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P&G to Cut 13,000 Jobs, Close Plants : Manufacturing: Procter & Gamble officials say move is designed to keep 156-year-old consumer products giant competitive with generic brands.

July 16, 1993|From Times Staff and Wire Reports

CINCINNATI — Consumer products giant Procter & Gamble Co., responding to private-label competitors of its brand-name products, announced Thursday that it will close 30 plants and eliminate 13,000 jobs worldwide over the next three years.

Edwin L. Artzt, chairman and chief executive, said the global cutbacks are the first on this scale for the 156-year-old company, famous for a broad range of items from Tide laundry detergent to Pampers disposable diapers.

P&G has about 180 employees at a plant in Anaheim that manufactures a fruit soda under the label Sundor. Linda Ulrey, a Procter & Gamble spokeswoman, said the company has not determined what effect the reorganization will have on that operation.

The 1990s have produced a marked shift away from brand-name products toward cheaper goods as consumers seek what has come to be known in the retail industry as "value."

As a result, Procter & Gamble and other major brand-name manufacturers have found themselves under siege from makers of non-brand or generic products that often are sold under the name of the store that carries them.

"We believe that we must slim down to stay competitive in a very competitive world," Artzt said. "Consumers want better value, and our competitors are getting leaner and quicker. We are simply going to have to run faster to stay ahead, and we intend to do that."

Artzt said the public "has come to think of corporate restructuring as a sign of trouble, but this is definitely not P&G's situation." The company expects to report a record profit of more than $2 billion for the fiscal year that ended last month.

On Tuesday, P&G announced it was reducing its cost to retailers between 3% and 15% for liquid Tide, Cheer, Era, Dreft and Ivory Snow. P&G said it will cut the price of Ivory dishwashing liquid by 13% and Downy fabric softener by 5% to 8%. Price reductions on disposable diapers were announced earlier in the year.

The job eliminations amount to 12% of 106,000 employees worldwide.

Half of the job cuts will come from the plant closings and others will come from early retirements, buyouts and attrition of administrative workers. Of the administrative jobs, P&G said 60%, or 4,000, will be in the United States, including about 2,000 in the Cincinnati area.

In the case of the plant closings, P&G said it will try to reassign as many of the 6,500 workers as possible.

The proposed closed factories total one-fifth of P&G's 147 plants worldwide. Artzt said the company is not ready to identify the plants but that the factories will be given at least a six-month notice.

P&G's net earnings for fiscal 1992 were $1.9 billion, up 6% from the year before.

P&G shares fell 87.5 cents Thursday to close at $51.625 on the New York Stock Exchange.

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