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Fluor Sells 50% Stake in Engineering Firm

Deal: Move is part of cost-cutting effort, which includes scaling back site location and strategies unit.

May 15, 1997|JOHN O'DELL | TIMES STAFF WRITER

Fluor Corp.'s drive to slash $100 million from operating costs is leaving few parts of the giant international engineering and construction services firm untouched.

In its most recent move, Irvine-based Fluor said Wednesday that it is trimming back its site location and development consulting unit and has sold its 50% interest in a Wisconsin engineering and architecture firm to the other part owner.

Terms of the sale were not disclosed. Fluor said the transaction is expected to close in November and would not have a material impact on its financial performance.

The 100-employee Wisconsin company, Marathon Engineers/Architects/Planners, specializes in pulp and paper mill projects. Fluor bought a half-interest in the company several years ago as part of an effort to market its engineering expertise to as many industry segments as possible.

Now company executives say that Fluor and its principal operating subsidiary, the Fluor Daniel engineering and construction unit, have been hurt by the high overhead costs of maintaining business units in almost 30 different industries. Fluor last week said it expects to report a $70-million loss for its second quarter.

The company's presence in the pulp and paper industry "no longer fits our long-term strategic direction," said Fluor Daniel President Jim Stein.

Fluor sold its interest in Marathon to Finnish engineering firm Jaakko Poyry Oy.

Separately, Fluor executives acknowledged Wednesday that they have pared down the consulting unit that recently helped Fluor Daniel win a contract to oversee construction of a $300-million auto plant that Mercedes-Benz is building in Alabama.

Fluor's Global Location Strategies unit had been hired by the German car maker to find it a U.S. manufacturing site--and the consulting job helped Fluor gain the construction management contract as well.

Now, as part of its retrenchment, Fluor is closing Global's main branch offices, in Chicago and New Jersey, and is laying off seven of the unit's 40 employees.

Fluor executives say they believe Global can generate just as much business as it always has while operating only one office, its headquarters in Greenville, S.C.

Fluor shares rose $1 to $50.50 on the New York Stock Exchange.

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