Sunday, June 13, 1999
About Organization 2005
The Cincinnati Enquirer
Durk Jager, president and CEO of Procter & Gamble, went to Wall Street last week and unveiled details of the company's restructuring. He pulled no punches: “Organization 2005 marks the most dramatic change to P&G's structure, work processes and culture in the company's history.”
The restructuring and Mr. Jager's comment underscores the need for Cincinnati-based P&G — which markets about 300 brands to billions of consumers in 140 countries — to change the way it does business. Tired of watching competitors gobble up market share in consumer categories it once dominated, the company is putting more muscle into becoming a global power.
The company aims to achieve three things: shrink costs, increase sales and speed the process of introducing new products to consumers.
It plans to do that by developing seven global business units focused on product segments, such as laundry, feminine hygiene and hair care. It also shifts the company's focus from geographic expansion to faster, more innovative product development.
But Organization 2005 comes with a heavy cost:
• An estimated 15,000 jobs will be eliminated, roughly 13 percent of P&G's worldwide work force.
• About 1,900 of those lost jobs will be in Cincinnati, almost all at the downtown headquarters. Most of the cuts will come from attrition or reassignment and be completed by 2005.
• Ten plants and smaller production lines will be shuttered.
• The company will take a $1.9 billion after-tax charge.
While analysts are cautious of the changes, Mr. Jager promises a brightened financial picture.
“Organization 2005 is focused on one thing: leveraging P&G's innovative capability,” Mr. Jager said.
Analysts tell P&G: We'll see
About Organization 2005
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