Will turnarounds cost more jobs?

At its plants and offices and labs along I-95 in Delaware, 1,700 of our 6,100 neighbors who work at DuPont Co. will learn shortly - many by Monday - that their jobs have been eliminated.

They're being dismissed to "reduce our corporate overhead" and "restructure our cost base," chief executive Edward Breen warned in a memo a few days ago.

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New CEO Daniel Crowley comes to the Triumph Group from Raytheon.

Breen has done the big corporate cut, shine, and sale before, boosting profits and enriching shareholders of the former General Instruments Corp. and Tyco International after leaving thousands looking for work.

Investors cheered, and ran up DuPont's share price, when Breen was named the boss there in October. They have shown less enthusiasm, so far, for his post-job-cuts plans to merge DuPont with Dow Chemical Co. and spin the combination into pieces.

As turnaround practitioners, Breen and Andrew Liveris, Dow's president, chairman, and CEO, have to make those pieces look more profitable and interesting to shareholders. Not just thinner.

Investors also are betting on a turnaround at another locally based industrial company - Triumph Group Inc., a firm with $4 billion in yearly sales that operates 60 aircraft engine, structures, and parts plants around the world from its Chesterbrook offices.

Triumph grew and largely prospered for 18 years under Richard C. Ill, chief executive since the company's spin-off by Philadelphia's former Alco Standard Corp. Ill was a deft acquirer of specialized manufacturers and military, commercial and civil aircraft contracts.

The company has done less well since Ill tried to retire three years ago. His lieutenant and heir apparent, Jeffry Frisby, stepped down in April, drawing Ill back out of retirement as the company looked for a permanent replacement.

Triumph is in a business that has to time long-term factory and people investments to changeable military and civilian aircraft specs and evolving standards. Without a permanent CEO, as profitability slipped, the share price fell from a high of $85 last year, to about $70 in May, down to half that on Monday.

On Tuesday, Triumph hired Raytheon executive Daniel Crowley as Ill's replacement. The stock shot up nearly 20 percent. His resumé added $300 million to Triumph's market value in one day.

How do investors expect that the new CEO is worth that much or more? "It will take an outsider to shake things up," Steven Cahall, analyst at RBC Capital Markets L.L.C. in New York, wrote to clients.

Despite the hiring delay, the new CEO's experience running a business unit larger than Triumph for Raytheon - after serving as chief operating officer for all of Lockheed Martin - makes him "ideal," analyst Myles Walton told clients at Deutsche Bank: Crowley has run large manufacturing organizations on "challenging" and achingly complex projects such as the U.S. military's F-35 Joint Fighter, and managed people and resources through "cyclical spending pressures" such as the withdrawal of U.S. troops and supply contracts from Iraq and Afghanistan.

At Triumph, Walton added, Crowley faces three challenges: to review the "fit" of its current collection of businesses, "address a cost base" swollen by "unrealistic" past growth projections, and profit from big changes in commercial aircraft orders. He expects a plan to lower costs and raise profits from Crowley as soon as April.

Does that mean layoffs and plant closings? Crowley sees Triumph as a "turnaround opportunity," he told me. As a "facts and data guy," a factory engineer to the core, "I'll let the data decide whether plants should be consolidated." But the best way to grow profits is by boosting sales, he added.

Crowley said he has built good relations with managers at Boeing, Airbus and other big customers: "They want to see higher-level performance."

Unlike the old DuPont with its fast-eroding Wilmington base, Triumph is decentralized. When plants open, shut, or change hands, it's often a local matter noted more by aircraft buyers and suppliers than local communities.

What would it take for Triumph to locate more manufacturing close to home? Crowley admires Germany's intensive trades-training program. "There are some schools in the U.S. that feed that. But the U.S. doesn't have the same structure and certification," he said, adding that he supports efforts by the aircraft manufacturers' associations to tighten standards.

Crowley is moving from Massachusetts to the Philadelphia area as part of the deal. He starts Monday.

JoeD@phillynews.com

(215)854-5194@PhillyJoeD

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