P&G Eyes Eastern Europe, Trims the Fat

Posted: March 13, 2007

Procter & Gamble (P&G), based in Cincinnati, has received much media attention as of late, what with two of its latest big business decisions. Raising some concern, the company first announced plans to cut more than half of the work force at its cosmetics plant in Ireland and move some of its operations to Poland over the next two years. Shortly following this announcement, the company declared it will divest its Western European tissue/towel business to SCA, a global consumer goods and paper company. What are P&G’s motives?

The details in regards to the closing of the Irish plant were outlined by company spokesman Doug Shelton, in a report by AP. The plant in Nenagh, County Tipperary, will continue operating with 220 employees, down from the approximate 500. "That plant remains important to P&G business," Shelton in a report. "It will continue manufacturing cosmetics." He added that the company is moving its skin care production to Poland for strategic reasons including proximity to the important emerging markets in Eastern Europe.

Mindy Thompson, manager of the Nenagh plant, said in a report that it was a difficult decision and not a reflection of the high-quality workforce in Ireland. “Our focus is now to work closely with our employees to ensure they are supported at this time and through the transition ahead. We will maximize the opportunity we’ve been given for the future of the Nenagh plant to become the focus of our European cosmetics supply chain operations.”

According to AP, some employees can transfer to the new location while others will be offered separation packages. The reduction will be phased over a two-year period, Shelton said. In other reports, the Irish government announced it would do everything it could to help those employees facing job losses from P&G’s cuts.

The Nenagh plant, opened in 1985, is currently the largest employer in the town, according to reports. It manufactures products for the Max Factor and Cover Girl makeup ranges, Oil of Olay skin products and perfumes for the Hugo Boss and Laura Biagiotti brands. Oil of Olay production will move to Poland, P&G said in a release.