P&G cuts 9,600 jobs

P&G plans to cut 9% of its workforce

The consumer products group Procter & Gamble plans to cut 9,600 jobs worldwide.

The company has been struggling with rising costs and slow sales growth for the past two years.

No one ever cost-saves their way to sustainable growth

A.G. Lafley
chief executive

Sales increased just over 4% in fiscal 2000 and fell 4% in the first six months of fiscal 2001.

P&G makes Crest toothpaste, Tide detergent and Pampers nappies.

The 9,600 cuts within a workforce of 110,000 amounts to 9% of the company's employees.

This is lower than rumours of 11,000 to 22,000 cuts which were circulating on Wednesday.

US jobs under threat

About 40% of the job losses will be in the US.

One-third of the cuts will come from manufacturing projects. This will also involve plant closures.

Job figures

9% of workforce cut

40% of cuts in US

17,400 cuts in total since 1999

The remaining two-thirds of the reductions will affect non-manufacturing positions at all levels.

The job cuts extend a previous cost-cutting programme from 1999 called "Organisation 2005", which involved 15,000 job losses.

The company still had 7,800 jobs to cut under that programme. With this latest announcement, the total job losses will be about 17,400.

Savings

The cost of the job-cutting programme is estimated to be about $1.4bn after taxes.

Through the programme, P&G plans to reduce overhead and manufacturing expenses, saving $600m to $700m by 2004.

"The cost benefits of strengthened competitiveness and improved productivity are significant, but this is not just a cost-cutting program," said A.G. Lafley, chief executive.

"No one ever cost-saves their way to sustainable growth," he said, adding the company would invest its savings in marketing, product innovation and improved pricing practices.

Last month, P&G said it expected profits in the second half of fiscal 2001 to be lower than expected because of an economic crisis in Turkey, its 12th-largest market.

P&G shares closed down 45 cents at $62.75.