Read the original case [[here|/static/files/MBI/Module%2017/The%20Great%20Nuclear%20Fizzle%20at%20Old%20B&W.pdf]]

!Questions
# Draw up a timetable of the major events described in the case study before the Mount Vernon plant was opened.
# What went wrong and why? Be specific.

!Summary
* Transition to Nuclear Energy was slowed down by a number of factors:
** Technological difficulties and public resistance. 
** An unexpected cause for delay has been one company's crucial failure to deliver a single vital component of nuclear power plants.
* Company was Babcock & Wilcox Co
* Delivered one crucial component: Nuclear Pressure Vessle
* The company //sold its entire projected output of pressure vessels for years ahead//
* The plant produced just //three pressure vessels in its first three years of operation.// (Late 1968, after the production snarl reached horrendous proportions, a vice president responsible for the Mount Vernon operation committed suicide)
* General Electric and Westinghouse Electric took the almost unprecedented step of forcing B & W to turn most of their partially completed vessels over to other manufacturers.
* Perhaps \$40 million worth-were taken out of B & W's shops
* Chairman Morris Neilson, 65, who chose Zipf for his present job a year (before 1968??) and handed him his present problems. 
* 1924: Young Doc became a steeplejack and ironworker and in 1924 joined the corporation he was later to head.
* 1940: By the time World War II came along, Neilson was superintendent of marine erection. 
* 1956, set up an extensive research facility at Lynchburg, Virginia. One of B & W's first important nuclear jobs was to build Consolidated Edison's Indian Point Plant
* 1957: became president and chief executive officer. 
** Nuclear losses continued under Neilson, but he improved B & W's overall profitability dramatically
* Sales stayed near or below the 1958 figure of \$366 million
* 1963-this was a low period in the utility buying cycle earnings climbed year by year.
* Profits went from \$13 million in 1958 to \$22 million in 1963.
* At that point, sales also began to go up, rising 71 percent in the next five years.
* Early 1960s: the plant was planned, Neilson believed he had found a niche in the nuclear industry that offered a quick return. A nuclear pressure vessel,
* 1965 plant starts operating on a makeshift basis for almost two years
* 1965: U.S. utilities went on a nuclear-plant buying. The Mount Vernon plant was designed to produce one completed pressure vessel a month, once it was in full operation
* Profits peaked in 1967 at \$33 million, at \$2.69 a share
* The most biting criticism of Neilson's regime comes from men charged with nuclear assignments. In their eyes, Neilson's lack of formal education proved a serious handicap. It can be seen, in retrospect, that he may have been too successful in keeping B & W lean. His determination to keep down the fat sometimes "had the effect of cutting into good red meat" says a former B & W executive
* Aug 1966: A linear accelerator, used to detect welding flaws, was delivered 11 months late. The first delays at Mount Vernon were caused by suppliers falling far behind schedule in providing vital equipment.
* September 1967: a highly automated, tape-controlled machine center-the heart of the plant arrived a full year behind schedule
* Mount vermont lacks skilled labour force (error in selecting the location for the plant)
* The plant was closed by labor disputes on several occasions. The most serious occurred when the three-year contract expired in 1967, while equipment was still being installed. The Boilermakers went on strike over wages and work rules, and the plant was down for 40 days-unnecessarily long, in the view of President Thomas Ayers of Chicago's Commonwealth Edison, who had pressure vessels tied up at Mount Vernon. 
* B & W took an optimistic view of its prospects-choosing, according to that 1968 memorandum, to regard Mount Vernon as "an unspoiled labor market."
* September 30, 1968, only 514 of the 1,060 hourly employees hired in the preceding three years were still working for B & W; in other words, the company had hired three men for each one it trained. "Turnover of the Mount Vernon workforce has been a particularly frustrating problem, and a major reason B & W has been unable to bring its full manufacturing capabilities to bear on the situation," the 1968 memorandum concluded.
* The B & W memo cites the "noncompetitiveness of our wage scale" as a reason for the high turnover rate in the Mount Vernon work force
* The man directly responsible for the Mount Vernon plant was John Paul Craven, vice president in charge of the power generation division at Barberton. As head of B & W's largest division
*  September 1968, before the seriousness of the pressure-vessel crisis at Mount 'Vernon be-came generally known, Neilson stepped aside as chief executive in favor of George Zip
* Oct 1968 Zipf scheduled a meeting at the Mount Vernon plant with Craven and Austin Fragomen, vice president for manufacturing.
* Oct 1968 Craven suicide: (took off his clothes and climbed into a dry bathtub in his $250-a-month apartment at Akron's luxurious Carlton House. Then he slashed his ankles, cut his throat, and stabbed himself in the heart with the serrated eight-inch blade of a butcher's knife)
* AfterCraven's death, George Zipf took personal charge of the power generation division, and of the Mount Vernon works
*  Fall of 1968, B & W pacified GE to some extent by setting up a temporary welding shop on barges anchored at Madison,B & W brushed aside its customers' worries with assurances that things at Mount Vernon were not really as bad as they seemed. Even after Craven's death, the B & W management continued to maintain that its optimistic scheduling, with some minor changes, would prove to be realistic.
* April 1968, while B & W's biggest customers were searching for other suppliers. Doc Neilson-who was retiring on May 1 as an officer of the company, he quitly sold 15,000 of his 20,000 shares of B & W stock. The price at the time was about 533 a share.
* A couple of weeks later B & W stockholders got their first official hint of serious trouble ahead. George Zipf revealed at the annual meeting that he expected earnings to drop by 20 to 30 percent in 1969 because of the company's losses on nuclear business. (The actual decline, of course, has since proved to be much greater than Zipf predicted.) Before lone, the price of B & W's stock sank into the 20s. 
* On May 14 1969,  B & W sent out telegrams brusquely letting customers know that the situation at Mount Vernon was even worse than they had sus-pectedL B & W was adding 2 to 12 months to earlier delivery schedules
bag
mbi_public
created
Sat, 17 Sep 2011 07:43:18 GMT
creator
dirkjan
modified
Sat, 17 Sep 2011 07:43:18 GMT
modifier
dirkjan
tags
Case
M17
creator
dirkjan