Sep 20, 2019

Ep 192: Stephane Aubarbier - COO & CEO, Assystem

Chief Operating Officer & Chief Executive Officer
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Show notes

Adding business smarts to an engineering background (0:56)
0:56-5:14 (Stephane explains how he got his start in the nuclear industry and the steps he took to become Assystem’s COO and CEO.)

Q. Where did you grow up and how did you get into the nuclear space?
A. Stephane Aubarbier is a mechanical engineer from a French engineering school. He began his career at Assystem as a commissioning engineer, which work with nuclear plants until they are working correctly. Stephan worked in both the automotive and nuclear industries. Stephane found that he was complaining about the construction and design processes as a commissioning engineer and so was made the project director where he realised he was more comfortable with marketing rather than the technical aspects of nuclear power. He then realized that he was lacking in finance and management capabilities, so decided to go back to school to get an MBA after 7 years with Assystem. He then joined a vendor company before returning to Assystem to lead the development of nuclear activity. He is now the Chief Operating Officer & Chief Executive Officer of Assystem.

Shifting management teams to deliver projects on time (5:15)
5:15 - 16:04 (Stephane discusses the need for nuclear projects to focus less on design and more on completing projects on time. He describes Assystem’s approach to achieving this.)

Q. What were some of the things you were seeing at the time, in terms of nuclear construction and design, that you wanted to change?
A. We have more of an ability to manage requirements of projects now, such as regulations and expectations of performance. We must start with a design’s specifications, which must also fit the requirements of a project. Using the digital tools of today, Assystem can be more clever when designing plants. The process switches from push to pull when a project enters the construction phase as the project’s goals move to pull the plant into operation as soon as possible. This change requires a different mindset, and Stephane usually places a new management team in charge as a project progresses to the construction phase. This change forces a project into the next phase, removing the temptation for a management team to dwell on the design during the construction phase. This strategy keeps projects on time and on budget.

New nuclear projects face 2 main issues regarding timeline. The first is that the original timeline committed to may not be realistic. The second is a lack of focus on the ability to deliver a project compared to the focus that is given to engineering and designing a project. A mindset focused on delivering projects is therefore key to a nuclear project’s success.

Adopting the copy and paste model to reduce project costs (16:05)
16:05-24:34 (Stephane explains that Assystem has gradually identified issues of the nuclear industry and have adopted the copy and paste model to reduce design time and overall project costs.)

Q. From your experience, has there ever been a period of time where you realized that we needed to separate engineering from the construction side of the project or was this more of a gradual realization?
A. It has been gradual. Assystem began as a commissioning firm, but have transitioned to construction management, plant design and managing the overall project. They have identified the difficulties along the project line and always kept in mind the need to deliver a project on time. Stephane sees a major cultural gap between delivering and designing a project. The change in the way of managing a project in the design phase and the construction phase is what sets Assystem apart and pushes the nuclear industry forwards. The best way to push projects forward to complete them on time is to copy and paste rather than reinvent. This also means keeping the time spent on designing to a minimum.

Designing a project is not the primary cost, as 15-20% of project costs are related to construction. An additional 25-30% of costs are related to the operation of a plant, including fuel, labor and maintenance, and 35-60% of a project’s overall cost is due to funding. 75% of funding costs are related to risk coverage. The cost of funding a project is high because of safety issues, risks of operation and risks of construction. The copy and paste model reduces this cost because the design, supply chain and construction method remains unchanged, diminishing the overall risk of the project.

Assystem’s business strategy (24:35)
24:35-34:57 (Staphane discusses Assystem’s strategy when it comes to recruiting engineers. He also explains why Assystem has stayed in the nuclear industry since 1966.)

Q. How do you train and convince engineers to think with a business mindset?
A. Assystem tends to recruit engineers that focus more on project management rather than design. These engineers will therefore naturally focus on the delivery of the project rather than only on the design phase. Assystem has small design offices, but most engineers are on site. Assystem also coaches engineers to be more focused on customers and what is happening outside of the company, which Stephane believes is the reason for 80% of Assystem’s success.

Assystem employs about 6,000 people, mostly in Europe and the Middle East. Assystem began in 1966 as a spin off of a French governmental organization that focused on nuclear activity research. Assystem was in charge of commissioning all French nuclear facilities, whether they were operated in France or sold and built abroad. Over the years, Assystem branched out to include other sectors and grew to about 10,000 employees but decided to sell 60% of the company to refocus on the nuclear industry in 2017.

Growing in other sectors meant that Assystem needed to make a decision. They were unable to be key players in each of the automotive, aerospace and nuclear industries. They decided to focus on nuclear rather than another industry because Assystem prefers to work on complex infrastructure projects and because Assystem’s origins are in the nuclear sector. Additionally, Assystem believes increasing the nuclear electricity supply is the only way to combat climate change and CO2 emissions.

Assystem was able to develop their nuclear business in the Middle East due to the acceptance of nuclear power there. They have also developed a collaboration with the Russian nuclear industry as 75% of nuclear projects are led by the Russian industry. Looking forwards to 2025, Assystem believes they can grow 50% in the nuclear industry primarily with new builds in Asia, North Africa and the Middle East as well as supporting existing fleets in the UK and France.

Why decreasing energy consumption will not combat climate change (34:58)
34:58-45:17 (Stephane explains Assystem’s position on capping energy consumption versus finding a carbon free electricity solution. He also explains that increasing education is key to the nuclear industry’s success.)

Q. Where people actively paying attention to climate change at the time or was Assystem ahead of the time?
A. Assystem believes that climate change is real. Assystem has looked at public and different government opinions to understand if climate change affects energy consumption and they found the answer to be no. Energy consumption has been exponential since 1900 and is still growing despite global wars. Stephane believes efforts to cap energy consumption will not work as energy consumption will still grow during the next century. This means we must consider how to produce energy without affecting the Earth.

There is also a discrepancy between what governments are saying and what the people and governments are actually doing. Many western governments believe they can limit energy consumption but do not have an ability to understand global management of energy. Additionally, the general scientific education of the public is low, so speaking about energy and nuclear power is difficult. For example, 60% of the French population wrongly believes that nuclear power produces CO2 emissions. This means that even though plants have been running for 40 years in France, people still think CO2 is produced. While people sincerely care about climate change, they still hold onto wrong beliefs about what is generating climate change. Stephane thinks this is a challenge that the current and future generations will need to take on and thinks it will rely on transparency and sincerity.

Assystem’s country collaborations (45:18)
45:18-57:54 (Stephane explains how Assystem collaborates with other countries. He also discusses the possibility of a global nuclear regulation.)

Q. What are some of your collaborations with other countries and how do you use the copy and paste model on a global scale?
A. Assystem works with countries such as Saudi Arabia, the United Arab Emirates, Uzbekistan and Turkey. In these countries, Assystem works with public bodies to help develop nuclear programs according to the International Atomic Energy Association (IAEA) regulations. They also assist the country’s nuclear industry in being successful in building nuclear projects. Assystem’s strategy focuses on limiting designs and ensuring requirements from the local safety authority are met. Assystem faces two main challenges when partnering with a new country. The first revolves around the fact that all newcomer countries must develop their own nuclear program. The second challenge requires Assystem to resist developing a new reactor design each time a country wishes to build a new facility. Overall, Assystem works to reduce the gap between the local requirements and the designs proposed by vendors.

Regarding developing a global nuclear regulation, this could be possible if each country would abide by it. Today, there are different nuclear regulations in each country. Even though the same basic regulation exists in each country, the legal environment changes, meaning the nuclear regulations are affected. For example, nuclear liability is defined differently in each country. We can envision global standards, but Stephane is not sure that it will occur in the near future. Finding common regulation and making regulation changes in the main nuclear countries will be difficult.

The first thing Assystem does when creating a new country partnership is understand the specificities of the regulations within the particular country. They will then assist a country in choosing the right reactor technology for them if one has not yet been chosen. A country will often, however, already know which technology they want to use because bilateral agreements with another country may already be in place. These agreements often drive the technology choice and determines the available funding. Pressurized Water Reactors (PWR) make up about 99% of new build programs worldwide. Between the different PWR technologies, there are some differences but the design concepts are very similar. This is because designers want to reach the same level of safety. Assystem therefore focuses on the gaps between the design proposal for licensing and the local safety authority requirements. This process becomes more successful when less innovation is involved in a design because the project will be more likely to be delivered on time.

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