In a bold move, Procter & Gamble (P&G) has announced plans to cut 7,000 jobs—approximately 6% of its workforce—over the next two years. This significant restructuring is aimed at navigating the challenges posed by fluctuating consumer demand and escalating costs driven by tariff uncertainties.

During a recent Deutsche Bank Consumer Conference held in Paris, top executives revealed that P&G will not only be reducing its workforce but will also be exiting certain product categories and brands across various markets. Although specifics on which brands will be divested were not disclosed, the company confirmed that these changes are essential for streamlining operations.

As global consumer spending remains under pressure, the world's largest consumer goods company is preparing for further declines in demand, especially as higher prices continue to impact buying behaviors. Executives assert that this restructuring is an acceleration of their ongoing strategy to thrive in a competitive market.

The backdrop of this decision is the ongoing trade war instigated by President Donald Trump's tariffs, which have destabilized global markets. P&G, which sources a significant amount of raw materials and products from China, has already reported over $34 billion in losses due to these tariffs. Analysts predict even more extensive impacts in the future.

Back in April, P&G signaled its intent to raise product prices and stated that it would utilize every available strategy to counter the repercussions of the tariffs.

CFO Andre Schulten underlined that adjusting pricing and implementing cost cuts would be paramount in the current climate. During the conference, he and Operations Chief Shailesh Jejurikar acknowledged the unpredictable geopolitical landscape and the resulting uncertainty facing consumers.

As of June 30, 2024, P&G reported a workforce of approximately 108,000 employees, with the job cuts primarily affecting non-manufacturing roles. The company's restructuring strategy aims to simplify its organizational hierarchy by broadening roles and reducing team sizes. This shift is also expected to optimize the supply chain, ultimately driving down costs.

In an era marked by economic unpredictability, P&G’s decisive actions reflect a broader trend among consumer goods manufacturers as they adapt to a rapidly changing market environment.