Milwaukee, Wis.— To compete globally, cut costs, and develop new products faster, Rockwell Automation is being reorganized into two units and will lay off 3,000 employees over the next year. This news followed a June 29 announcement of several company-wide restructuring projects by Rockwell Automation's parent, Rockwell International Corp.

The restructuring will create two new entities, a revamped Rockwell Automation unit and a new Motor and Mechanical Power Transmission unit. Both will report to Don Davis, Rockwell's chairman and ceo. Rockwell Automation groups, such as Allen-Bradley, Reliance Electric, Rockwell Software, and their sales and support staffs, will continue to report to Jodie Glore, Rockwell Automation's president and coo.

Reliance Electric's motors and Dodge's mechanical power transmission products will be combined in the Motor and Mechanical Power Transmission unit, which will be led by its new president, Joe Swann. The new unit plans to pursue a "lower cost structure, optimized for production of motors and mechanical products."

"Rockwell Automation has grown 11 percent annually for the last five years, but we recognize the changing needs of our customers and have taken a long, hard look at our organization. The long-term benefit will be a more streamlined, customer-focused, globally competitive organization," says Mr. Glore. "Getting our costs in line over the short-term will contribute to a healthy performance during the flattening we see developing in some markets and with some customers. Most industry forecasts project reduced capital spending to continue in our U.S. and worldwide markets."

To lower its costs, Rockwell Automation plans to streamline human resources, finance, and information technology services by eliminating overlapping functions among brands. It will also divest under-performing product lines and those "no longer strategic to its success."

Rockwell Automation's streamlining will also include cutting about 3,000 people from its workforce. This will be accomplished by reducing temporary and contract help, canceling planned new hires, and other selected layoffs. The company states that many of the changes will occur immediately, and some will be implemented throughout the next year. Affected employees will receive severance pay and outplacement support.

Observers add the reorganization was probably also inspired by software's continuing advance into the controls and automation field. They speculate that an increasingly software-driven controls market may eventually push more high-end PLCs and other support-intensive automation products towards the commodity equipment side.