Simpson kick-starts GEC restructuring

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The Independent Online
George Simpson, the newly appointed managing director of GEC, has revealed his first moves to restructure the company after taking over the helm from Lord Weinstock.

However, GEC yesterday announced only a limited programme of factory closures and sell-offs, and said investors would have to wait longer to hear Mr Simpson's long-term strategy.

The closures and cost-cutting moves mean the loss of 1,000 jobs, most of which will go outside the UK. David Newlands, GEC's finance director, said: "The jobs impact in this country will be really very small, in the low hundreds."

The restructuring costs reduced GEC's half-yearly profits by pounds 160m. After the exceptional charges, pre-tax profits fell from pounds 402m to pounds 261m. Excluding these one-off costs profits would have risen by 4.7 per cent, to pounds 421m.

Most of the job cuts will hit two businesses bought by GEC in the last six months. The company said pounds 45m of the write-offs would go to cut costs in a power transmission and distribution business, bought from AEG in September, and at the US Hazeltine Corporation, a maker of electronic identification systems.

Mr Newlands said the group was also preparing to close a large factory in continental Europe, though he declined to give further details until the employees had been told. In addition, two smaller business would be sold off, including one before Christmas. These general restructuring provisions would account for pounds 65m of the write-offs.

GEC played down suggestions that the restructuring was an early indication of the direction Mr Simpson is likely to take with the empire he inherited from Lord Weinstock. The group has already made clear it wants to significantly raise its profits growth.

"This is not really to do with Mr Simpson. George arrived with us on 9 September. There are nearly 125,000 people in GEC and he has been getting to know some of them. He's now sitting down and carrying out a fundamental review of the businesses," commented Mr Newlands.

However there are clear indications Mr Simpson is starting to change the culture, including his habit of arriving at work as early as 7am. Lord Weinstock generally did not appear at until 10.30am.