CINCINNATI -- The Procter & Gamble Co. said Wednesday it will eliminate 15,000 jobs worldwide over six years -- about 13 percent of its work force -- and close about 10 plants in a global restructuring program.
The changes begin when the company's new fiscal year begins July 1, said management of the company best known for such consumer products as Tide detergent, Crest toothpaste and Pampers diapers.The restructuring, in what P&G calls its Organization 2005 program, is designed to increase sales, get new products to market more quickly, cut costs and make the company -- which grew from a 19th century soap producer -- more responsive to market changes.
"The result will be bigger innovation, faster speed to market and greater growth," said Durk Jager, P&G's chief executive.
It is the company's first major initiative since Jager, a 29-year P&G veteran, became chief executive on Jan. 1.
P&G stock, which rallied late last week when reports of the reorganization appeared, retreated Wednesday morning following the announcement. At midmorning on the New York Stock Exchange, P&G was down $1.44, or by 1.5 percent, at $93.38 a share.
Under the program, the company will move from four business units based on geographic regions to seven global business units based on product lines. The company will also establish new market development organizations to tailor sales programs for local markets.
"Organization 2005 marks the most dramatic change to P&G's structure, work processes and culture in the company's history," Jager said.
The program will cost Procter & Gamble $1.9 billion after taxes. Management expects that it will generate after-tax savings of $900 million annually by fiscal 2004.
The company said 10,000 of the job cuts probably would occur through fiscal 2001, which ends June 30, 2001. The rest will come in the following years. Jager said some workers will be laid off, but P&G will try to make maximum use of retirements, relocations, voluntary departures and reductions in hiring.
Employees who are laid off will be offered financial assistance and job retraining, Jager said.
Management said 42 percent of the work force reduction will occur in Europe, the Middle East and Africa, 29 percent in North America, 16 percent in Latin America and 13 percent in Asia. The specific plants and businesses to be affected will not be publicly identified until final decisions are made and employees have been notified, Jager said.