Dresser-Rand to cut 8 percent of its workforce

HOUSTON – Diesel engine and gas turbine maker Dresser-Rand Group is cutting 8 percent of its 8,100-employee workforce around the world in coming weeks, the company said Friday, trimming operating costs as falling crude prices have crushed profits in the oil service sector.

The Houston firm, which makes oil industry tools including compression equipment and steam turbines, said the plan will cost $50 million in severance and other charges as it divests assets this year. But its “flexible” manufacturing business will enable the company to start realizing savings from fixed costs this year, it said.

“While current market conditions may generate discomfort in the industry, we believe the company is structurally well placed with its flexible manufacturing model to implement an efficient and a relatively non-disruptive restructuring plan,” CEO Vincent Volpe Jr. said in a written statement.

Dresser-Rand noted the market’s “prevailing view” is that oil prices will remain low.  Last September, Dresser-Rand had agreed to sell itself to German industrial conglomerate Siemens AG for $7.6 billion, including debt. The company said the market outlook, not the pending merger, prompted the layoffs and the divestments.

The company banked a profit of $46.2 million, or 60 cents a share, in the October-December period, compared to $32.8 million, or 43 cents a share, in the same period the year before. It said it expects a relatively stable year for its sales, even though its fourth-quarter margins were hit by falling oil prices and, in overseas markets, the strength of the U.S. dollar.

Siemens last year had inked the deal to buy Dresser-Rand in a bid to take on GE and other rivals in the U.S. energy market.