31, 1999 showed an 11 per cent jump in pre-tax profits to £360m ($578m).

The company reported that it has continued to invest in its energy business units, concentrating on applications in the oil and gas sector and power generation equipment in the under-75 MW market.

Rolls-Royce is expecting its sales of industrial gas turbines to grow over the next year as a result of the increasing demand for distributed generation products. It said that market interest in its industrial Trent gas turbine remains strong in spite of the fact that its development has taken longer than expected.

Rolls-Royce also launched its latest portfolio of medium speed diesel engines, the Allen 5016, during 1999.

News digest

British Energy strategy: UK nuclear generator British Energy has made significant progress in reaching its strategic goals of moving into energy supply, flexible generation and international expansion, according to its latest review of business development. It says that it will continue to improve operations in its core UK nuclear generation business by driving down costs, take full advantage of its US assets and continue to increase the flexibility of its generation portfolio in the UK.

Aggreko growth: Power rental group Aggreko has reported that its pre-tax profits for the year to December 31, 1999 grew 30 per cent to £51.3m ($81.1m) following additional demand for its services over the millennium holiday period. Turnover and operating profit were both up 26 per cent at £226m and £57m respectively. The millennium demand, including emergency power supplies after Hurricane Floyd, added around five per cent to operating profits.

Hydro invests: Hydro-Quebec CapiTech of Canada has invested $1m in a minority stake in Metallic Power Inc. of San Diego, USA, a manufacturer of 4 kW zinc-air fuel cells for stationary and mobile power applications. Metallic’s products include DC battery back-up systems for telecommunications as well as standby power units for business and residential consumers.

Plug Power agreement: US fuel cell manufacturer Plug Power has entered into an agreement with US-based Advanced Energy Systems to integrate Advanced Energy Systems’ power electronics technology into its residential fuel cell systems over the next year. the deal gives Plug Power a 28 per cent ownership interest in Advanced Energy Systems while Advanced Energy Systems will receive a combination of cash and Plug power stock.

Repsol-YPF power plans: The Spanish-Argentine petroleum company Repsol-YPF has said that it is to make the development of natural gas fired power plants one of its strategic pillars of the future. The strategy will be based on the use of the company’s natural gas reserves and its natural gas pipeline network. The company has a long-term aim of becoming an integrated energy company.

Tractebel up 18 per cent: Belgian energy group Tractebel has reported an 18 per cent jump in 1999 net current profits to $515m, helped largely by growth in its international energy business. The group is currently evaluating its strategy and structure, and there is strong speculation of a closer integration with its part-owned power subsidiary Electrabel and of a tie-up with another large European energy player.