The privatized U.S. Enrichment Corp. announced last week that it will lay off 850 of its 4,000 employees this summer.
USEC, which was a federal agency until it was privatized in July 1998, will divide the layoffs equally between its plants in Paducah, Ky., and Portsmouth, Ohio. USEC provides enriched uranium fuel to commercial nuclear power plants.
"Increased global oversupply of enrichment and strong competition have resulted in increasing pressure on us to further reduce our labor costs," said USEC executive vice president Jim Miller. "We continue to strongly support government activities to carry our worker transition programs and to create new jobs."
Over the objection of critics who said privatization would pose a risk to national security and the environment, the Treasury Department in July 1998 sold USEC in an initial public offering for $2.4 billion. USEC is now a shareholder-owned corporation, with fiscal 1999 revenues of more than $1.5 billion.
Under the terms of its privatization agreement, USEC could only lay off 500 employees for the first two years after its IPO. All 500 layoffs were voluntary. This summer's layoffs will affect 20 percent of the corporation's remaining workforce. USEC hopes the new round of layoffs will also attract retirement-age employess to voluntarily leave.
The layoffs are in part due to the fact that USEC is legally obligated to purchase enriched uranium at above-market prices from Russia, said Dan Minter, president of Local 5689 of the Paper, Allied-Industrial, Chemical and Energy Worker's International Union (PACE), which represents workers at the Ohio plant.
The Clinton administration hoped USEC would benefit from and thrive in the competitive marketplace, but the corporation has run into financial difficulties since its inception. USEC's stock was at $14.50 a share when it went public. Last Thursday it closed at under $6. USEC has asked Congress and the Clinton administration to consider subsidizing some of its costs.
Minter said an Energy Department cleanup project may generate work to help alleviate the effect of the layoffs. DOE is also considering a joint venture with USEC to develop new technologies for enriching uranium at a lower cost. But the union's warnings before USEC was privatized-that the requirement to purchase overpriced Russian uranium coupled with new tax and other financial burdens would make the corporation financially unstable-appear to be coming true.
Minter said he understands the need to make government more efficient and cross the "bridge to the 21st century" that President Clinton frequently referred to in his campaigns.
"We just hope that bridge isn't paved with pink slips," Minter said.