Mass dismissals appear in the nearest perspective again for the second-largest tobacco company in the U.S, R.J. Reynolds Tobacco Co. According to the company, it has offered large severance packages for 1,800 plant workers in order to dismiss volunteers.
William Crawford, a spokesman for Reynolds said they don’t have any precise lay off plan. The proposal will not cover those workers who are not willing to leave.
Previously, when the Camel-maker carried out similar analysis, it led to essential dismissals. It cut nearly 2,600 jobs in 2004, among which were 800 manufacturing jobs. In addition it almost finished cutting 570 jobs among office staff, initiated two years ago.
Reynolds spokesman said that the company experts have found areas where it can boost productivity and reduce expenses. Crawford added that the final decision on how many jobs to cut and in which area would be based by current business needs, and mentioned that last time the company offered its workers severance packages was in 2003.
The Reynolds’ job-cut has not surprised industry analysts, who named reduced demand for tobacco products as the major reason for dismissals.
The decline of cigarette sales has been triggered by hefty taxes, implementation of strict public smoking bans and general public attitude to smokers.
According to Reynolds third quarter report, the volume of cigarette sales dropped 11 percents to 20.6 billion cigarettes. In addition, Reynolds experts estimated a 12 percent decline for the whole industry in the third quarter.
During the last 20 years Reynolds has cut nearly 80 percent of its manufacturing units, from 15,500 jobs to 3,030 by next January.
Workers who spoke with Winston-Salem Journal reporters said they have been worried that Reynolds probably plans a major cut in manufacturing jobs or transfer the production to Latin America. Such strategy could comprise the shutting of its factory in Whitaker Park, where production volume has already been cut dramatically. Currently the Camel-maker employs 1,200 people in Tobaccoville plant and 600 in Whitaker Park.
Experts doubt that there will be many volunteers, since the unemployment rate in the Triad is around 11 percent, with especially difficult situation is reported in production sector, that has been hit the hardest by mass lay offs.
The major part of Reynolds’ workers earn from $50,000 to $62,400 annually. In comparison, average salary in manufacturing sector across the State of North Carolina is $31,574 annually, in conformity with local Employment Department.
Rebecca Clark, professor of Business Studies at North Carolina State University admitted that the amount of payment by severance package would vary according to each worker’s personal situation; however, in general the difficult economic times will force many workers to reject the offer.
Reynolds American is not the only tobacco company to cut jobs and close plants. Philip Morris USA, the largest tobacconist across the nation has recently finished the procedure of closure of its oldest plant, located in Concord, laying off hundreds employees, and transferring the remaining part of workers to the plant in Richmond.
Clark said that it is an axiom since when demand falls; it inevitably leads to job cuts, as the needed work force declines.