Layoffs Planned by Fluor Daniel

By JOHN O’DELL

March 25, 1997 12 AM PT

TIMES STAFF WRITER

IRVINE —

In the first of a series of job cuts to help slash costs by $100 million a year, Fluor Daniel Inc. said Monday it will reorganize its Chicago office, laying off or reassigning 100 of the 390 workers there.

While Fluor officials won’t comment on specifics of their cost-cutting plan, more layoffs are sure to be a part of it. As with most service companies, payroll costs are a big part of Fluor’s $1.6 billion in annual operating expenses.

Company officials said they will not know for several weeks how many of the Chicago workers will get pink slips in what could be the first widespread layoff program at Fluor in more than a decade. Like most engineering and construction service companies, Fluor’s payroll is in constant flux as it adds new contracts and as old ones expire.

The last companywide layoffs occurred in 1984, when Fluor was struggling with a general economic slump that afflicted the industry. Since then, Fluor has grown from 14,000 employees to more than 50,000 worldwide.

The new cost-cutting drive was announced last week to help bolster the company’s stock, which has been battered by investors since the company’s first-quarter profit fell short of the 14% increase estimated by analysts. Fluor’s first-quarter earnings rose 8% to $62 million.

Company officials said Fluor’s financial performance has been affected by unexpected cost overruns at two large power plant projects. They were unable to promise analysts that there would be no further erosion of profit in the second quarter--prompting several large brokerages to downgrade their recommendations on Fluor stock.

Both of the power plant projects are being handled by Fluor Daniel, chief operating unit of the Irvine-based engineering and construction services giant.

Lee Tashjian, a Fluor vice president, said Monday that company officials have determined that several regional offices, such as the Chicago engineering center, can be staffed with fewer people.

The Chicago staff, he said, grew because of a major contract there to help install a 911 emergency telephone service in the city. That contract, Tashjian said, is coming to an end. The office serves clients in the telecommunications, power, food and beverage industries.

If the company had not decided to launch a major cost-cutting effort, employees left without work as the contract winds down likely would have been transferred to other locations, Tashjian said.

Fluor said its Chicago office will be staffed with fewer permanent employees and that workers from other Fluor Daniel units will be temporarily assigned there if the workload grows again. The company operates an internal temporary staffing operation, shifting engineers, accountants and other skilled workers from job to job among its 80 offices.

Fluor common stock fell 50 cents in New York Stock Exchange trading Monday to close at $54.375 a share. The stock was at a 52-week high of $75 a share on Feb. 18, when Fluor announced its first quarter results. It fell $13 that day and has bounced between $54 and $64 a share since then.

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Trouble at Fluor

Fluor Corp.’s stock, which reached a 1997 high of $75 on Feb. 18, has taken a beating since the company announced a fiscal first-quarter profit increase fell short of the 14% anticipated by analysts. Weekly closing prices and Monday’s close:

January

3 $61.88

10 64.88

17 68.38

24 67.38

31 71.38

February

7 $71.13

14 73.88

21 64.75

28 60.63

March