Entergy set to cut 165 jobs in state

40 at LR call site to go by next year

Entergy Arkansas will lay off 165 workers in the state as part of a move by Entergy Corp. to cut 800 jobs, the electric utility said Tuesday.

The 165 employees represent 4.7 percent of Entergy Arkansas’ approximately 3,500 employees.

About 40 of the 165 layoffs will come from a Little Rock call center, said Hugh McDonald, Entergy Arkansas’ chief executive officer. Those 40 layoffs will happen sometime in the summer next year, he said. Entergy said the rest of the layoffs will occur before the end of the year.

In addition to the loss of 165 jobs in Arkansas, Entergy Corp. will lay off about 240 employees in Louisiana, more than any other state in its coverage area.

The job cuts throughout the corporation will help Entergy be more efficient, McDonald said.

“The industry is changing dramatically,” McDonald said. “But at the end of the day, we have to be competitive to be sure that the cost to our customers is competitive.”

Within the utility side of Entergy Corp., about 17.5 percent of all the management jobs will be eliminated, as will about 2.5 percent of nonmanagement workers, McDonald said. There will be no reductions in linemen and workers who help restore power, McDonald said.

“Difficult decisions like job reductions are sometimes the very tough outcome of making long-term, fundamental improvements in the way a company works,” Leo Denault, Entergy Corp.’s chairman and chief executive officer, said in a prepared statement that was part of the company’s second-quarter earnings release.

Entergy shares fell 93 cents to close Tuesday at $69.60 in heavy trading on the New York Stock Exchange. Entergy reported net income of $163.7 million in the second quarter, about 55 percent below earnings of $365 million in the same period last year.

The layoffs have been “focused squarely on being fair to our employees throughout the process and being responsive to the needs of our customers, our employees, our communities and our owners,” Denault said in the statement.

For months, Entergy Corp. has been working on seven strategies to improve the firm’s financial performance. One of those is a reduction of employees or what Entergy calls “human capital management.”

“In the long run, these changes will ensure our employees are in the right jobs, have the right skills to be successful and the right tools and resources to meet the changing business needs,” Denault told analysts during a Tuesday conference call.

Entergy Corp. also will reduce contractor spending, Denault said.

Denault, who has a background on the financial side of Entergy Corp., probably saw some changes that needed to be made, said David Cruthirds, a Houston regulatory lawyer and publisher of energy newsletter “The Cruthirds Report.”

“I think it’s always good for an organization to periodically get rid of dead wood,” Cruthirds said. “But whether this results in a newer, better Entergy, that remains to be seen.”

James Jones, Entergy Arkansas’ regional customer service manager, told the Little Rock Board of Directors on Tuesday that the company has plans to add about 65 skilled jobs to the Little Rock economy when it builds a transmission center near a substation on Vimy Ridge Road. The utility is asking fora zoning variance to build a driveway, and the board is to vote next week.

“We’re looking to eventually build a new building on the property that will house a minimum of 65 people and will be a transmission operation center,” Jones said. “These are highly technical jobs and they will be needed to monitor the transmission grid 24/7.”

Entergy Corp. also is “evaluating additional opportunities to obtain savings, including compensation and benefits, procurement and nonemployee operating expenses,” Denault told analysts. The company has set a goal of $200 million to $250 million in savings to be implemented by the end of 2015, Denault said.

Entergy also said it took a $7 million, second-quarter expense as a result of an industrial accident at Arkansas Nuclear One near Russellville. The accident on March 31 killed one worker and injured eight others.

Since the accident, one of Entergy Arkansas’ two nuclear reactors has been shut down. Entergy expects the reactor could be back in service as soon as early August.

Entergy is seeking recovery of its costs through lawsuits against subcontractors and from insurance, Andrew Marsh, Entergy Corp.’s chief financial officer, said during the conference call.

Entergy expects that its total costs for the accident eventually will be between $95 million and $120 million, Marsh said in the conference call. That total “may change as we continue restoration activity,” Marsh told analysts.

Front Section, Pages 1 on 07/31/2013

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