Varian Unveils Plan to Cut Costs, Restructure Firm

Varian Associates said it is implementing a series of corporate cost-cutting and restructuring measures that it anticipates will save $20 million to $30 million annually.

The Palo Alto-based company, which manufactures equipment for the semiconductor, communications and microwave industries, said Tuesday that it is reducing its work force by 5%, implementing a 10% pay cut for its top executives and management staff and authorizing temporary shutdowns among its 26 U.S. plants. It has also ordered a hiring freeze and curtailment of travel and other discretionary expenses.

Additionally, Varian announced some organizational changes as part of a restructuring that follows the departure last month of Varian President Jerome Meyer.

Seen as Positive Step

Analysts viewed the measures as a positive step by the company, which has been troubled by the continuing slump in the semiconductor industry as well as federal spending cutbacks affecting its large military-based programs. Earlier, Varian said it expects to post a pretax loss of $4 million to $10 million for the quarter ended July 4.

The management realignment comes under the direction of Thomas D. Sege, Varian’s chairman and chief executive who reassumed the presidency in June. Norman H. Pond, president of the electron devices group--the largest of the company’s four divisions--has been promoted to executive vice president.

Larry L. Hansen, executive vice president and head of the semiconductor equipment division, has been given additional responsibilities for vacuum products, which formerly had been under the wing of the medical and industrial products division. Additionally, international group operations and staff functions for manufacturing, engineering and management systems will be consolidated and will be run by William E. Finney, head of the medical products group.

Varian said the work force reduction should trim 600 to 650 jobs from its payroll. Although some of the cuts will be made through attrition, the company expects to make layoffs within the next three months. So far, 50 employees have been terminated from operations in Palo Alto and San Carlos, Calif.