OFFICE OF WORKER AND COMMUNITY TRANSITION

PROGRAM UPDATE

May-June 1997

WORK FORCE RESTRUCTURING ACTIONS

WORK FORCE RESTRUCTURING PLAN APPROVED FOR ROCKY FLATS IN COLORADO

On May 5, 1997, the Department of Energy transmitted to the U. S. Congress a revised Rocky Flats Environmental Technology Site Work Force Restructuring Plan. The new plan is intended to guide periodic ongoing restructuring activities that will be required as the Site transitions to ultimate closure and responds to issues raised by stakeholders following circulation of a draft plan in December 1996.

The plan revises the voluntary separation incentive program previously offered at the Site to limit eligibility to Cold War workers and cap maximum payments. It establishes policies for employees affected by outsourcing, and procedures for work force planning. Implementation of the Site closure plan will likely require smaller, selective, and more predictable restructuring activities in both scope and schedule. As projects are completed, workers will be moved to other tasks or separated if their skills are no longer required.

On February 3, 1997, the Department announced work force restructuring actions involving project completion, outsourcing, efficiency and productivity improvements, and changes in the skills mix necessary to fulfill ongoing tasks. Based on an analysis by the contractor, it is estimated that up to 400 positions at the site could be affected over the next two years. Under the plan, necessary work force reductions at Rocky Flats will be accomplished through a combination of voluntary separations and layoffs. Additional reductions may be accomplished through attrition.

The restructuring is expected to involve some activities that will be outsourced to subcontractors. It is anticipated that many current Kaiser-Hill employees in these activities will be provided job offers by the new subcontractors. The contractor intends to continue reassigning personnel to meet changes in skills mix requirements, including appropriate retraining, as well as to manage attrition and new hiring consistent with the work force analysis.

WORK FORCE RESTRUCTURING ANNOUNCED AND WORK FORCE RESTRUCTURING PLAN APPROVED FOR THE SAVANNAH RIVER SITE IN SOUTH CAROLINA

On May 13, 1997, the Department of Energy announced that notices of involuntary separation will be given to approximately 500 employees as part of an overall reduction of up to 1,500 positions, originally announced in February. Approximately 90 of these workers volunteered to be separated and will receive severance in order to avoid another worker being separated. These reductions are necessary to meet Fiscal Year (FY) 1998 funding levels.

The Site has proposed a strategy that would separate employees before the beginning of October 1997 (FY 1998), in order to avoid additional separations in that year. A second round, previously anticipated, may not be required, pending Congressional action on the budget. A final round of approximately 75 reductions would occur in the fall as projects are completed. The remaining reductions are expected to be achieved through attrition between now and the end of Fiscal Year 1998. The current best forecast could result in a total reduction during FY 1997 at Savannah River of approximately 1,600 positions. This is 600 fewer than the reductions forecast at the meeting with the Congressional delegations in June of 1996.

Over the next several years there remains a strong potential that new missions will offset employment reductions resulting from changes in the core environmental management mission. Based on current budget targets, the Department expects that Site employment will stabilize in 1998.

On May 22, 1997, the Department of Energy transmitted to the U.S. Congress a revised Savannah River Work Force Restructuring Plan which was developed to respond to work force restructuring requirements that will occur at the Savannah River Site.

In 1996, 72 employees participated in an early retirement program, and 214 workers took a voluntary separation incentive at Savannah River, well below the participation rate for similar programs in previous years. An additional 408 positions were reduced through attrition, and 398 involuntary separations occurred, primarily related to construction crafts.

Subsequently, all four Congressional committees of jurisdiction have recommended additional funding for nuclear materials and facilities stabilization activities at Savannah River. Assuming this funding is enacted, 1997 employment reductions at the Site will be approximately 1,600 positions.

WORK FORCE RESTRUCTURING ANNOUNCED AT SITES IN PORTSMOUTH, OHIO AND PADUCAH, KENTUCKY

On May 29, 1997, the Department of Energy (DOE) announced that notices of separation will be issued to approximately 130 workers of United States Enrichment Corporation's (USEC) prime subcontractor, Lockheed Martin Utility Systems (LMUS). These reductions, which include an anticipated 104 positions at Portsmouth, Ohio and 11 at Paducah, Kentucky are necessary because of completion of projects associated with the Nuclear Safety Upgrade Program and reduced USEC services to DOE forecast for Fiscal Year 1998.

The Department has determined that section 3161 of the National Defense Authorization Act for Fiscal Year 1993 applies to those workers whose separation can be related to changes in DOE-funded activities. A work force restructuring plan is being developed to cover these and potential future restructuring at these sites.

A benefits package will be provided to all affected workers consistent with the benefits provided to recently separated workers at Oak Ridge. The package includes severance, medical, education, relocation and outplacement benefits. Preference-in-hiring will be provided to separated workers who meet the Department's eligibility criteria. An opportunity will be provided for workers to volunteer and receive severance if this will avoid an involuntary separation. It is anticipated that 30 to 40 of the reductions can be achieved this way.

DOE will provide funding for workers associated with changes in Departmental services, and USEC will fund costs associated with non-DOE business.

WORK FORCE RESTRUCTURING ANNOUNCED AT KANSAS CITY PLANT

On June 12, 1997, the Department of Energy announced that up to 700 positions are expected to be reduced at the Kansas City Plant in Missouri at the beginning of Fiscal Year 1998 to configure the work force to meet revised workload schedules and projected budget allocations.

The newly revised workload schedules fully support the nuclear weapons stockpile. Existing production missions assigned to the Kansas City Plant will not be changed as a result of this work force restructuring. No work will be moved to other sites.

A draft work force restructuring plan has been developed by the Albuquerque Operations Office in an effort to mitigate the impact of the work force reduction on the Plant's employees and the community surrounding the Kansas City area. The Department will circulate the draft plan for stakeholder review and comment on June 25, 1997.

The draft plan includes an incentivized voluntary reduction-in-force program. The plan also discusses provisions for involuntary separations that may be necessary, including displaced workers medical benefits, preference-in-hiring, tuition, outplacement, and relocation assistance for eligible workers.

WORK FORCE RESTRUCTURING ANNOUNCED AT THE HANFORD SITE IN WASHINGTON

On June 26, 1997, the Department of Energy announced that approximately 46 notices of involuntary separation were issued to employees of Fluor Daniel as part of up to the 700 positions to be reduced this fiscal year at the Site, as originally announced on November 22, 1996. These reductions will help reduce indirect overhead costs at the site. Approximately 21 of these employees are members of the collective bargaining unit. In addition, Hanford Environmental Health Foundation plans to open a voluntary separation program to achieve overhead reductions for approximately 15 positions.

COMMUNITY TRANSITION ACTIVITIES

COMMUNITY TRANSITION FUNDING APPROVED FOR SAVANNAH RIVER COMMUNITY REUSE ORGANIZATION IN SOUTH CAROLINA

On May 21, 1997, the Department of Energy approved $6.9 million to the Savannah River Regional Diversification Initiative (SRRDI), the Lower Savannah Development Corporation, the Tri-County Alliance, the Savannah River Operations Office and Westinghouse Savannah River for use in mitigating the adverse impacts of defense-related downsizing at the Savannah River Site. The funds will be distributed in the following manner: (1) SRRDI - $4.05 million; (2) Lower Savannah River Development Corporation - $1.45 million; (3) Tri-County Alliance - $400,000; (4) Savannah River Operations Office - $800,000; and (5) Westinghouse Savannah River - $200,000.

With the end of the Cold War and the changing mission at the Savannah River Site, the prime contractor work force at the Site has been reduced from almost 21,000 at the end of FY 1992 to approximately 14,400 by the end of 1996. These cuts represent almost a 31 percent work force reduction, with an additional 875 reductions anticipated during Fiscal Year 1997.

The community transition grants will be administered through the Department's Savannah River Operations Office. The Savannah River Operations Office proposes to fund projects in the areas of: (1) applied research and development programs that will promote rapid commercialization of new products and manufacturing processes; (2) scientific education and technology training programs that would upgrade the work force skills through the modification or development of programs to meet future needs of regional employers; (3) entrepreneur development services programs that provide incubator space, share business services, and financial and technical services; (4) an executive exchange program with Westinghouse Savannah River; and (5) worker retraining for craft personnel.

The $6.9 million in funding for the communities surrounding the Savannah River Site is expected to result in expansion of the community transition initiatives in the region by creating economic development programs in the affected communities, and creating 670 jobs which will help to achieve an independent economy. In addition, the funds will allow employees affected by the downsizing to be employed by new or expanded businesses.

COMMUNITY TRANSITION FUNDING APPROVED FOR OAK RIDGE COMMUNITY REUSE ORGANIZATION IN TENNESSEE

On May 29, 1997, the Department of Energy approved $10.0 million to the Community Reuse Organization of East Tennessee (CROET), the Oak Ridge Operations Office and its management and operating contractors for use in mitigating the adverse impacts of defense-related downsizing at the Oak Ridge Reservation.

After years of economic growth and prosperity, driven largely by spending at the Department of Energy Oak Ridge facilities, East Tennessee finds itself facing an economic challenge. Between Fiscal Years 1993 and 1996, approximately 1,622 contractor positions have been eliminated at Oak Ridge. An additional 1,680 reductions are anticipated during Fiscal Year 1997. Changing policy initiatives and budget cutbacks at the Federal level are directly affecting job growth, types of industries leaving the region and the speed at which new technology is developed or current technology is transferred to the private sector.

The community transition grants will be administered through the Department's Oak Ridge Operations Office. The Oak Ridge Operations Office proposes to fund four primary projects: (1) reindustrialization and reuse of the existing K-25 facilities and surrounding land; (2) work force development initiatives that will retrain workers, transfer skills to the private sector and integrate manufacturing education into the region; (3) Gene Research that will determine gene function in human disease; and (4) Regional Research and Development Initiatives for Technology 2020, the National Transportation Research Center and local economic development programs.

The $10.0 million in funding for the Oak Ridge community is expected to result in expansion of the previous community transition initiatives in the region by creating economic development programs in the counties surrounding the Oak Ridge Site, creating jobs for displaced workers and helping to achieve an independent economy. In addition, the funds will allow creative uses of the Department's facilities and employees affected by the downsizing in a way that creates new job opportunities in the region.

COMMUNITY TRANSITION FUNDING APPROVED FOR ROCKY FLATS IN COLORADO

On June 18, 1997, the Department of Energy approved $4.0 million over the next two years to help mitigate impacts of defense-related downsizing at the Rocky Flats Environmental Technology Site. The money will be used to support the Rocky Flats Local Impacts Initiative, which is the Community Reuse Organization for Rocky Flats, and surrounding communities.

The $4.0 million in federal funds will be administered through the Department's Rocky Flats Field Office. The office proposes to fund six primary projects that are expected to: (1) strengthen the manufacturing base; (2) promote Colorado as a center for environmental commerce; (3) assist start-up companies; (4) assist Rocky Flats vendors; (5) support existing companies; and (6) facilitate technology transfer.

With the end of the Cold War and the changing mission at Rocky Flats, the work force at the Site was downsized by more than half -- from about 7,500 in 1993 to 3,534 by the end of 1996. DOE's community transition grants are expected to help strengthen and diversify the regional economy, creating new, permanent, high-wage private sector jobs, especially in fields matching the skills of displaced Rocky Flats workers, by diversifying the local economy, helping companies in target growth sectors expand, assisting businesses started by Rocky Flats workers and enhancing research, training, education and technical assistance in target industry areas.

ASSET MANAGEMENT

SALE OF THE OXNARD FACILITY, CALIFORNIA

On June 30, 1997, the Rocky Flats Field Office (RFFO) concluded the sale of the Oxnard Facility, located in Ventura County, California. The Oxnard Facility formerly housed the DOE High Energy Rate Forging (HERF) facility, which produced forgings for weapon parts. In 1994, DOE decided to close the facility upon completion of its defense-related mission in 1996.

The Oxnard Facility consists of 7 buildings on 13.75 acres. It was sold for $2.225 million to Rio Farms, a firm based in Camarillo, California. When added to the proceeds from last year's $1.8 million sale of Oxnard's industrial equipment, the total return to the government is over $4 million. RFFO will be able to use some of this money to pay for costs they incurred associated with the sale. After deducting costs, this sale will result in an estimated $1.5 million being returned to the U.S. Treasury.

In addition to the proceeds which will accrue to the government, RFFO will benefit by saving about $300,000 annually in landlord costs as a result of this sale.

ASSET SALES/LEASES

Attachment 2 reflects the $6.46 million that has been deposited in the Department of Energy's asset sales account at the Department of Treasury. An additional $24.97 million in asset sales and leases are pending completion and verification prior to deposit in the appropriate accounts at Treasury.

LABOR RELATIONS

CONTRACT NEGOTIATIONS

The following is a list of collective bargaining agreements that have been recently negotiated or are scheduled to be negotiated in the second quarter of calendar year 1997:

COMMUNITY REUSE ORGANIZATIONS

FERNALD
David McWilliams, Chair
Fernald Community Research Organization
3371 Hamilton Cleves Road
Hamilton, OH 45013
(513) 738-0164
(513) 863-6250 (FAX)

E-mail: rosu_dm@swoca.ohio.gov

HANFORD
Sean Stockard
TRIDEC
901 N. Colorado St.
Kennewick, WA 99336
(509) 735-1000, ext. 225
(509) 735-6609 (FAX)
E-mail: sstock@owt.com

IDAHO
Dan Cudaback
Eastern Idaho Economic
Development Council
683 N. Capital Ave.
Idaho Falls, ID 83402
(208) 522-2014
(208) 522-3824 (FAX)
E-mail: eiedc_dc@srv.net

LOS ALAMOS
Sid Singer, Chairman
Los Alamos Regional Development
1808 el Grancho
Los Alamos, NM 87544
(505) 662-5495
(505) 662-2088 (FAX)
E-mail: ssinger@roadrunner.com

MOUND
Mike Grauwelman
MMCIC
P.O. Box 232
Miamisburg, OH 45343-0232
(937) 865-3921
(937) 865-4431 (FAX)
E-mail: mmcic@aol.com

NEVADA
Tim Carlson, President
NTS Development Corporation
2340 Paseo Del Prado
Suite D-108
Las Vegas, NV 89102
(702) 257-7900
(702) 257-7999 (FAX)
E-mail: tcarlson@ntsdev.com

OAK RIDGE
Lawrence Young, Executive Director
Community Reuse Organization of East Tennessee
113F Union Valley Road
Oak Ridge, TN 37830
(423) 482-1336
(423) 483-6126 (FAX)
E-mail: younglt@oro.doe.gov

PINELLAS
Andrew H. Hines
Pinellas Plant CRO
Triangle Consulting
150 Second Avenue, North
Suite 1600
St. Petersburg, FL 33701
(813) 894-1100
(813) 822-0914 (FAX)
E-mail: ahh@gte.net

PORTSMOUTH
Greg Simonton
Project Director
Southern Ohio Diversification Initiative
1864 Shyville Road
Piketon, OH 45661
(614) 289-3654
(614) 289-4591 (FAX)
E-mail: not currently available

ROCKY FLATS
DeAnne Butterfield, Executive Director
Rocky Flats Local Impacts Initiative
5460 Ward Rd., Suite 205
Arvada, CO 80002
(303) 940-6090
(303) 940-6088 (FAX)
E-mail: deeane@rflii.org

SAVANNAH RIVER
Lewis Attardo, Executive Director
Savannah River Regional Diversification Initiative
P.O. Box 696
Aiken, SC 29802
(803) 593-9954 ext. 1409
(803) 593-4296 (FAX)
E-mail: srrdi@aik.tec.sc.us