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Big P&G layoffs reported
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June 4, 1999: 11:40 a.m. ET
Company said to plan factory closings, thousands of job cuts worldwide
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NEW YORK (CNNfn) - Procter & Gamble Co. will announce a massive corporate restructuring next week that includes thousands of layoffs worldwide and the shuttering of several underperforming plants, according to analysts who have spoken with the company.
The changes will mark the first significant step in a previously announced reorganization designed to accelerate P&G's sales and boost profits over the next 10 years.
P&G Chief Executive Officer Durk I. Jager is expected to detail the changes at a company briefing for analysts, investors and media Wednesday in New York.
P&G spokesman Simon Denegri declined to confirm the details of that briefing Friday. However, Denegri noted the announcements will mark but the first step of an "Organization 2005" strategy announced by the Cincinnati-based household and consumer products giant last September.
"Last September we said we would follow with more details and next week, we will," Denegri said.
Analysts, top investors already told
But top P&G executives already have met with analysts and institutional investors to detail the changes, which analysts predict will result in a $2 billion to $3 billion restructuring charge.
"People who follow Procter & Gamble know they are moving on a restructuring plan and it's going to result in layoffs and plant closings," said Constance M. Maneaty, an analyst with Bear Stearns in New York. "They need to shake things up a little bit."
"Conceptually, everyone is very pleased because . . . they are trying to become more streamlined and nimble," said Wendy C. Nicholson, an analyst with Salomon Smith Barney. "Procter just feels like they have become stymied in bureaucracy."
Most of the job cuts and plant closings are expected to occur outside the United States, when the 110,000-employee company is reorganized into seven business units to be run as global entities instead of parts of regional divisions.
The cuts are also expected to be aimed at streamlining the company's bulky management structure.
In addition, the Organization 2005 strategy calls for forming eight Market Development Organization regions, establishing a single global business service and overhauling the company's reward structure, training programs and general corporate culture.
Despite the massive restructuring charge, which comes as the company is once again seeing an earnings resurgence on its balance sheet, analysts support the changes, first reported in Friday's New York Times.
"The reorganization is also targeted at keeping their volume moving forward and generating cost savings," said Amy Low Chasen, an analyst with Goldman Sachs in New York. "So I think it will also accelerate their earnings even more."
Wall Street was supportive as well, pushing P&G's stock up 3-3/8 to 96-7/8 in mid-afternoon trading.
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Procter & Gamble
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