Fluor Moves Out; Rents Move Up
Fluor Corp. is about to sign a deal to build a new company headquarters, likely in Aliso Viejo, and will move from its landmark mirrored glass tower in 1999, company employees were told Thursday.
Fluor officials refused to comment. But sources who attended a staff meeting Wednesday afternoon said they were told by Fluor executive James Stein that the company will save millions of dollars a year in rent and other costs by building a new, state-of-the art office complex.
Fluor’s move has long been rumored, but the company would only say that it has been negotiating several possible deals, including staying put in the sprawling compound that it built as a corporate headquarters in 1977.
Stein’s remarks Thursday left no doubt abut the company’s intentions. He told employees that they would be moving from Irvine in two years.
Stein did not specify the new location--that announcement, he told workers, will come in about 10 days. But real estate industry insiders have been saying for weeks that the company has cut a deal with a major office developer in Aliso Viejo.
The move from the 20-year-old Park Place complex in Irvine--where Fluor occupies 850,000 of the 2 million square feet--is likely to create new problems for the owners of the property. Fluor sold the complex to an investment group in the mid-1980s. That group has since filed for bankruptcy and is in the process of turning over a 90% stake in the property to its bondholders.
Stein, newly appointed president and chief operating officer of Fluor’s chief subsidiary, Fluor Daniel, called Thursday’s meeting to discuss his plans to slash $100 million a year from Fluor’s $1.6-billion annual operations budget.
He told workers during the nearly hourlong session that there would be no mass layoff, as happened in 1984 and 1985, when Fluor slashed its payroll by more than 30,000 employees through layoffs and by selling business units. Since then, the payroll has grown by 36,000 and Fluor now has 50,000 workers worldwide.
Top management has been “too removed” from the company, Stein said, and Fluor has become entangled in too many pursuits that don’t bring in much profit.
The new plan, Stein said, calls for a review of all operations and the closure or consolidation of many of Fluor’s 80 offices. The company also will be eliminating marginal business units and conducting a selective layoff. The exact amount of personnel trimming, Stein said, hasn’t been decided and will be left up to individual operating group managers.
He told employees that the cost-cutting plan won’t remove Fluor’s “muscle and bone” but will result in a company with considerably fewer lines of business--it now has more than 30--and with employees who can function in more than one operating unit.
Fluor’s ballyhooed corporate “re-engineering” three years ago, Stein reportedly said, enabled the company to grow. But it has grown too freely with too many overlapping support units. There are accounting departments, for example, in each business group rather than a central accounting office taking care of all the groups’ needs, Stein complained.
Stein also told employees that the cost-cutting program was launched almost nine months ago and was not the result of a recent massive slide in the price of the company’s stock. Fluor shares closed Wednesday in moderate New York Stock Exchange trading at $50.125, down $1 for the day and off 33% from a $75 high on Feb. 18.
The falling stock price, Stein reportedly told employees, was “a wake-up call.”
Times correspondent Melinda Fulmer contributed to this story.
