Mike Cox was sitting in his office watching TV when he heard the news that Westinghouse Electric Co. has filed for bankruptcy.
“And I knew that they dinged me,” he said.
With 56 years in the Bethel Park family business, Mr. Cox’s pipe valve and fitting distribution shop has been through this before. A couple of steel company bankruptcies come to mind, he said.
And is typical in such cases, Westinghouse’s bankruptcy has turned small-time vendors and contractors, as well as company employees, into detectives — scouring through volumes of court documents for hints of motives and expectations. Some are withholding goods, others have filed claims for their products back and even the company’s partners are questioning whether they’ve got the full picture.
When Mr. Cox heard the news, he called a few friends and other Westinghouse suppliers. Within days, all received letters from the Cranberry-based nuclear firm, with regrets that their invoices for work performed before the March 29 Chapter 11 filing could not be paid at this time.
Going forward, Westinghouse said it would be “business as usual.”
The James M. Cox Co., where Mr. Cox is president, earlier this year supplied $31,000 in pipe valves and fittings to Westinghouse’s Blairsville plant, which makes components for nuclear fuel. Westinghouse, a “good customer for many years,” makes up a small percentage of Mr. Cox’s business.
Westinghouse headquarters in Cranberry
He looks at the $31,000 as a total loss. If any is recovered in bankruptcy proceedings — perhaps in pennies on the dollar as in previous restructurings where his business was a creditor — he’ll regard it as a Christmas present.
Still, Mr. Cox said he’ll continue to supply the Blairsville plant.
Jon McElravy, a contract technician who works for Westinghouse’s PaR Nuclear subsidiary helping operating plants refuel during outages, is on a Westinghouse job right now — having compartmentalized his indignation.
Mr. McElravy spent most of March at the Susquehanna Steam Electric Station during its outage, for which he is owed $42,000.
It’s not like he didn’t know the company was in trouble. For months before the bankruptcy, he’d been reading about the financial issues at Westinghouse’s Japanese parent company, Toshiba Corp., and was up on cost overruns at two nuclear power plant construction projects in Georgia and South Carolina, which drove Westinghouse into its predicament.
“You get into what makes people bitter,” he said. “Even before they filed for bankruptcy, they said, ‘Don’t worry about it, it’s business as usual.’ Then you get a letter.”
He had already committed to working an outage at the Beaver Valley nuclear power plant this month and, with eyes wide open, he showed up for work.
“But I have to look into the future,” Mr. McElravy said. “Even if they do pay me, now I’m really gun shy.”
Sarah Cassella, a Westinghouse spokesperson, said vendors and suppliers will be paid as usual during the bankruptcy process and that “It is in our mutual best interest to preserve our business relationship.”
“We certainly hope the business relationships we have built over time will sustain this process,” she said.
“In addition, if a vendor or supplier has a contract with our company, they generally are required to continue to perform services or provide products,” Ms. Cassella said.
Mr. McElravy has spent hours reading through the bankruptcy filings. He understands the $800 million debtor-in-procession financing package Westinghouse secured from a private equity firm is meant to pay for expenses like his paycheck.
Yet, there are questions that Westinghouse isn’t sharing the whole picture.
In mid-February, after Toshiba delayed releasing its quarterly earnings for the first time, citing trouble at Westinghouse as the reason, Westinghouse’s CEO José Gutiérrez was beamed into the company’s various sites via telecast to deliver a message of reassurance and caution.
He advised employees not to listen to news reports chronicling the run-up to a bankruptcy. He told them the company would be fine and to watch their cash spending.
Ms. Cassella said Thursday, “Any information shared with employees is accurate at the time it is delivered.”
But the bankruptcy had been in the works for months. Earlier this month, utility regulators in Georgia who oversee the building of two AP1000 plants there, asked one of the project owners, Georgia Power, to give a full account of how long it’s been helping Westinghouse prepare to file for Chapter 11 and who was involved.
The request came after an attorney for Georgia Power was quoted in an E&E News article on March 31 saying that by the end of last year, the bankruptcy “was only a matter of when, not if.”
Vendors panic
While large companies routinely use the bankruptcy code as a way to shed debt and come out on the other side as a functional entity, vendors big and small still panic.
Dozens of companies have filed reclamation claims asking for the return of all materials delivered to Westinghouse facilities within 45 days of the bankruptcy filing.
Air Products and Chemicals, of Allentown, wants its helium, argon, nitrogen and hydrogen back. Emerson Process Management is trying to reclaim its sensing and monitoring equipment. Curtiss Wright would like its pumps and valves returned.
The claims amount to millions of dollars in goods which could potentially be returned if they haven’t already been used or built into components.
Suppliers’ anxiety is impacting Westinghouse’s employees ability to do their jobs.
One employee said a vendor that makes prescription protective glasses is demanding workers pay for them up front and get reimbursed by Westinghouse on their own. Other employees report having trouble getting work boots on a company credit card.
The company has run into delays getting its own components back from machine shops that have held them up expecting to be paid for past debts.
Trust issues
The trust issue extends beyond vendors and employees. The southern utilities that own the nuclear projects at the root of Westinghouse’s financial meltdown have noted Westinghouse hasn’t allowed them to see a detailed schedule and the backup documents behind it.
In testimony before South Carolina utility regulators earlier this month, Stephen Byrne, senior vice president at Scana Corp., said that only since the bankruptcy has the utility been able to consult directly with the construction firm actually building the plants and access information that Westinghouse had previously kept confidential.
When asked for the latest estimates on what would be involved in finishing the power plant projects, Mr. Byrne said, “Westinghouse has owed us that schedule for, really, quite some time.”
Mr. Byrne said Westinghouse has had the schedule since last year, but when it figured out it would cost much more to finish the plants than originally anticipated, the company held back releasing that information.
“I don’t know, though, that I’m all that interested in their schedule any longer,” Mr. Byrne then said.
Ms. Cassella declined to comment on that.
Anya Litvak: alitvak@post-gazette.com or 412-263-1455.
First Published: April 28, 2017, 4:00 a.m.