Procter & Gamble to shut 30 plants, cut 13,000 jobs Effect on Baltimore operations unclear

July 16, 1993|By Ross Hetrick | Ross Hetrick,Staff Writer

Procter & Gamble Co., which has two operations in the Baltimore area, said yesterday it will close 30 plants and eliminate 13,000 jobs worldwide over the next three to four years.

The cuts, representing 12 percent of the company's work force, are aimed at maintaining the company's dominance as a cleaning products, cosmetics and food company. Although financially healthy, the company faces increasing competition, particularly from generic products.

The effect of the restructuring on Procter & Gamble's Baltimore operations, which include the former Noxell operation in Hunt Valley and a soap plant near the Inner Harbor, remained unclear yesterday. The plants employ more than 2,000.

"We really don't know," said Ann Jenemann Smith, a spokeswoman for the Cincinnati-based company. "The precise number and locations have not been determined."

Procter & Gamble, whose products include Ivory soap, Cover Girl makeup, Jif peanut butter, Folgers coffee, Duncan Hines foods, Crest toothpaste and Luvs diapers, has 49 plants in the United States and 98 abroad. Ms. Smith said some of the plant closings will be announced by the end of this year.

The company said the restructuring was necessary partly because it has acquired 79 plants over the past 11 years while closing only 24. That has left "a significant number of opportunities to consolidate to lower product costs," according to a company statement.

'A healthy, growing business'

Unlike most other companies that have recently announced large layoffs as part of restructurings, the fortunes of Procter & Gamble have been improving, not declining.

"We have a healthy, growing business, a strong balance sheet, positive cash flow, state-of-the-art products and a well-stocked technology pipeline with plenty of opportunities for growth," Edwin L. Artzt, P&G's chairman and chief executive, said in a prepared statement.

"However, we must slim down to stay competitive. The consumer wants better value. Our competitors are getting leaner and quicker, and we are simply going to have to run faster to stay ahead."

Procter & Gamble predicted yesterday that it would report more than $2 billion in profit -- before various restructuring and special charges -- when it releases results next month for its fiscal year, which ended June 30. That level would be about 8 percent above the company's earnings for the previous fiscal year.

The company said the restructuring would save it $500 million in after-tax profits each year by 1995 and 1996. The company also said it intended to boost annual common stock dividends to $1.24 a share, from $1.10.

Wall Street shrugs off news

Wall Street's reaction to yesterday's announcement was tepid, with the stock declining 87.5 cents, to close at $51.625. However, analysts said, the stock price has moved up in recent weeks in anticipation of the announcement.

"It's a good company; it's very strong financially," said Douglas A. Christopher, an analyst with Crowell, Weedon & Co., a regional stock brokerage firm in Los Angeles.

But, he said, it is becoming more common for strong companies to shrink in preparation for a possible slower economic future and to become more competitive.

"There is always fat to cut," Mr. Christopher said.

He cited Colgate-Palmolive Co. and PepsiCo Inc. as two financially healthy companies that have also restructured in recent years.

While Procter & Gamble's actions had been expected, estimates of the work force cuts had been about half to three-quarters of what they turned out to be, he said.

Two-stage reorganization

The company's reorganization will come in two stages. The first stage, scheduled to occur in the next 24 months, would cut 6,500 workers from its current payroll of 106,000 employees worldwide. The effort would eliminate 4,000 jobs in the United States, including 2,000 at its headquarters in Cincinnati.

The second phase of the restructuring, which is expected to take three to four years, would involve closing the 30 plants and the elimination of 6,500 jobs. Where there is more than one plant at a location, the company said it might close only part of the site.

Procter & Gamble's Hunt Valley operation, acquired from the Noxell Corp. in November 1989, includes two plants that make Cover Girl, Clarion and Max Factor International cosmetics, according to Kerry A. Desberg, a spokeswoman for the Hunt Valley plant.

There are also five additional administrative operations scattered around various office buildings in the Hunt Valley area, she said.

Procter & Gamble also owns EuroCos, which has its U.S. operation based in Hunt Valley. EuroCos sells designer fragrances.

In all, the company employs 1,800 in Hunt Valley.

Ms. Desberg said the company had "invested heavily" in its Hunt Valley operations since their acquisition. "We continue to expand and upgrade," she said, noting the work force has grown 30 percent since Noxell was acquired.

The Baltimore soap plant, with 220 employees, produces dishwashing soap under the brand names Joy, Dawn and Ivory Liquid.

It is only one of two Procter & Gamble dishwashing soap factories in the country, a spokesman said.

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