Procter & Gamble (NYSE: PG) will cut as many as 5,700 jobs, despite the fact that Wall St. is impressed by the company’s success. Its shares trade at a two-year high, up 25% over that period. The expense reduction move is another example of how a large corporation takes jobs out of the economy despite doing well financially.
CEO Bob McDonald says he is compelled to save the $10 billion that new expense reductions will cause. As an aside, it is worth noting that McDonald made $16.1 million last year, and his compensation has increased each of the past two years. The reason for the broad cuts is that the company has reached a slow growth period in the U.S. and EU. That should be expected in Europe, as the economy deteriorates there. However, according to P&G’s last 10-Q, revenue grew across all of the firm’s major divisions. Total sales rose 4% to $22.1 billion in the most recently reported quarter, a performance that is fairly strong given the duration of the last recession.
There has been a great deal of talk recently about how large American companies might help improve the U.S. jobs base. The President’s Council on Jobs and Competitiveness has this as a specific goal. McDonald is not a member of the council, but his predecessor at P&G, A. G. Lafley, is. The committee has its work cut out for it when an American firm like P&G is willing to cut jobs when its financial fortunes are relatively robust.
Douglas A. McIntyre
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