Legal & Regulatory

B&W to Restructure Power Business, Cites Dismal Coal Projections

Projections that coal utilization will decline faster than previously forecast have spurred Babcock & Wilcox Enterprises (B&W) to shed 200 jobs and restructure its traditional power business that serves coal-fired power generation in a bid to reduce overhead and improve efficiency.

The Charlotte, N.C.–based energy and environmental technology and service company said on June 28 that the new organizational structure includes a redesign of workflow for its North American–based coal power generation resources to provide an “effective, flexible organization that can adapt to the changing market conditions.”

It means that B&W will consolidate aftermarket and global new build activities for coal-fired generation into one segment that will be led by Mark Low, senior vice president of the new Power segment. All renewable energy projects, including the B&W Vølund subsidiary, will be consolidated into another segment, led by Paul Scavuzzo, senior vice president of the new Renewable segment.

“This new structure will allow for a Power segment focus on efficiency and support for our traditional customer base while the Renewable segment focuses solely on renewable project execution and worldwide growth,” the company said.

The cost-saving measures, including the job cuts, will take effect immediately, it said. B&W also expects additional facility consolidations in the coming year.

James Ferland, chairman and CEO of B&W, said taking the measures now would ensure that the company remains profitable in a challenging market.

“We have reduced the size of our organization that supports the coal market by roughly 20% and restructured how we support this market,” said Ferland. “These changes will allow us to continue to provide outstanding service to our customers and maintain solid profit margins in our power business despite an expected 15-20% reduction in U.S. coal customers’ demand for our parts and services by 2017 or 2018,” he added.

Ferland also noted that the company will make marked efforts to grow its renewable energy business and diversify its portfolio through acquisition.

The company is currently in the process of acquiring SPIG, an Arona, Italy-based global provider of custom-engineered cooling systems and services. Ferland said B&W expects to close the $171 million deal early in the third quarter. “In addition, we plan to leverage our strong balance sheet and focus on diversification which we believe will provide increased value for our investors,” he said.



Sonal Patel, associate editor (@POWERmagazine, @sonalcpatel)


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