Major redundancies loom as Procter & Gamble cleans house
15 Jan 2000
A major restructuring effort at Procter & Gamble is to leave 15,000 people without jobs and will close ten plants. The `Organisation 2005' initiative is planned to shave $900million off the company's annual costs, and boost sales growth by 6-8 per cent per year.
Organisation 2005 will cost P&G some $1.9billion after tax, to be spread across the next six years. The fruits of this restructuring should be a 13-15 per cent increase in earnings per share every year up to 2005. `The cost is well-justified by both the ongoing operational benefits of our new structure and the substantial financial benefits it will generate for our shareholders,' Jager comments.
The restructuring will include a standardisation of product lines and reorganisation of manufacturing capacity in line with global business units; a reduction in internal transactions; and a simplification of P&G's organisation `to reduce hierarchy and speed decision-making'. Some 6700 of the jobs lost will be in production; most of the redundancies will take place over the next two years.
`We have always said that Organisation 2005 is about accelerating growth, not cutting jobs,' claims chief executive Durk Jager. `These job reductions are principally an outgrowth of changes, such as standardising global manufacturing platforms, to drive innovation and faster speeds to market.' As many of the redundancies as possible will be through natural wastage or voluntary, and `financial assistance' will be offered to those selected for involuntary redundancy.
