Procter & Gamble to cut 5,700 jobs and $10 billion
Procter & Gamble Co plans to cut a total of 5,700 non-manufacturing jobs as part of a new plan to reduce costs by $10 billion by the end of fiscal 2016
With so many recent stories of pharma layoffs, at least the latest story in that realm is only indirectly related to pharma, as Procter & Gamble Co.—which announced it would slash 5,700 this year and cut $10 billion over the next few years—is a large consumer products company and not a Big Pharma player.
Still, even though the company sold its prescription-drug unit in 2009 to Irish company Warner Chilcott Ltd. for $3.1 billion and essentially exited the pharma R&D business, people still think of P&G when they go into personal health aisles in the stores, and the company does have a few well-known over-the-counter health products like Pepto-Bismol and Vicks.
As the world's largest household products company, P&G employs some 129,000 people, and among those are about 57,000 non-manufacturing jobs. The 5,700 jobs on the chopping block will come from the non-manufacturing portion of the business. P&G has already said it would cut 1,600 positions in the current fiscal year, and now it says it will cut another 4,100 jobs during fiscal 2013,which begins in July.
The company anticipates savings of around $800 million from the job cuts, executivessay, but the company plans to trim a total of $10 billion of costs over the next four years, including $1 billion in marketing costs and $3 billion in overhead costs.
P&G's problem is lackluster growth—or no sales growth in some areas—in the United States and Europe, plus risingcosts of raw materials, including fuel, and volatile overseas markets."This will make us more agile and more fast-moving as an organization," McDonald said.
"We realize that we have to do it," CEO Bob McDonald said. "The environment necessitates it."
Othersavings will come from cutting back on TV advertising, using lessexpensive packaging, eliminating duplicate work and creating morepartnerships with outside researchers to develop new products.