Tuesday, June 12, 2007

The Cost of Doing Business in NY

If you're a private company with primarily with one customer, the US Government, you have to be careful in how you go about improving productivity, saving money and eventually saving US taxpayer's dollars.

Such is what Bechtel Plant Machinery Inc. (BPMI) found out on Oct 11, 2006 when they announced plans to close their Schenectady, NY operation and consolidate the majority of its operations at one site in near Pittsburgh PA.

BPMI made this decision after the conclusion of a six month study. Jim Dillon, the manager of procurement operations said: "It is a sister operation of ours in Pittsburgh and we are trying to make sure we provide the best service at the lower price to the Navy."

Bechtel Plant Machinery is a major supplier of nuclear propulsion systems for the US Navy. It's contracts run into the hundreds or millions a year.

Basic nuclear propulsion plant components (very basic)

The Navy continues to struggle with high shipbuilding costs, limited budgets and an aging fleet. The age of current nuclear submarines fleet will be particularly acute in coming years with the predominant 688 class nearing the end of their service life.

The fact that of one of the Navy's key vendors was looking to reduce costs should be welcome news to those in government concerned with controlling defense costs and the federal budget.

NOT SO for the Senators from New York.
One month after the BPMI's restructuring announcement Senators Clinton and Schumer of NY took action to stop the company's consolidation plans.

(Senators Chuck Schumer and Hillary Clinton of NY)

In November 2006 Senators Charles Schumer and Hillary Clinton, and Congressman Michael McNulty met with representatives from Bechtel and released a joint statement.

"Today, we met with representatives from Bechtel to let them know, in the strongest possible terms, that we want Bechtel to reconsider its decision to relocate 260 jobs to Pennsylvania from Schenectady. We expressed our extreme disappointment that this decision was reached without any consultation with Congress, the state of New York or the county and city of Schenectady. We have requested specific information from Bechtel and will follow up with them in the near future to continue our ongoing conversations."

After the November 2006 elections in which the Democrats pick up the Senate seat covering the Pittsburgh, PA area Senator Schumer put out a Press Release stating:


Schumer, Clinton, McNulty: Bechtel Puts 60-Day Hold on Further Action

(Washington, DC): -- Senators Charles E. Schumer and Hillary Rodham Clinton and Congressman Michael R. McNulty (D-Green Island) have been told that Bechtel Plant Machinery, Inc. (BPMI) will wait 60 days to make any further decisions related to its plan to effectively close its facility in Schenectady and relocate 260 white-collar jobs to the Pittsburgh area. Senators Schumer and Clinton and Congressman McNulty released the following statement in response:

"We are encouraged to learn that Bechtel is willing to allow the City of Schenectady and New York State to present arguments for maintaining its current operation in Schenectady. We will continue to work aggressively with Mayor Stratton, County Legislature Chairwoman Susan Savage, and State officials in the effort to persuade Bechtel to reverse their decision and keep the 260 jobs in Schenectady."

After getting Bechtel to delay their final decision for 60 days the Senators six days later place further demands on the company with an additional Press Release. In this they urged the company to stop recruitment efforts in Pittsburg and inquiring about relocation plans by employees.

In February 2007 Bechtel Plant Machinery Inc. decided to retain 130 positions in Schenectady, NY thereby reducing it's consolidation effort. In addition the state of New York and the Empire State Development (ESD) Corp. will provide a $2 million grant for a new technology center creating an engineering center for Bechtel and office space that is in move-in condition.

Finally in June the U.S. Department of Defense announced a $69 million addition to a $129 million contract won in October by Bechtel Plant Machinery Inc. 85 percent of the work will be done in Pittsburg, PA with Schenectady, NY getting the remaining 15 percent.

Senator Hillary Clinton is a member of the "Senate Armed Service Committee" and the "Senate Committee on Environment and Public Works" that oversees Nuclear Safety.

Senator Charles Schumer is a member of mostly Judiciary and Finance Committees.

I thought the timeline was interesting with company decision directly after the election, coincidence I guess. Both Senators moved fast on saving those jobs for there State, but I don't see the urgency with only a couple of hundred jobs moving one state or less than 500 miles away. It's not like they were outsourcing nuclear engineering to Mexico!

Senator's time and taxpayer money well spent?


Eagle1 said...


bullnav said...

No, certainly disappointing but not at all surprising.
'Course with those two, I would expect they would try to get the company to operate at a loss if they could...

Vigilis said...

The grasp of these lawyer-politicians when it comes to economics is apparently utter cluelessness.

Thanks for exposing this telling story that forebodes a path to socialist folly.