Pollution control firm restructures

September 12, 1995|By Kim Clark | Kim Clark,Sun Staff Writer

Environmental Elements Corp., which has seen its profits go up in smoke along with the demand for its air pollution control devices, announced another restructuring yesterday.

The Baltimore-based maker of smokestack "scrubbers" said it will close its Jeffersonville, Ind., facility and lay off most of the 50 workers there.

At least 10 of the Indiana workers will be offered jobs in Baltimore, the company said.

In addition, the company shuffled its executives. Chairman Richard Hug, who led the company when it broke away from Koppers Co. in 1983, and when it went public in 1990, was moved to chairman emeritus.

F. Bradford Smith, president and chief executive officer, was moved up to chairman.

And Edward H. Verdery, who had served as chief operating officer for the last two years, will add president and chief executive officer to his title.

The executive changes, though long expected, came earlier than planned because of continuing financial difficulties, Mr. Smith said yesterday.

After seeing that the first fiscal quarter, which ended June 30, was disappointing, the company's board decided it must "drive our costs down in order to meet a smaller market. . . . It was a hard decision," he said.

Environmental Elements reported losing $609,000 on sales of $18.7 million in its first quarter of 1995. The company has been struggling with declining sales and high costs for several years. Although it eked out a $37,000 net profit on $78 million in sales in 1994, it has lost money on its operations since 1992.

The company restructured in 1993 and again last year, and cut its staff from 340 to today's level of approximately 250.

Mr. Smith said he thought this would be the company's last restructuring. "I think we're done" cutting staff and shuffling managers, he said.

After closure of the Jeffersonville plant -- where workers made repair parts for scrubbers -- the company will likely have about 200 employees, Mr. Smith said.

He said the company will take a $1 million charge in the current quarter to cover the changes, but Environmental Elements hopes to more than recoup that money when it sells its 20,000-square-foot plant in Indiana.

One key to the changes is reducing the company's emphasis on making scrubber repairs, while emphasizing more profitable niches such as engineering repairs and designing new installations, he said.

The restructuring should cut the company's costs so that it can be profitable with as little as $60 million in annual sales, Mr. Smith said. Previously, analysts estimated that the company could only begin to make money after it reached at least $75 million in sales. Mr. Smith said the company, which analysts say sells about one-third of the nation's smokestack emissions scrubbers, has been generating disappointing sales and earnings numbers because its potential customers aren't being pushed by the U.S. Environmental Protection Agency to order new anti-pollution devices.

He said the next big boom in demand from U.S. customers probably won't start until 1997, when the EPA is supposed to issue new regulations that reduce the emission levels permissible from paper mill smokestacks.

Environmental Elements' stock closed at $2.625 in New York Stock Exchange trading after the announcement yesterday, up 12.5 cents.

Baltimore Sun Articles
|
|
|
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.