French Nuclear Delays Escalate as Contractors Fumble in Dark

(Bloomberg) -- France faces a decade-long struggle to upgrade its nuclear power plants, but for Natacha Piot, whose firm makes metal pipe supports for reactors, there’s little visibility beyond Christmas. 

She’s chief executive officer of one of the dozens of subcontractors engaged in a 48 billion-euro ($56.4 billion) project to extend the life of Electricite de France SA’s aging atomic plants. Like several of her peers, Piot is critical of how the state-run utility is managing the process. 

“I can’t afford to hire because we don’t know what we’ll have to do in a month,” said Piot, CEO of CITA Production, based near the Saone River, north of the vineyards of Burgundy. “We’re overloaded until Christmas, but it’s a total haze for 2018. We’re in a permanent fog.”

EDF has cut earnings forecasts as longer-than-planned maintenance and refueling halts at its 58 reactors were compounded by safety checks demanded by the nation’s nuclear watchdog. That means the utility expects nuclear-power generation to barely rebound this year, after a shortage of skilled workers at its contractors cut output by 7.9 percent to 384 terawatt-hours in 2016.

French Nuclear Delays Escalate as Contractors Fumble in Dark

EDF will probably miss its nuclear output goals in 2017 and 2018, lowering earnings to the bottom of the company’s latest forecasts, Olly Jeffery, an analyst at RBC Capital Markets, wrote in a Dec. 6 note. “Delays could slip into 2019 as well,” he said.

As EDF wrestles to prolong the lifespan of reactors by at least an extra decade, CITA Production, the firm founded by Piot’s father in 1964, isn’t the only subcontractor struggling to keep up with the utility’s fast-changing requirements.

“Working methods must be changed, and subcontractors should be brought in earlier to better take into account manufacturing lead time,” said Marcel Masson, head of Gewiss France, which is making cable trays for backup diesel generators that EDF is obliged to build following the Fukushima accident six years ago. “Installers are required to meet unrealistic deadlines.”

French Nuclear Delays Escalate as Contractors Fumble in Dark

EDF defended its supply-chain management, saying it’s giving more than 80 percent of required works to suppliers six months before each unit halts. “Close to 100 percent” of the parts required are available before planned outages, said the company, which must also cope with an increase in the wide-ranging inspections that each reactor must undergo every 10 years.

To be sure, EDF is grappling with a host of new issues that make managing its contractors more challenging. The increase in checks to comply with the requirements of both EDF and the regulator “can delay restarts,” said Christian Jeanneau, head of nuclear activities at engineering group Assystem SA, which helps the utility plan reactor maintenance and restarts. “There are more works to be done during unit halts, which were already constrained,” he said.

While EDF said on Nov. 14 that most reactors would be online by early December, a dozen were still halted as of Dec. 12.

Less Attractive

Doubts about the future of the nuclear industry and the utility’s quest to cut costs are also making the maintenance market less attractive and leading to shortages of skilled labor, according to Jean-Luc Magnaval, head of EDF’s workers’ committee.

“Each unit halt triggers a race for welders and piping workers,” Magnaval said. “Any delay is sending planning up in the air.”

Lower margins and cost cutting is making it difficult for the smallest suppliers to absorb swings in demand, said Jeanneau of Assystem, which has added about 350 employees to its nuclear division since 2012. He’s optimistic that digital tools will facilitate better maintenance planning.

But for CITA Production, which employs 50 people including three temporary workers, that clarity of purpose remains elusive.

“EDF has been telling us for years that we have to prepare for the lifetime extension works and the post-Fukushima upgrades, but we don’t see any forward planning,” CEO Piot said in a Nov. 23 interview. “Orders come really late, so it’s very complicated in terms of workload.”

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