Anatomy of a Corporate Transplant : Unocal Moves to Costa Mesa

The 12-story building overlooking the San Diego and Costa Mesa freeways has been in an anesthetic slumber for nearly five months now, its facade of smoked glass and brown stone concealing the extensive surgery taking place inside.

The building is only 9 years old, and its bones are still strong. But nine years is a lifetime in this age of corporate mutation and technological turnover. Old-style office designs sap a company’s strength, and digital data starts to clog old phone lines.

So when Bank of America moved out of the building last fall to make way for a division of Unocal Corp., the new tenant decided it was time for an extensive, $15-million operation that, when complete, will leave only the skeleton and skin unchanged.

The building awakens Friday, when 700 Unocal employees start to move in.

Unocal is a staid, 105-year-old oil company trying to adapt to a changing world. Stung by lower demand for petroleum and stiff price competition, the company has seen its revenue fall 35% since 1990, and has cut more than 4,000 jobs over the past five years.

In an effort to remake itself, Unocal rolled its refining and marketing operations into a new subsidiary--76 Products Co.--in July 1994, and hired Larry Higby, a marketing specialist with no oil industry experience, to run the $2.5 billion-a-year unit.

“I wanted a place people were excited about coming to, that provided an opportunity for free interchange, free thought,” said Higby, whose career has carried him from the Nixon White House to top marketing positions with companies including the Los Angeles Times and Pepsi-Cola.

Employees moving from eight Unocal locations in Southern California will work side by side for the first time in the new building. Most will leave behind private offices with window views for modular workstations without walls.

They will step into the 21st century, with fiber optic cables whisking data around the building at the speed of light, and software that lets them do everything from faxing pipeline contracts to placing lunch orders, all from their desktop computers.

The project is far-reaching, given Higby’s hopes that he can boost morale, increase efficiency and thrust employees into a technological Tomorrowland, all in one giant step. After all, rolling out a new version of software is enough to paralyze some companies for weeks, let alone an oil company where some employees have let their e-mail pile up for years because they don’t know how to open it.

“This is the most ambitious project I’ve ever worked on in terms of changing the way people work by changing their environment,” said Nancy Levy, an L.A.-based designer for 18 years and principal with the firm Interior Architects Inc., which is in charge of the project.

Levy added that the endeavor has caught the attention of other companies, including Unocal rivals. “Arco called me and said, ‘Could we take a look at what 76 Products is doing?’ ” she said.

The move will not be painless. Company officials acknowledge that as many as 20% of the employees involved in the move might quit rather than face longer commutes. And executives expect a few months of chaos, as employees scramble to learn new skills in a dramatically different place.

But when the healing is done and the bandages come off, Unocal hopes to have rejuvenated not just a building, but an entire company.

From a design point of view, the building consists of four layers stacked upon one another, and each layer has its own agenda. The second floor is about technology, the middle floors are about teamwork, and the top floor is a high-tech nod to corporate tradition.

But the ground floor is where it starts, and it’s about breaking the ice.

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Sitting behind a shady brick courtyard with a babbling fountain, Unocal’s building is one of three identical structures lined up in a row along Anton Parkway in Costa Mesa. When employees file through the glass doors on Friday, they will enter a space subtly designed to erase barriers between departments simply by getting employees to meet one another.

To accomplish that, the company is relying on a powerful incentive: food.

The ground floor will be home to the company’s credit union and a gym where workout clothes will be laundered for free every day. But more importantly, it will be home to two fast-food outlets offering take-out tacos and sandwiches. Those outlets are the only places food will be available throughout the entire building. Not even vending machines will be installed on upper floors.

But the scheme is a little more complicated than merely ensuring accountants and pipeline experts bump into each other while waiting in line for grub. To get to the food, employees will have to walk through a spacious room with booths and tables that looks like a restaurant but isn’t.

Designers hope this room, called the club room, will become a bustling hangout for employees, an impromptu meeting space where the booths have not just salt shakers and napkin holders, but electrical outlets and high-speed data connections for laptops.

“The only way to get a sandwich is to go through the club,” Levy said. “That was intentional.”

Many employees will probably never see the second floor, but their work will pass through it digitally every day.

The second floor is home to the computer room, a white, high-tech lab where 13 tower computers hum side by side, and where the floor is really just a patchwork of panels covering hundreds of cables, like trap doors hiding a snake pit.

The room, home to a powerful, new computer network, is a high-tech playground for John Mount, manager of 76 Products’ information services department.

“What I see here is the chance to take 76 Products and move us up to the next notch,” said Mount, a big man whose thick red hair and bushy beard make him look more like an outdoorsman than a computer whiz.

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What he’s most excited about, he says, is that the new technology will be so fast and reliable “that it will become just like a light switch--employees will forget about information services after 30 days.”

That would indeed be an achievement, considering the around-the-clock repairs his department has to make to the company’s existing computer network.

“We have what we call massive collisions,” Mount said. He means that as employees try to send or retrieve information from their computers, they send out electronic signals into a network so crowded that other signals are constantly whizzing by, causing accidents.

When such collisions happen--and they do 97% of the time at Unocal--the computer trying to send the data freezes for up to 30 seconds. That may not sound so bad to some companies, but many Unocal employees are sending or retrieving data once a minute all day long.

The problem becomes a headache for lawyers transmitting documents back and forth, marketing specialists sending information to gas stations, or accountants entering numbers into the company’s electronic books. These employees often take out their frustrations on Mount and his department.

“We’ve been called worthless, and sometimes four-letter words are chosen,” Mount said. “It’s comical at times, but it’s terrible too.”

Walking past refrigerator-sized electronic cabinets into the corner of the new computer room, Mount pointed toward a cluster of thick, orange hoses that could protect him from verbal harangues well into the next century.

The hoses, which contain fiber optic cables, shoot straight up the spine of the building, all the way to the top floor. Thanks to these cables, every employee will have a multilane digital roadway all to himself or herself.

“It’s like moving from a garden hose to a fire hose,” Mount said.

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The network is so flexible that when employees switch desks, or even floors, Mount merely drags his mouse to move the employee’s files, access codes and software to the new desk. And the network is so smart that when one of the servers that powers it goes down, the network tries to fix the problem itself and, if it can’t, pages Mount or one of his technicians to come help.

In time, the network is expected to all but replace paper at 76 Products. Over the next five years, 220,000 sheets of paper will be taken out of file cabinets and stored electronically, and free-standing fax machines will disappear, giving way to fax modems built into each computer.

There is 750,000 feet of cable--60% of it fibersnaking through the building. It rises from the computer room into exchange rooms on each floor, where it is spliced and switched and stretched out along long metal trays above the ceiling tiles. From there, it is dropped down into walls and pulled between the sound-absorbing panels of cubicles before it finally dead-ends at the plastic-covered outlets on employees’ desktops.

“Our building has been wired to take us 10 years into the future,” Mount said.

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Data will race up the building at the speed of light, but employees still have to ride elevators to get to the middle floors. There, they will take their places in a work space designed to be flexible and functional, and to facilitate teamwork.

Employees sit in rounded, egg-white cubicles, pieces of which detach so that they can be wheeled together with other pieces to make temporary meeting tables.

Every floor has a nearly identical layout, so employees will know their way around, and distinct color schemes to help employees remember which floors they’re on.

Sprinkled about each floor are quiet rooms, where employees can shut themselves in to concentrate on a job or make a private phone call; resource rooms equipped with felt pens and drawing boards for brainstorming sessions; and work rooms, where groups from different departments can set up temporary offices for months to work on a project.

A survey of Unocal employees found that managers spend less than 30% of their time at their desks, compared to more than 70% for lower-level employees. So managers lose their window views in the new building. Their offices are moved to the center to clear the windows for everyday employees who might actually be around to look through them, and will probably appreciate being considered important enough to get the chance.

Many managers no longer get offices at all. Before the move, 75% of the employees were in individual offices, and the remaining 25% in workstations. After the move, those percentages will almost be reversed.

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Many employees are moving to the new building from Unocal Center, a historic, 12-story building overlooking the Harbor Freeway in downtown Los Angeles. The differences between the new building and the old are striking.

Completed in 1958, Unocal Center won design awards for its impressive facade, which juts out toward the freeway like the bow of a giant oil tanker.

But inside, Unocal Center is clearly a relic of a bygone era. Instead of fiber optics serving as the key connection between floors, there is a clunky escalator grinding its way upward. Instead of informative signs pointing toward departments, there are blank walls leading to dark, 100-foot hallways where doors are labeled with such descriptive placards as “MM09-12.”

Behind one of those doors, in a cubbyhole of an office, sits Rick MacDonald, 47, a product supply scheduler at Unocal. MacDonald’s job is to make sure that 12 Unocal terminals in the western United States are replenished with just the right amount of nine different types of fuel every 7.5 days, so that tanker trucks can pick up the fuel and take it to gas stations.

Sometimes Unocal’s refineries have extra fuel and sometimes there isn’t enough. When that happens, Unocal makes a deal with Chevron, Arco or another rival. Millions of dollars are made and lost on these transactions each year, and Unocal has lost its share largely because key people sit in buildings 42 miles away from one another.

Several weeks ago, one of Unocal’s rivals had a refinery problem and needed to ship 1.68 million gallons of reformulated gasoline within three days. Through a petroleum broker, the company offered to buy the fuel from Unocal for 55.5 cents per gallon.

Unocal didn’t have any fuel to sell on such short notice, but MacDonald remembered that it was owed 1.26 million gallons it had bought for 55 cents per gallon a few weeks earlier. If he sold it now, that would give Unocal a half-cent profit per gallon, or a quick $6,300.

Trouble was, only the accounting department would know for sure whether the gas was still available, and its staff was in Brea. He knew the accountants were often slow to answer their voice mail, and this time was no different. It took three hours for an accountant to finally call back, but by then the deal had been done, and Unocal was no longer in it.

“A couple of hours can cost you money,” MacDonald said. “Under the new system, the accountants are going to be on the same floor as us. Communications is the key.”

Indeed, MacDonald will no longer be in an office at all, but in a wide-open trading room, eye-to-eye with the traders who buy and sell the fuel that he schedules for delivery. In addition, the new computer network will allow MacDonald to call up the same information the accountants have, so he will be able to tell from his desktop whether there is fuel to sell.

Simply moving employees next to each other may solve a lot of Unocal’s problems, but the 76 Products division still has 2,800 other employees who won’t be moving into the building, not to mention the fact that 76 Products’ parent company will continue to be headquartered in El Segundo.

How does the company propose to bridge that distance? Digitally, of course.

The new building will house, on various floors, conference rooms equipped with digital cameras, projectors and connections powerful enough to move rooms full of people--or at least their images and voices--across phone lines almost instantaneously.

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The most posh of these conference rooms will be on the 12th floor, where top executives still get window views, and where Higby still gets a corner office with a private washroom.

Egalitarianism, after all, has its limits.

In the 12th-floor conference room, Higby and his executives can sit on one end of an oval-shaped table, under a ceiling wired with microphones, gazing through a high-tech window at the other end of the table.

The window is actually a 35-square-foot video screen, onto which are projected life-size images of other executives from another conference room in another city. Cameras in each room send pictures and sound across phone lines.

For more private conversations, Higby will be able to carry on personal video conferences through a camera built into his desktop computer.

“Speed and access to information is the key for the successful marketing company of the future,” Higby said. “It’s absolutely critical that you have the technology to get information, that you’re able to sort it, slice it and dice it, and understand how the consumer and your competitors are acting in the marketplace. Doing that is a bit of a journey, but we’ve moved well along the road.”

Perhaps too far along the road for some employees. Those who live in the San Fernando Valley can add another hour or more to their commutes. Others could be left behind by all the new technology, and still others are not being invited along for the move at all.

David Rozas started his career at Unocal 40 years ago working in the mail room, and has spent the past seven years as building manager at Unocal Center. But with the corporate headquarters moving to El Segundo, and 76 Products moving to Costa Mesa, Rozas said he was left without a job.

“I’ve grown attached to this building over the years,” Rozas, 59, said. “It’s a good iron horse that has held up well during earthquakes, and has a lot of pluses.”

Rozas said many employees are saddened by the move. “They’ve had private offices and now they’re going into bullpen areas. Sure it’s new, but the charm of the old building will be gone. You think it’s greener on the other side of the fence, and it’s not.”

For those who do come along, Higby hopes to keep morale up by having the company help pay for moving expenses, by allowing workers to dress casually every day of the week, and by giving them goodies like new chairs so state-of-the-art that employees must go through an hour of training just to learn how to sit in them.

Higby says the massive operation is necessary to revive his company, to make Unocal strong enough and nimble enough to survive another 105 years. Analysts aren’t so sure, and say all the fuss may be part of a plan to dress up 76 Products for a spinoff or a sale.

If that’s the case, and Higby acknowledges it’s a possibility, then maybe this isn’t life-and-death surgery after all.

Maybe this L.A. institution is doing what many Southern Californians have done over the years: moving to Orange County and getting a face-lift.