P&G to cut 15,000 jobs worldwide

Workers at Harford, Hunt Valley plants appear to be exempt

`We're pretty secure'

Global plan involves creating seven units organized by product

June 10, 1999|By Shanon D. Murray | Shanon D. Murray,SUN STAFF

Procter & Gamble Co. said yesterday that it will eliminate 15,000 jobs worldwide over six years and close about 10 plants in a global restructuring program, but officials at a local P&G plant said they expect the company's three Maryland facilities to be unaffected.

The restructuring -- the company's second this decade -- will pare about 13 percent of P&G's global work force of about 110,000. The program is designed to increase sales, get new products to market more quickly and cut costs, said Durk Jager, chief executive officer of the Cincinnati company.

The consumer products giant, known for 300 brands including Tide detergent, Crest toothpaste and Pampers diapers, will move from four business units based on geographic regions to seven global business units based on product lines.

There are 41,000 P&G employees at 32 plants in the United States.

P&G has a cosmetics and fragrances operation in Hunt Valley, acquired from Noxell Corp. in November 1989, that includes two plants that make Cover Girl, Max Factor and Oil of Olay cosmetics. There is also a distribution center in Harford County. All three facilities employ 1,400 workers, said Cheryl G. Hudgins, spokeswoman for P&G Cosmetics.

"I'm very comfortable we'll be here in the foreseeable future," she said. "We're pretty secure."

As of now, Procter & Gamble is not saying which plants will be affected, said Simon Denegri, a company spokesman. Employees may not be notified for another two years, he said.

Management said 42 percent, or 6,250 jobs, of the work force reduction will occur in Europe, the Middle East and Africa; 29 percent, or 4,300 jobs, in North America; 16 percent, or 2,450 jobs, in Latin America; and 13 percent, or 2,000 jobs, in Asia.

Some workers will be laid off, but P&G said it will try to make maximum use of retirements, relocations, voluntary departures and reductions in hiring.

"Our concern is to reduce the amount of uncertainty," Denegri said. "Out of maximum respect for our employees, we are as aware as everyone else of the need to do that.

"But we have more work to do to validate the current direction in which we're headed. When that is complete, we will be in position to notify those employees directly affected first, and then make a public announcement."

Meanwhile, Hudgins said, the Hunt Valley facility is in a hiring phase. In the past year, it has added a few hundred workers, she said.

Nearly two years ago, P&G moved its cosmetics operations in Canada and Puerto Rico to the Hunt Valley facility, and the company is in the process of relocating its Latin and South American operations there.

"We're sourcing the entire hemisphere," Hudgins said. "Given that data, we have reason to be confident."

Workers at the Hunt Valley facility share management's optimism.

"While everywhere else makes toilet paper and detergent, we're the only plant that makes makeup," said a 13-year veteran in the liquid makeup department who, like his co-workers, declined to be identified by name. "There's not a lot of duplication."

Said a seven-year veteran in the research and development department: "The people here are pretty confident about our jobs. We're concerned about the other people, especially in Europe, who are going to lose their jobs."

The restructuring program will cost the company $1.9 billion after taxes. Management said it expects to generate after-tax savings of $900 million annually by fiscal 2004.

Chief executive Jager, who took the helm in January, said the company expects sales eventually to rise by 8 percent annually, double its average the past five years, and earnings per share to rise by 13 percent to 15 percent in each of the next five years.

Procter & Gamble's last major restructuring was a reorganization in 1993 intended to reduce expenses to 12 percent of sales. That program involved closing 30 plants and eliminating 13,000 positions throughout the world.

The 1993 restructuring had cost $2.4 billion by its completion in 1997.

Daniel Peris, an analyst with Argus Research Corp. in New York, said a second restructuring raises concerns for him.

"Only in 1997 did the company swallow the reduction from 1993, and they are back at it again," he said. "There seems to be a notable problem.

"Creating global business units is an excellent idea, but why they have to do it again is a good question."

Wall Street also appeared hesitant in embracing P&G's news. The company stock fell $2.5625 to close at $92.25 a share.

But Douglas Christopher, senior analyst at Crowell, Weedon & Co. in Los Angeles, said he liked the moves.

"It's a refinement of an extremely sound business strategy for the next five years," he said.

Bloomberg News contributed to this article.

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