Arco Kicks Off Cutbacks With a High-Level Shake-Up

Atlantic Richfield Co., poised to begin a major cost-cutting campaign that includes layoffs, started at the top on Wednesday by announcing a management overhaul that includes the retirement of the Los Angeles oil company’s president and another senior executive.

Arco, which last week said it is developing a plan to slash costs throughout the company, also will be reducing capital spending and refocusing its efforts on markets where it can be the dominant or near-dominant player in exploration, production, refining or marketing, Chairman and Chief Executive Mike Bowlin said.

“In the oil industry, the world has changed very dramatically,” Bowlin said, pointing to lowest oil prices in more than a decade and gasoline prices that in recent months touched historic lows before rebounding slightly. Bowlin has vowed to keep Arco, the nation’s seventh-largest oil company, independent in the face of industry consolidation.

“There will be some markets and some countries outside the United States where we will no longer be,” Bowlin said in an interview. “I think we can shrink down the number of places where we are active.”

But Fadel Gheit, senior energy analyst with Fahnestock & Co. in New York, believes that Arco remains a prime takeover candidate.

“They can change the lineup as much as they like, but in my opinion this team is not going too far,” Gheit said. “They’re just buying time.”

Arco shares tumbled $3.06 to $70.94 Wednesday on the New York Stock Exchange amid a steep slide by the overall market.

Bowlin characterized the management restructuring as a first step in the plan to “help improve execution of the company’s core strategies and focus our resources on areas and businesses where we have or can attain a market leadership position.”

Arco President William E. Wade Jr., 56, will retire today, barely eight months after taking the job that he expected to be his last at Arco, his employer for 30 years.

The No. 2 job will be filled by Michael E. Wiley, 48, who also will take on the new title of chief operating officer. Wiley was promoted to executive vice president in Arco’s last management restructuring in January.

When Wade was named president last January, he was not considered heir apparent to Bowlin, who is only 55 and currently has no plans to retire. Four executive vice presidents were identified as possible Bowlin successors.

One of them, Executive Vice President Anthony Fernandes, 53, also is retiring. Fernandes ran the refining and marketing operations and also headed coal and chemicals, which recently were sold. Both Wade and Fernandes joined Arco in 1968.

Donald R. Voelte, 45, senior vice president of corporate planning, was named executive vice president on Wednesday, joining Marie Knowles, 51, who continues as executive vice president and chief financial officer, and J. Kenneth Thompson, 46, executive vice president responsible for Alaska and the Asia Pacific.

“When you’re going to have to go through major organizational, personnel and cost changes, you need to get the management in place that will be the ones that will run this company . . . after I’m gone,” Bowlin said.