Imperial Tobacco to Close Ontario Plants

Source from:  October 21, 2005 (CP) 10/24/2005

A total of 650 workers at Imperial Tobacco Canada plants in Ontario will lose their jobs as the company closes its last Canadian cigarette manufacturing plants and moves the production to an existing one in Mexico. A spokeswoman said the economics were compelling. The Canadian market continues to shrink while its unionized Mexican workers get one-sixth the wages of their Ontario counterparts. The Mexican plant, belonging to Imperial's giant corporate parent British American Tobacco, will expand and add 300 jobs. It will serve the Canadian market, and the company insists the taste of its products will not change. Christina Dona said the company will continue to buy its raw tobacco in southwestern Ontario, but it has long-standing issues with those farmers over price. The plant at Monterrey, Mexico currently gets its raw tobacco from Mexico and the United States. Dona said the rising manufacturing costs and shrinking market "had gotten to a level that the company could no longer ignore." Imperial said it will: •close the Guelph cigarette plant in 2006, cutting 555 jobs (it was Canada's largest tobacco manufacturing plant when it was built in 1959); •shut down the Aylmer fine-cut tobacco operation and processing plant in 2007, affecting 80 positions; and •cut about 15 positions in the Montreal head office. Imperial, which shut down its Montreal tobacco-making plant two years ago, said its tobacco sales in Canada fell to 20.5 billion cigarettes this year from about 32.7 billion in 1994. Imperial said it will maintain in Canada its new research and development centre besides its Montreal head office. It will take special charges of $525 million over the next three years, including non-cash charges to write off the value of plants and equipment. Dona said the Guelph plant unionized workers earn an average of $84,000 a year, and labour accounts for 80 percent of unit costs. Brad Borghese, who started working at the Guelph plant 31 years ago, said no one knew this would happen. "Nobody had a clue," Borghese, 53, told the Guelph Mercury. "They walked in and told us to leave. There was no warning or anything." Borghese said he isn't worried about himself, but he said many of the workers' lives have been tossed into upheaval by the closure announcement. "We have no idea because we don't know when they will close the door," he said. "There was no information. We're at the mercy of what they want to do." Imperial said it will "continue to negotiate with the Ontario Flue-Cured Tobacco Growers' Marketing Board for future purchases of Canadian-grown tobacco, and will continue to work with the board to find solutions to maintain a viable Canadian tobacco-growing industry." In the 1960s, there were more than 4,500 tobacco farms throughout Canada. That number fell to about 1,650 growers a decade ago and only 680 today, concentrated on a small stretch of land north of Lake Erie known for its fertile soils that provide Canadian tobacco with a distinct flavour. Enditem