Acknowledging that job losses are likely with the merger of Constellation Energy Group Inc. and Florida-based FPL Group Inc., executives tried yesterday to reassure workers that any reductions would be handled through attrition and retirements.
No layoffs are expected during the next year as the two companies that will be known as Constellation Energy close their deal. A work force reduction of less than 10 percent is expected, according to a slide presentation to employees that was included in a Securities and Exchange Commission filing that company officials made yesterday.
Executives said redundant operations such as back-office functions are likely to be trimmed as the company seeks to save up to $250 million from the merger through various means.
"In my view, employees at Constellation Energy and FPL Group will come to view this merger as overwhelmingly positive," Constellation Chief Executive Officer and President Mayo A. Shattuck III - who will become chairman of the merged company - said in an e-mail to employees yesterday. "While we expect to identify overlapping job functions, those that need to be eliminated may be addressed in large part through normal attrition."
Despite those efforts, company and business leaders said they are optimistic that the merger eventually will mean opportunities to expand the power company and create more jobs. Company executives hope to see growth in Constellation's unregulated business of buying, selling and supplying power to customers nationwide. That business has its headquarters in Baltimore.
"This business will have such growth prospects ... [that] I would see job growth in both markets," said Lewis Hay III, FPL's chairman, president and CEO.
Company officials did not offer specifics about job losses beyond the SEC filing. They also did not detail potential job growth in Baltimore and Juno Beach, Fla., where the combined company will maintain dual headquarters.
Constellation, the parent of Baltimore Gas and Electric Co., has nearly 9,600 employees, including 6,461 throughout Maryland and 2,589 in Baltimore. FPL has about 11,900 employees.
Shattuck said CEG has added hundreds of jobs in Baltimore through its retail and wholesale power trading and selling units. Constellation Energy Commodities Group, its wholesale unit, employs about 500 people and more employment growth is expected there, he said.
BGE makes up a large portion of the Maryland work force with about 3,100 employees but accounts for less than a quarter of Constellation's revenue. No changes at BGE are expected, Shattuck said. The utility, as with its southern counterpart, Florida Power & Light Co., will operate as an independent entity.
BGE employees associated with generating, transmitting and distributing electricity likely will remain in place after the merger, said Richard Clinch, director of economic research at the 's Jacob France Institute.
But merger and acquisition experts say it's common for combined companies to eliminate overlaps in jobs to cut costs.
"If you're in a support function, purchasing, accounting, all the back-office functions, Florida is a cheaper place to do business than Maryland," said Clinch, noting that he was skeptical about dual headquarters.
Aris Melissaratos, secretary of the Maryland Department of Business and Economic Development, expressed optimism about the merger's impact on the region's work force and economy.
"The doom and gloom about loss of jobs, I don't see that happening at either location because we're talking about a company that has a growth mentality here," Melissaratos said.
Still, not everyone was as positive about the merger.
Bill Barry, director of labor studies for the , worries that BGE employees could be at the losing end of the merger.
Barry said he spoke to about a dozen BGE employees in the past two days who expressed uncertainty and apprehension. Without a union to represent them, "they have nothing to guarantee any of their conditions," said Barry, a former union organizer.
The merger will bring together companies with different labor structures. About 3,200 utility employees of Florida Power & Light are represented by the International Brotherhood of Electrical Workers.
Constellation officials have been opposed to unionizing efforts and the company remains one of the few utilities in the country that is not union-represented. Workers there rejected bids to organize four times, most recently in 2001.
Gary Aleknavich, business manager of IBEW System Council U-4, said yesterday that he expects "no adverse effect" from the merger for Florida union employees, who ratified a three-year contract in August that gives workers a 10 percent pay raise over the length of the agreement.