Fluor and Duke to End Joint Venture

Fluor Corp. and Duke Energy Corp. said Wednesday that they would dissolve a power-plant construction venture to reduce expenses amid slumping demand for new generators.

Aliso Viejo-based Fluor, the largest publicly traded U.S. engineering company, requested the shutdown of Duke/Fluor Daniel, the companies said in a statement. Fluor, which will continue to pursue generator contracts on its own, will eliminate unnecessary costs by disbanding the venture, Chief Executive Alan Boeckmann said.

Charlotte, N.C.-based Duke, the biggest U.S. utility owner by revenue, is working with Fluor on a plan for winding down the venture over the next two years, the companies said. Calpine Corp. and other U.S. power producers canceled expansions after wholesale electricity prices slumped and Enron Corp.’s December 2001 bankruptcy led to a collapse in energy trading.

“The excess capacity out there is a powerful force,” said Hilliard Lyons Inc. analyst David Burks. “The whole supply-and-demand situation has changed significantly over the past three years.” Burks rates Duke shares at “neutral” and doesn’t own any.

Disbanding Duke/Fluor Daniel isn’t expected to have a material effect on either partner, the companies said.

Duke shares fell 5 cents to $19.03 and Fluor rose 34 cents to $33.79, both on the New York Stock Exchange.

As Duke/Fluor Daniel’s projects are completed, Duke and Fluor will move the venture’s employees back into the companies from which they came “where possible,” the firms said. The venture had more than 630 employees, including 274 who came from Fluor.

“We’ll certainly be looking to see if we can integrate them into our business over the next two years,” Duke spokesman Terry Francisco said.

Formed in 1989, Duke/Fluor Daniel had sales of $6.4 billion in 2001, building power plants with combined capacity of 16,000 megawatts, according to the partnership’s Web site. That’s enough power for 12.8 million typical U.S. homes. Sales began to decline last year. The partnership didn’t provide a revenue figure for 2002.