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Johnson & Johnson to cut up to 8400 jobs
by Matthew Dennis, firstword Last Updated:November 03, 2009 14:21
Johnson & Johnson announced Tuesday that it will reduce its global workforce by 6 percent to 7 percent by cutting as many as 8400 jobs, and restructure its business to achieve savings of $1.4 billion to $1.7 billion by 2011. The company said that the cost savings "will be achieved primarily by reducing layers of management," with the planned job cuts to be skewed to countries outside the US.
CEO William Weldon remarked that the restructuring programme was being introduced, partly due to the weak economy, noting that "if you look at the future economically, I think there's challenges still ahead of us," while CFO Dominic Caruso added that the action was not a direct result of the pending changes to health care reform in the US.
Weldon said the restructuring was aimed to ensure that the drugmaker "remains well-positioned and appropriately structured for sustainable, long-term growth in the health care industry." The savings, which are expected to reach $800 million to $900 million in 2010, will also be achieved through "increasing individual spans of control, and simplifying business structures and processes," the company stated.
Johnson & Johnson conducted a major restructuring in 2007, when it eliminated around 4800 jobs, and earlier this year, the drugmaker cut around 900 positions from its Ortho-McNeil-Janssen pharmaceuticals unit.
Commenting on the news, Wells Fargo analyst Larry Biegelsen said the rationale for the latest job cuts was "less clear to us compared to the one back in 2007" at which time the company "was facing a number of major patent expirations in its pharmaceutical business."
The company noted that with respect to the latest restructuring it will record a charge of $1.1 billion to $1.3 billion in the fourth quarter of the year, and reaffirmed its 2009 forecast of $4.54 to $4.59 per share.
Reference Articles
J&J to cut 6-7 percent of workforce in restructuring - (ABC News)
J&J to slash global workforce by as much as 7 percent - (Bloomberg)
J&J to cut up to 8,000 jobs (VIDEO) - (CNBC)
Johnson & Johnson to cut up to 8,000 jobs - (CNN Money)
Johnson & Johnson to slash workforce - (Financial Times)
Johnson & Johnson sets restructuring, plans charge - (Forbes)
Johnson & Johnson announces restructuring initiatives for sustainable growth - (Johnson & Johnson)
Johnson & Johnson cutting up to 7% of jobs - (MarketWatch)
J&J to cut as much as 7% of work force (free preview) - (The Wall Street Journal)
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