Gillette To Cut 2,700 Jobs

Monday, December 18th 2000, 12:00 am

By: News On 6

BOSTON (AP) â€” The Gillette Co. plans to eliminate 2,700 jobs, or about 8 percent of its work force, and close eight factories and 13 distribution centers as part of a plan to boost its profit growth.

The shaving products company said Monday its board had approved the restructuring plan which is to be completed over the next 12 months. The job cuts will come worldwide across all business functions and operating units. Gillette officials refused to say which facilities would be impacted.

Company officials said they wanted to improve the company's operating efficiency, streamline the supply chain and cut costs.

Acting chief executive Edward F. DeGraan said Monday in a conference call with analysts that the restructuring would involve a consolidation of management functions, and the centralization of corporate functions.

``It's important to recognize that this is not a massive reorganization,'' he said. ``We are streamlining the organization.''

Employees were notified about the reorganization on Monday. Layoffs will likely begin in January, DeGraan said.

Chief financial officer Charles Cramb said he expects the restructuring to result in annual savings of about $125 million, beginning in 2002. Because of the factory closures that will take place early in 2001, any savings next year will not be seen until late in the year, he said.

He said he expected the company's earnings to grow between 8 and 10 percent in 2001.

Investors seemed pleased by the move, boosting shares 87.5 cents to $34.69 in trading on the New York Stock Exchange.

In October, Gillette fired its chairman and chief executive Michael Hawley, even as it reported third-quarter net income of $350 million, which met the 33 cents-per-share estimate by analysts surveyed by First Call/Thomson Financial.

The restructuring plan will result in a one-time charge to earnings of $430 million after taxes, or 40 cents per share, in the fourth quarter.

Sally Dessloch, a vice president with J.P. Morgan in New York, said the cuts come as no surprise to analysts who have watched the company struggle during the past few years.

``The company has had essentially flat earnings,'' she said. ``It's clear they needed to take some steps to get back to earnings growth.''

Boston-based Gillette makes and sells a wide range of products, but is known most notably for its razors and toiletry products for both men and women. Just last month Gillette unveiled its new Women Venus razor, a new design made specifically for women in an effort to grab a larger share of the female market.

The company also produces alkaline batteries, hair products, toothbrushes, and small household appliances.

This summer, the Boston-based company revealed plans to sell its stationery products business â€” which includes the Paper Mate, Parker and Liquid Paper brands â€” to Newell Rubbermaid. The stationery business accounted for about 7.5 percent of Gillette's $10 billion in sales last year.

Gillette has 54 manufacturing facilities in 20 countries and distributes products in more than 200 countries and territories.

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On the Net:

Gillette site: http://www.gillette.com