Expansion of Areva and Babcock & Wilcox expected to attract skilled workers to Lynchburg

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by Bryan Gentry

Lynchburg is perhaps best known as the home of the late Rev. Jerry Falwell and his Liberty University. But the city is gaining a reputation for something else, one of the highest job growth rates in Virginia.

While affected by some of the woes of the national economy — unemployment is up and home sales are down — Lynchburg is adding jobs linked to a nuclear renaissance in the United States.

Two of the area’s largest employers are nuclear services companies and they’re ramping up their facilities and staff. Areva NP, a leading designer and builder of nuclear power plants around the world, has its North American headquarters in Lynchburg. Last year it submitted for federal review a new nuclear power reactor design. It plans to build an EPR (Evolutionary Pressurized Reactor) in the U.S. by

To meet that goal, Areva in Lynchburg is hiring at least 500 engineers and other professionals over the next three years, most of whom will earn more than $60,000 per year — nearly twice the region’s average household income.

Meanwhile, Babcock & Wilcox, is preparing for increased demand for heavy forgings and other components it makes for nuclear power plants. It is also growing its work force, though it has not attached a number to the expansion.

Together, the companies already employ more than 4,500 people in Lynchburg. As that number grows, regional leaders are watching for ripple effects in the housing market, in retail sales and in other high-tech businesses. Virginia Employment Commission projections say the region could add more than 7,000 jobs by 2014, reaching 117,200 jobs total.

“This is an exciting time for the nuclear industry, and we’re seeing that manifest itself in Lynchburg,” says Rex Hammond, president of the Lynchburg Regional Chamber of Commerce. The director of Region 2000’s Economic Development Partnership, Bryan David, says the expansion of the nuclear companies is a “game changer” in the region’s efforts to attract skilled workers. “These are knowledge workers,” David says. “These are the kind of highly skilled, highly trained workers that other communities are trying to attract.”

Other growth areas
Nuclear power is not the only industry stirring in Lynchburg. For several years, such sectors as high-tech, health care and higher education also have seen growth. As a result, in the first half of 2008, taxable sales increased 8 percent compared with the first six months of 2007, according to data from Virginia’s Department of Taxation.

The region has added jobs at a rate of 2 percent over last year, leading the state in job growth for most of the year.

Several other companies in the Lynchburg area have announced expansions this year, totaling more than $100 million in investments, including Areva’s expansion. The region recently cracked several business lists, hitting 24th on Forbes’ list of “Best Places for Business and Careers” and 71st on the Milken Institute’s top 100 “Best Performing Cities.”

Although Areva, B&W and Lynchburg’s regional leaders have placed their bets on a nuclear comeback, the resurgence of nuclear power does have its roadblocks. Opponents claim that nuclear power and its waste are huge environmental and public safety risks, and they are making their voices heard as new reactors are considered. Also, the Nuclear Regulatory Commission spends years reviewing the design for a reactor and the application for a construction license. While utility companies wait for the commission’s go-ahead, the price of almost every commodity used in the plant is going up.  The Department of Energy has offered $18.5 billion in loan guarantees to help new plants get financing, but competition is tight: 19 companies have requested a total of $122 billion in guarantees.

Lee Cobb, who recently retired as the region’s economic development director, acknowledges those issues, adding that no economic development project is failsafe. But he says promoting the nuclear industry is as safe as anything else the region could do, considering the growing demand for electricity. Cobb says that the industry’s presence in Lynchburg is no “accident of history. B&W came here for whatever its reason and chose to grow here.”

Lynchburg’s link to the nuclear power industry goes back to 1955. It was a small mountain city then with a slew of factories and foundries. The largest employer was Craddock-Terry, a shoe manufacturer.
In April 1955, Babcock & Wilcox announced it would build a 100,000-square-foot plant in Campbell County that would make equipment for nuclear plants and employ about 100 people. The plant grew to become one of the region’s largest employers as well as a leading designer and manufacturer for nuclear plants in the U.S.

But in 1979, a B&W-designed reactor suffered a partial meltdown at the Three Mile Island power plant in Pennsylvania, and the building of new nuclear plants in the U.S. screeched to a halt. But B&W continued business, building fuel for nuclear submarines and servicing existing plants. For a time, it changed its name to BWXT.

In 1989 a French-owned nuclear company, Framatome (now Areva), invested $50 million in a partnership with B&W and helped run some of B&W’s Lynchburg operations. (Framatone later bought B&W’s share of the partnership, and the two companies now operate separately.)

The two companies told newspaper reporters in 1989 that a nuclear renaissance was on the horizon. “Certainly, we were optimistic in the early ’90s,” says Ray Ganthner, Areva’s vice president of new plants deployment. The nuclear resurgence took longer than expected, he says.

While the nation was content with electricity from natural gas, coal and hydro, Areva focused on maintaining the existing fleet of nuclear plants. “We lost a lot of head count in those years,” Ganthner says. “It was not a growing business.”

Nuclear power began to make a comeback in public opinion in the 21st century. The Energy Policy Act of 2005 offered incentives to build new plants, including the offer of loan guarantees. Now, the Nuclear Regulatory Commission has more than a dozen applications for nuclear plants and has received a handful of applications for design certification.

One of those is Areva’s 1,600 megawatt U.S. Evolutionary Power Reactor. The design, Ganthner says, is bigger and better than older reactors and relies more on computerized controls, reducing the risk of human error. It’s based on a design Areva already is deploying in Europe. It took 1.4 million man-hours to convert the design for U.S. use and send it to the NRC.

UniStar Nuclear, a division of Constellation Energy, has four sites in mind for Areva’s new design. Ganthner says preparing the site-specific designs — which include seismic data and the drawing of many miles of pipe and wire — could tie up 300 people for three years. That’s the reason the company is hiring hundreds of employees in Lynchburg.

B&W, on the other hand, sees several roles for itself in the nuclear resurgence. “We are currently looking for the potential to [build] small or modular reactors” for regions that don’t need huge plants, says Rich Reimels, president of B&W’s Nuclear Power Generation Group.

B&W’s shops in the Lynchburg area can make some of the heavy forgings needed in nuclear reactors, so the company wants to “ramp up and train welders,” Reimels says. He also sees a niche in retrofitting the nation’s 104 existing plants — most of which are more than 40 years old — to extend their functional lives.

Chris Mowry, B&W’s chief business development officer, points out one challenge of fueling the nuclear renaissance in Lynchburg: competing with other companies for engineers and other skilled workers.

‘Grow your own’ mindset
Ganthner agrees. Recruiting the engineers Areva needs takes long-term planning and forging relationships with colleges and universities, he says. Several colleges in the Lynchburg area have started programs to produce engineers. Sweet Briar College in Amherst graduated its first engineering majors this year. Two engineering degree programs in Lynchburg are in their second year, one at Liberty University and the other at Central Virginia Community College in conjunction with the University of Virginia.

Stan Shoun, vice president of work-force development for CVCC, says the region has adopted a “grow your own” mindset for work-force development. Some programs reach out even to middle school pupils, encouraging their interest in engineering and technology. “We want local talent and local companies,” Shoun says. “We do not want to send our kids to Northern Virginia. We don’t want to send them to Chicago to get a job. We want to show them that there is a career pathway [here]. We want to keep the best and the brightest for ourselves.”

Ron Sones, dean of Liberty University’s engineering program, says it offers graduates great employment opportunities with area companies. “They could hire hundreds of kids per year, if we could crank them out,” he says.

Liberty University itself remains an economic force in Lynchburg. It now has more than 11,000 residential students and about 4,000 employees.

Lynchburg’s growth is influencing how real estate agents market certain areas. A group promoting a new neighborhood called Wynbrooke Place this summer slapped the phrase “Just 9 miles to AREVA, BWXT & Liberty University” onto its ads. “We wanted to get the word out to all those new employees and families that we are very close,” says Mary Bryant, a real estate agent for Dawson Ford Garbee Realtors.

The company thought several aspects of the neighborhood might appeal to engineers, such as the fact its builder specializes in energy-efficient, “green” features.

Bryant expects new employees — along with friends or relatives who might follow them here — could provide a big boost to the local housing market.

The region also stands to gain a lot from other businesses that could spring up to serve those who move in. Mowry said B&W does business with several companies in the area already, and there’s a potential for more. “I think as the renaissance grows, there will be an opportunity for other companies to co-locate here … as people actually start cutting metal and making things,” he says. “The
renaissance is just beginning.”

Lynchburg’s economy at a glance

January through June 2008 (compared with same time 2007)

• Home sales: 920, down 19 percent
• Home prices: Average price $177,000, 2.7 percent increase
• Foreclosure filings: 68, up about 70 percent
• New car sales/registrations: Down 26 percent in Lynchburg city (through September)
• Taxable sales: $1.26 billion, up about 8 percent
• Jobs: 110,000, up 2.3 percent

Sources: Lynchburg Association

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