The Context

‍In 1997, faced with an increasingly competitive electricity supply market following privatisation of the industry, British Energy (BE) sought urgent and major cost reductions in its £300M per annum contracts with its biggest supplier, British Nuclear Fuels (BNFL), which accounted for one-third of BE’s turnover.  

An independent survey across both companies’ commercial interfaces prior to opening the 1997 negotiations confirmed a legacy of deep resentments and entrenched attitudes. Aware of the successes being achieved by the UK offshore oil industry and elsewhere through partnering with strategic suppliers, the two companies’ CEOs agreed to promote this approach in their forthcoming negotiations, using JCP, who had a successful track record in these successes.

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The Intervention
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The facilitators adopted a dual approach, firstly with the negotiating teams and each company’s senior management teams, with the aim of breaking down traditional attitudes and expectations and getting both sides to ‘think outside the box’ at what each saw as their critical business drivers.  

For BE, this meant having someone take their used fuel off their hands (i.e. a waste disposal issue) rather than get involved in its detailed future management.  

Secondly and in parallel, the facilitators mentored closely both companies’ senior management teams to provide them with the security that negotiations were effectively being handled by their empowered staff and giving them the space to think strategically about future mutual objectives.

The result was a £6B suite of contracts successfully negotiated in less than 8 months compared to the previous contracts that took 7 years to negotiate. BE saw the prices it paid to BNFL fall by 20%, a £1B improvement in its balance sheet for reduced financial provisions, and a directly attributable 6% rise in its share price.

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The Impact
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This success led to the formation of 11 task teams involving almost 100 staff, fully empowered to identify and implement improvement initiatives.  In their first year, these secured savings of over £2M with more to follow. This ‘collaborative’ method of working led to improved morale and gave each side the willingness to address problems before they became significant, avoiding the need to take up senior management time with contract disputes, etc.

This was the first use of partnering in the UK nuclear industry, and led to JCP’s significant involvement with BNFL, Magnox, and the Nuclear Decommissioning Authority (NDA), forging partnering relationships in the decommissioning of Magnox power stations.

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