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DuPont bows out of Savannah River Site bid
By Sheila Watson
Contributing Writer
Despite last October’s announcement of a partnership with Fluor Daniel to pursue business opportunities at the Savannah River Site, officials at DuPont have announced the company will not participate in the U.S. Department of Energy’s SRS bid process.
“We have concluded that, based on current business conditions and the need to focus resources on existing business priorities, we will no longer pursue a competitive bid for the operations at the Savannah River Site,” said DuPont chairman and CEO Charles O. Holliday Jr. “DuPont remains committed to continue working with the U.S. government and the Department of Energy across a broad array of applications and technologies.”
The announcement came one day after the company released news of a large drop in profits.
“We were hit with significant head winds,” DuPont spokesman Anthony Farina said. “A couple of our businesses underperformed, and the hurricanes hit us hard too.”
Unplanned outages at plants in Brazil, the Netherlands and Ohio hurt fourth-quarter performance. The company also lost ground in its agriculture and nutrition business because of weak insecticide sales in Asia and problems in Brazil.
Struggling with those business troubles, the aftereffects of hurricanes Katrina and Rita, and soaring energy costs, the company’s fourth-quarter profits fell 43% from the same period the year before. The company also issued a warning that the downward pressure on earnings have slipped into the first quarter of 2006.
“The bottom line is we need to do better,” said Farina. “We’re concentrating on our core business, focusing on the short term.”
The chemical company earned 16 cents a share in the 2005 fourth quarter compared with 28 cents in the prior-year period. Revenue rose 3% to $6.24 billion from $6.03 billion, although sales volume declined 4%. Revenue from agriculture and nutrition products declined 6% to
$900 million, and coatings and color revenue fell 4% to $1.5 billion.
Energy costs, driven by natural gas, were $350 million higher in the 2005 fourth quarter than the prior-year period. The company said it expects energy costs to rise again in 2006. DuPont uses natural gas as both power for its plants and as a raw material in its manufacturing products.
In addition to the company’s financial woes, relations with the United Steelworkers International Union have been strained and might have caused problems for DuPont had the contract negotiations continued.
In fact, the USW hailed the decision of DuPont to pull out from bidding on the SRS contracts.
“We are pleased that DuPont has decided not to seek contracts at the Savannah River Site,” said Joe Drexler of the USW Strategic Campaigns Department.
The USW had written a letter to DOE Secretary Samuel Bodmon opposing the award of any contracts to DuPont based on the company’s record in operating the nuclear complex.
The union had also filed a written request to the DOE under the Freedom of Information Act and had intended to use the findings from its study of DuPont’s operational problems at the site to oppose any awarding of the contract to the company. The USW had made its efforts known through two press releases.
The USW represents 1,800 DuPont workers and 5,000 workers at nuclear weapons facilities, and is the largest industrial union in North America with 850,000 members.
DuPont’s decision brings to an end a long history with the SRS. In October 1950, in the midst of the Cold War, President Harry Truman asked DuPont to construct and subsequently operate the Savannah River Site. DuPont operated the site for the U.S. government for nearly
40 years at a cost of $1.
With DuPont out of the running, officials at Fluor Daniel are moving forward with plans to bid on the contract. The company is currently in discussion with several companies regarding the bid process.
“We fully understand the rationale behind DuPont’s decision and will be exploring new arrangements to pursue this important work, which is vital to national interests,” said Fluor Chairman and CEO Alan Boeckmann.
“We believe our strong core competencies in managing large, complex nuclear and environmental programs uniquely enable us to provide safe, cost-effective and secure operations at Savannah River. We are enthusiastic about the DOE’s desire to change the status quo there, as evidenced by the recent issuance of the formal SRS acquisition strategy.”
Fluor Daniel is a South Carolina-based subsidiary of Fluor Corp. For more than 60 years, the company has held two principal contracts with the DOE to provide environmental remediation services at former nuclear weapons sites at Hanford, Wash., and Fernald, Ohio. Fluor has eliminated two of the five most urgent risks at the Hanford complex to date, the company said.
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