Gas Co. Parent Outlines Broad Restructuring : Utilities: Pacific Enterprises creates several new units, shifts executives and considers layoffs. It is also looking abroad.
In a fundamental revamp of its operating structure, Pacific Enterprises, parent of Southern California Gas Co., announced on Friday a wave of executive changes, creation of several new business units and the prospect of job layoffs at the utility.
In the restructuring, a new natural-gas products development division and an overseas pipeline and power plant business will be formed. In addition, a flock of upper-level executives will move from the slimmed-down utility in a broad shift of policy planning to the parent company.
“I think it’s getting us set up to be the kind of company we need to be,” said Willis B. (Bill) Wood, chairman and chief executive of Pacific Enterprises.
The restructuring creates a new overseas business, Pacific Enterprises International, that will seek to capitalize on booming demand for natural gas in the developing world by building pipelines, power plants and other infrastructure projects.
“We do not obviously have strong international skills, so anything we did in that would be in conjunction with one or more joint venture partners,” Wood said.
Wood said he had no intention of getting back into the gas exploration and development business. A former exploration subsidiary, the Thrifty Drug chain and several sporting-goods retail chains--acquired in an ill-fated attempt at diversification--were sold in a dramatic belt-tightening begun in 1992.
At the Gas Co., operations will be grouped under two new business units--Energy Transportation Services, which will serve the utility’s largest customers, and Energy Distribution Services, which will sell gas to residential and small business users.
Warren Mitchell will remain as president, becoming the senior Gas Co. executive. The position of chief executive will be eliminated, with current CEO Richard D. Farman remaining as president and chief operating officer in a newly created Pacific Enterprises Office of the Chairman, working with Wood.
“We will undoubtedly end up with fewer people” at the Gas Co., Wood said. “The implementation will probably take at least until the middle of the year.”
The Gas Co. has been hard-pressed by a decade of deregulation of the natural gas industry, and the changes were characterized as a bid to become more competitive against other energy providers.
“I think it’s a bold move by the Gas Co. to find the silver lining in the cloud of restructuring,” said Gary Simon, an Oakland-based director of Cambridge Energy Research Associates, based in Massachusetts.
Existing subsidiaries of Pacific Enterprises will be grouped under a new business entity to be called Energy Management Services. An as-yet-unnamed product development group will also be formed.
Executives being shifted include Gas Co. planning vice president Christopher R. Sherman to become Pacific Enterprises senior vice president of energy management services. Former Gas Co. senior vice president Frederick E. John becomes a senior vice president at the parent company. Former Gas Co. information systems vice president John L. Estes becomes a Pacific Enterprises vice president and chief information officer. G. Joyce Rowland will move to Pacific Enterprises as vice president, human resources, and Thomas S. Sayles will become vice president, public policy, leaving his relatively new post as Gas Co. vice president for public affairs.
Pacific Enterprises stock rose 50 cents Friday to $21.375 on the New York Stock Exchange.
