Along with third quarter 2008 restructuring charge, an additional charge of about $20 million is anticipated to be shown when year-end 2008 results are announced on February 3, 2009. Run-rate annual savings from these actions are anticipated to total over $40 million.
We have completed the planned significant personnel and organizational changes needed to help position Nalco to succeed in 2009 and beyond, despite very challenging global economic conditions. Now our leadership team and employees can completely focus on running the business and helping our customers to succeed, Nalco chairman, president and chief executive officer J. Erik Fyrwald said.
To better serve our customers, we are driving our businesses going forward using an integrated business management approach, with our Division leaders having full responsibility for driving revenue, earnings, cash flow and return on capital. Therefore, in addition to sales and marketing responsibility, they will have responsibility for the other resources needed to drive performance — including supply chain operations, research, finance, human resources and other capabilities, noted Fyrwald. While this is standard practice at many companies, Nalco has historically separated functional responsibility from business sales and marketing. These changes will ensure that all efforts are aligned on winning in the marketplace.
In support of this change, the company has formed a new Water and Process Services Division to focus on the customers across industrial, paper and institutional markets with water, air and process applications. The new organization combines the best of the Industrial and Institutional Services and Paper Services divisions.
The creation of the Water and Process Services Division allows us to better leverage our substantial scale and technology advantages against competitors — several of whom compete in both paper process and water treatment markets, Fyrwald said. This new organization streamlines middle management — enabling faster communication and execution between senior management and customer-driven sales engineers. At the same time, we will maintain industry-specific focus in our marketing and research to remain on the cutting edge of technology development and service. The new division is also structured for the realities of today’s economic environment, and allows us to more quickly move talent to the best growth opportunities.
Nalco executive vice president Dave Flitman has been named as president of the Water and Process Services Division. He has global leadership responsibility for the segment. Executive vice presidents David Johnson and Eric Melin have the regional implementation accountability for the water and process services and overall company regional management responsibility as presidents of Europe, Africa and the Middle East (EAME) and Asia/Pacific, respectively. Flitman will lead global water and process services leadership team that includes Johnson and Melin.
While paper services will be integrated with the water business operationally, its financial results will continue to be reported independently.
Nalco’s Energy Services Division will have full accountability for energy customers globally, in addition to the broad cross-functional responsibility internally. Most of our customers served by Energy Services operate globally. In order to continue to ensure that we provide high-quality, consistent services and technologies, we will manage this business in the same manner, Fyrwald said. Energy Services markets remain key growth opportunities for Nalco, and this new structure puts us in the best position to successfully develop to our market potential. Steve Taylor leads the global organization as executive vice president and president, energy services.
