Downward Spiral

A few years back I met a chap who worked for Kimberly-Clark, the giant American manufacturer of paper-based products which owns the Kleenex, Andrex, and Huggies brands among others. One of the most astonishing things he told me was that, in 2012, they stopped selling Huggies nappies in Europe:

Kimberly-Clark is to stop making and selling Huggies nappies in Europe, except for Italy.

The company has decided to concentrate on non-fastening nappies such as pull-ups and will continue to make Huggies-branded wipes and Little Swimmers.

As a result, it will be closing a number of plants, putting 1,300-1,500 jobs at risk across Europe.

My friend told me it was because they’d got the business model all wrong and couldn’t compete against own-brand supermarket nappies. I raised an eyebrow and asked how Proctor & Gamble manage to sell so many Pampers nappies. He looked a little sheepish and said yeah, they really got the business model wrong and ended up with mills which couldn’t turn a profit. To me, this is the equivalent of PepsiCo deciding it’s all a bit too difficult to sell cola in Europe and ceding the entire market to Coca Cola. My friends with children lamented the fact they could no longer buy Huggies and were either stuck with Pampers (which in the absence of Huggies meant they could charge what they liked), or unknown brands of dubious quality.

I thought whoever in Kimberly-Clark was responsible for a failure of this magnitude would have been hung, drawn, and quartered in the board room and his body parts sent on a tour of their global offices. However, I don’t know what happened to those responsible and apparently nobody in the company likes talking about it. Speaking with my friend, who worked in marketing, I gathered Kimberly-Clark is one of those companies where lots of highly-educated people sit in plush offices having conference calls with one another and sharing PowerPoint presentations which show they’re losing money and so a mill in Bulgaria will have to be closed. There appeared to be at least two layers of management too many with key positions filled because “they had to find a position for him/her” or because it was good for someone’s international career to keep a particular seat warm for a while. My friend was senior, smart, experienced, and capable but spent half the time making presentations for his boss and then implementing a series of minor, pedantic changes to each slide. The other half  seemed to be spent on conference calls until midnight with colleagues in the same time zone.

I was therefore unsurprised when this news was announced last January:

Kleenex and Huggies maker Kimberly-Clark Corp said on Tuesday it expects to eliminate 5,000-5,500 jobs, or 12-13 percent of its workforce, as part of its global restructuring program.

The company said it expects to close or sell about ten manufacturing facilities and would exit or divest some lower-margin businesses.

Now I don’t know how many people in plush offices lost their jobs as a result of this – I understand a few were earmarked for redundancy – but it’s funny how companies announcing restructuring only refer to the factories that will close, not the armies of highly-paid paper-shufflers they have clogging up whole towers in major capital cities. Without wanting to go all Karl Marx on you, if I were a maintenance technician facing redundancy from a Kimberly-Clark mill I’d be rather expecting the senior management to be fired en masse given it’s they who drew hefty salaries while presiding over this mess. Alas, accountability is a word which disappeared from the lexicon of modern management quite some time ago.

Anyway, today for a wholly unrelated reason I stumbled across Kimberly-Clark’s business leadership page which has this graphic:

Does this look like an organisation which has its priorities straight? Hey, we’re having to close ten factories and lay off 13% of our workforce, but at least we have 46% minorities on our board and 34% of management positions held by women! Think of the positives here, people!

According to Wikipedia, Kimberly-Clark is a company founded 146 years ago by men who looked like this:

How long do you reckon it has left under its current management?

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11 thoughts on “Downward Spiral

  1. “How long do you reckon it has left under it’s current management?”

    Probably not long, given they are “right-sizing” when the market in the US is booming.

    I worked for a large telecom manufacturer, once upon a time. I’ve never seen such bloat, mostly from diversity hires. Our team, which had one account (a large regional carrier at the time) had some 80 people, including a diversity director, a middle aged black woman. I have no idea what she did for the team. Make sure we were selling to minorities?

    First time I laid eyes on her was in an utterly useless team “brainstorming” meeting. I could have summed up our issues that we were trying to discern in that meeting by a simple line – “We fucked them and now they hate us and won’t buy our stuff”. That said, I’ve never seen someone so happy to be in a meeting.

    To the point, you are right. These companies are fat with D and E levels, who are among the last rats to leave the ship. And when they do, they float away on a raft of money.

    In an interesting contrast, the company I work for now went through something similar. Why are our European sales flagging?

    I don’t know what was determined at their meeting, but afterwords the CEO obliterated the entire sales ‘E’ team, and some “D”s. They mostly leave us worker bees alone.

  2. “if I were a maintenance technician facing redundancy from a Kimberly-Clark mill I’d be rather expecting the senior management to be fired en masse given it’s they who drew hefty salaries while presiding over this mess.”

    Well for that maintenance tech, if he keeps his perspective properly oriented and his eyes open, he will most likely find new work more quickly than those sr. management people. At least that’s been my perspective as a SW developer. Yes, there may very well be disruption in finding new employment and such but the demand for products is out there and those who can produce product will always have a place.

    I know nothing about the paper business but what I have seen is a lot of K-C products when working for space/defense contractors. I’m guessing the heavy government market for lab tissues and such by the numerous defense contractors and NHS and CDC and other organizations put a requirement in the contracts that require the company to hit certain diversity goals. Goals that are most apparent at the Sr. Mgt. level as these are the people meeting the government agencies to get the contracts. Thus those goals are more important to the bottom line than expanding a private enterprise market. Also, what I found odd about K-C products that we had in computer labs and such was that they were always over-kill. Too thick to do most of the day-to-day basic jobs. Not that it was all that important but I always found this not-the-tool-for-the-job problem quite consistent across places where I worked. Maybe just my experience, but odd.

    As to the Marx thing, I feel you. The thing is western/capitalist civilization is so outrageously productive relative to the rest of the world that we produce a tremendous amount of waste, physical, intellectual, process-driven, all kinds, such that with our increasing productivity it takes a longer and longer time for the inefficiencies and waste to cause the kind of hurt that forces change. It’s way too easy to just go along to get along than try to fix something, no matter how obvious the problem is, before it breaks. I’ve often wondered if it might be more efficient in the long run if we had people running around breaking things, and breaking them repeatedly and forcefully just as soon as they are fixed, such that it would force inefficiency and waste issues to come to a head sooner. Ah, but that’s crazy talk.

  3. 3g capital. Those guys became billionaires by buying into large comfortable firms then firing every single person who wasn’t doing something productive.

  4. That said, I’ve never seen someone so happy to be in a meeting.

    Per t’other Tim: “Every organisation will, in the end, be run by those who stay awake in committee”

  5. I’ve often wondered if it might be more efficient in the long run if we had people running around breaking things, and breaking them repeatedly and forcefully just as soon as they are fixed, such that it would force inefficiency and waste issues to come to a head sooner.

    I’m also in SW (DevOps) but I used to be a sysadmin. “Break shit to see what happens and how fast we can fix it” is a more accurate term for the disaster recovery and business continuity drills we used to run.

  6. it’s funny how companies announcing restructuring only refer to the factories that will close, not the armies of highly-paid paper-shufflers they have clogging up whole towers in major capital cities

    Rolls Royce did the opposite a few months ago. Are they a non-diverse patriarchy?

  7. Funny how when local goverment has to cut its expenditure, the management teams on six-figure salaries never shrink, nor the tiers beneath them, while the roads deteriorate and bin collections are cut…

  8. Price’s law will bite in all large organisations unless there is a serious leader who can direct the operation away from that disaster.

  9. But… but… I thought it was proven fact that the more diversity, especially at board and senior management level, the more profitable? Or is Woolies proving this to be a myth?

  10. I’d say this is what you get when you’ve company management comprised mostly of university grads. A degree course, any degree course is a box ticking exercise. Satisfying ones assessors one meets the criteria they have set out. The whole process is self referential.
    So they ponce around for a few years at university learning the theory of shit, followed by a career at a major company practising the theory of shit. They must be able to do the job because they’ve a piece of paper says they can. Everyone else around them must be able to do their jobs because they have their own pieces of paper. Reality only intrudes, way down the CoC, where the people who have knowledge & experience of the shit actually do it. But they’re largely barred from the senior management jobs because they don’t have the pieces of paper,having spent their time gaining knowledge & experiece not pieces of paper.

  11. 2012? That’s about the time they cancelled a large and long standing contract with the company I work for. I never found out why at the time, but always assumed it was just the new girl who was our new liaison, trying to stamp her uniqueness on her position by making big changes

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