Johnson & Johnson announced plans to lay off as many as 8,400 employees world-wide as part of a push to save as much as $1.7 billion in 2011.
The New Brunswick, N.J., health-care giant said it would achieve the cost savings by reducing layers of management and simplifying business structures and processes across the company's global operations.
The company's previous major restructuring was in July 2007, when it eliminated 3%-4% of its work force, Wells Fargo analyst Larry Biegelsen said.
MoreLive Blog: J&J Execs Discuss Layoffs J&J's Statement on Job Cuts .
"The rationale for this restructuring is less clear to us compared to the one back in 2007 because in 2007, JNJ was facing a number of major patent expirations in its pharmaceutical business and challenges in its drug-eluting stent business," Mr. Biegelsen said.
It wasn't clear where the job cuts would be made by J&J, which makes drugs, medical devices and consumer products. All three of the units have shown signs of weakness as heightened generic competition has hurt its prescription-drug arm, while unfavorable currency-exchange rates have pulled down sales growth for consumer health care and medical devices.
Several drug makers—suffering as big-selling drugs increasingly face generic competition—have announced layoffs. In September, Eli Lilly & Co. announced plans to reduce its work force by nearly 14%, or 5,500 employees, and revamp its operating structure. Meanwhile, large mergers between Pfizer Inc. and Wyeth as well as Merck & Co. and Schering-Plough Corp. involve significant layoffs.
J&J earlier this year cut about 900 jobs from its U.S. pharmaceutical unit, and in August it consolidated its management structure. When the company released its third-quarter results last month, Chief Financial Officer Dominic Caruso left open the possibility of further cost cutting, saying the company was evaluating its plans for next year.
J&J said it would take a fourth-quarter restructuring charge of as much as $1.3 billion. The company, a member of the Dow Jones Industrial Average, reiterated its 2009 earnings target excluding items such as that charge.
—Peter Loftus and Jon Kamp contributed to this article.
Write to Kevin Kingsbury at kevin.kingsbury@dowjones.com
J&J to Cut Up to 7% of Work Force
By KEVIN KINGSBURY
Johnson & Johnson announced plans to lay off as many as 8,400 employees world-wide as part of a push to save as much as $1.7 billion in 2011.
The New Brunswick, N.J., health-care giant said it would achieve the cost savings by reducing layers of management and simplifying business structures and processes across the company's global operations.
The company's previous major restructuring was in July 2007, when it eliminated 3%-4% of its work force, Wells Fargo analyst Larry Biegelsen said.
MoreLive Blog: J&J Execs Discuss Layoffs J&J's Statement on Job Cuts .
"The rationale for this restructuring is less clear to us compared to the one back in 2007 because in 2007, JNJ was facing a number of major patent expirations in its pharmaceutical business and challenges in its drug-eluting stent business," Mr. Biegelsen said.
It wasn't clear where the job cuts would be made by J&J, which makes drugs, medical devices and consumer products. All three of the units have shown signs of weakness as heightened generic competition has hurt its prescription-drug arm, while unfavorable currency-exchange rates have pulled down sales growth for consumer health care and medical devices.
Several drug makers—suffering as big-selling drugs increasingly face generic competition—have announced layoffs. In September, Eli Lilly & Co. announced plans to reduce its work force by nearly 14%, or 5,500 employees, and revamp its operating structure. Meanwhile, large mergers between Pfizer Inc. and Wyeth as well as Merck & Co. and Schering-Plough Corp. involve significant layoffs.
J&J earlier this year cut about 900 jobs from its U.S. pharmaceutical unit, and in August it consolidated its management structure. When the company released its third-quarter results last month, Chief Financial Officer Dominic Caruso left open the possibility of further cost cutting, saying the company was evaluating its plans for next year.
J&J said it would take a fourth-quarter restructuring charge of as much as $1.3 billion. The company, a member of the Dow Jones Industrial Average, reiterated its 2009 earnings target excluding items such as that charge.
—Peter Loftus and Jon Kamp contributed to this article.
Write to Kevin Kingsbury at kevin.kingsbury@dowjones.com
The worrisome thing about all these job losses is that the businesses may decide that they don't need all of the employees they once had.
Of course they won't.
"Streamlining" operations by eliminating jobs and forcing those employees who remain to pick up the slack is the new norm.