When then-chairman John Smale wanted to know how much business Procter & Gamble did with Wal-Mart, it took his sales and accounting staffs 3 1/2 months to discover the Arkansas discounter was P&G's biggest single customer worldwide.
Yesterday, 14 years and three major restructurings later, Procter & Gamble Co., the nation's largest manufacturer of household products, said it was once again eliminating jobs and shuttering factories in an effort to make things go faster.
The Cincinnati-based company said it would cut 15,000 jobs -- 13 percent of its worldwide work force -- and close 10 manufacturing plants over the next six years as part of an "Organization 2005" restructuring plan designed to shorten the process of developing new products and getting them to market.
"The result will be bigger innovation, faster speed to market and greater growth," said Durk Jager, P&G's new president and chief executive and the man responsible for making the new plan work.
In the past, P&G often has taken so much time test-marketing products that its competitors were able to come out with a rival product at the same time or earlier. One marketing consultant yesterday called the lengthy testing process "P&G University" because it gave competitors time to go to school on the new P&G products.
For the Dutch-born Jager, once described as being like "General Patton arriving with the Third Army," the task is to make such new P&G products as Dryel, Swiffer and Febreeze as well known and dominant in world markets as Crest toothpaste, Pampers diapers and Pringles potato chips.
Dryel is a new home dry-cleaning product, Swiffer an electronic broom that attracts dust like a piece of flypaper and Febreeze a fabric odor remover.
P&G has sales of more than $37 billion in 140 countries, with more than 300 different brands, but lately the 120-year-old company had become better known for its cumbersome bureaucracy than its innovation. Colgate recently toppled Crest from its long-held position as the No. 1 toothpaste after Colgate introduced Total, a product that leapfrogged Crest by becoming the first toothpaste that could legitimately claim it combated gingivitis. Other products, such as Pampers and Ivory soap, have also lost market share to improved products by competitors.
Under the new restructuring program, P&G will move from four business units based on geographic regions to seven global units based on product lines. The company also will establish new market development organizations to tailor sales programs to local markets.
Burt Flickinger, a former P&G executive who is now managing director of the consulting firm Reach Marketing, said that cuts P&G made six years ago, in its last restructuring, were designed to help the company cut costs and reach its target numbers for sales and marketing. "This is clearly a strategic change. It's not cutting expenses; it's defining a strategy," Flickinger said. "What the company's really doing is confirming its global position."
In 1993 P&G eliminated 13,000 jobs and closed 30 plants worldwide. Most of those job cuts came from early retirements, attrition and voluntary separation packages, according to the company.
Whatever the newest restructuring goal, yesterday's announcement didn't make much of an impression on Wall Street. P&G stock immediately dropped $4.50. It closed at $92.25, down $2.56 1/4.
The company estimated the after-tax cost of the new program at $1.9 billion and said it expects to generate after-tax savings of $900 million a year by the start of fiscal 2003.
Nearly 30 percent of the job cuts will be in the United States, with 42 percent occurring in Europe, the Middle East and Africa. The balance of the cuts will be in Latin America and Asia. The company said it would not identify specific plants and businesses to be eliminated until final decisions are made and employees have been notified.
Jager said that some workers will be laid off but that P&G will try to make maximum use of retirements, relocations, voluntary departures and reductions in hiring.
Employees who are laid off are to be offered financial assistance and job retraining.
Earlier this week, P&G announced plans to realign its advertising agencies so that one firm would handle specific P&G brands worldwide rather having different agencies handle the same brands in different companies. Flickinger called the earlier announcement equally important for the company.
Less to Smile About
Colgate recently toppled Crest from its long-held position as the No. 1 toothpaste, even though Crest sales have increased from the year before. The top five brands account for about 78.5 percent of sales in a $1.6 billion market.
Market Sales* Change from
Rank Toothpaste Company share in millions year before
1 Colgate Colgate- 27.2% $441 +18.8%
2 Crest Procter & 25.8% $418 +10%
3 Aquafresh SmithKline 10.4% $168 -7.3%
4 Mentadent Unilever 9.2% $150 -12.7%
5 Arm & Hammer Church & 5.9% $96 -7.9%
*Sales for 52 weeks ended March 28 at food stores, drugstores and mass merchandisers.
SOURCE: Information Resources Inc.
CAPTION: DURK JAGER