P&G cuts further 9,600 jobs as pharma division comes under spotlight

Procter & Gamble has announced plans to cut 9,600 more jobs worldwide,or 9% of its workforce, as part of an extension of its Organization 2005 program which was initiated in 1999 and called for 15,000 jobs to be eliminated (Marketletters passim). Of that last figure, only 7,200 people have left P&G's employ.

40% of the latest round of lay-offs will be in the USA, and one-third of total job losses will come from manufacturing. The company expects savings from this aspect of the program to be approximately $600-$700 million annually after tax by fiscal year 2003/4, but noted that the job-cutting program will cost $1.4 billion.

P&G's chief executive, Alan Lafley, described the announcement as "very difficult," but added that "this program is right for the long-term health of our business and is the next step in our plan to restore long-term growth." However, he claimed that " this is not just a cost-cutting program [as] no-one ever cost-saves their way to sustainable growth." The savings are going to be invested "in getting our consumer value and pricing right, continuing to invest in innovation on core businesses...and continuing to provide strong marketing and sales support for our brands," Mr Lafley concluded.