For specialist contractors struggling with tough economic conditions, the nuclear energy sector stands out as a major source of potential work. However, as one leading specialist explains, it is not for everyone.
Senior Hargreaves has been in the nuclear business for almost 40 years, but it still feels like an apprenticeship, according to managing director Kevin White.

The company has been involved with many of those iconic names: Sellafield; Sizewell; Heysham; Hunterston; Dounreay and Aldermaston and is now working closely with EDF and a number of the consortia de-commissioning and building the UK's current and future nuclear capacity.

With new plants due to start coming on line in 2018 - there is lots of work on the horizon, but construction teams are not due on the first site until 2014 so this is not a short-term fix for the sector's current financial troubles.

Hargreaves manufactured and installed the ductwork in the last nuclear power station built in the UK - Sizewell B - where the company had a workforce of 120 permanently on site for two years. Heysham 2 was also completed by the firm shortly before Sizewell, but Enterprise Sheet Metal did all the ductwork at Torness around the same time and then promptly went out of business.


'There is a lesson in that for us all,' says White, who is also chairman of the HVCA's Ductwork Group. 'With these massive, complex contracts you have to be very careful. They will suck up manpower and time so you have to be right on top of the management to make sure you do not overstretch yourselves.'

Standards

The standards required by nuclear clients are, not surprisingly, right at the top of the best practice scale. Heavy duty, fully welded stainless steel and extremely high levels of filtration are specified in many buildings. However, at the end of the day, it is still ventilation and the high standards are those that the whole sector should aspire to anyway, according to White.

'The HVCA Ductwork Group exists to promote and champion best practice, and those standards are simply the norm on nuclear power projects,' he says. 'For the new generation of power stations, the consortia insist that these high standards are applied to everyone in the supply chain, including our own suppliers. They cannot afford to lose team members along the way and they apply an 'open door' approach to everyone so they can have complete traceability of every component in every system in every building.'

DW144* is the ductwork industry quality standard, but for nuclear clients it has to be 'DW144 Plus, Plus, Plus' he adds, with carbon and stainless steel nuclear standard specification ductwork throughout.

All suppliers are expected to be accredited to ISO9001, 14001 and 18001 backed by third party validation to ensure that quality, health & safety and environmental management is robust.

Safety is, naturally, a key consideration but this has come to be defined within the nuclear industry's quality standards. Nuclear clients require the highest possible quality standards and safety is a natural consequence - quality is the new nuclear safety, according to clients and suppliers.

'There is no negotiation on this subject now,' says White. 'Quality stands alongside safety in the contract hierarchy and I have no doubt this will also apply to every power station constructed from now on.'


The project time frames are extremely long - another reason why hard-pressed contractors thinking of diversifying into this sector might be disappointed. The earliest of the new nuclear reactors is expected to begin operating in 2018 at Hinckley and Hargreaves is already involved in the pre-planning phase with prospective clients. After that the overall programme envisages reactors coming on line at 18 month intervals up to 2025.

So a ductwork contractor can be putting in valuable time and design resources for several years before it starts to see a payback on that investment, although the rewards can be substantial with the services worth as much as £20million on each reactor.

'Nothing happens quickly,' says White. 'There are no shortcuts. Approvals take many months as there is so much documentation to review with different disciplines involved. And it is a constantly changing picture; as something else emerges the clients develop a new process, which every supplier must take on board.'

Inspectors

Hargreaves' head office in Bury, Greater Manchester is used to hosting large teams of inspectors from the nuclear industry and regular inspections are part of the culture. Everything is checked by the client before it leaves the factory to ensure nothing sub-standard even reaches the building site and they insist on total traceability for every component throughout its operating life.

This kind of work requires a completely different mindset to standard ductwork contracts, according to White. 'There's no mystique, as such, but you can't just wake up one morning and decide you are going to do ductwork for the nuclear industry. You have to evolve from a ductwork contractor into an 'engineering construction company' that carries out ductwork.'

The client/supplier relationship is totally different. For example, the energy consortia putting together the nuclear energy plants give a presentation to every potential supplier to make sure each one is absolutely clear about what is expected of them in terms of quality. The normal sales-pitch approach is reversed with the client presenting to the supplier.

The process leading towards the building of the new plants begins with consultations into waste and decommissioning of the old stations. This is followed by a lengthy process of regulatory review before the initial designs and site licensing process gets underway.

Every aspect is highly politicised, for obvious reasons, and the project timetables will be affected to some extent by future government energy policy and the reshaping of our domestic electricity supply market.

So, if you want to work in such a heavily regulated sector you have to be patient.

'Nuclear contracts are not going to get our industry out of its current hole,' says White. 'You can't just hang on until 2014 in the hope of picking up one of these sizeable jobs. The ductwork sector has a very tough period ahead of it. It will be at least a year until we see an improvement in the general economic picture.'
Hargreaves supplies many of the ductwork firms in the UK so keeps a close eye on company failures - and it is not a pretty picture. Several long-established firms have disappeared recently.

Hargreaves itself is a much smaller business than it was in the ductwork heyday of the late '80s and is more heavily focused on the specialised, high end market. The management took a decision seven years ago to slim turnover down from £24million to around £18 million and directly employed staff now number about 200 down from a peak of 500.

Profitable

'That was a deliberate tactic,' says White. 'It is not about being the biggest company, but having the appropriate level of turnover so we can be efficient and profitable. The important aspect is that we have been stable around the £18 million mark for six years despite the ups and downs.

'The strategy was to focus on larger contracts and more specialist work where our expertise allows us to be more profitable,' says White.

'Nuclear contracts require a large investment during extended periods. There is unlikely to be any major site work for us until 2014 - so this is not a short-term fix for the current cash flow problems of the sector.

'We will have to engage extra workers when the on-site phase begins but we have time to do that and give them the right training.'

The company remains on the original site opened by Henry Hargreaves 130 years ago, but the footprint is also considerably reduced. Once the manufacturing begins for the nuclear projects, the company has access to a neighbouring building for additional storage capacity, but in the meantime White is running a smaller, leaner operation better suited to the current marketplace.

The latest State-of-Trade survey by the HVCA Ductwork Group showed the rate of converting enquiries into tenders has worsened in the past 12 months.

It is now at about 10 enquiries to every tender and the amount spent on tendering has increased from 4 per cent of turnover to 7 per cent.

'Companies have to be more selective - it is a matter of survival,' says White. 'When things are difficult people are more inclined to take risks and go for work they should leave alone. They are going into projects looking at how to minimise their loss rather than focusing on profit - there is no future in that.

'We have trimmed our operation and are firmly focused on more profitable work and on specialist projects, including nuclear, but that also demands higher quality standards and a well trained workforce,' he adds. 'That is the business balance companies must consider, but it is one of the ways forward for our industry through these current lean times and into the future.'

• The HVCA's Specification for Sheet Metal Ductwork (DW144) is available from HVCA Publications on 01768 860405 (hvcapublications@welplan.co.uk) or via the Association's website at www.hvca.org.uk/publications. Copies cost £30.00 (HVCA members) or £60.00 (non-members).