Westinghouse to lay off 1,500 as it deals with investigations and tries for turnaround

Jose Emeterio Gutierrez appeared before Westinghouse employees on Thursday — a group that has thinned by more than 700 people over the past few months — and announced that the nuclear firm will lay off 1,500 workers total as part of its reorganization.

The company president and CEO delivered the news at a monthly all-staff meeting beamed across several locations, a regular gathering that has been the site of several unpleasant updates since the beginning of the year.

In February, Mr. Gutierrez used the venue to disclose that Toshiba Corp., the Japanese parent of Cranberry-based Westinghouse Electric Co., had to write down more than $6 billion on the value of the nuclear firm. In March, he told employees that Westinghouse was filing for bankruptcy because of the weight of the cost overruns on two new nuclear power plant projects in Georgia and South Carolina.

Meanwhile, news surfaced this week about several ongoing investigations taking place as Westinghouse tries to stage a turnaround.

The soft-spoken and exceedingly polite executive has always maintained an optimistic tone, at one point flashing a slide of a boat in turbulent waters on the screen — a metaphor for Westinghouse that he said would come out stronger at the end of this ordeal.

He’s peppered his talks with sayings like “One Westinghouse” and “servant leadership.”

On Thursday, one employee asked him what that means. He said it means running the organization from the bottom up.

“If I have my 11,000 employees really engaged, motivated, willing to really fight to make this company better, that is tremendous,” Mr. Gutierrez said later in an interview with the Post-Gazette.

Asked how that’s going, he replied: “I’m not stupid.”

“I cannot be expecting that all my employees are happy and happy with these actions,” he said. “But they understand we have to do something.”

In late July, the company said that it would cut about 7 percent of its global workforce, which totaled around 12,000 at the time, including 4,500 employees in the Pittsburgh region. Mr. Gutierrez on Thursday told employees that all told, 1,500 people would lose their jobs before the end of March.

In the background of Westinghouse’s reorganization efforts are various probes into what went wrong with the company, its partners and its two construction projects in Georgia (still going) and South Carolina (canceled on July 31).

Federal prosecutors have issued subpoenas to South Carolina Gas & Electric and Santee Cooper, the two utilities that commissioned the South Carolina project. One of the utilities disclosed the information Thursday. Mr. Gutierrez said Westinghouse has not been served.

The Cranberry firm is also providing information to the U.S. Securities and Exchange Commission, which is “conducting an investigation into certain pre-bankruptcy transactions and practices involving Westinghouse,” the agency said in a document filed in bankruptcy court this week.

Mr. Gutierrez said he could not discuss that and he declined to address comments made by Santee Cooper’s outgoing CEO Lonnie Carter, who described to state senators this week how he’d felt deceived by Westinghouse.

Mr. Carter also described how he suspected that the well-meaning Mr. Gutierrez had been misled by his own staff about what Westinghouse could and could not deliver.

“That was a conversation that I had with Mr. Carter,” Mr. Gutierrez said. “He said what he said, and I’m not going to comment on that.”

Mr. Gutierrez said he wants to talk about the Cranberry company’s plans for a turnaround, which include focusing on existing nuclear reactors, pursuing non-nuclear work and investing in technology. He promised more robotics, more digitization and even 3-D printing.

He said Westinghouse is analyzing its footprint across the world, looking at how to renegotiate or restructure contracts with suppliers to make sourcing more efficient, and looking to expand into unserved territories.

There is likely to be more automation and more investment in Westinghouse’s 15 factories, which produce components and fuel, he said, and perhaps some consolidation as well.

He described the staff cuts as “surgical” — as in not uniform across all of Westinghouse’s business lines and locations but weighted heavier on certain groups, which he did not list.

Except for management.

“We have been reducing management positions, director positions, VPs and senior VPs,” he said. “We are flattening the organization.”

It is a common complaint among Westinghouse’s rank and file that the company had become too top-heavy, with too many in management out of touch with technical talent. That was one of the findings of an internal employee survey that Westinghouse did last year.

Mr. Gutierrez said efforts to deflate the hierarchy are partly in answer to those concerns. “In some way, I think that we are responding to requests from our employees,” he said.

He said he is targeting exiting bankruptcy by the end of the first quarter next year.

Westinghouse’s investment bank is fielding “a lot of interest” from potential buyers, he said, and the company’s business plan assumes it will continue to operate as a whole, instead of being sold in parts.

Anya Litvak: alitvak@post-gazette.com or 412-263-1455.

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