Cost-cutting exercise sees P&G eliminate 1,600 jobs
The announcement was made by CEO Robert McDonald and CFO Jon Moeller during the company’s earnings call to discuss P&G’s financial results.
The consumer goods firm plans to eliminate ‘overhead’ or non-manufacturing jobs, including some in marketing.
‘Selective hiring’
Moeller explained that P&G would rely on a combination of attrition, ‘selective hiring’ and restructuring to get to the reductions, which will result in $240m in annual savings, in line with what P&G typically generates through annual restructuring spending.
The reduction affects about three per cent of P&G's non-manufacturing workforce of about 50,000.
The cost-cutting exercise will work hand-in-hand with the company’s new advertising strategy, aimed at lowering the company’s staggering annual ad spend.
On the back of indifferent second quarter results the Ohio-based company announced it will revise its multi-billion dollar annual advertising spend, banking on digital marketing to help contain media spending in the long-term.
Cutting costs
Robert McDonald admitted that regardless of how much sales increase, the ad budget, thought to be around $10bn annually, will have to be moderated.
“I believe that over time, we will see the increase in the cost of advertising moderate. There are just so many different media outlets available today and we're quickly moving more and more of our businesses into digital. And in that space, there are lots of different avenues available,” he said.
Traditional media has been the culprit for using up most of P&G’s advertising budget in the past, but McDonald hinted that Facebook and Google could hold big value for the consumer goods giant in the future.
