Tempe, AZ February 19, 2002 British engineering group Invensys today announced a corporate restructuring aimed at reducing its debt load and improving customer service.
The company, which has been dogged by high debt incurred as it made a series of acquisitions in recent years, is reorganizing into two main groups, Production Management and Energy Management.
The Product Management group, which will include enterprise software provider Baan, is to focus on providing production technologies and services to the sectors of oil, gas and chemicals; power generation; food, beverage and personal healthcare; and discrete and hybrid manufacturing.
The Energy Management division will offer energy solutions, metering systems, appliance and climate controls and power systems to the power and energy infrastructure market, as well as for industrial, commercial and residential buildings.
A third group of companies will be sold off in an effort to reduce by $2 billion the company's staggering debt, reported to total about $4 billion.
The restructuring comes at the end of a strategy review process ordered by new CEO Rick Haythornthwaite, who has described Invensys, formed three years ago from the merger of two U.K. engineering firms, as a "sprawling conglomerate."
The review gave the company a better view of its customers' needs and the state of the market, Haythornthwaite said in a statement. "After a rigorous examination of our businesses and opportunities, we now have a clear understanding of today's smarter customers, tougher competitors and the risks and rewards before us," Haythornthwaite said.
Joe Cowan, president of Invensys Manufacturing and Process Solutions, said in an interview that the review showed that many of the company's customers were not satisfied with the return on investment they were getting out of Invensys' products. "Our customers have told us that they have not gotten the fast return on investment," Cowan said. "A lot of products have been put in that haven't gotten a return for our customers."
In particular, the company's unusually frank statement on the reorganization noted that while customers value the domain expertise that Invensys brings to the industry verticals it serves, "they [the customers] cite poor execution as the main barrier to our becoming the partner they seek."
The reorganization will allow the company to focus on providing products and services that will generate better ROI for its customers, Cowan said, adding that as part of this new customer focus, the company will deploy at various divisions a customer-relationship management (CRM) system from its own Baan unit.
The company also is undertaking initiatives to improve its project management and execution, and to drive toward a lean supply chain.
Invensys says it cut 11,000 jobs in the year ending September 2001 but is not currently planning any new large-scale layoffs in its workforce of 76,000.