APAC Inc., the highway construction and materials division of Ashland Inc. said that it is restructuring its operations to improve competitive market positions and increase profitability.

"People may assume this is a cost-cutting move, but it isn’t. As a result of a thorough strategic review of our operations, we’re reorganizing to change the way we do business and compete more effectively in each of our markets," said Charles F. Potts, APAC president and Ashland senior vice president.

Ashland President and Chief Executive Officer James J. O’Brien characterized the restructuring as an important step in transforming Ashland into a stronger, more competitive company. "The effort at APAC is part of a total corporate emphasis on organizational effectiveness and greater market focus. These elements are fundamentally important to our objective of improving Ashland’s overall profitability and producing more consistent and more predictable earnings in the future," O’Brien said.

"APAC is the nation’s largest highway contractor, but being the biggest doesn’t matter much unless we remain the best. That’s what the restructuring aims to do. It will enable us to compete more effectively across markets in ways that we haven’t done before," Potts added. "We will realize some savings in the process, but the most important benefits will come from improving our competitive position and building better platforms for future growth."

"The restructuring is related to but separate from APAC’s ongoing Project PASS business process redesign effort. The reorganization involves operations, while Project PASS aims to improve the efficiency and effectiveness of administrative processes and functions, including purchasing, information systems, financial accounting, and equipment management.

"Our market-focused, strategic reorganization, along with the ongoing implementation of Project PASS, puts us on the path to meet our previously stated goal of a 10 percent after-tax return on our investment in APAC in fiscal 2004," said David J. D’Antoni, Ashland senior vice president and group operating officer with responsibility for APAC and Valvoline.

Prior to the reorganization, APAC operated its business through 39 separate operating companies in five geographic regions spanning 14 states in the Southeast and Midwest. The new structure consolidates the 39 companies into 25 market-focused business units, which are grouped into three regions with similar revenue-generating capacity. Regional leadership is based in APAC’s Atlanta headquarters.

Potts cited numerous benefits from the restructuring, including improved coordination and integration of services in the market place; greater economies of scale; more consistent delivery of construction services; the potential to increase market share and use partnerships and alliances more effectively; and an improved ability to share people, equipment and best practices.

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