The survey of 250+ nuclear experts found that nearly half see the greatest demand for supply chain services coming from the existing operations of nuclear plants, as opposed to new plant construction. Specifically, 49% cited existing asset utilization as driving demand. Other areas identified as driving demand included maintenance, replacement parts for existing plants, and engineering services. The aging existing nuclear fleet is creating needs for equipment, skills, and services that the supply chain must work to fulfill, according to the survey respondents. Addressing gaps in the supply chain, such as the aging workforce, lack of experience in young workers, and availability of specialized equipment will be important to meet this demand from existing nuclear plant operations.

1. In aSSocIatIon wItH
nuclear Supply chain Gap analysis 2013
Report Prepared and compiled by: Dr Malik Khalid Mehmood PhD
Chief Technical Advisor

2. | Page 2
Supply chain Gap analysis 2013
In 2012 the US nuclear supply chain market was estimated at We invited industry experts to comment on the gap in the nuclear
$100 billion and recent industry analysis anticipates that nuclear supply chain and asked them - whether they saw it as an issue,
new-build investment will reach some $1.5 trillion by 2030. where the main gaps were and how they planned on tackling
them.
Over the next 15 years $500 billion will be spent globally on
international procurement to support nuclear new build - this After interviewing 250+ nuclear experts working in the US and
anticipated growth calls for the support and development of a the global supply chain industry, nuclear energy Insider
robust and reliable nuclear supply chain. have collated the results to give you the latest market data.
A nuclear plant requires millions of components, and if new The results indicate that there is ample capacity and demand in
suppliers of nuclear-grade components are going to support the the supply chain - and a developing international market will lift
supply chain industry and manufacture reliable safety critical investment, add more competition to the market place and hence
parts, they need to gain the required certification. encourage improved services, innovation and modernization.

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Playing to win in the nuclear Industry
"A renaissance within a renaissance?" could be the heading that depicts the A Whole new Meaning
outcome of nuclear energy Insider's recent supply chain gap analysis. We view this
concept with a positive frame of mind. What does that mean? "Existing asset utilization" may be the code words for
"renaissance" now.
Over the past several years the renaissance banner flew high over the industry;
the goal was US domestic new-build. Since nationwide new-build has not fully Without extensive US new-build in the near future, our existing nuclear facilities
materialized, that goal is different. have become ever more valuable. The 20 percent of the electricity we supply to the
nation, especially as the economy gains momentum, is needed juice for growth. our
This survey illuminates those new insights. even without the traditional end-product becomes more valuable. So do our plants.
renaissance there is perceived opportunity in the supply chain, according to 80+
percent of respondents. they see growth in emerging needs across the board -- In the US vendor base, equipment, engineering skills, and facilities management
the availability of equipment, engineering skills, and facilities management are are noted as critical needs along with quality assurance, training, safety and
identified as the three major gaps. consulting services as important needs.
Almost half the respondents identify 'existing operations' of some sort as the What is the thread? People. Talent, the knowledge and skills that are the foundation
greatest demand for supply chain services. of any industry's integrity.
Industry cluster experts talk about the 'social glue' that makes clusters and supply
chains work well. The personal touch is the grease in the gears. In Start-up
nation, a book that describes the way Israel has been innovative and successful,
one official says, "...everybody knows everybody, and there is a very high degree
of transparency." Knowing each other and working together are traits of cluster
success.

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People Drive Success
A critical supply chain gap is in our future workforce. One estimate says that Our cluster just finished an intense two-year effort of supply chain education for
within the total 59,700 US employees in the industry, there can easily be 23,200+ small firms, bringing networking and industry education to companies that would
jobs to fill in the next five years. There is that much turnover. "The contraction in not easily find such resources. We put a personal face on a big industry....eye-to-
the nuclear workforce in the 1990s and the slow pace of hiring in the last decade eye...building transparency and relationships.
has left an incumbent workforce that is aging, with up to 39 percent eligible for
retirement in the next five years," says this source. Sound like any industry you know?
This Insider survey is one more marker that we need to address the gap sooner "Learn to let go of the past... what is done is done...."
rather than later.
Addressing workforce issues requires a unified industry approach.
What next?
In the carolinas' nuclear cluster - in fact across the carolinas' energy cluster - we
prefer to look at teamwork like this: Act decisively to close the gaps, but that means more than traditional training or
procurement work. It requires a revitalized state of mind. Our young leadership
"coordination means we share data; cooperation means we class reviews a book each year called, Sway - the Irresistible Pull of Irrational
share resources; collaboration means that we share goals." Behavior by Ori Brafman. That book has a lesson for us, "... learn to let go of the
past....what is done is done..." Sway says that people can be fenced-in by the past
We have the data. That’s easy. and what others say. As a result, people play not to lose, they don't play to win.
In some regions there are companies that have come together to support academia, Instead, let's chart our own success. We can look at the developing gap as a real
that is good coordination. That’s a bit more of a challenge. threat or, as Sway describes, treat it as an opportunity.
Collaboration is toughest and most productive. Let’s introduce collaboration in a The nuclear industry is in an environment to win: assets growing in value, a
profoundly meaningful way. Unbundle traditional higher education and corporate carbonless product when carbon constraints are desired, a place for steady jobs
training models to meet our talent and skill needs. Add more options. For instance, when regional economies cry for employment, and an energy resource essential to
carolinas' nuclear cluster companies band together to develop the highest build local economies.
potential young nuclear leaders in our states. Industry competitors work side-by-
side to teach about policy, innovation, managing, and other critical thinking skills. There is a renaissance within a renaissance. As long as we collaborate - truly
This leadership energy carolinas program is in its fifth year, and makes these share goals - how could we not win?
valuable human assets more valuable to us.

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Who was surveyed?
Nuclear energy Insider took a cross section of the industry to ensure a fair forecast of industry movements
and developments in the supply chain.
What is your primary job role within your company? in which region are you based?
30.7%
15.8%
14.0% 14.9%
93%
.
56%
.
28%
. 33%
. 14%
. 14%
. 09%
.
00%
.
Procurement
Developmen
Developmen
Managemen
consultancy
engineering
Inspection /
research &
operations
workforce
Financial
technical
licensing
planning
Busines
Service
Project
Sales
legal
s
s
t
/
t
t
Which of the following best describes your organization??
tier 2 contractor 25% uSa 68.1% asia Pacific 1.4%
ePc contractor 22% uK 8.0% canada 6.6%
asia 4.2% Middle east 2.3%
tier 3 contractor 19%
europe 8.0% other 1.4%
oeM 19%
utility 12%
regulator 3%

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Is there a gap in the U.S. supply chain?
How much of your time is dedicated to supply chain related activities? Do you agree there are current gaps in the U.S. supply chain vendor base?
all 10.2% Strongly agree 29.8%
Majority 21.4% agree 59.5%
Moderate 44.2% Disagree 9.8%
little 21.9% Strongly Disagree 0.9%
none 2.3%
Nearly 90% of respondents recognize that there is a gap
in the U.S. supply chain vendor base and nearly 60% of
the respondents Strongly agree there is a gap.

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What is causing the gap in the U.S. supply chain?
What do you identify as the main driver(s) for the gap in the u.S vendor base? "Ultimate impact is at the utility level, however the industrial
and ePc element suffers from years of marginal investment in
There is a clear lack of experienced young personnel coming into the industry capital equipment and professional talent."
to replace the ageing workforce. There is a need to focus on integrating more
experienced personnel into the processes supporting manufacture, maintenance
and operation, and management."In the absence of in-house personnel, hire Who does the gap in the U.S. vendor base affect the most?
experienced consultants."
53.1%
utilities 42.5%
oeM's 11.9%
36.3% ePc's 24.4%
tier 2 contractors 10.6%
regulators 5.0%
21.3% rate payers 5.6%
21.3% 18.1%
14.4%
13.1%
Suppliers feel that nQa1 is open to so many interpretations there is a lack of
understanding, direction and that the "attitude in supply chain management is lacking
lack of lack of lack of lack of lack of lack of lack of collaboration". This absence of "clear & concise specifications along with appropriate
nQa1 specific efficient competitive Quality training experience oversight of the supply chain" is hurting the industry and preventing an efficient timely
suppliers equipment delivery / pricing / assurance / ageing
strategy being implemented.
availability long lead high cost workforce
times
The utilities take a similar stance citing the "lack of coordination and political vested
interest" as a key problem area. But predominantly, there is a lack of engineering
Research demonstrates there are 'significant impacts to Doe/nnSa nuclear skills, trained personnel for project oversight and not enough competition amongst
construction projects' and that it is 'always the customer / tax payer that is most nQa1 suppliers that "provide a quality product beyond good paper". Specific parts are
affected. never the stock holder or Board members.' expensive with long lead times and there is not enough focus on the success of the
outcome.

8. | Page 8
the biggest challenges in the nuclear supply chain
Which do you think are the 3 biggest gaps in the U.S. vendor base?
There is demand for increased training efforts to better manufacturing capabilities and skills, as well as stronger
"A supply chain 'gap' does
business infrastructure to support nuclear manufacturing.
not necessarily mean no
75.0% availability. We are in a global
60.6% 64.4%
marketplace. It means supply
chain efficiency - which can
41.3% always be improved."
24.4%
10.6% 94%
. 10.6%63%
.
Additional points that were highlighted:
equipment
availability
engineering
skills
Facilities
management
Safety services Quality
assurance
training
programs
It systems consulting
services
legal services
• Forgings and raw materials compliant with
(nQa1
nuclear codes
compliance) • Obsolescence
One of the main issues stressed by the utilities was the need for better education, transparency and • Lack of understanding of fraud/
counterfeiting prevention
knowledge. there is a lack of supply chain vendors with current modern technology and experience in
engineering, construction and decommissioning services. • Ability for nuclear fleet across companies
to share critical spares and consistent
The lack of modernized manufacturing equipment and skills means that there are very few success stories processes.
of new nuclear projects that have been completed within budget, scope and schedule. • Heavy / ultra heavy forging
• Nuclear qualified foundries
The industry is lacking in specific skills sets such as efficient welding services,
• Training simulators
procurement services and qualified craftsmen for example electricians, health
Physics, technicians, etc.

9. | Page 9
Key problem areas
Some of the key problem areas identified were equipment availability in the U.S., engineering skills and effective site The ageing workforce is not all bad news -
management. We asked what the key causes were - these were the most commonly sited: companies should embrace it as an opportunity
to take advantage of the more tech savvy
generation and implement on-going training
equipment availability engineering Skills facilities management
programs and platforms to mentor young
lack of experience in young career individuals. "You can mould young
Heavy equipment / major parts Procurement skills recruits as they are not stuck in old ways"
workforce - training programs
Pumps, valves ageing workforce Bad communication "Gap in retiring engineers and
incoming, new graduates"
Software, It welding engineers Plants operations and maintenance
reverse engineering for obsolete Better leadership - poor senior Again much of the feedback from ePc's was
obsolete parts parts management skills based on the fact that 'far too many sites are
managed with displaced workers who don't
control and Instrumentation design no flexibility in production
nuclear grade capabilities skills have the skill base to efficiently manage the
facilities'. utilities sited equipment availability
Seismic testing equipment, Managing new equipment / new lack of training programs as an issue due to the lack of qualified U.S.
emergency and safety related plant activities manufacturers. In addition, there is the need
ageing workforce / retiring for more competition for quality hardware with
Specialist equipment Site construction personnel engineers fewer paper requirements as numerous parts
are currently sourced oversees instead.
understanding digital control
long lead times I.t. / Digital skills systems The suppliers stated that the number of
Succession planning - start to "legal and financial liabilities mean that many
loss of manufacturing capabilities Program implementation vendors prefer to sell commercially and make
finish skill sets the purchaser bear the cost of dedication", as
lack of Qa program opposed to the expense of becoming a qualified
Parts with pedigrees and certs Procurement understanding implementation / clear guidelines supplier.

10. | Page 10
Global supply chain
Over 80% of the companies surveyed see opportunities in the U.S. supply chain market, 45% citing North
America as the second biggest opportunity for growth behind china.
Do you see opportunities within the U.S. supply chain for your company? Where do you think the biggest supply chain opportunities are for growth?
49.0%
45.7%
Yes 81.5%
no 5.3%
n/a 13.2% 27.8%
20.5%
12.6% 14.6%
11.3%
Does your company have plans to explore the global supply chain market to
fill the gap in the u.S. market? North Canad Europe U.K. India China Middle East
America a
37.1%
An internationally diverse supply chain is evolving to support the nuclear plant
29.8% construction and there is plenty of scope for competition, a large global market
will boost investment, and a diverse range of players in the market will encourage
innovation.
12.6% 10.6% 99%
.
"With regards to new construction, suppliers could fill the gaps
if it was obvious that there would be a steady stream of need.
Yes, already Yes, in the on going Increasingly no, we
the unsure future of new plants will restrict uS suppliers from
have a global next 12 debate likely use local doing what is needed and many of the items will need to be
supplier base months suppliers
sourced internationally"

11. | Page 11
We asked 250+ specialists to identify the area with the greatest demand for
nuclear supply chain services
Where is the greatest demand for supply chain services in the nuclear industry? "Suppliers need to take an interest in developing QA programs that can confirm
acceptability of their product. There seems to be a significant lack of interest
in satisfying nuclear QA requirements - a major education program should be
39.7% undertaken by an industry/regulatory consortium to train suppliers." aside from
a lack of clear regulations there seems to be a huge gap in communication,
especially for the smaller vendors. There is the need for "better communication
between small mills, the middle men such as the distributors who deal with the
23.8% utilities directly, and better understanding of what is required, both commercially
19.9% and technically."
The U.S. needs to recover the leadership in the civil nuclear plant
73%
. business,
66%
. successfully introducing new NPP's and understand what will trigger new projects
26%
. abroad, in order to develop the supply chain market to support the industry
enhancement.
construction Plant Plant Decommissioning emergency constructing
projects maintenance enhancement projects preparedness on site waste "while the US nuclear industry has not been building new
projects projects upgrades storage
facilities
reactors over the last 30 years, other countries (e.g. Korea,
China, canada, etc.) have been. These countries have
amassed a wealth of knowledge, people and supply chain
equipment that
The principal comment was with regard to increasing engineering skills, can be used to fill the gaps in the US vendor base."
improving supplier quality and encouraging a more competitive market. other
responses included: M&A on plants and Fukushima regulatory response
Initiatives. the US has the potential to take advantage of a cash rich growing nuclear industry
and provide quality services where the industry is lacking. But at present it seems
that a lack of understanding, clear cut regulations, efficient training programs,
vendor quality and long lead times is hindering the U.S. nuclear supply chain
industry from reaching its full potential. It is time to address these long standing
issues, and as carolina nuclear cluster suggests, look at the developing gap as
an opportunity for growth, and a chance to do things better.

12. | Page 12
Nuclear energy Insider
Thank you for your interest in the Supply chain Gap analysis study. Nuclear energy Insider hopes you found the
information collected interesting.
Dr Malik Khalid Mehmood PhD
Chief Technical Advisor