Assignment #3

Colgate-Palmolive Company HR Downsizing

The number of corporations currently undergoing the downsizing process abound.

One such company is Colgate-Palmolive Company.

Their effort is aimed at improving global competitiveness through cutting costs and improving efficiencies. Over the next two years, 24 of Colgate's 112 global factories will be closed or reconfigured. Some 3,000 workers worldwide, which is 8.5 percent of their 36,000 workforce, will lose their jobs. For these restructuring and administrative changes, Colgate will take a $369 million after tax charge in the third quarter. Colgate's last restructuring effort took place in 1991.

The main reasons for Colgate's recent restructuring are

♣ reduced trade barriers in Europe and Latin America;

♣ The need for new technology in manufacturing to improve competitiveness;

♣ the trend toward more concentrated products such as laundry detergent, which requires less production; and

♣ acquisitions that result in adding more plants.

These restructuring efforts are aimed at improving Colgate's position worldwide, and according to analysts, may allow the company to catch up with rivals, Proctor & Gamble Company, in particular. Analysts claim Colgate should have moved earlier. It will take three years for Colgate to recoup the expenses of the restructuring, which will do little to help the company overcome the short-term problems it faces, especially in Mexico. After the fall of the peso last December, annual sales have dropped to $550 million for 1995 from approximately $800 million in 1994.Original projections for this year's sales were $900 million. Colgate's situation indicates a need for more frequent evaluations and change. This would help the company become less effected by market shifts, and better prepared to protect its market shares and margins in the short-term.(Levaux, 1995).

Reference(online):http://iopsych.org/downsize.htm
Colgate website: http://www.colgate.com/app/Colgate/US/HomePage.cvsp