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Otis overhaul to cut 2,000?
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April 13, 1998: 12:21 p.m. ET
Global restructuring will close over a dozen centers and trim work force
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NEW YORK (CNNfn) - Otis Elevator Co., the world's largest elevator company, said Monday it will close two-thirds of its worldwide engineering centers as part of a broad revamping that could result in the elimination of more than 2,000 jobs.
The Farmington, Conn.-based company, a subsidiary of United Technologies Corp., said it would immediately reduce the number of its engineering centers from 19 to 6.
The potential layoffs would represent about 3.3 percent of a worldwide work force of more than 60,000 people employed at about 1,700 locations.
The company will also close or downsize other factories over the next 12 months as it completes a "global manufacturing rationalization program."
Otis said it will likely incur a first-quarter charge from the actions. But it added that the charge will be offset by a gain from a favorable settlement of a contract dispute elsewhere in United Technologies.
Stephen Page, Otis's president and chief executive officer said the in-house overhaul, while difficult, is necessary if Otis hopes to maintain its competitive edge in the 200 countries where it does business.
Though based in the United States, the company generates more than 80 percent of Otis's revenues outside the country. The company's European and Transcontinental Operations contribute a little more than half of total sales volume.
North American sales account for a quarter of total volume. Pacific-Asian operations generate 19 percent of revenues, with Latin American units contributing the balance.
"Our highest priority is to set a new direction for Otis - a direction that embraces global thinking, decision making and behavior, unparalleled product quality and being first to market with new and innovative products and services," Page said.
Otis has already closed its Paris-based European headquarters and reorganized its global operations into seven geographic regions. The company said the actions had been triggered in part by a slowdown in Asian volume.
More than 60 percent of the world's 100 tallest buildings use Otis high-rise equipment. The company operates more than 1.2 million elevators around the world.
Shares of United Technologies (UTX) were down 15/16 at 94-3/8 in midday trading Monday.
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