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Supply Chain Issues Starting to Bite

January 13, 2011

Supply chain issues starting to bite

As I scanned nuclear industry related blogs this week, I noted a report that the Chinese are facing a slowdown in their aggressive construction program because their domestic nuclear supply chain does not have sufficient capacity to supply the demand. This could be important for the North American supply chain for several reasons.

First, it means that the Chinese are not likely to be exporting nuclear equipment to North America. To fulfill the government’s plans, their capacity will need to be devoted to domestic construction. This provides some measure of protection for the nuclear fabrication industry in North America, which is still waiting for the industry here to make the transition from planning to execution.

At the same time, India is also planning an aggressive nuclear construction program that the Russian nuclear industry is aggressively pursuing. This should keep the Russian supply chain occupied. (The Obama administration also just signed an agreement to export nuclear equipment to Russia.)

These aggressive construction plans may eventually provide the nuclear fabrication industry in North America with export opportunities, but only if the industry is globally cost and quality competitive. To reach a competitive level, fabricators must use high quality high productivity fabrication techniques to offset the higher cost of labor. Other industries use automated high productivity welding processes to achieve the productivity required to be competitive on a global basis. Techniques such as tandem gas metal arc and laser-gas metal arc hybrid welding can produce high quality welds with productivity at least 30-40 percent higher than traditional single arc processes. The use of automated systems also decreases the need to use highly skilled (and expensive) welders who are in short supply.

The first step to using these new techniques for nuclear fabrication is to get them approved by the American Society of Mechanical Engineers nuclear code committees so that fabricators can use them. The industry needs to start planning this effort today so that these high quality high productivity techniques will be ready when construction demand increases after 2014.