Johnson & Johnson said it plans to lay off as many as 8,200 workers in a massive restructuring the conglomerate hopes will save up to $1.7 billion annually.
Saying it will cut 6 percent to 7 percent of its 117,000-employee workforce, or 7,020 to 8,190 workers, New Brunswick, N.J.-based JNJ announced a sweeping set of changes, especially to its management structure.
“Cost savings will be achieved primarily by reducing layers of management, increasing individual spans of control, and simplifying business structures and processes across the company’s global operations,” the company said in a press release.
The moves are expected to result in pre-tax savings of $1.4 billion to $1.7 billion annually once they’re all in place in 2011. JNJ said it’s anticipating pre-tax savings of $800 million to $900 million next year.
And despite an expected pre-tax charge of $1.1 billion to $1.3 billion during the fourth quarter of 2009, Johnson & Johnson confirmed its earnings guidance for the full year at $4.54 to $4.59 per share, excluding special items like the restructuring charges.
CEO William Weldon told analysts on a conference call that the cuts, across all businesses but mostly outside the U.S., are in part a response to consumer confidence and unemployment numbers.
“Until we get unemployment under control and people feel safe and comfortable, I don’t think people are going to be spending in areas where they’ve spent previously,” Weldon said. “Until unemployment numbers improve, there will continue to be economic pressure on healthcare. … I don’t think anybody’s expecting it to come roaring back tomorrow.”