McCraw to Head Combined Fluor Engineering Unit

In a move underscoring its plunge into non-energy markets, Fluor Corp. said Thursday that it is combining all of its engineering and most of its construction operations into a worldwide organization that will be headed by 51-year-old Leslie G. McCraw Jr., who has played a leading role in Fluor’s diversification efforts.

McCraw’s appointment continues a changing of the guard that has been accelerating as Fluor anoints a younger and more vigorous leadership in its struggle to return to profitability. McCraw, who had been president and chief executive of Fluor’s new Daniel International subsidiary, will report directly to Fluor Chairman David S. Tappan Jr.

As president and chief executive of the newly formed Fluor Daniel Engineering & Construction Group, McCraw will be in charge of a unit that includes 13,000 of Fluor’s 25,000 salaried employees. The units being welded together--Daniel International and Fluor Engineers--last year represented $3.18 billion of Fluor’s $4.17 billion in total revenue.

Not included in the new Fluor Daniel organization is Fluor Constructors Inc., which is being organizationally divorced to do government work and private jobs that require union contracts. Daniel is a so-called open shop contractor that uses both union and non-union subcontractors.

Fluor Contractors on Thursday was removed from contention for a $2.5-million construction management contract for an expansion of the Los Angeles Convention Center. The action, strongly urged by the Los Angeles City Council on Wednesday, was taken by the Convention and Exhibition Center Authority. A city ordinance bars contracts with companies that do business in South Africa because of that nation’s policies of racial segregation and discrimination.

But Fluor’s presence in South Africa, where it did an estimated $40 million in business last year, is not likely to harm Fluor Daniel’s efforts to obtain more general industrial contracts, said Herb Hart, an analyst with S. G. Warburg, Rowe & Pitman, Akroyd in San Francisco.

Hart said that while Fluor Constructors may lose some municipal contracts, he does not believe that Fluor’s private industrial customers will blackball the company for its decision to stay in South Africa.

McCraw’s promotion catapults him into prominence as an apparent contender to become chairman and chief executive of Irvine-based Fluor when Tappan retires in December, 1987. Also frequently mentioned as a candidate for Tappan’s job is John A. Wright, 43, who last January was named president and chief operating officer of Fluor.

Wright, formerly chairman and chief executive of St. Joe Minerals Corp.--also a Fluor subsidiary--is in charge of all of Fluor’s natural resources businesses.

For the past two years, McCraw has been a director of Fluor as well as head of Daniel International, the Greenville, S.C., subsidiary that one industry analyst said has evolved into “the heart of Fluor’s engineering and construction business.”

Daniel provides engineering, construction and maintenance services to industrial customers in fields as diverse as biotechnology, food processing, automotive manufacturing and the production of synthetic fibers.

Buck Mickel, the 60-year-old chairman of Daniel and vice chairman of Fluor, said Thursday that McCraw is a “very competent, brilliant young man” and “a great leader of people” who is good at delegating authority. McCraw spent 15 years with Du Pont Co. before joining Daniel in 1975 as vice president and division manager.

Mickel said he expects McCraw to be named chairman, vice chairman or corporate president after Tappan retires in 16 months.

McCraw’s three chief deputies in the new Fluor Daniel group are Gerald M. Glenn, 44, who is in charge of worldwide marketing; Vincent L. Kontny, 49, who will head Fluor Daniel operations in the Western Hemisphere, and Hugh K. Coble, 51, who is in charge of international operations. Glenn, Kontny and Coble formerly worked for Fluor Engineers.

Fluor purchased Daniel International for $225 million in 1977 to provide a domestic construction complement to what then was Fluor’s primary business of engineering and building oil and petrochemical plants overseas. Over the last several years--as the building of refineries, pipelines and synthetic fuel plants has been halted by falling oil prices--Daniel has become Fluor’s most dynamic unit.

Currently, Daniel International accounts for about 70% of Fluor’s $4.2-billion project backlog. One former Fluor official likened Daniel’s expanded importance at Fluor to “the minnow swallowing the whale.”