Adapting to a Bearish Nuclear Market : The Transition of Framatome in the 1980s

The 1980s were comparably lean years for the nuclear power industry. This was not just out of general economic trends; rather, a number of medium-tolong-term endogenous dynamics were putting constraint upon an international industry still articulated in national champions. The cumulative effect of such dynamics was a growing gap between the distribution of production capacity and potential domestic demand. If for a while export markets appeared as a possible solution, they did not stand up to earlier, inflated expectations. Drawing on unpublished documents of the Framatome Board, it is possible to understand how the French company tackled the problem of a bearish nuclear market. After having started a process of inner differentiation since 1983, by July 1986 Framatome adopted new strategic guidelines aimed at transforming it into a ‘multipolar’ group. On the one hand, the nuclear sector was scaled down, with a sizeable cut in heavy boiler-making capacity, a refocusing on product and services, and a policy of alliances aimed at developing an European standard nuclear island (i.e. the joint venture with Siemens) and penetrating into the U.S. market (i.e. agreements with Babcock & Wilcox). On the other hand, the realm of electronics was deemed as a most promising area for diversification as its high-tech content suited well a firm overstaffed with engineers and technicians accustomed to deal with their end-product in terms of safe reliability. With the creation in 1989 of Framatome Connectors International as a holding company for Burndy, Souriau and Jupiter, the French group became one of the five biggest enterprises of the sector; the ‘pole connectique’ was expected to produce one-half of consolidated revenues by 1993. Framatome reacted timely in front of a depressing nuclear market trend by progressively formulating a strategy which was basically aimed at using the sizeable profits obtained through the French nuclear power programme in order to preserve the company’s capacity and expertise for better times. This process intertwined with and was complicated by the struggle to defend Framatome independence as an industrial subject in respect of its own shareholders, with first the crisis of Creusot-Loire and then the clash with CGE. The strategy would have been basically sound if it had not revolved around the forecast of a upturn of the nuclear market in the mid term; such a nuclear renaissance, however, hardly materialised. Moreover, the choice in favour of connectors for diversifying the company’s area of activities was unexpectedly problematic, while the well-known difficulties of the EPR reactor and the ultimate exit of Siemens from the nuclear industry cast a further shadow on Framatome’s strategy. The latter’s basic – and probably unforeseeable – flaw, however, consisted in confiding in a possible restart of nuclear power in the Western industrialised countries after Chernobyl.