Once home to 6,000 workers, Alstom facility will cease manufacturing operations by year's end

Nuclear drought, oil glut doomed Alstom operations in Chattanooga

The Alstom plant on Riverfront Parkway in downtown Chattanooga is seen Tuesday, Feb. 1, 2015.
The Alstom plant on Riverfront Parkway in downtown Chattanooga is seen Tuesday, Feb. 1, 2015.

GE Power timeline

* 1888 - James Casey and M.M. Hedges bought property from creditors of a defunct iron company and formed the Casey-Hedges Co. Its business was the making of small boilers.* 1889 - Patrick Walsh and Michael Weidner set up the Walsh-Weidner Co. to produce pressure vessels, tanks, fire tube and water tube boilers.* 1928 - The two companies consolidated and became known as the Hedges, Walsh, Weidner Co. After that, Combustion Engineering purchased the new organization.* 1956 - Combustion’s Chattanooga facilities occupied 100 acres and more than 1.5 million square feet of floor space.* 1989 - Combustion is swallowed by Asea Brown Boveri.* 2000 - Alstom buys the boiler and fossil fuel business of ABB* 2007 - Alstom announces plans for a new $300 million Chattanooga plant.* 2015 - GE buys Alstom Power.Source: Combustion Engineering, Alstom

photo The Alstom plant in on Riverfront Parkway in downtown Chattanooga, Tenn., is seen Tuesday, Feb. 1., 2015.
photo Alstom Power has sold a large tract off Riverfront Parkway that once held wind tower maker Aerisyn. This file photo shows the large white manufacturing bays along with tower segments stored on the parcel. The blue bays are Alstom's turbomachinery plant.

A cornerstone of Chattanooga's manufacturing might for more than a century is expected to shut down by year's end.

GE Power unveiled plans Tuesday to close three former Alstom facilities on Riverfront Parkway it bought late last year and lay off most of the workforce, eliminating 235 jobs.

The company will shutter its Steam Turbine Manufacturing facility, the Boiler Service Center and the Materials Technology Center, GE Power spokeswoman Katie Roberts Jackson said.

"This planned action, while extremely difficult, is viewed as necessary to allow GE to manage costs and capacity in a very competitive market," the company said.

About 50 Chattanooga employees in engineering, commercial and other functions will remain in the city, Jackson said.

She said the future of the manufacturing site, including a $300 million plant Alstom opened in 2010 to meet predicted nuclear power demand, is "under review."

Bill Kilbride, the Chattanooga Area Chamber of Commerce's chief executive, said the business group met with local plant officials a few months ago on an unrelated matter and "everyone was waiting to hear what the outcome would be" after the acquisition.

"We were all hoping," he said, adding that production quality at the facilities is "outstanding."

Hamilton County Mayor Jim Coppinger said GE Power officials told him Tuesday that Chattanooga and its workforce were attractive.

"I said 'Please consider us for the future for anything that may develop,'" he said.

GE Power told employees in meetings Tuesday morning about plans to close the facilities and sent workers home for the day. Employees had noticed they hadn't been receiving work for which the facilities were built, and there was a lot of manager turnover, according to an employee.

Larry Morrison, a former seven-year employee in Chattanooga, said the facilities will be missed.

"It was always on the cutting edge," said Morrison, who now serves as apprenticeship training director for Plumbers and Steamfitters Local 43.

Chattanooga Mayor Andy Berke said in a statement his "thoughts go out to the employees and families impacted by Alstom's closing."

"I have spoken with leadership at GE, and they are committed to continuing to work with us to find a solution in regards to the existing [payment in lieu of tax] agreement," he said.

In July 2015, Alstom agreed to pay more in property taxes to Chattanooga and Hamilton County because of its failure to reach its job goals in the earlier expansion. The company was to pay more than $630,000 a year in new taxes for the remaining eight years of its tax incentive agreement.

Helen Burns Sharp, founder of the Chattanooga group Accountability for Taxpayer Money and a frequent tax incentive critic, said Tuesday the GE Power announcement can be "a wake-up call about how the city and county need to improve the current process for vetting, monitoring, and enforcement."

"I hope that Mayor Berke and Mayor Coppinger will take leadership roles in proposing improvements or explaining why they believe the status quo is acceptable," she said.

City spokesman Marissa Bell said the city and county have put specific provisions for "clawbacks" in incentive agreements since March 2014.

Jackson said facility closings will begin later in the year and continue through year's end. She said the power market is challenging, citing relatively low oil prices, and the closings were an outgrowth of the integration of GE Power and the Alstom assets.

"These are very difficult decisions and this plan is in no way a negative reflection of GE's Chattanooga workforce," the company said. "GE will provide comprehensive benefits to assist impacted employees through this transition, and the company is prepared to bargain with the local unions concerning the impact of this plan on represented employees, including subjects of severance pay and group insurance."

Last November, U.S.-based GE completed its $10.6 billion acquisition of the power and transmission division of France-based Alstom. The combined business is estimated to have annual revenue of about $30 billion, according to reports.

According to a publication of Alstom predecessor Combustion Engineering, its energy manufacturing history in Chattanooga dates back to 1888.

About 35 years ago, the Riverfront Parkway manufacturing site then owned by Combustion had nearly 6,000 workers and was Chattanooga's largest employer. It served as a maker of fossil fuel and nuclear steam generating equipment.

While the employee headcount fell sharply over the decades since then, a revival was expected in 2007 when then-facility owner Alstom announced plans to build the $300 million plant to make new turbines for an expected renaissance of the nuclear industry.

That site would join an existing facility focusing on replacement components for coal-fired plants that employed 600 people at the time.

Top Alstom officials from France and Canada visited Chattanooga with plans for the new plant to employ 350 by 2013.

However, shortly after the plant opened, an earthquake and tsunami hit Japan and its Fukushima nuclear plant in 2011. In addition, the energy market saw more of a demand for natural gas-powered plants, and the Chattanooga facility never reached its employment target.

U.S. Sen. Lamar Alexander, R-Tenn., had at one point envisioned doubling the number of nuclear reactors by building another 100 nuclear reactors in the United States by 2030.

But instead of adding more nuclear units, utilities are closing older reactors and only a handful of new reactors are being built.

U.S. utilities, which operated 105 reactors a decade ago, are now operating only 99, and PG&E announced Tuesday it will close its Diablo Canyon nuclear plant in California by 2025. Earlier this year, utilities announced plans to phase out another nine reactors. That could leave the U.S. with only 94 nuclear units, even with the additions planned this year by TVA at the Watts Bar nuclear plant and other new units being added in Georgia and South Carolina.

Coal power plants, which also use Alstom pipes, turbines and other equipment, have been hit even harder by a combination of new carbon regulations and the falling price of alternative energy generation from natural gas, solar and wind.

Business Editor Dave Flessner contributed to this story.

Contact staff writer Mike Pare at mpare@timesfreepress.com or 423-757-6318.