In May 2017, Westinghouse Electric Company (\u201cWestinghouse\u201d) CEO Jos\u00e9 Guti\u00e9rrez told an industry gathering that his company would be exiting its historic bankruptcy proceedings \u201cleaner, stronger and more competitive\u201d [1]. However, with the advent of the digital era in power generation, potential challenges loom on the horizon. Though it has promising business development opportunities in Asia, Westinghouse faces headwinds as it adapts to a digitalizing world, as over the past year its competitors have rolled out major digitalization initiatives while Westinghouse was stuck in bankruptcy court. As it enters a period of renewed optimism, can the company make up lost ground? Or will digitalization prove a bridge too far for the new, improved Westinghouse?<\/p>\n
The Nuclear Industry and Westinghouse<\/em><\/p>\n Nuclear power accounts for approximately 20% of electrical power generation in the United States [2], with 25 utilities operating 100 nuclear reactors across the country [3]. These plants require extensive fuel, maintenance and other engineering services, which are largely supplied by three major vendors: French government-owned Areva, US-Japanese joint venture GE Hitachi Nuclear Energy, and Toshiba subsidiary Westinghouse [4].<\/p>\n At the end of the 2000s, prior to the nuclear disaster at the Fukushima Daiichi power plant in Japan, surging natural gas prices, worries about climate change, and government subsidies led to many experts anticipating a \u201cnuclear renaissance,\u201d as new power plant projects across the US were slated for construction [5]. Yet, only Westinghouse pursued new reactor builds, designing and supplying four in the southern US [6]. Unfortunately, these new projects went badly almost immediately, a spiral accelerated by the imposition of new post-Fukushima regulatory requirements and the discovery of major design mishaps., By the end of 2016, Westinghouse\u2019s parent company, Toshiba, decided to place the company under bankruptcy protection, and customers cancelled two of the company\u2019s new reactor projects [6]. The company has spent most of 2017 under bankruptcy protection, and has been largely idle as a result.<\/p>\n The Role of Digitalization<\/em><\/p>\n Digitalization is a key trend for the nuclear industry to embrace, as even under the most favorable circumstances, nuclear power plants present a significant challenge from both a capital and operating cost standpoint [7]. To that end, last year, in the face of persistently low natural gas prices, the industry\u2019s primary trade group set a goal of reducing reactor operating costs across the fleet by 30% [8], and subsequent initiatives by Westinghouse\u2019s rivals have shown that digitalization could make a major contribution to this effort.<\/p>\n For example, in March 2017 Areva announced a partnership with IBM\u2019s Watson Internet of Things to bring artificial intelligence and data analytics technology to the nuclear power sector. With the technology, the company claims that utilities will, among other things, be able to \u201cto quickly and easily predict asset performance and quality issues to optimize supply chain processes\u201d [9]. At the same time, in November 2017, GE Hitachi announced that it had successfully completed a pilot program with the US\u2019s largest nuclear operator, Exelon, to apply data analytics to nuclear operations, and that it was pushing the technology out to the rest of the fleet [10]. This follows an October 2017 announcement that GE is partnering with Apple to expand its industrial Internet of Things platform to Apple devices [11].<\/p>\n Westinghouse\u2019s Challenge<\/em><\/p>\n Despite Westinghouse touting its \u201cvery healthy and profitable\u201d operations in Asia and elsewhere [12], the question remains as to how the company will react to its competitors\u2019 moves in the digital sphere. To date, Westinghouse has digitalized its procurement services, implementing the Ariba eProcurement platform in partnership with Accenture in 2013 as part of \u201ca strategic initiative to improve its end-to-end purchasing and invoicing processes\u201d [13]\u00a0[14].\u00a0 However, other nuclear companies also have digital supplier portals, and Areva also offers utilities a service it calls \u201cIntegrated Procurement Solutions,\u201d or modular procurement services to address component obsolescence and other supply chain challenges for utilities [15]. Apart from this effort, it is difficult to find any other instance in which Westinghouse\u2019s management has pursued significant digitalization.<\/p>\n Moving forward, Westinghouse will likely have to mimic its competitors and develop a data analytics offering to help utilities better cope with procurement and operational issues. Beyond this, digitalization should be a centerpiece of the company\u2019s strategy moving forward, including incorporating the concept into the company\u2019s supply chain as it recovers from failed projects, so as to gain a leg up on the competition. Otherwise, in an industry with tight margins and limited opportunity for growth, the company may find itself back in bankruptcy court before long.<\/p>\n (749 words)<\/p>\n [1] Nuclear Energy Institute, “Westinghouse CEO Says Company Will Emerge \u2018More Competitive\u2019,” Nuclear Energy Institute, May 24, 2017, https:\/\/www.nei.org\/News-Media\/News\/News-Archives\/2017\/Westinghouse-CEO-Says-Company-Will-Emerge-More-Com, accessed November 2017.<\/p>\n [2] U.S. Energy Information Administration, “Monthly Energy Review October 2017” (PDF file), downloaded from U.S. Energy Information Administration website, https:\/\/www.eia.gov\/totalenergy\/data\/monthly\/pdf\/sec7_5.pdf, accessed November 15, 2017.<\/p>\n [3] U.S. Nuclear Regulatory Commission, “List of Power Reactor Units,” https:\/\/www.nrc.gov\/reactors\/operating\/list-power-reactor-units.html, accessed November 2017.<\/p>\n [4] World Nuclear Association, “The Nuclear Renaissance,” September 2015, http:\/\/www.world-nuclear.org\/information-library\/current-and-future-generation\/the-nuclear-renaissance.aspx, accessed November 2017.<\/p>\n [5] Ayesha Roscoe, “U.S. approves first new nuclear plant in a generation,” Reuters, February 9, 2012, https:\/\/www.reuters.com\/article\/us-usa-nuclear-nrc\/u-s-approves-first-new-nuclear-plant-in-a-generation-idUSTRE8182J720120209, accessed November 2017.<\/p>\n [6] Brad Plumer, “U.S. Nuclear Comeback Stalls as Two Reactors Are Abandoned,” New York Times<\/em>, July 31, 2017, https:\/\/www.nytimes.com\/2017\/07\/31\/climate\/nuclear-power-project-canceled-in-south-carolina.html, accessed November 2017.<\/p>\n [7] Brad Plumer, “Nuclear power is dying. Can radical innovation save it?,” Vox.com, March 27, 2017, https:\/\/www.vox.com\/energy-and-environment\/2017\/3\/27\/15043522\/nuclear-power-future-innovation, accessed 15 November 2017.<\/p>\n [8] Nuclear Energy Institute, “Delivering the Nuclear Promise\u00ae:Advancing Safety, Reliability and Economic Performance\u201d (PDF file), downloaded from the Nuclear Energy Institute website, https:\/\/www.nei.org\/CorporateSite\/media\/filefolder\/Communication-Tools\/Delivering%20the%20Nuclear%20Promise\/Strategic-Plan_Delivering-The-Promise_r1_rtm.pdf?ext=.pdf, accessed November 15, 2017.<\/p>\n [9] Areva, “AREVA Partners with IBM\u2019s Watson Internet of Things (IoT) to Offer Next-Generation Data Analytics to the Nuclear Industry,” 14 March 2017, http:\/\/us.arevablog.com\/2017\/03\/14\/areva-partners-with-ibms-watson-internet-of-things-iot-to-offer-next-generation-data-analytics-to-the-nuclear-industry\/, accessed 14 November 2017.<\/p>\n [10] Karen Thomas, “GE Hitachi expands Exelon analytics learnings to US nuclear fleet,” Nuclear Energy Insider, November 15, 2017, https:\/\/analysis.nuclearenergyinsider.com\/ge-hitachi-expands-exelon-analytics-learnings-us-nuclear-fleet, accessed November 2017.<\/p>\n [11] Natalie Gagliordi, “Apple, GE partner to bring Predix apps to iOS,” ZDNet News, October 18, 2017, http:\/\/www.zdnet.com\/article\/apple-ge-partner-to-bring-predix-apps-to-ios\/, accessed November 2017.<\/p>\n [12] David Stanway, “Westinghouse says will operate normally in Asia, Europe despite Chapter 11,” Reuters, April 28, 2017, http:\/\/www.reuters.com\/article\/us-toshiba-accounting\/westinghouse-says-will-operate-normally-in-asia-europe-despite-chapter-11-idUSKBN17U15P, accessed November 2017.<\/p>\n [13] Westinghouse Electric Company, “Westinghouse Signs Services Contract with Accenture,” PRWeb, May 16, 2013, http:\/\/www.prweb.com\/releases\/2013\/5\/prweb10740026.htm, accessed November 2017.<\/p>\n [14] Westinghouse Electric Company, “How to Register on the Ariba Supplier Network” (Microsoft Word Document), downloaded from Ariba website, https:\/\/service.ariba.com\/Supplier.aw\/ad\/eduPortalDoc?key=MzgzODF8anZBRzg1M3hmOTkyMnl5eTkyeTM*, accessed November 15, 2017.<\/p>\n [15] Areva, Inc., “Integrated Procurement Solutions ” (PDF file), downloaded from Areva website, http:\/\/us.areva.com\/home\/liblocal\/docs\/Catalog\/NPC\/ANP_U_386_V5_15_IntegratedProcurementSolutions.pdf, accessed November 2017.<\/p>\n","protected":false},"excerpt":{"rendered":" In May 2017, Westinghouse Electric Company (\u201cWestinghouse\u201d) CEO Jos\u00e9 Guti\u00e9rrez told an industry gathering that his company would be exiting its historic bankruptcy proceedings \u201cleaner, stronger and more competitive\u201d [1]. However, with the advent of the digital era in power […]<\/p>\n","protected":false},"author":9581,"featured_media":25779,"comment_status":"open","ping_status":"closed","template":"","categories":[3991,2123,1421],"class_list":["post-25778","hck-submission","type-hck-submission","status-publish","has-post-thumbnail","hentry","category-digital-technology-and-supply-chains","category-digitalization","category-nuclear-power","hck-taxonomy-organization-westinghouse-electric-company","hck-taxonomy-industry-energy","hck-taxonomy-country-united-states"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-rctom\/assignment\/rc-tom-challenge-2017\/","yoast_head":"\n