A Conversation with Mike Rencheck, President & CEO, AREVA Inc.
By Denver Nicks, Associate Editor
|While Mike Rencheck was finishing up a degree in electrical engineering at Ohio State University there was trouble back home in Pittsburgh, where the closure of a steel mill sent his family’s finances into a tailspin. “The entire family lost their jobs in a matter of about six months—brother-in-laws, cousins, uncles—it was pretty devastating,” he says today, his irrepressible smile tinged with a hint of solemnity around what was clearly a serious event. “I was asked by my parents to come back home to help out.”|
|Mike Rencheck, President & CEO, AREVA Inc.|
Fortunately, he’d been a summer intern at the Beaver Valley Power Station, near Pittsburgh, back when its Unit 2 reactor was still under construction. After finishing school he was offered a job at the plant, and so began a career in the nuclear industry that has led to where he is today: president and chief executive officer of AREVA Inc., a leader in one of the most dynamic and future-oriented industries on earth.
Power Engineering: What is the AREVA Solutions Complex and why is it important?
Mike Rencheck: The AREVA Solutions Complex is basically an innovation center. It’s a collection of areas where we produce technologies to make the nuclear fleet safer, more reliable and more economical. For nuclear applications, we have a 7-GHz, ten-thousand pound shaker table. It’s one of the largest, if not the largest, in this hemisphere. We have ovens to commercially test equipment. We have other environmental chambers. We have metallurgical labs and a full chemistry lab. We have one of two electron microscopes in the world there, where we can turn the electron beam on a piece of either contaminated or non-contaminated metal and it will tell you the chemical composition of the metal; then you can start to peel back the grain boundaries. We have machine shops, refurbishment areas, a motor area and a fuel inspection area, plus classrooms. We can even do electrical component reverse engineering.
We set this complex up so that we could continue to keep the existing fleet running, looking at plant life extensions to eighty years-we have all the tools available to analyze an existing plant system and make sure it is capable of running for 80 years. We’re also developing repair techniques and inspection techniques, which we are deploying. It’s a unique facility in the industry and we think it will help the existing fleet of nuclear plants stay in business.
Power Engineering: Where do you see AREVA’s future in North America?
Mike Rencheck: AREVA is vertically integrated across the entire nuclear footprint, so we have mining, enrichment, we make fuel assemblies, service existing plants and we build new reactors. We have reactor designs that start with the EPR™ at 1,600 MW. We also have a boiling water reactor, KERENA, at 1,200 MW; the ATMEA, which was just selected for use in Turkey, is a 1,100 MW pressurized water reactor, and we have small reactors. Here in North America, our high-temperature gas reactor design has been selected by the Next Generation Nuclear Plant Alliance, and we’re involved with several companies developing small modular reactors. So we have a full product range offered by reactors and services group.
We also specialize in keeping the existing fleet running and are one of the innovators in license renewal. We also have a back-end division, which basically does dry-cask storage, as well as technologies for decommissioning and recycling. And last but not least-our front-end division has a fuel plant in Richland, Washington, where we make both boiling water reactor and pressurized water reactor fuel. We’re capable of making many other styles of fuel there as well. We’re also pursuing the Eagle Rock Enrichment Facility in Idaho; we already have a license for the facility from the Nuclear Regulatory Commission, and we’re working to find an investor for the early years and are still in discussions with the Department of Energy for a loan guarantee.
Power Engineering: What’s the climate for nuclear build or nuclear activities in general in the U.S.?
Mike Rencheck: There are a few things that electric utilities need to factor in. One is fuel diversity. If we start focusing on one source of fuel, such as natural gas, we’ll be setting ourselves up for failure at some point in the future. Now what’s causing that sentiment is probably a better question. When you look at what’s happening in the economy right now, it’s low energy demand that is driving pricing to a point where, whether it’s a new gas plant, coal plant, nuclear plant, solar plant, wind plant, that price isn’t high enough to send a signal to build new generating plants. It’s also not high enough to cover both the operating cost and in some cases the capital investment costs to keep some of the facilities operating, be they gas, coal, or nuclear.
How long will this last? If it lasts too long we’ll see decisions made around short-term profitability, especially for investor-owned utilities in the marketplace. So we could be in for the ‘perfect storm’ where we retire too much capacity in the near-term because of market pricing signals and some market distortions due to weak demand. Then, when the economy recovers and the electricity markets pick up, we find ourselves in an upside-down position, with real electricity shortages and the need to build capacity fast. That could force us in a direction of very volatile fuel sources, typically fossil fuel sources.
Power Engineering: What about the prospect for something like a carbon tax?
Mike Rencheck: A carbon tax would have a big impact on how nuclear is viewed within the industry. It would send a signal for cleaner forms of generation. However, with energy demand down as a whole, unless the tax is very high, it would not likely be enough to stimulate new build.
So you’re looking at a merchant market condition that is somewhat tenuous. The Electric Reliability Council of Texas (ERCOT) is a perfect example of that right now. If you watch ERCOT and how they’re going about dealing with capacity shortages or potential capacity shortages, you see a marketplace that is struggling to add new sources of generation, time and time again, without the proper price signals.
Power Engineering: What do you look for in hiring people?
Mike Rencheck: There’s a lot to be said about how one behaves as a leader. One, you have to be willing to make decisions, sometimes very difficult ones. Other times, you have to be the kind face, the gentle face, to make sure that people are inspired and motivated to do new things. You have to be creative. You have to be willing to take risks and understand that those risks are manageable, and you have to be able to help folks manage risks. There are a lot of people, especially in the engineering world, that are risk-adverse, but true innovation won’t happen without taking some risks. So, as a leader, you have to make it okay for that to happen, because you fail nine times before you find the one true success that’s going to help the industry.
So, when we look for leaders within a region we’re looking for people with people skills, with the ability to both take a risk, be kind and gentle, and at the same time be firm and make decisions when needed. We’re looking for these people as they come through the ranks, to help shape the next generation of leaders here within the industry and within our company. When you look at the top fifty innovative companies in the world, AREVA is ranked number thirty-eight, and we view that as a responsibility in the industry.
Nuclear is our business. Without nuclear we have very little business, although now we’re getting into renewables and also medical isotopes. It’s a tough business in that you have to have high standards, be able to articulate those standards, and have others adopt and follow those high standards while keeping everything in balance. This industry is all about safety and for us, when we innovate, that has to be first and foremost. We always say we start with excellence in mind, and then we frame everything around safety, quality, high performance, and delivering results.
Power Engineering: Prospects for nuclear fusion power?
Mike Rencheck: On a global basis, we’re part of the ITER team. We’re working on the cooling systems and have a very keen interest in what’s happening in California at the Lawrence Livermore National Lab (LLNL) where fusion is being tested in the U.S. We’ve had a number of people visit and really take a good hard look at what they’re doing at LLNL, and they seem to be making progress. Fusion is probably still out there in the future, but we have folks that are actively working on different projects for it.
Power Engineering: You mentioned there’s another Mike Rencheck in the world who may go into the nuclear field—your son. How do you feel about prospects for his career should he go into nuclear power?
Mike Rencheck: I think they’re very good. One of the things the nuclear industry gives you is it really teaches you how to lead people and how to manage in times and circumstances that require innovation and creativity, high standards for safety, performance, and at the same time it requires you to manage the financial aspects, public interface points . I think when you enter this industry at a young age, you learn how to do these things, including project management skills.
I wasn’t in nuclear my entire career. I left nuclear around 2001 went into traditional generation including environmental controls on power plants, maintenance and related aspects. I found that the skill set I had learned in nuclear or around management of facilities directly applied in that space. We didn’t need all the regulatory paperwork and its burdens, but the techniques of the management ideas all fit very well. We saw great improvements in terms of fossil plant outage durations, construction times, the ability to build large facilities in a very orderly manner. So as my son considers joining the nuclear industry, I think as a young engineer coming out of college, he’ll have that same opportunity. So should he, when he graduates, decide to become a nuclear engineer or work nuclear power, I would be very happy with that.
Power Engineering: Anything else?
Mike Rencheck: I think nuclear will offer the opportunity for jobs, not only in the near-term, but in the long-term. When you look at what’s happening right now within the industry, you’ll see the national demographic shift where we have roughly seventy million boomers and thirty million gen-X’ers take place.
In nuclear, a very highly technical field, you’ll see the number of job openings swell. What you see happening now with children as they’re moving through grade school, the ninth grade has about four million or so students, and when you get to the point of graduating from college, you’re down to roughly a 170,000 students that will graduate with a science, technology, engineering or math (STEM) degree. So think about those demographics, think about the job opportunities in that space. I’ve read different articles that say by 2018 there’ll be a million job openings for STEM positions.
Power Engineering: The Nuclear Energy Institute says by 2016 maybe as much as thirty-nine percent of the nuclear work force will enter retirement age.
Mike Rencheck: I’ve seen statistics for companies our size where the number of employees over 60 equals 20 to 25 percent of the company and that’s not unique. You talked about my son specifically, but when you look at that from a population perspective, if you want a job and you want a good paying job, nuclear offers that opportunity. Our starting salary is pretty high and that’s for folks with and without a college degree. So if you get into a technical field and go work in the AREVA Solutions Complex, working on qualifying equipment or components, that’s a pretty high-paying salary, especially in Lynchburg, where you don’t have the cost of living of a place like Washington, D.C.
The industry is safe. There haven’t been any fatalities in the industry as a result of a nuclear accident. They’re good jobs. They’re not just short-term jobs. You can build a career in this industry. You can go to work like myself at the age of twenty as an intern, and thirty years later, you have a career to look back on. And if you choose to leave it, the skill sets that you attain are applicable elsewhere.
I think in the near-term, if you’re talking about opportunity, with the Boomers retiring and the need for energy always alive, you’re seeing vast employment opportunities in the energy field that often go overlooked.
Nuclear power has a safety accident rating from OSHA (Occupational Safety and Health Administration) of 0.06 reportable events per 200,000 hours worked. The financial industry has a higher accident rate. Think about that. Manufacturing as a whole is 4.4. That stunned me, because when I look at that, for our paradigm that would be completely unacceptable.
It’s just the opportunity, the genuine standards and skill sets that you get taught and safety that you can apply in any industry. If you look at Alcoa’s financial turn-around years ago by Paul O’Neill, he focused on one thing: safety. He would talk about safety in front of Wall Street analysts. They’d want to talk about numbers and he’d want to talk about safety and what happened to the performance of that company? It just took off.
It’s those value systems, those leadership traits, those management traits, that set you in a good way whether you decide to stay in the industry or not. I think that these leadership traits are unique to this industry.
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