Fenner restructuring may include cutbacks

PITTSBURGH—Fenner P.L.C.'s restructuring efforts within its global conveyor belting business are being expanded to include the Americas region, where cutbacks are being pondered.

The why is simple. The company's sales and earnings are down, its Engineered Conveyor Solutions conveyor belt division is suffering, and the coal mining industry has not bounced back from a tailspin that dates to 2012.

What and when aren't as clear.

But it is likely changes within the firm's Fenner Dunlop operation in North and South America are coming, Fenner CEO Nicholas Hobson indicated in two conference calls.

Some cuts already have occurred, a spokesman said, but he did not say how many or where they were made.

The biggest change, as far as the company's Pittsburgh-headquartered Fenner Dunlop Americas business is concerned, came in early October with the departure of Cassandra Pan, who served as president of the North American operation and head of the Engineered Conveyor Solutions Americas regional unit, which oversees conveyor belt operations throughout the region.

Pan took early retirement on Oct. 5. She had been president of Fenner Dunlop Americas since 2009, and prior to that she was managing director of the company's business in China for 101/2 years.

“She had plans to retire and decided to accelerate the process,” said Scott Frenz, vice president of marketing for Fenner Dunlop Americas.

In a later interview, Pan said it was her decision to retire after 17 years with the firm. “It's been an amazing experience for me. I worked hard and gave it all I had. But the markets have changed so dramatically. It's a terrible market for the coal industry.”

She said she intends to spend more time with her family in Asia and Italy.

Her decision came at the same time the company began making significant changes at the top of its global ECS belting division, creating a tighter management unit.

Previously, Pan headed Engineered Conveyor Systems-Americas, Edwin Have ran ECS-EMEA (Europe, Middle East and Africa), and Graham Lenz was head of ECS-APAC (Australia, New Zealand, China and Southeast Asia). They reported to David Landgren, who was responsible for the entire belting division.

Under the new restructuring, top management responsibilities are split between the Northern Hemisphere and the Southern Hemisphere/Asia-Pacific.

Have takes over for Pan with added responsibilities. He now is executive director of the Northern Hemisphere, comprised of the Americas, Europe, Africa/Middle East and India.

Landgren was named executive director of the Southern Hemisphere/Asia-Pacific, including Australia, China and South Africa. Lenz will continue as managing director of Australia/APAC, Frenz said.

Landgren and Have report to Hobson. They will continue to serve as members of the Fenner executive committee.

The alignment of business operations for Fenner ECS primarily is due to geography and clustering of customer types, Frenz said. He said a significant number of mining companies have their largest operations in the Southern Hemisphere. While those same firms have some big mines in the Northern Hemisphere, “the business in Europe and the Americas is much more diverse.”

A large number of industrial bulk materials operations—including those for aggregates, cement, grain, power generation and ports—are more common in the Northern Hemisphere, according to Frenz.

Hobson doesn't expect to see any improvement in the mining industry's poor economic conditions anytime soon.

In a recent interview, Hobson said the mining market “is in difficult straits due to the low prevailing prices of minerals. Pressure on earnings has led many mining companies to reduce costs within their operations and by reducing expenditures with supply partners such as Fenner Dunlop.”

That has led to significant reductions in capital expenditures, he said. Fenner Dunlop, he added, has experienced less demand for both products and services in many regions, including the Americas.

“Earlier in 2015, we announced (and implemented) significant reductions in both variable and fixed costs at many of our facilities around the world,” in particular in China and England where the work forces and capacities were cut, Hobson said.

Fenner Dunlop reduced capacity in both countries by cutting back production to a single shift.

In North America, he said, “we have experienced declining revenues from the coal mining industry, which has been impacted by declining demand and the low price of coal due, among other things, to low natural gas prices. However we continue to make good progress in other industries in North America.”

Fenner is reviewing medium term activity levels of its U.S. business, and once the process is complete “we will be able to determine what is the optimum structure for our business in order to enable us to continue to provide our customers with the technologically advanced products, excellent customer service and integrated engineered conveyor solutions they expect from Fenner Dunlop,” he said.

In terms of what will happen at its North American operations, Hobson said Fenner Dunlop is proactive in managing its costs in response to external factors such as low commodity prices. That's evidenced by cutbacks it made in China and England, he said. “External effects sometimes cause us to make very difficult decisions about manning levels.”

As in the past, he said, market conditions will determine how the firm will manage costs in North America.

“In difficult economic times such as these, all parts of an organization must be continuously scrutinized to ensure we continue to fulfill our customers' expectations while being mindful of our obligations to other stakeholders,” he said.

Some job reductions at Fenner Dunlop Americas already have taken place. Several cuts were made in the company's fabricated products and services unit.