In Europe, the company intends abandoning its factory in Hamburg. It gave assurances, however, that employment at its Salford plant in Britain, which employs 500, will remain "at about present levels".
The restructuring has been partly spurred by sharply reduced earnings from Mexico, which represents roughly a fifth of the company's operations. However, it is also following a broader trend in the industry to trim workforces and focus production of different products in single factories.
"It was just a question of time for Colgate to start doing this, I think it was inevitable," Carol Warner, an analyst at Salomon Brothers in New York, said. In the past three years, Colgate's competitor, Procter & Gamble, has set about laying off 13,000 of its workers.
Analysts were nonetheless caught off guard by earnings predictions from Colgate, also announced yesterday, which were lower than expected. The company said earnings for the year would come out at $3.57-$3.60 per share. Analysts had been anticipating 40 cents.
Performance in Mexico has been badly hit by the economic turmoil since the start of this year. "Mexico is a core part of the business and has been a wild card they have not been able to control," Ms Warner said.
To cover the restructuring, Colgate will be taking a charge of $369m in the third quarter which will results in a loss.
Commenting on the changes, Reuben Mark, chairman, said: "The rationalisation will allow us to further capitalise on improvements in manufacturing and information technologies and the efficiencies that exist today in our focused factories dedicated to the manufacture of products in specific categories."
As part of the reorganisation, the Salford plant will lose production of Palmolive soap to a different factory in Anzio, Italy.Reuse content