Alstom Power's plans to cut 100 jobs at its Chattanooga boiler services plant will leave it with about half the staff it had just two years ago and a fraction of the about 600 workers it employed five years ago.
The Riverfront Parkway facility, which makes equipment primarily for coal-fired power plants, will employ about 200 people after the layoffs take place by the end of August, the company said Tuesday. The layoffs are due to reduced workload and low order volume.
Next door, at Alstom's turbomachinery facility, the 150 people working there are about half the number company officials envisioned when that $300 million operation opened in 2010 to make equipment for nuclear power plants.
In total, the 350 people Alstom will employ on Riverfront Parkway by the end of August are a shadow of what the site had once held.
Four decades ago, the industrial tract then owned by Combustion Engineering had nearly 6,000 workers and housed Chattanooga's largest manufacturing employer, which made fossil-fueled and nuclear steam-generating equipment.
Fadi Abou-Ghantous, general manager of Alstom's boiler services site, said Tuesday it's essential for costs to be aligned with the market in today's competitive environment.
"To meet this challenge and remain competitive with domestic and foreign competitors, we must optimize the cost and footprint of our production facilities," he said.
Both facilities belonging to Paris-based Alstom are victims of slowdowns in two key power sectors.
While the boiler services site has serviced coal-fired plants, there has been a move away from coal to other energy production. A year ago, Alstom furloughed most of its then 335 workers for nearly a month as the company consolidated operations in response to sluggish equipment sales.
Since 2010, utilities have announced plans to shut down more than 150 U.S. coal plants, according to the Sierra Club. Also, proposed federal restrictions on carbon emissions from new coal plants have discouraged most utilities from building new facilities.
“To meet this challenge and remain competitive with domestic and foreign competitors, we must optimize the cost and footprint of our production facilities."”
On the turbomachinery side, Alstom made a $300 million bet on a renaissance of nuclear power that hasn't taken place in the United States. The plans sustained a setback about a year after the Chattanooga site opened when the Fukushima, Japan, nuclear power plant sustained a meltdown after an earthquake off the coast triggered a tsunami.
Alstom had cut staff at the new plant, but last year added about 60 jobs related to gas turbine production.
Helen Burns Sharp, a Chattanooga activist, estimated that a payment-in-lieu-of-tax agreement with the city and Hamilton County related to the plant forgave more than $2 million in property taxes last year.
Under the PILOT agreement, Alstom paid the school portion of its tax bill but won't pay the rest through a 15-year period that ends in 2022.
The PILOT agreement called for an increase of about 300 jobs by Alstom between July 5, 2007, and Dec. 31, 2014. The PILOT says that if the company failed to achieve the projections on jobs and investment, the city and county reserve the right to terminate the benefits of the agreement for its remaining years.
Sybil Topel, the Chattanooga Area Chamber of Commerce's vice president for communications, said it would be up to the city and county to determine enforcement.
The changes at Alstom in Chattanooga come as the European Union reviews a plan by U.S.-based General Electric to acquire most of Alstom's power equipment business. The purchase, set to close in this year's second quarter, includes the Chattanooga operations, according to Alstom.
Last December, Alstom shareholders backed the $4.92 billion deal in which GE will buy assets accounting for about 70 percent of the French group's revenue. While Alstom would refocus on its smaller rail transportation arm, the companies also will set up three GE-controlled joint ventures in nuclear power, electricity grids and renewable energy, and GE will sell its rail signaling unit to Alstom.
Contact Mike Pare at email@example.com or 423-757-6318.