P&G swims, workers sink Nothing personal: Procter & Gamble set the corporate tone for the 1990s by closing plants and laying off thousands of employees while the company was making record profits.

April 07, 1996|By Jay Hancock | Jay Hancock,SUN STAFF

If corporate America has become meaner and greedier, some people think Procter & Gamble Co.'s Edwin L. Artzt taught it how.

In 1993, while the Cincinnati-based company was booking a record $2 billion in operating profit, Mr. Artzt, the company's chief executive, decided to wipe out 13,000 jobs and close 30 factories.

His hit list included a Baltimore plant with 215 employees that made Dawn, Joy and Ivory dish soap.

"We have a healthy, growing business, a strong balance sheet, positive cash flow, state-of-the-art products," he said.

"However, we must slim down to stay competitive."

Since then, the nation's largest consumer products company has prospered.

Its profits have soared by 40 percent. The price of its stock has nearly doubled.

Mr. Artzt did well, too: He collected salary and bonuses amounting to more than $15 million over four years.

But many of the laid-off workers haven't been able to find jobs that match what they once had.

As the maker of Crest, Ivory, Tide and Pampers, and purveyor of a squeaky-clean image of family life, Procter & Gamble has always been an American totem.

As one of the first U.S. businesses to downsize at a time when it was doing well, the company became a symbol of something less benign: a ruthlessness by American companies that has touched off a national debate about workers' security and economic values.

But if P&G demonstrates the pain of corporate upheaval, it also shows its larger economic benefit, some argue.

Many economists believe P&G is a model of how U.S. corporations can adjust and thrive in radically changing business conditions.

"There is going to be some short-term pain -- like the soap plant in Baltimore," said William Ward, a business professor who has studied P&G and taught at Susquehanna University and the University of Maryland.

"But those are necessary things so that this company is going to grow and prosper.

"Procter & Gamble isn't positioning themselves for the economy of the 1990s; they're positioning themselves for the global economy of the next millennium."

Rick Briscoe, one who knows firsthand about the pain, sees the P&G layoffs and plant closings in darker terms.

He lost his job of 20 years when the company's soap plant in Locust Point closed last year. At his new workplace, he earns half the $38,000 a year that P&G paid him.

"Some people are extremely bitter," he said about the closing, "and other people are just extremely uncomfortable. It's a simple case of the corporation going for larger profits and ignoring the people that put them where they are."

More than meets the eye

But economists argue that the company's decisions -- and their consequences -- were far more complicated.

P&G was forced to respond to a real business threat, they say, and was remarkably successful at it.

And the company has lowered prices for shoppers, created new jobs in new markets and benefited thousands of shareholders -- many of them ordinary, middle-class Americans, including laid-off employees.

Even President Clinton, who has called for a conference in Washington next month to showcase companies that share success with their employees, recently praised Procter & Gamble as a corporate good citizen, pointing to some of its benefit programs.

In urging U.S. businesses to act responsibly toward their employees, Mr. Clinton acknowledged that things will never be the same.

"We are entering a new economy that is so different that we're going through the period of most profound change that we've been through in 100 years," he said.

Mr. Briscoe knows that better than most.

"That P&G family that we believed in most of our lives," he said, is "gone."

Shoppers like Gail Clancy may not have started the economic ripple that swept Rick Briscoe from his job. But they pushed it along.

"I buy for price," Mrs. Clancy said recently outside a Wal-Mart in Catonsville. On some items, dish-washing soap, for example, she doesn't even worry about the brand. "It's up for grabs," the Ellicott City resident said. "Whatever's on sale."

She likes Tide, one of P&G's laundry detergents. But she won't buy it just anywhere.

"Wal-Mart supposedly has the cheapest Tide," she said. "I try to get it here."

P&G managers started worrying about penny-pinching shoppers and stores like Wal-Mart about five years ago.

The national recession was ending, but consumers weren't acting like it. They shopped discount stores, bought generics and waited for sales.

Partially as a result, P&G's U.S. sales were hurting. Grocery and drugstores' house-label brands took 11 percent of U.S. shoppers' dollars in 1989, 14 percent in 1990 and then stayed at 15 percent.

Many people believed that private-label products would eventually grab a third or more of the market and severely wound P&G, said William Cron, professor of marketing at Southern Methodist University and a former P&G salesman.

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