J&J To Restructure, Will Fire 7,000 to 8,000

Johnson & Johnson has announced plans for a global restructuring designed to “prioritize its innovation efforts,” according to a company statement. The plans are expected to increase operational efficiency and generate annual savings of $1.4-$1.7 billion, when fully implemented in 2011, with $800-$900 million expected in 2010. The savings will be allocated to new growth platforms; new product launches; core businesses; as well as provide more flexibility to adapt to the changing market. Along the way, the company will lay off 6-7% of its headcount, which equates to 7,000-8,000 people. The expected restructuring charge will be $1.1-$1.3 billion in 4Q09.

“Johnson & Johnson has long adhered to a broad-based operating model and set of sound management principles that have driven our success,” said William C. Weldon, Johnson & Johnson chairman and chief executive officer. “Today, we are announcing a series of actions and plans designed to ensure that our company remains well-positioned and appropriately structured for sustainable, long-term growth in the health care industry.”

The company plans to cut layers of management, increase individual spans of control, and simplify business structures and processes across the company’s global operations. Mr. Weldon said, “These types of changes are difficult under any circumstances, and will have a very personal impact on people who have been dedicated to the mission of Johnson & Johnson. We recognize their contributions to the achievements of our business, and are committed to treating them fairly and with respect throughout this process.”