J&J Revamps, Cuts Jobs

Johnson & Johnson is restructuring to improve its operating efficiency through more simplified processes and fewer layers of management. J&J says this latest move will cut 6–7% of its workforce, or between 7,000 and 8,000 jobs, and generate up to $1.7 billion in annual savings when fully implemented by 2011. The goal is to position J&J for growth by freeing up resources to invest in new opportunities and support product launches, said CEO William C. Weldon in a conference call with analysts. The company will not change its decentralized style of running multiple, diversified subsidiaries, he emphasized. As a result, cutbacks will be made broadly across all three business areas—pharmaceuticals, consumer products, and medical devices and diagnostics—at the operating company level. Weldon also pointed out that the driver was the challenging external business environment and not internal issues, as had been the case for a restructuring in 2007. Nor is the realignment intended to address proposed, and still uncertain, changes in U.S. health care policy. In fact, he added, many of the cutbacks are likely to be outside the U.S.