Good morning. If you’ve attended gatherings like this over a period of 30 years or more, as I have, and listened to speakers discuss nuclear energy, you get used to hearing these speakers describe the significant challenges facing the nuclear industry.

In the early days, the speakers outlined the challenges facing a young industry with future unlimited. Later, the speakers were somewhat grim, responding to issues and criticisms that threatened to limit, if not actually foreclose, that future.

Today, I want to follow that speaking tradition by focusing on the profound challenges now facing the nuclear industry – with one important difference. Today’s challenges are the results of success…the success of a mature and productive nuclear industry that is on the verge not only of realizing the full potential of its first generation of existence, but of laying the foundation for another generation—a generation that will carry the industry from the fiftieth anniversary we will soon be celebrating right through to the nuclear centennial. One of the most significant challenges facing the nuclear industry in this country is how to educate, hire and retain the young people we will need to operate today’s nuclear plants in the near and mid-term future and to help build and run the next generation of plants.

That, of course, is one of the topics of this conference, and I commend the organizers for bringing together so many experts to advance our knowledge and preparedness in this vital area. While I want to discuss workforce issues, I first want to talk about the circumstances in the nuclear industry that require such an infusion of talented young people, and that can provide them with fulfilling careers that will make important contributions to their country.

We are in every sense experiencing a nuclear renaissance in the United States. Every performance and safety category we measure is reaching new heights. We have worked hard in the wake of the events of last September 11 to assure opinion leaders, regulators and the general public that U.S. nuclear plants are secure. Opinion polls tell us that the public has confidence in the industry, and believes in the importance of nuclear power to the nation’s future environmental and economic well-being.

And we have resolved the political aspects of an issue that our critics tried to use to limit the role of nuclear power in America’s energy future – the Yucca Mountain used fuel repository. With the decisions and support of the Administration, and affirmative votes in both the House and the Senate, the Department of Energy is now proceeding toward licensing and construction. The industry’s efforts to secure the site decision were remarkable, and I congratulate you.

The U.S. nuclear industry’s outstanding record of safety, reliability and production has created this nuclear renaissance we are now experiencing, and it forms the basis for the future of the U.S. industry.

[OUTPUT SLIDE]
Nuclear output has risen by 33 percent since 1990 – the equivalent of adding 24 new nuclear plants to the grid. Last year brought the latest in a series of records – 767 billion kilowatt-hours.

[CAPACITY FACTOR SLIDE]
We also set new records for capacity factor every year. Final numbers for last year show an average of about 91 percent – another record.

(SIGNIFICANT EVENTS SLIDE)
This outstanding performance is largely a result of the industry’s focus on safety at all of our facilities. Time and time again we have seen that the safest plants are the most efficient. Safety is ingrained in the behavior of every employee at every nuclear facility in the country.

The results of this insistence on safety are dramatic. Last year, the industry average of significant events has dropped to a vanishingly small three one-hundredths of one percent per reactor. That’s one-thirtieth of the number reported to the NRC only 12 years earlier.
It is this culture of safety and performance that we must convey to the next generation of nuclear workers, and that is one reason that this conference, with its emphasis on excellence in human performance, is particularly valuable.

(PRODUCTION COST SLIDE)
Increased productivity and a focus on safety have dramatically lowered nuclear production costs in the U.S. Nuclear energy now has lower production costs than coal, and nearly one third the production cost level of gas-fired electricity. In 2000, the latest year for which we have comparative figures, nuclear energy’s production costs were 1.76 cents per kilowatt-hour, while coal was at 1.79, and natural gas way up there at 5.28 cents per kilowatt-hour. Production costs include operations, maintenance and fuel. We hope to keep lowering the bar, and demonstrating that nuclear energy can continue to be an economical electricity source today and into the future.

(ECONOMIC PERFORMANCE WALL STREET SLIDE)
We showed this chart to Wall Street analysts during our annual briefing on industry issues earlier this year. It shows rolling average production costs for three different three-year periods – 1996 through 1998, 1997 through 1999 and 1998 through 2000. The production costs of the first quartile of plants are well below that of the fourth quartile – but two things are apparent. First, the costs of the top performers are still falling, and second, the poorer performers are closing the gap.

The Wall Street analysts told us that – in marked contrast to the past when nuclear plants were a drag on stock value – they now regard nuclear plants as valuable assets that increase the attractiveness of the stocks of plant owners.

The recognition of increased value is not only helpful to the owners of current nuclear plants, but it helps to underscore the case we want to make for the market value of the next generation of nuclear plants to be built in the U.S.

[DOE NUCLEAR POWER 2010]
And those future nuclear projects are getting nearer to reality. The Department of Energy has begun implementation of its Nuclear Power 2010 Initiative, which it calls “a roadmap” for planning and building new nuclear plants in the U.S. by 2010.

The process has already started. Three U.S. nuclear operators, Dominion Resources, Entergy and Exelon, have received DOE grant to study sites at existing nuclear facilities as candidate sites for new plants.

They are testing the new Nuclear Regulatory Commission early site permitting processes, which make it possible for a company to set aside, or “bank” sites in advance of making a decision to build a new plant. We expect the process to be as predictable and efficient as the current license renewal process. Both are examples of a systematic regulatory improvement by the NRC, which is working with the industry in both its current operations and future planning.

(LICENSE EXTENSION SLIDE)
The new license renewal process has reduced both time and expense. But the really significant factor in the decision to renew a plant’s license is the value of the nuclear asset.

The NRC has approved license extensions for 10 nuclear plants, and more than one-third of the remaining plants have either applied or announced their intentions to apply. We now expect virtually all U.S. nuclear plants to seek license extension – which adds 20 years of generation, for a total of 60. That’s a big reason why we need new staffing for the long term.

(DEMAND GROWTH SLIDE)
The U.S. Energy Information Agency projects that the United States will need an additional 393,000 megawatts of electricity to meet a modest growth rate in electricity demand of 1.8 percent annually over the next 20 years. That would add 50 percent to our national grid. And that level of increase assumes a growth rate that is actually slower than the 2.2 percent growth in electricity demand that the U.S. has experienced over the past decade. If the growth rate is 2.5 percent, we will need to increase our grid by over 70 percent.

Some of this new capacity will come from renewables, and some from coal and natural gas. But a significant portion also must come from nuclear energy.

(VISION 2020 CAPACITY SLIDE)
Last year, we unveiled Vision 2020, a plan to provide this country with 50,000 megawatts of new nuclear capacity, (VISION 2020 EXPANSION SLIDE) and another 10,000 megawatts of expansion of existing capacity. That might seem like an ambitious goal -- the equivalent of three new 1,000-megawatt plants per year between now and 2020 -- but it is in reality not excessive, when we consider America’s energy needs.

We’re already well underway to meet the capacity expansion goal of Vision 2020. Uprates approved or under review by NRC, or announced, will add about 3800 megawatts to U.S. nuclear capacity by 2007. That includes the restart of the Tennessee Valley Authority’s Browns Ferry Unit One.

In the year since we announced Vision 2020, we have begun laying the groundwork to make it a reality. The early site permitting initiative I mentioned earlier is part of a system of new legislative and regulatory processes for building and licensing new nuclear plants that includes the Department of Energy’s plans. The NRC also has certified three advanced plant designs, and more such approvals are expected.

We are working with industry to make sure that the necessary infrastructure – the materials, equipment and construction capabilities — are in place when needed to build those plants.

But at least as important as the hardware is the human element. The industry needs talented and motivated young people to sustain – and perhaps raise – the standard of excellence the industry has set thus far. And we have a detailed, multi-pronged effort under way to try to attract, hire and retain those young people.

This is not a new issue for the nuclear industry, and certainly not for the organizers of this conference, but it now has, I think you would agree, an increased urgency to it.

I’d like to tell you a bit about our analysis of the situation, our key initiatives, and the progress we have made on them.

[NEI’S EXPANDED INITIATIVE]
In the summer of 2000, NEI organized a series of 15 focus groups at four major engineering schools. We wanted to know what young people thought of our business. We also polled recruiters industrywide to see what approaches they were using to attract young talent.

Disturbingly, students mainly perceived the industry as both dangerous and boring… rigidly hierarchical…a dying industry with limited growth opportunities. When we acquainted them with the opportunities available in the nuclear industry, the students told us that companies should increase their visibility on campus…and make more of an effort to portray an exciting workplace.

In response, we began meeting with our member companies, and the academic community…which has seen declining numbers in their engineering programs. They told us they needed better ways of sharing and implementing effective recruiting practices.

The results of those two efforts led us, in March of last year, to hold our first recruiting workshop with representatives from universities and our industry. The intent was to share best practices among entities interested in keeping talent flowing to our industry.

We also held a workshop to identify insights and best practices among our industry’s human resources organizations. The product of that workshop was a report containing excellent examples from NEI member companies…including proven techniques for staff training, professional development, team building, mentoring and succession planning.

The next step was to form a Staffing and Recruiting Task Force to analyze trends in staffing supply and demand, to identify areas of concern, and to develop a comprehensive action plan for the future. Apart from industry participants, the task force draws from EPRI and INPO, government organizations including NRC and DOE, labor, the American Nuclear Society, the Nuclear Engineering Department Heads Organization and the Health Physics Society.

One of their first orders of business was an industrywide staffing survey. The broad objective of the survey was to determine whether there will be enough entry-level personnel with the right education and skills to meet the needs of the nuclear industry over the next 10 years. It also set out to determine how the industry’s salaries and benefits stack up against competitive industries. The survey examined thirteen job classifications, including degreed workers, skilled craft, technicians and operators.

[DEMAND FOR NEW NUCLEAR PLANT WORKERS SLIDE]
The survey told us that demand for new workers at existing nuclear plants will increase dramatically. We will need about 29,000 workers to fill vacancies in the thirteen job classifications. That means we’ll have to recruit about 40 percent of our plant staffs over the next decade….or about 2,000 workers a year in the near term, and 3,000 a year a decade from now.

Despite what we may have thought about retirements, that’s not the major reason for the increase in demand in the near term. The data show that through 2004, about 55 percent of workers will be lost to other industries. Retirement is a bigger drain beginning in 2005 and beyond.

[TOTAL INDUSTRY DEMAND SLIDE]
The real surprise was the competition we will face from other employers in the industry. The demand for workers from other related employers…such as engineering design and services and the Department of Energy…is expected to be more than double that of commercial nuclear power facilities, bringing the total demand to 90,000 workers over the next decade. DOE facilities alone will require even more employees than the commercial sector—50 percent more in the aggregate over the 10-year period—and as many as 6,000 per year for DOE in the near term.

Our survey showed, though, that the industry is in a good position to compete for qualified employees. The industry is competitive in terms of overall employee compensation and in six benefit categories that were examined in the study.

Another major trend we noted is that, for the most part, the supply of degreed professionals, operators and skilled craft will meet the industry’s needs – with some exceptions.

The good news is that there will be enough electrical and mechanical engineers, operators, nuclear welders and most other disciplines—provided we’re aggressive about recruiting. Yet supply won’t be adequate in some areas unless steps are taken now.

[STAFFING PROBLEMS]
We project that the industry will come up short by about 700 health physicists over 10 years, even if all degreed health physicists join the energy sector…and demand for these candidates will extend well beyond the nuclear energy industry. We also see a shortage of about 800 nuclear engineers to fill needed positions. We’re addressing both situations in our integrated staffing plan, which I’ll discuss shortly.

[NEXT STEP FOCUS AREAS]
Our task force took the results of the study, the focus groups and the workshops, and used them as the basis for an integrated plan. We are focusing on addressing those shortfalls…on partnering with universities and trade schools to recruit degreed and non-degreed individuals…on improving the nuclear industry’s visibility and image…and on working to increase government support for university reactor programs, scholarships and fellowships.


[NEAR TERM EXAMPLES]
We are responding to the health physics shortfall, for instance, through outreach to affiliated organizations, making the broader industry aware of their programs so that we can work toward the same goal on a dual track. For example, NEI and the Health Physics Society are working together in mutually beneficial recruiting and staffing efforts. We made a presentation and had an exhibit at the Society’s annual conference in June. At NEI’s own Health Physics Forum last month, we initiated a program through which companies sponsor HP students, including attendance at the forum and other industry events.

CONTE is a model for development of partnerships among industry, government and academia. NEI is following the same model in a conference we’re co-sponsoring with the Department of Energy and Rensselaer Polytechnic Institute. It’s called “Universities, Industry and Government: Partners for the Future of Nuclear Education and Technology,” set for October 27 and 28 in Albany, New York. Our objective is to achieve a better understanding among key policymakers in these three areas, which as you know can bring very different perspectives to the table.

We also have a very active recruitment promotion program aimed at high school and pre-major college students. The centerpiece is a Careers and Education web location, with complete, colorfully-presented information on careers in nuclear energy.

Another initiative is the North American – Young Generation in Nuclear organization. Earlier this year, NEI hosted Young Gen’s second annual professional development workshop in conjunction with our Nuclear Energy Assembly. I was privileged to speak to the attendees, and let me tell you, they are sharp.

[YOUNG GEN/WIN]
A number of our brightest Young Gen members are women, and many of them are also members of another mentoring organization – U.S. Women in Nuclear. The U.S. affiliate formed in 1998 and is part of the international organization, WIN Global. We recently held the third annual U.S. Women in Nuclear annual workshop, and drew an enthusiastic crowd.

We feature some of these young women – and men -- in print and on our website. I invite you to visit the site and see for yourselves what young people such as Dr. Sama Bilbao y Leon, a nuclear Safety Analyst Engineer at Dominion Generation, have to say about careers in nuclear energy.

Young Gen and WIN are great vehicles for mentoring, and we’re encouraging development of local chapters among our members. If you don’t have one in your area, I would urge you to help get one started. We can provide all the information you need.

[WHERE WE ARE FOCUSED]
We’re going to need a steady supply of workers over the years, so we’re focused on keeping the pipeline filled, with both degreed and non-degreed workers. In addition to working with universities to attract degreed workers, we have a task force on non-degreed worker staffing. We are taking steps to develop partnerships with vocational and trade schools, and labor groups, through apprentice programs and other means.

We are also looking at a variety of ways to reach the non-traditional workforce, particularly women and minority groups.

We are actively reaching out to any group with similar or overlapping interests. ANS, the Health Physics Society and the American Society of Engineering Educators are among them. We’re also working with the U.S. Chamber of Commerce on an initiative to identify and work with non-degreed job candidates in Chamber-served communities.

Once we have the workers, the challenge is to keep them. And that may require adjusted thinking on the industry’s part. The attitudes of young people – what will provide job satisfaction – may be different, and if so, it’s up to the “older generation” to find that out. Our action plan includes future focus groups, and trading information with other industry groups working on parallel lines. ANS, for instance, is conducting a survey of high school science teacher and student attitudes toward nuclear energy and technology that will help us to update our information.

We’re also working with member companies to collect accurate data on reasons for attrition of nuclear industry workers – particularly when they leave for other industries. It’s also important to identify, expand and develop programs within companies and organizations that foster employee retention, such as access to professional development programs, on-site higher education opportunities and mentoring programs

[WHAT ELSE IS NEI LOOKING AT?]
We’re also taking a further look at ways of reaching students and prospective employees. We have significantly expanded the Careers and Education section of our website to include position descriptions, links to scholarship and fellowship opportunities, and other practical information. But we need to get the students and the job-seekers to the site, so we may consider advertising and other methods of increasing exposure.

Companies also should explore partnerships with local universities in order to facilitate a presence on campus… just like Intel, Microsoft, and IBM. We can’t just show up for the job fairs. We need to be present talking about our industry, the bright future, the type of work we offer. For example, Westinghouse and Penn State have joined together in a program that targets four objectives – recruitment, nuclear advocacy, development and retention.

And we need to reinvigorate the craft pipeline…look at ways to make the point that young people who are not interested in college have alternatives. The nuclear industry offers well-paying, rewarding positions that require other skills and aptitudes for which a college degree is not needed.

And, ironically, just as we need more nuclear engineers, we learn that the National Council of Examiners for Engineering and Surveying is considering dropping the nuclear Professional Engineers exam – supposedly for lack of exam candidates. We are supporting American Nuclear Society efforts to work with NCEES to keep the exam and let them know there will be more candidates in the future.

[A CHALLENGE TO YOU]
There’s a lot more that companies could be doing, and I would encourage you, as trainers and human resources professionals, to go back to your companies and spread the word. Here are a few suggestions:

• Get your CEO and your top people personally involved in human resource recruiting programs. Those of you who heard George Hairston yesterday know that he is a dynamic and enthusiastic person, and he takes that enthusiasm with him to college campuses. Let me call your attention to a piece that ran in the third quarter issue of the Nuclear Professional magazine—in case you haven’t seen it. The article provided a review of Southern Nuclear’s excellent recruiting efforts. It noted that George Hairston spends up to 40 percent of his time recruiting future employees, as do many of Southern’s other senior executives. That level of effort is paying off already, and will pay off even more in the future.
• Beef up your internship programs, and when you get interns, give them meaningful work to do. The interns need to know that the work is challenging—at least more than routine administrative tasks—and interesting. And don’t just drop them in to the work situation—develop an orientation program – both for the interns and the people they’ll be working for, to make their work contribution, and their experience, more rewarding.
• Be more flexible about the knowledge and skill levels needed to do a job. We have a bias as an industry toward valuing experience – and we have to realize that there won’t be enough of it to go around in the future. We must concentrate on developing our own talent, particularly in non-degreed areas, and in the non-traditional workforce.
• Start, or augment existing, mentoring and professional development programs, including cross-training and networking opportunities for existing employees.
• Encourage student efforts. You can do a lot with a little on campus. For instance, NEI is contributing $1,000 and other assistance toward a student design project at Texas A&M of an alternative low-level waste isolation facility. Small sums of money and in-kind support by your design engineering staffs could provide a great experience and prove invaluable as well for the students.
• And meet the students and the job seekers where they are – on the web. A few weeks ago, we conducted an informal survey of industry websites and found in most cases sparse, or no, information on careers or positions available in the nuclear sector of your businesses. If you have openings, you are missing out on a large segment of the student or job seekers that are surfing the web.

Those are just a few suggestions. We have many more activities and initiatives under way, and we’ll be happy to provide more information to anyone who wants it. Two important sources of information are our Human Resources Process Benchmarking Report, and our Nuclear Human Resources Professionals community of practice. You can find both on our member website, and I invite you to take advantage of them.

[DEVELOPING THE NEW WORKFORCE]
The key point is that the industry recognizes the importance of recruiting, mentoring and retaining young workers. We have an integrated plan, and we’re reaching out to all parties involved to achieve our aims.

In closing, let me say that this is truly an exciting time for the U.S. nuclear industry. Nuclear energy has compiled a record of safety and performance that has proven its value to the U.S. economy, and to environmental quality. Nuclear energy is no longer a choice for the future, it is an imperative. No other fuel for electricity generation available in the United States can match nuclear energy’s combination of low production costs, forward price stability, environmental and energy security advantages.

The nuclear industry of tomorrow will be an exciting and rewarding place to work, and the next generation of nuclear workers will have the satisfaction of knowing that they are making a contribution to the economic and environmental well being of their country, and the world. Let’s get that word out.

Thank you.