Fluor Veteran to Steer Economy Drive

IRVINE — In a bid to regain investors’ affections after a disappointing first quarter, Fluor Corp. on Tuesday named a longtime company executive to head its chief operating unit and vowed to shave operating expenses by $100 million a year.

It is not clear whether the cost-cutting effort will include layoffs. Fluor’s operating expenses totaled $10.6 billion, so a $100-million annual savings would represent less than 1%.

To spearhead the cost-cutting drive, Fluor officials selected 32-year company veteran James C. Stein. He will fill the long-abandoned post of president of Fluor Daniel Inc., the international engineering and construction firm’s major business unit.

Fluor Daniel discarded the office of president three years ago in favor of a team of group presidents and other senior executives responsible for various operations of the subsidiary. Stein, for example, had been president of Fluor Daniel’s Diversified Services unit.

Fluor Corp. Chief Executive Les McCraw told shareholders at the company’s annual meeting Tuesday in Houston that Stein, 53, now will direct companywide “realignment and cost-reduction initiatives” that are to be in place by the end of Fluor’s 1997 fiscal year in October.

Specifics of the plans weren’t offered. Lee Tashjian, a Fluor Corp. vice president, said he could not comment on details or on the impact the cost cutting might have on employment until company officials outline the plans to employees over the next few weeks.

Analysts said the company’s announcements were aimed at restoring investor confidence. Fluor’s stock plunged to $63 a share from $75 when the company announced on Feb. 19 that its profit for the first quarter rose by 8% instead of the 14% that many analysts had predicted. On Tuesday, Fluor shares rose 25 cents to close at $64.75 in light trading on the New York Stock Exchange.

The company said the weak performance was largely the result of unanticipated cost overruns in two large power plant projects.

“The significance of a new president for Fluor Daniel is that now somebody’s neck will be on the line,” said Robert E. Toomey, an industry analyst with the Piper Jaffray Inc. brokerage in Minneapolis.

Toomey added that while Fluor’s cost-cutting goal isn’t a very impressive percentage of overall costs “it is a large number of dollars, and reflects their intention to really get a cost reduction program growing.”

Stein, who started with Fluor in 1964 as a management trainee, has been an engineer, project manager, industrial and commercial group vice president and a group president. He presided over formation of Fluor Daniel Diversified Services unit in 1993.

Fluor spokeswoman Debbie Durell said the company will name a new Diversified Services president at a later date. That unit was started in 1994 to serve as an in-house supplier of equipment, technical and management personnel and environmental and plant maintenance services to the various Fluor operating units. It also ran a temporary staffing company that leased personnel to outside companies when their services weren’t needed within Fluor.