Gillette restructures again to axe 2,700 jobs

After issuing six earnings warnings in the past 18 months, which resulted in the ouster of its chief executive Michael Hawley, US-based household goods group, Gillette, announced a massive restructuring exercise. The announcement, made by acting chief executive Edward DeGraan, will lay off 2,700 employees, or 8 per cent of its workforce.

The restructuring, the latest attempt to revive the fortunes of Gillette whose earnings have been flat for more than two years, plans to complete the cost-cutting programme over the next 12 months and is targeting ongoing savings of $125 million a year.

The restructuring, which will be worldwide and across all divisions of the company, will see the closure of eight factories and 13 distribution centres. Gillette will consolidate management, outsource low-volume products and write off underperforming assets.

The latest restructuring, coming close on the heels of the last exercise carried out in 1998, which laid off 11 per cent of its workers, is seen as a refinement of the 1998 exercise.

Gillette, which grew very fast through the 1980s and most of the 1990s through aggressive expansion in the emerging markets and the application of high technology to everyday products, began to fail after the 1997 Asian financial crisis. To compound that problem was the slowdown in European sales due to a fall in the euro.