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HOUSTON-The city’s second largest employer, Halliburton Corp. will split off its troubled engineering and construction business into a separate entity, cutting senior management positions and tightening the operation.

Halliburton had signaled that action was pending when the divisions showed a third quarter decline of 21% in construction revenues. “They already said they were going to make some changes in their E&C business,” says a local analyst. “What we did not know was the extent to which they would be making cuts and the charges they would be taking.”

Halliburton’s traditional and energy-related E&C business will be managed by Kellogg Brown & Root. It faces “challenges.” It has a shrinking customer base, labor problems overseas and difficult relationships with key clients in a viciously competitive environment.

Halliburton officials say the restructuring will be completed during first quarter 2001. Despite the E&C problems, the company hopes to meet or exceed earnings expectations.The oil and gas giant got into the construction business in 1962 when it bought Brown & Root. It had expanded with the purchase of Dresser Industries, when it combined Dresser subsidiary M.W. Kellogg with Brown & Root. Dresser is now being sold.

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