Examination of Witnesses (Questions 200
- 219)
WEDNESDAY 16 JULY 2008
ADRIAN BULL,
DR MIKE
WEIGHTMAN, DAVID
BARBER AND
ROBERT DAVIES
Q200 Dr Iddon: The supply chain has
been mentioned more than once by this panel. Where are the significant
bottlenecks in the supply chain, if there are any that you perceive?
Mr Bull: The most obvious is in
the provision of the very heavy forging components. At the moment
there is really only one company in the world, Japan Steel Works,
that makes those ultra heavy forgings. They are investing in increasing
their capacity. There are other companies around the world, including
in the UK, that are also looking at whether they might invest
significant amounts of money to develop a comparable capacity,
but at the moment that is where the major pinch point is. Companies
like Westinghouse and other vendors have slots in that order book
for many, many years ahead so that we can assure ourselves that
we can provide and source those components to meet the orders
that we sign up to.
Q201 Dr Iddon: We cannot gear up
in this country for heavy forging, is that it?
Mr Bull: It is possible. It was
in the press recently that Sheffield Forgemasters have a capability
to produce forgings not quite at that level and they are looking
at investing many millions of pounds into whether they want to
invest and build the ultra heavy forging capability not just for
the UK market but for the global market. I think that is driven
by a point that cuts across lots of the discussion we had earlier
on about the supply chain of human resources as well as components,
which is we are just at the point in that hockey stick curve where
the nuclear renaissance that people have talked about for many,
many years is starting to take off. We have heard about this renaissance
for the best part of a decade, but in terms of hard orders being
signed, it has only been in the last two or three years that we
have started to see our AP1000 orders. A previous piece of evidence
was about the eight that we have sold already and that has been
in the last 18 months. We are seriously starting to ramp up that
order book. It is only when people see real orders rather than
just a lot of talk and speculation that they are going to be much
more confident investing in many cases many millions of pounds
in supply chain fabrication equipment.
Q202 Dr Iddon: So what will be the
key to encouraging companies to invest in manufacture in this
sector?
Mr Bull: I think it will be when
they see those orders becoming real for the various reactor vendors.
We are in discussions with a number of supply chain companies
and I am sure Rob and other vendors are in the same position in
terms of making agreements with them to source capacity and source
what they can produce from that capacity if they were to invest
in it. We have the confidence in turn to do that as we see our
order book developing. It is as the customers are starting to
put pen to paper—
Q203 Dr Iddon: So it is beyond licensing
and planning?
Mr Bull: Absolutely. The licensing
activity is ongoing. Utilities can put planning applications in,
they can get to the end of that process and then they are perfectly
at liberty to just stop. It is when somebody actually signs the
order, the procurement construction contract, that they have committed
to build the thing. With all of the work we are doing now in the
UK we have to remember there is not an order yet. We are doing
an awful lot of preparatory work and companies like ourselves
and others are investing in the GDA process, but we need a customer
at some point to translate that into real plant orders. When that
starts to happen or when that starts to become much more likely
is when I think you will really see those supply chain companies'
investment stepping up a gear. I should not imply they are not
investing at the moment, but I think their interest will step
up a gear.
Q204 Dr Iddon: Robert, does Areva
see it that way or do you perceive some other bottlenecks?
Mr Davies: I do not like the word
bottlenecks as it gives an impression that if something is not
available today then you cannot have the ultimate product tomorrow.
Right now that is not the case. I do not know yet of any vendor
who is unable to sign the contract to provide a reactor by date
X realistically within the licensing regime because there is a
bottleneck of component X, Y, Z, whatever it is. We know all of
the shortfalls within the global supply chain to feed our reactors.
People mentioned forging because it slips off the tongue, but
there are a whole range of things which vary from tubing, some
of the I and C equipment. Some we might take five years in advance
and some two years in advance. If you came to me today and said,
"I want a reactor, please, and I would like you to turn the
first earth in 2013 to turn on in 2018," then I or any other
vendor would then have a list for you and say, "You might
now start to buy these items and leave them in the back yard and
then we will start building it in 2013." As far as the supply
is concerned, I am sure our approach is really very similar to
the other vendors and that is a global one. It is not in the interests
of a company to invest in this nuclear renaissance just for a
local market. That is very dangerous. What happens if the local
market goes right? What happens if it goes sour? Then that investment
just goes down the pan. Therefore, from our point of view, we
see companies who are able to support us in a global view and
support local. That is where the opportunity is for the UK, it
is an opportunity now to join globally and to support locally.
Dr Iddon: As you know, gentlemen, the
Planning Bill is going through the House at the moment. Its plan
is to set up a Commission and to speed up planning processes for
large capital investment, especially nuclear power stations. It
has undergone amendment in the House of Commons because our Members
were unhappy about the lack of involvement of local authorities
and so on. In general does the new Planning Bill meet with your
agreement? Would you be seeking amendments to it yourselves if
you were in Parliament?
Q205 Chairman: Could you say whether
you think from the regulator's point of view the new planning
arrangements will assist you in being able to make decisions within
more clear timeframes?
Dr Weightman: I do not think it
is in a sense relevant to our decision making. We will do our
job on behalf of the people come what may.
Q206 Chairman: Does it help?
Dr Weightman: I do not know whether
it helps or not.
Q207 Dr Iddon: Sizewell B had a very
long public inquiry.
Dr Weightman: That took our resources
in terms of having to contribute, quite rightly, in that planning
system at that point in time. We are putting a lot of effort in
now to being a lot more open with how we regulate new build at
the moment. We got the vendors to put their safety cases into
the public domain subject to commercial and security considerations
and invited comments from the public. We have put all our reports
at the end of step two into the public domain, with some 50-odd
reports around that. We have been very clear about our safety
assessments, our standards and that is very clear in the public
domain. We are comfortable with whatever public scrutiny there
is of our approach and our standards and our work because we are
public servants. At the end of the day our duty is to the public
and the UK Government.
Q208 Chairman: Does anybody else
want to comment on the planning issue?
Mr Bull: The principles of it
we would welcome, that more timely and streamlined confidence
in the timescale for decision making in the planning process is
something that the industry needs given that we are looking at
private sector investors and the comments that you made about
their ability to go elsewhere in the world. They need to know
what the process is in the UK. So we welcome that. If it does
what it says on the tin it will have been very helpful not just
to the nuclear industry but to other parts of the energy sector.
I think the GDA process and the new planning reforms really go
hand in hand because the only way you can get that predictable
and more streamline planning process is to take out the safety
and technical scrutiny of the reactor designs that, quite rightly,
does need to be done and do that upfront in a one-off exercise,
which is what the GDA process represents.
Q209 Dr Iddon: This time round we
are likely to build a number of these nuclear reactors on existing
sites where the local community relies upon this big investment
for jobs, especially in the Lake District. We were at Sizewell
B yesterday out in Suffolk and a considerable number of local
jobs are involved on the Sizewell B site.
Mr Bull: It will be up to the
utilities to decide where they put them, but a lot of the sensible
comment seems to be that the existing nuclear sites look like
a good bet for certainly the first wave of new nuclear stations.
Q210 Mr Marsden: I would like to
ask some questions about the recruitment and skills issues. We
have had some discussion on this in previous sessions. You were
talking about some of your specific shortages in the inspectorate
earlier on. Is this a reflection of shortages in engineering generally
or is it that much worse in nuclear?
Dr Weightman: I am sure the NIA
has got figures on that. I think it is a reflection of the general
shortage of engineering skills around. I have heard from David
Barber that in terms of general engineering then the skills are
transferable. It is a global market as well and that can operate
both ways. I was up at Heysham One the other week looking at some
items there, the boiler closure unit aspects and it was very interesting
to see they had got quite a lot of American engineers over to
assist them in that and they were assisting them in quite a lot
of work there because there is a large programme of work in looking
at some of the ageing phenomena in the existing reactors.
Q211 Mr Marsden: Given the security
sensitivities of much of what is going to be done we are going
to need to have a home grown workforce, are we not?
Dr Weightman: I do not dispute
that. It is still a global work market that will operate both
ways. Clearly in one of my other areas of responsibility, nuclear
security, we have to look at the vetting of whoever is involved
in operating new nuclear power stations and there are issues around
that as well.
Q212 Mr Marsden: Adrian, you mentioned
the young people you have recruited at Springfields over the last
two years. I was at Springfields earlier in the summer and I think
what is going on there is very interesting and positive. The reality
of it is, with demography as it is going to be over the next 10
to 15 years, you are going to need to re-skill quite a lot of
the existing people as well as hoping to bring in people from
schools and universities. What strategies have you got for that?
Mr Bull: You are right, there
is that issue about the retention and re-skilling of the existing
workforce. Our workforce has gone from around about 4,200 at its
absolute peak in the mid-Eighties down to about 1,300 and it is
up to about 1,400 or 1,500 now and rising at the moment. We are
looking at how we attract new people in. We do a lot of work with
the schools and the universities in the region around Preston
and more widely across Lancashire and the vast majority of our
recruits do come to us from local surrounding areas. We are seeing
the benefit of that engagement that we do on our doorstep. We
offer some particular advantages for young people who come in
and want to join the BNES Young Generation Network.
Q213 Mr Marsden: You are talking
about young people. I am being ageist on this occasion. I want
to hear about older people. What are you doing for older women,
for example?
Mr Bull: I am not aware that we
have any specifics—
Q214 Mr Marsden: What about adult
apprenticeships generally?
Mr Bull: I would have to write
to you with the figures on that. I do not have the break down
by age profile of our apprentices. I know we have about 70 in
the system at the moment.
Q215 Mr Marsden: Does anyone else
want to comment on this demographic issue? The point that I have
just made to Mr Bull is that even if you get all of the red hot
school-leavers and graduates you are still going to have a shortage
because you are going to have far fewer graduates and school-leavers
in the next 10 to 15 years.
Mr Barber: One of the issues as
well generally in the UK is everybody has been competing in the
transfer market. Going back to the football analogy earlier and
buying players from other teams. What is the balance between growing
your own talent and the people you take in the transfer market?
We took on 420 people last year and 50 of those were apprentices
and 20 graduates. So we are heavily biased to buying people in
the transfer market and we feel that we need to move more to the
other side to grow our own talent to be more secure going forwards.
Q216 Mr Marsden: Let me ask you about
the sector skills council, Cogent, as you are a Board member of
that. We heard in the previous session that there were possibly
four or five sector skills councils that potentially affect the
nuclear industry. Cogent, of course, has "pot pourri"
membership of quite a lot of other non-nuclear interests. Does
that hamper or assist trying to get skills going in to the nuclear
sector?
Mr Barber: It comes back to the
earlier point of having general engineering skills. Really what
you want is the Cogents, Semta, EU skills to be collaborating
together on growing the whole engineering skills population. There
are a lot of similarities, even if you just take the Cogent footprint,
in the foundation degree apprenticeships on the approach that
we take to skills. The efforts that are going in to promoting
science and engineering in schools are all common.
Q217 Mr Marsden: So the fact that
Cogent is quite a broad umbrella sector skills organisation does
not worry you?
Mr Barber: No. To some extent
it is helpful. The co-ordination needs to take place within other
sector skills councils. I do not think the Government needs to
do anything else in terms of the skills structure. What it needs
to do is focus on making sure it delivers what it has set out
to deliver.
Q218 Mr Marsden: Are you happy you
are going to be relicensed by the new UK Commission on Employment
and Skills?
Mr Barber: It is a difficult one
for me to comment on, but I would hope we are because we have
got very good support from industry on that body and it has got
clear targets and plans to move forwards. There is quite a large
number of organisations trying to do the same things, but where
we bump up against them we are very clear on who is doing what.
You develop a memorandum of understanding so they are not overlapping.
The CEO of the National Skills Academy for Nuclear is also coordinating
activities across the whole of the National Skills Academy again
for the same reason.
Q219 Mr Marsden: I met her and, if
I may say so, she is a very impressive figure.
Mr Barber: That was our concern
from an industry point of view, a lot of people tripping over
the same things. I think those are positive approaches to try
and improve that.
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