Scuttlebiz: Big losses make for bad PR at Vogtle

This doesn’t look good. It’s what my former colleagues in the PR business would call “bad optics.”

 

I’m talking about the $6.3 billion write-down Toshiba Corp. disclosed this past week because of cost overruns that its Westinghouse Electric Co. subsidiary incurred building new nuclear reactors at Plant Vogtle south of Augusta and at the V.C. Summer plant north of Columbia, S.C.

Just as the partial meltdown at Three Mile Island put an end to nuclear power construction 38 years ago, Toshiba’s hara-kiri-inducing loss could be the financial meltdown that triggers the end of America’s nuclear power renaissance.

This isn’t hyperbole. Honestly, how will more than two dozen proposed nuclear reactors across America get built after a multinational Japanese conglomerate handling just four incurs a loss so massive that it forced the CEO to resign and leaves the company having to sell parts of itself just to stay afloat?

I’m a big fan of nuclear power, and I have been since I was old enough to recognize most anti-nuke propaganda (e.g., The China Syndrome) as hippie-hangover schlock. It pains me to say the industry’s future looks bleak. But fortunately, I don’t have to say it; Gregory Jaczko, the former head of the U.S. Nuclear Regulatory Commission, has already beat me to it.

“This … certainly means the end of new nuclear construction in the U.S.,” the Obama administration appointee told Bloomberg this past week, most likely with a big smile on his face.

“Mistakes were made,” as they say, in building these new units.

But to be fair to those involved in the Southern Co.- and SCANA Corp.-led projects, it’s reasonable to expect some delays and overrun on jobs of this size and scope. You can’t put a highly specialized industry on ice for decades and assume it can pick up where it left off without a learning curve. That’s like reuniting ABBA and expecting Agnetha and Björn to belt out a pitch-perfect “Fernando” without a rehearsal.

And realize that nothing — nothing — is engineered as exhaustively or scrutinized so intensely as a nuclear plant. Not skyscrapers, particle colliders or even the space shuttle.

So when problems started to arise with The Shaw Group Inc.’s pre-fab modules — the Lego-like steel building blocks used to make the reactor’s containment building — it was bound to have a cascading effect on everything else at the construction site.

I was at Vogtle in 2012, and I saw plenty of modules from Shaw’s Lake Charles, La., plant in the storage yard with red “reject” tags dangling from them.

Shaw’s problem became Chicago Bridge &Iron’s when it acquired Shaw in 2012. Then it became Toshiba’s when its Westinghouse subsidiary – the designer of the AP1000 reactor – acquired those assets from CB&I in 2016.

To keep its head above water, Westinghouse last year brought in global engineering and construction giant Fluor Corp. to help manage the projects, which still will probably end up at least three years behind schedule and billions over budget.

As I said: bad optics.

The bright side is the reactors will be completed. They’ll be commissioned, connected to the power grid, and will help supply two growing Southern states with cheap, reliable and emission-free electricity for at least the next half century. And, like the nation’s other nuclear power plants, they’ll pay for themselves multiple times over.

People eventually will stop complaining about how much they cost and how long they took to build, just as they stopped complaining about the first two Vogtle units that went online three decades ago.

Within a few years after completion, critics will be blogging about something else on their laptops and smartphones. And when they do, they’ll likely be sitting under the glow of incandescent bulbs, in the comfort of air-conditioned homes, with “No Nukes” bumper stickers on their electric cars plugged into their garages.

All made possible by more than 4,000 megawatts of baseload electricity surging from the largest nuclear generating station 25 miles south of Augusta.

NEXT ON THE LIST: So what business on the south side of Washington Road between the old Berckmans Road and the realigned one will become the next Augusta National Golf Club-owned vacant lot?

There’s not much Washington Road frontage left to acquire now that the club, through a limited liability company affiliate, has added the 1 3/4-acre Pep Boys property to its real estate portfolio for $6.85 million. That price — eye-popping by Augusta standards — eclipses the $5.35 million it paid for Jay’s Music Center’s 3/4-acre corner parcel near the old Berckmans Road last fall and the $2.5 million it forked over two years ago for the nearly 1½-acre TGI Friday’s property.

And it makes the $905,000 it paid 12 years ago for the .85-acre Goodyear/National Hills Tire &Service property look like a bargain.

Makes you wonder what the 1-acre Wendy’s parcel will fetch. A princely sum, to be sure. But probably nowhere near what the club’s proxy will pay to obtain the nearly 2-acre The Olive Garden property at 2736 Washington Road or the 1.6-acre Walgreen’s at the corner of Washington and the new Berckmans roads.

And if the club ever decides it wants the 14-acre Publix shopping center across Berckmans, I think it’s safe to say the sale will be in the eight-figure range.

WILL YOU TAKE A CHECK?: Shortly after selling his land, Jay’s Music owner Doug Frohman said he’d be moving the family business to the former Piccadilly cafeteria building at 3110 Washington Road. Well, he’s a man of his word; he closed on the 11,000-square-foot former restaurant building Dec. 22 for $1.28 million.

But just two days before that he bought the former United Loan &Firearms building at 1040 Broad St. for a little over $500,000. Guess he needed to do something with all that extra cash before the taxman paid him a visit?

You may recall the United Loan pawn shop closed more than a year ago. It’s owner, Johnny Finley, left a note on the door directing former customers to Friedman’s Jewelers/Southeastern Armory, the business owned by his cousin Donnie Thompson.

FUNNY THING ABOUT REAL ESTATE: The topic of the former Frohman property came up recently when I was speaking to Bruce Freshley about the departure of the Somewhere in Augusta bar and grill from the building he owns at 2820 Washington Road.

The Charleston, S.C.-based businessman wistfully recalled how he passed on the chance to buy that corner parcel in the early 1990s for $400,000.

So, he missed an opportunity to get more than 12 times his initial investment? Those things happen, right?

But Mr. Freshley seems to be doing just fine. He’s working with a restaurant operator to try to bring Jacksonville, Fla.-based Metro Diner to the former Somewhere in Augusta site. The family restaurant, featured on celebrity chef Guy Fieri’s Food Network show Diners, Drive-Ins and Dives, has parlayed its fame into multiple locations in the Southeast.

According to Metro Diner’s website, its only Georgia restaurant is in Roswell. Athens and Savannah — but not Augusta — are listed as locations that are coming soon. Macon is not on the list either, but it has a Metro Diner going up on Northside Drive. So go figure.

UNIFORMITY: Coming soon for Augusta Sportswear Group — a single catalog. The Grovetown-based sports apparel wholesaler announced this month it has merged its three divisions — Augusta Sportswear, Holloway and High Five — so customers can buy from all three without making separate orders.

The company said the consolidation began in December with the creation of a single sales force. By the end of 2017 it will have one catalog and a single invoice.

The Augusta Sportswear brand focuses on youth recreational leagues, clubs and middle schools. Holloway is primarily varsity jackets and outerwear for high schools and universities, and High Five is geared to soccer and volleyball. The company’s new structure will be built around market-based divisions: Outdoor, Team Uniform and Off-Field.

IT CAME FROM DETROIT: It’s a good thing ash trees aren’t critical to Georgia’s $23.6 billion forest-related economy. If they were, we’d have a serious problem.

That’s because the Emerald ash borer is here. Dun-dun-duuuuunnn!

First detected in 2002 in Michigan, the invasive Asian beetle has spread to 30 Eastern states. Although Agrilus planipennis has been in Georgia for more than three years, just two months ago the federal quarantine area was expanded to include most of the top 1/3 of the state, including Richmond, Columbia, McDuffie and Lincoln counties. Interestingly, none of South Carolina falls in the 30-state quarantine zone.

The little bugger hasn’t been found in the metro Augusta area, but foresters are on the lookout for the pest’s telltale signs, which include D-shaped holes in trunks and dead trees.

“The problem can show up overnight,” Nathan Lord, an assistant professor of biology at Georgia College in Milledgeville, Ga., told the school’s news service. “It’s severely impacting a couple ash species to the point we may not have any more left in the U.S.”

The school said Dr. Lord is working with Xavier University in Ohio to create a DNA database of beetle species that will be housed at the U.S. Department of Agriculture.

Ash trees are only about 1 percent of Georgia’s tree population. They’re mostly found along rivers and creeks or planted in urban areas. Ash is used to make such things as furniture, tool handles and hockey sticks.

The bulk of Georgia’s $681.2 million worth of timber in 2015 came from the yellow pinesmost commonly used to make building materials.

Georgia pines already have a predator: the Southern pine beetle, also known as the pine bark beetle. So when it comes to trees and pests, the Peach State is pretty well covered.

Maybe we should ship some Southern pine beetles to Asia? You know, to return the favor.

 

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