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Say it ain't so, P&G.

Say It Ain't So, P&G

Buried away inside a recent issue of the Wall Street Journal was a story that could have a far reaching impact on the nonwovens industry.

The innocuous, one column article was headlined "P&G Cutting Its Spending For Fiscal '91...Business Slump Cited, but No Target Is Disclosed; Results Remain Strong." And the first sentence of the 13 paragraph piece read simply: "Procter & Gamble Co., hurt by slumping U.S. business, is cutting marketing, sales, product development and other costs to slash spending for the remainder of its fiscal 1991."

It was the brief reference to a cut in "product development" that really caught our eye. Could it really be that Procter & Gamble, the company that almost single handedly developed the largest single end use of nonwovens in the world, is sacrificing some of its landmark research and development efforts simply because its 1991 earnings may be under Wall Street analysts' estimates?

While no where were diapers mentioned by name (the soaps and food areas were primarily singled out), the ramifications for the nonwovens industry were seen immediately. Suppliers may view the announcement as potentially life threatening, what with so much of the industry dependent on what the giant in Cincinnati does. But competitors-and there are plenty of them around the globe-will more than likely breathe a sigh of relief that maybe their chief nemesis will come back to the pack a little in product development, not to mention sales and marketing.

As could be expected, an official P&G statement labeled the moves nothing more than a belt tightening in today's economic downturn. The company refused to confirm in what areas the cuts would be made or exactly how much will be trimmed. But, according to the Wall Street Journal, they will be aimed at areas such as product development and marketing support, two crucial parts of P&G's strategy. "Everyone has been told to figure out their one or two big projects and focus on them and get rid of the rest," one source said. Managers have also been told to focus on their most profitable brands in each category. Consideration will be given to selling unprofitable brands that don't turn around quickly.

Strong words from the 500 pound gorilla of the personal products industry that is used to getting whatever it wants. While we doubt that P&G will fade away in the disposables industry because of a funding cut in one fiscal year, it does portend an ominous trend and illustrates all too clearly that the worldwide recession is even reaching deep into our little industry.

Sadly, what it may mean is that the next "Pampers" or "Attends," or even "Pringles" potato chips, may be a little longer in coming. And thatwould be a shame.
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Copyright 1991 Gale, Cengage Learning. All rights reserved.

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Title Annotation:Editor's Page; Procter and Gamble Co.'s cuts in product development
Author:Jacobsen, Michael A.
Publication:Nonwovens Industry
Article Type:editorial
Date:Apr 1, 1991
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