[Congressional Record Volume 143, Number 150 (Friday, October 31, 1997)]
[Senate]
[Pages S11539-S11541]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                   AMERICAN MANUFACTURING AT ITS BEST

  Mr. FORD. Mr. President, today I rise to pay tribute to the Paducah 
gaseous diffusion plant [PGDP] in Paducah, KY. On October 20, 1997, 
Industry Week Magazine recognized the Paducah facility as one of 
``America's 10 Best Plants'' from among 275 plants nominated for the 
honor in 1997.
  According to Industry Week, a national publication which annually 
salutes the top performing manufacturing facilities in North America, 
the dual purposes of the competition are ``to recognize plants that are 
on the leading edge of North American efforts to increase 
competitiveness, enhance customer satisfaction, and create stimulating 
and rewarding work environments; and, to encourage other North American 
managers and work teams to emulate the honorees by adopting world-class 
practices, technologies, and improvement strategies.''
  There is no question that the Paducah facility, a federally owned 
nuclear fuel enrichment plant managed by Lockheed Martin Utility 
Services, meets these criteria. In fact, it is a model for any 
manufacturing plant in any industry in the country. Over the past 10 
years, the Paducah plant has nearly tripled output from 2.3 million 
units per year to 6.8 million units per year. And this amazing increase 
in productivity was achieved using existing equipment and machinery. 
Similarly, the percentage of production units in-line has risen from 57 
percent of capacity in August 1993, to an impressive 96.9 percent in 
April 1997. To top it all off, the Paducah facility boasts 100 percent 
on-time delivery for the past 5 years with a zero product defect rate. 
Now that, Mr. President, is what quality American manufacturing is all 
about.
  On July 25, the Clinton administration gave formal approval to move 
forward with privatization for the U.S. Enrichment Corporation [USEC], 
the Government entity that currently owns PGDP. Hopefully, this process 
will be completed early in 1998. As I have maintained for the better 
part of 10 years, privatization will not only enable Paducah to utilize 
cutting edge technologies to keep it competitive in the world uranium 
market, it will also keep thousands of productive employees on the job 
well into the next century.
  Mr. President, I ask unanimous consent that the article entitled 
``Lockheed Martin Utility Services'' be printed in the Record following 
my remarks.
  There being no objection, the article was ordered to be printed in 
the Record, as follows:

[[Page S11540]]

                  [From Industry Week, Oct. 20, 1997]

                    Lockheed Martin Utility Services

                         (By John H. Sheridan)

       Perhaps it has something to do with the fact that the huge 
     production facility he runs is located smack dab in the 
     middle of a 4,000-acre wildlife refuge--complete with pesky 
     beavers and a herd of deer. Or maybe he just enjoys telling 
     animal stories. But if you ask Steve Polston about the 
     management philosophy that drove culture change--and an 
     impressive business turnaround--at the Paducah Gaseous 
     Diffusion Plant (PGDP) in Paducah, Ky., be prepared for a few 
     lessons in zoology.
       For instance, there's his yarn about the ``tiger rabbit''--
     a creature that has become the stuff of western Kentucky 
     legend.
       Polston, who is general manger at PGDP, a nuclear-fuel 
     enrichment facility owned by the federal government and 
     managed by Lockheed Martin Utility Services, likes to show a 
     picture of one of these critters. It's your basic rabbit, but 
     it has black-and-orange stripes. ``It might look a little bit 
     like a tiger,'' says Polston, ``but you can't expect it to 
     act like a tiger.''
       In a sense, that was his perception of the PGDP complex 
     about five years ago, when the initial steps were taken to 
     begin transforming the 1,550-employee facility from a 
     financially struggling unit of the U.S. Dept. of Energy (DOE) 
     into a businesslike operation. An important step was passage 
     of the Energy Policy Act of 1992, which spun the Kentucky 
     facility out of DOE--along with a sister plant in Portsmouth, 
     Ohio--and into a newly created government entity, the U.S. 
     Enrichment Corp. (USEC). Legislation adopted in 1996 set in 
     motion a plan to eventually privatize the business.
       ``In the beginning,'' says Polston, ``we knew we weren't a 
     real business--even though they called us a business.''
       For one thing, the culture of the plant was mired in a 
     can't-do mentality, the legacy of years of bureaucratic 
     oversight. For another, costs were out of control. ``We had 
     been losing market share because our costs were going up 
     rapidly,'' Polston recalls. In the early 1990s DOE analysts 
     had projected that USEC's world market share would drop from 
     46% to less than 20% by the year 2000. And there was 
     speculation that the two plants might close for good early in 
     the 21st century--a rather ominous projection, since the USEC 
     plants together supply 80% of the fuel to run nuclear 
     powerplants in this country. If they shut down, the U.S. 
     would no longer be self-sufficient in nuclear-fuel-processing 
     capability.
       In trying to turn things around, the first challenge was to 
     get costs under control. But it was clear that would require 
     cultivating new attitudes--in the management ranks as well as 
     among the unionized workforce, which is represented by the 
     Oil, Chemical & Atomic Workers (OCAW) Local 3550 and the 
     United Plant Guard Workers of America.
       Explaining PGDP's approach to cost-control issues, Polston 
     sets the stage with--you guessed it--another animal story. 
     When an elephant is young, he points out, it is trained to 
     stay in place by a short tether attached to its leg and tied 
     to a stake. After years of conditioning it associates the 
     tether with an inability to move about freely. ``When an 
     elephant grows up,'' Polston explains, ``you can hold it in 
     place with a piece of old clothesline. After I came here six 
     years ago, I began to envision us as a big elephant 
     restrained by a small rope. Our workers thought it was 
     impossible to get our costs down.''
       One way to begin changing that mentality was an infusion of 
     new management blood. Polston began recruiting senior 
     managers with backgrounds in commercial nuclear power--people 
     who understood the realities of a competitive business 
     environment. ``I wanted to break that rope,'' he explains. 
     ``I wanted their private-sector mentality to rub off on us.''
       He also began preaching the merits of cycle-time reduction 
     and elimination of non-value-added activity. At the same 
     time, training, communications, and quality and teamwork 
     initiatives were intensified--with the support of OCAW union 
     leaders.
       A primary cost-reduction thrust has been to emphasize the 
     use of lower-cost, nonfirm power, since electricity 
     represents 60% of the facility's total costs. To accomplish 
     this, the plant took a more aggressive approach in using 
     freezer/sublimer equipment developed by the Paducah 
     engineering staff, as well as a sophisticated computer 
     system, enabling the plant to reduce power consumption during 
     high-price periods and then make up the production slack by 
     increasing power usage during off-peak hours when rates are 
     lower.
       A second key initiative--which called for broad involvement 
     by the workforce and rigorous adherence to procedures--was to 
     improve the reliability of process equipment. A strong 
     preventive-maintenance program was beefed up, and workers 
     were encouraged to participate widely in a problem-reporting 
     system that has cultivated a continuous-improvement 
     mentality. When an employee points out a problem or potential 
     problem, it goes into a corrective-action system that plant 
     officials describe as a ``bear trap'' that forces follow-up 
     activity. In some cases, joint union-management teams are 
     formed to investigate and implement solutions. In 1996 the 
     problem-reporting/suggestion system identified 6,000 plant 
     issues--generating about 10 times as many improvement ideas 
     as in years past.
       When an employee fills out a problem-report form, he or she 
     is required to include suggestions on how to solve the 
     problem. ``Some of the suggestions have been very creative 
     and insightful,'' Polston notes. ``We identify low-threshold 
     problems before they become bigger problems.'' Coupled with 
     the problem-reporting system has been an extensive effort to 
     train employees in root-cause-analysis methods.
       At the core of PGDP's extensive employee-communications 
     program has been an effort to translate business goals 
     established by USEC into terminology and objectives that the 
     entire workforce can identify with. After a winnowing 
     process, emphasis was placed on three key goals:
       Ensure an accident-free environment.
       Strive to get 100% of the plant's production cells on 
     stream.
       Reduce the cost of SWUs--that is, ``separated work units,'' 
     a measure of the effort required to boost the U235 level in 
     the uranium hexafloride (UF6) processed by 
     hundreds of ``converters'' in the four-building production 
     complex.
       To keep employees abreast of progress toward the goals, the 
     latest performance metrics are posted on a large sign at the 
     entrance to the property, so that when they drive in each 
     morning workers know exactly how they're doing. In addition, 
     color-coded charts posted in strategic locations provide at-
     a-glance updates on progress toward the current Top 10 plant 
     objectives--which are established annually under the PGDP 
     Quality of Operations plan.
       So how they have been doing?
       Well, the predicted falloff in market share never occurred. 
     In fact, since 1992 USEC--which generates more than one-third 
     of its annual revenues from sales to overseas customers--has 
     increased its domestic market share and boosted its export 
     sales. In the last five years the Paducah plant has reduced 
     its manufacturing costs by nearly 11% while establishing an 
     enviable record of shipping product 100% on-time and 100% 
     within specification--without maintaining an inventory 
     buffer. And the folks at USEC headquarters in Washington have 
     ample reason to be pleased with the bottom-line results.
       ``We're an example of efficiency in the public sector--and 
     we make a tidy profit for the U.S. Treasury,'' says John R. 
     Dew, who oversees training programs at Paducah and carries an 
     unusual title--manager of mission success. ``Our management 
     team has taken a 45-year-old bureaucratic government 
     operation and turned it into a profitable business that is at 
     the top of President Clinton's list for privatization,''
       For 1996 USEC was able to report net income of $304.1 
     million on sales of $1.41 billon--an enviable 21.6% profit 
     margin. If the U.S. Treasury Dept, the USEC's sole 
     shareholder, eventually does approve the sale of the business 
     to private interests--a move that could take place early next 
     year--it will mean a nice windfall for Uncle Sam. By some 
     estimates, the sale could prove to be the biggest U.S. 
     privatization move ever, exceeding the $1.6 billion sale of 
     Conrail in 1987.
       Securing final approval of the sale could prove a bit 
     sticky, however, since the new owners would obtain access to 
     what is still considered highly classified technology--
     including AVLIS, a next-generation enrichment process being 
     developed by USEC, in conjunction with Bechtel Corp.
       Perhaps a little history will put the national security 
     issues into perspective. The Paducah facility was built in 
     1952 by the old Atomic Energy Commission, under orders from 
     President Harry Truman, to produce enriched uranium for 
     thermonuclear warheads--as a hedge against possible war in 
     Southeast Asia. The site met all of the official site-
     selection criteria established during the early years of the 
     Cold War and at the height of Sen. Joseph McCarthy's anti-
     Communism crusade. For one thing, Paducah was more than 100 
     miles from any city with ``known Communist activity.''
       In addition to the official criteria, the site selection no 
     doubt also was influenced by the fact that Paducah was the 
     home town of Alben W. Barkley, then U.S. vice president.
       By 1964 the U.S. had developed an ample supply of weapons-
     grade nuclear material, and the Paducah facility was 
     converted to production of fuel for nuclear power plants. In 
     simple terms, the enrichment process involves heating 
     cylinders containing solid UF6 until it gasifies, 
     then forcing the gas through a miles-long enrichment 
     ``cascade''--a series of converters separated by jet-engine-
     like compressors. In each converter, uranium molecules pass 
     through a porous material, which gradually separates the 
     lighter U235 molecules from the heavier U238 molecules--
     creating an ``enriched'' stream with a higher concentration 
     of U235. The enriched stream is eventually withdrawn and 
     cooled to a solid state in 14-ton cylinders.
       Electrical power to drive the 1,860 motors in the system 
     comes from two primary utilities--including a nearby 
     Tennessee Valley Authority plant--along with electricity 
     purchased in the open market and ``wheeled'' to the Paducah 
     site. The power is distributed through four large power 
     switchyards, one for each of the four processing plants. 
     ``Just one of these switchyards could handle the power needs 
     of a city the size of Washington, D.C.,'' explains Terry 
     Sorrel, customer-relations representative.
       The heart of the production complex is a large circular 
     control room that monitors the operation of all the equipment 
     on site. One section of the control room, called the

[[Page S11541]]

     ``Power Pit,'' manages the purchase and distribution of all 
     electrical power used throughout the facility. ``Our goal,'' 
     says Ron Taylor, power-operations manager, ``is to have a 
     reliable power supply at the lowest possible cost.''
       Thanks to the sophisticated freezer/sublimer equipment, the 
     power load can be quickly adjusted by freezing or subliming 
     up to 200 tons of uranium gas. To reduce power requirements, 
     UF6 gas is withdrawn from the system and frozen.
       Much of PGDP's progress during the last five years can be 
     attributed to a cooperative union-management relationship, 
     which has led to the creation of joint union-management teams 
     at various levels. For example, an empowered union-management 
     team developed a system to provide better heat protection to 
     people working in high-temperature areas. Teams also have 
     improved quality and maintenance efficiency (the site has 300 
     maintenance workers). And one team developed a six-year plan 
     for facility upgrades.
       Now, an effort is underway to expand the team concept by 
     creating high-performance work teams that will be responsible 
     for day-to-day operations. Added impetus for this initiative 
     came from a visit by union and management representatives to 
     another Lockheed Martin plant--a former ``Best Plants'' 
     winner--in Moorestown, N.J. ``Teamwork is a win/win 
     situation, but we realized that we were functioning on a 
     project basis,'' says Steve Penrod, operations manager. ``At 
     Moorestown, we saw a culture of teamwork in day-to-day 
     activities.''
       Union officials support the high-performance team concept, 
     says Mike Jennings, an OCAW representative for continuous-
     improvement programs. ``It is a slow process, since it is a 
     big change in culture,'' he says. ``We aren't going to force 
     teams on anyone.''
       Paducah has taken a team approach to operations performance 
     improvement, placing heavy emphasis on a ``conduct of 
     operations'' code that demands ``rigorous attention to 
     detail,'' says Penrod. As part of the effort, a team 
     including hourly workers developed a ``Code of 
     Professionalism'' that specified how employees should conduct 
     themselves on the job.
       Undergirding all of the performance-improvement efforts at 
     Paducah has been an extensive communications effort--which 
     includes ``All-Hands Meetings'' twice a year for 1,200 or 
     more employees. ``At these meetings, we reinforce our 
     expectations, we discuss our performance measures, and we 
     give people the opportunity to comment and raise any issues 
     they may have,'' explains Howard Pulley, enrichment plant 
     manager. ``Among other things, they may tell us which of our 
     systems are causing them to not be efficient.''
       Then there are ``C2'' meetings--in which small groups of 
     employees focus on compliments and concerns. Every other 
     month, 15 people are selected at random to participate. After 
     discussion, the groups vote on their top three compliments--
     citing things that are being done well--as well as their top 
     three concerns. ``We follow up on their issues and then 
     provide feedback,'' Pulley says.

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