Business & Tech

Westinghouse says it’s bankrupt, a blow to nuclear industry

NEW YORK — Westinghouse Electric Co., which helped drive the development of nuclear energy and the electric grid itself, filed for bankruptcy protection Wednesday, casting a shadow over the global nuclear industry.

The company’s corporate parent, Toshiba of Japan, is scrambling to stanch huge losses stemming from Westinghouse’s troubled nuclear construction projects in the American South. Now, the future of those projects, which once seemed to be on the leading edge of a renaissance for nuclear energy, is in doubt.

“This is a fairly big and consequential deal,” said Richard Nephew, at the Center on Global Energy Policy at Columbia University. “You’ve had some power companies and big utilities run into financial trouble, but this kind of thing hasn’t happened.”


Westinghouse, which once symbolized America’s supremacy in nuclear power, now illustrates its problems.

Get Talking Points in your inbox:
An afternoon recap of the day’s most important business news, delivered weekdays.
Thank you for signing up! Sign up for more newsletters here

Many of its injuries are self-inflicted, such as a disastrous deal for a construction business that was intended to control costs but instead precipitated the events that led to the bankruptcy filing. Overall, Toshiba has been widely criticized for overpaying for Westinghouse.

But some of what went wrong was beyond either company’s control. Slowing demand for electricity and tumbling prices for natural gas have eroded the economic rationale for nuclear power, which is extremely costly and technically challenging to develop. Alternative-energy sources like wind and solar power are rapidly maturing and coming down in price. The 2011 earthquake in Japan that led to the nuclear disaster at the Fukushima Dai-ichi plant renewed worries about safety.

Westinghouse’s problems are already reducing Japan’s footprint in nuclear power, an industry it has nurtured for decades in the name of energy security. Even before the filing, Toshiba had essentially retired Westinghouse from the business of building nuclear power plants. Executives said they would instead focus on maintaining existing reactors — a more stable and reliably profitable business — and developing reactor designs.

That has made the already small club of companies that take on the giant, expensive, and complex task of nuclear-reactor building even smaller. General Electric, a pioneer in the field, has scaled back its nuclear operations, expressing doubt about their economic viability. Areva, the French builder, is mired in losses and undergoing a large-scale restructuring.


Among the winners could be China, which has ambitions to turn its growing nuclear technical abilities into a major export. That has raised security concerns in some countries.

The shrinking field is a challenge for the future of nuclear power, and for Toshiba’s revival plans. Its executives have said they would like to sell all or part of Westinghouse to a competitor, but with a dwindling list of potential buyers — combined with Westinghouse’s history of financial calamity — that has become a difficult task.

Toshiba is also divesting its profitable semiconductor business and plans to sell a stake to an outside investor to raise capital. Most of the companies seen as possible buyers are from outside Japan. Some Japanese business leaders fear the sale will further erode Japan’s place in an industry it once dominated.

After writing down Westinghouse’s value, Toshiba said it expected to book a net loss of $9.9 billion for its current fiscal year, which ends on Friday.

“We have all but completely pulled out of the nuclear business overseas,” said Toshiba’s president, Satoshi Tsunakawa. Of the huge loss, he added, “I feel great responsibility.”


Bankruptcy will make it harder for Westinghouse’s business partners to collect money they are owed. That mostly affects the US power companies for whom it is building reactors, analysts say. It is unclear whether the company will be able to complete any of its projects, which in the United States are about three years late and billions over budget.

The power companies — SCANA Energy in South Carolina and a consortium in Georgia led by Georgia Power — would face the possibility of new contract terms, long lawsuits, and absorbing losses that Toshiba and Westinghouse could not cover, analysts say.

The cost estimates are already running $1 billion to $1.3 billion higher than expected, according to a recent report from Morgan Stanley, and could eventually exceed $8 billion overall.

Toshiba said Westinghouse had total debt of $9.8 billion. The Chapter 11 bankruptcy filing was made in US Bankruptcy Court in New York.