Nuclear supply identified as new ground at MAM conference

The emerging market of nuclear supply was the topic of panel discussion this morning at the Missouri Association of Manufacturers’ 2016 conference and annual meeting.

At the Ramada Plaza Hotel & Oasis Convention Center, MAM CEO Kim Inman said the nuclear industry was identified as one of many possible replacements for a continual decrease in Department of Defense contract dollars coming into the state via a study conducted by Los Angeles-based technical and management support systems company Aecom (NYSE: ACM).

According to the Office of Economic Adjustment, the value of DOD contracts awarded to Missouri companies declined roughly 7 percent to $9.4 billion in fiscal 2014 from $10.1 billion in fiscal 2013. The state’s high point came in 2011 with $11.8 billion in awarded contracts.

Other potential areas identified by the study include commercial aviation, unmanned aerial vehicles, aka drones, and autonomous vehicles – all set to experience between $8 billion and $730 billion in revenue growth within the next five years.

“For many years in this industry, when we talked about revenue growth we talked about millions of dollars and now we’re talking about billions,” Inman said. “Our economy is changing, we’ve identified where the growth is and now the question is how to go after it.”

American Mergers & Manufacturing International co-founder and President David Garcia kicked off the event with a presentation on the need for American manufacturers to supply the globally expanding nuclear industry, and the potential for Missouri’s manufacturers to add it to their revenue stream.

Citing data from a Nuclear Energy Institution report, Garcia said the expected spend for operating and maintaining 437 nuclear power plants worldwide will reach $375 trillion by 2050. In the U.S., the current spend is between $7 billion and $10 billion annually for operations and maintenance on 99 sites.

Garcia added the operations and maintenance spends do not take into account additional revenue captured through future plant designs, installations, upgrades, decommissions, research of new technologies, or the 60 reactors already under construction in 15 countries.

“When you look at that potential market – that’s a lot of money,” Garcia said, noting countries exhibiting the strongest demand for nuclear energy – including China, South Korea and the United Arab Emirates – lack the infrastructure to produce necessary components.

“Over the last four or five years, the volume of suppliers that have the ability to produce parts is decreasing, and right now there’s a significant and continuing deficit of suppliers who are aware or have the desire to be involved in it,” Garcia added.

Garcia also moderated a discussion between the audience and six panelists from five manufacturing companies – also members of AMMI’s Consortium of Manufacturers – regarding the challenges they faced in entering the nuclear supply chain.

Brent Holloway, director for nuclear business development at Greenville, S.C.-based Lucideon Integrated Power Services, said in order to become part of the supply chain, manufacturers must be willing to make an investment of time and resources to obtain Nuclear Regulatory Commission-required Nuclear Quality Assurance-1 certification from the American Society of Mechanical Engineers.

“It’s not a short putt, but it’s definitely a strategic view if you want to be sustainable,” Holloway said. “There aren’t many industries that say, ‘We don’t care about the price – we care about the quality.’”