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P&G brings back former CEO Lafley

To replace Bob McDonald in the wake of company’s poor performance.

Procter & Gamble, the world’s largest consumer products manufacturer, is bringing back its former CEO A.G. Lafley, replacing the embattled chief executive Robert A. “Bob” McDonald, as part of restructuring plans.

McDonald, who joined the company in 1980 and served as president and CEO from 2009 to 2013, will step down from his position by the end of June 2013, while Lafley will take over the new role with immediate effect.

Lafley has also been elected to the Board of Directors and will serve as its chairman.

The change in leadership comes in the wake of poor performance in the recent times that disappointed investors and analysts. It is also an urgent signal to push up sales to beat rivals.

Although P&G focuses on premium brands, McDonald, when he took over as the CEO, had to shift the strategy to lower cost products and newer markets to boost sales as financial crisis had left consumers short of cash.

However, as these efforts did not show much improvement in results, he had been under the strict scrutiny of the board for the last one year.

In the recent quarters, the company had shown some slight improvement in results, but it again slipped back in late April.

Under Lafley, the company held the top position in the global consumer products market with $84 billion sales and acquired major firms such as Gillette and Wella. However, since then, it lost its position to competitors such as Unilever.

Lafley joined the company in 1977 and served as president and CEO from 2000 to 2009.

Jim McNerney, lead director at P&G, said:  “AG’s record and his depth of experience at P&G make him uniquely qualified to lead the company forward at this important time. The board expects A.G. to further improve results, implement the current productivity plan, and facilitate an ongoing succession process. The Board is confident that he will continue improving P&G’s performance.”

Javier Escalante, an analyst at Consumer Edge Research, told the Financial Times that morale at P&G was as low today as it was when Lafley took over from Durk Jager in 2000. “So he knows how to appeal to the culture and the better part of Procter’s pride and drive,” Escalante said.

P&G shares grew by 0.4 per cent to $78.98 following the announcement of leadership change.

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Geoffrey Howe dies, aged 88

Howe was Margaret Thatcher's longest serving Cabinet minister – and the man credited with precipitating her downfall.

The former Conservative chancellor Lord Howe, a key figure in the Thatcher government, has died of a suspected heart attack, his family has said. He was 88.

Geoffrey Howe was the longest-serving member of Margaret Thatcher's Cabinet, playing a key role in both her government and her downfall. Born in Port Talbot in 1926, he began his career as a lawyer, and was first elected to parliament in 1964, but lost his seat just 18 months later.

Returning as MP for Reigate in the Conservative election victory of 1970, he served in the government of Edward Heath, first as Solicitor General for England & Wales, then as a Minister of State for Trade. When Margaret Thatcher became opposition leader in 1975, she named Howe as her shadow chancellor.

He retained this brief when the party returned to government in 1979. In the controversial budget of 1981, he outlined a radical monetarist programme, abandoning then-mainstream economic thinking by attempting to rapidly tackle the deficit at a time of recession and unemployment. Following the 1983 election, he was appointed as foreign secretary, in which post he negotiated the return of Hong Kong to China.

In 1989, Thatcher demoted Howe to the position of leader of the house and deputy prime minister. And on 1 November 1990, following disagreements over Britain's relationship with Europe, he resigned from the Cabinet altogether. 

Twelve days later, in a powerful speech explaining his resignation, he attacked the prime minister's attitude to Brussels, and called on his former colleagues to "consider their own response to the tragic conflict of loyalties with which I have myself wrestled for perhaps too long".

Labour Chancellor Denis Healey once described an attack from Howe as "like being savaged by a dead sheep" - but his resignation speech is widely credited for triggering the process that led to Thatcher's downfall. Nine days later, her premiership was over.

Howe retired from the Commons in 1992, and was made a life peer as Baron Howe of Aberavon. He later said that his resignation speech "was not intended as a challenge, it was intended as a way of summarising the importance of Europe". 

Nonetheless, he added: "I am sure that, without [Thatcher's] resignation, we would not have won the 1992 election... If there had been a Labour government from 1992 onwards, New Labour would never have been born."

Jonn Elledge is the editor of the New Statesman's sister site CityMetric. He is on Twitter, far too much, as @JonnElledge.