Colgate-Palmolive Co.: Recalls, Fakes And A New CEO

Manufacturers deal with hot issues all the time. Issues ranging from counterfeit products to product recalls are par for the course in big business. But what happens when a company must deal with all of these issues at once?

Ask Colgate-Palmolive Co., one of IndustryWeek's 50 Best Manufacturing Companies for 2007.

The New York-based manufacturer of myriad toiletries including soaps, deodorants and toothpastes as well as pet food goods via its Hill's Pet Nutrition Inc. business has garnered a lot of unwanted press lately.

First it was the pet-food recall of products contaminated with melamine, now it is fake toothpaste making its way into discount and dollar stores across the United States.

Counterfeit products are one thing. Counterfeit products that pose a health hazard are a whole different story.

Indeed, the fake toothpaste contains diethylene glycol, an anti-freeze chemical sometimes used as a cheap sweetener. The chemical can cause liver and kidney damage. Colgate-Palmolive said that it does not use diethylene glycol, nor does it import toothpaste from South Africa -- where the fake tubes of toothpaste claim to be manufactured.

Colgate Chairman Reuben Mark (and former CEO) said in a June 15 statement, "We are all highly committed to reliability, quality and superior product performance. We will spare no effort to help consumers avoid counterfeits and support regulators in their efforts to remove these products from the marketplace."

While no manufacturer is immune to counterfeits and product recalls, the damage done oftentimes means a changing of the guard. In Colgate's case, a premeditated switch proved timely.

In line with the company's previously announced succession plan, Colgate-Palmolive announced that effective July 1, 2007, Ian Cook has been elected president and CEO and a member of the company's board of directors.

Cook's appointment coincides with Mark's retirement as CEO, a position he held since 1984. At the board's request, Mark will remain chairman of the board of directors for a period of up to 18 months after July 1, 2007.

"This action reflects the happy result of a long-term succession plan and a detailed timetable developed and long agreed to by Colgate's Board of Directors," said Mark in a prepared statement.

According to an April 25 press release, worldwide sales grew 12% to $3,213.9 million, due in part to the company's 2004 restructuring program. As previously announced, the four-year restructuring program was to deliver ongoing savings at an annual rate of $250 million to $300 million after tax by 2008, with total charges for the program of $550 million to $650 million after tax.

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