Universal to Close Plant in Danville

Source from:  BY JOHN REID BLACKWELL TIMES-DISPATCH STAFF WRITER Dec 14, 2005 12/15/2005

Some employees will be offered positions at N. Carolina plants Southside Virginia's tobacco economy took another hit yesterday when Richmond-based Universal Corp. said it will close its Danville tobacco processing plant by the end of the year. About 77 full-time and 325 seasonal jobs will be lost, but the company said some of the plant's 53 full-time, salaried employees will be offered work at other Universal plants in North Carolina. The closing is the latest in a series of cutbacks and consolidations in the tobacco leaf industry because of falling production of U.S.-grown tobacco, largely the result of competition from cheaper, foreign-grown leaf. Leaf merchants such as Universal buy tobacco from farmers and process it, removing the stems and storing it for delivery to customers. The decision to close the plant "was extremely difficult, given our long history of operations there and the wrenching personnel issues involved," said Keith Brewer, president of Universal Leaf North America U.S. Inc., a Universal Corp. subsidiary in Rocky Mount, N.C., that runs the company's domestic tobacco operations. Universal Corp., the world's largest tobacco leaf merchant, has operated the Danville plant since 1971, but the company or its predecessors have had a presence in the city for about 100 years. Todd Haymore, a Universal Corp. spokesman, said the plant has performed well, but other factors led to its closing. U.S. sales of flue-cured tobacco -- the main type of leaf grown in Southside Virginia -- dropped from about 544 million pounds in 2001 to an estimated 430 million to 440 million pounds this year, he said. Marketings of burley tobacco -- grown mostly in Southwest Virginia, Kentucky and Tennessee -- have dropped even more. Faced with a shrinking market, Universal's two largest competitors, Danville-based Dimon Inc. and Wilson, N.C.-based Standard Commercial Corp., merged in May. Dimon had already announced the closing of its Danville tobacco processing plant in 2004. To improve efficiency, Universal invested about $130 million in its processing operations from 2001 to 2003, including building a new processing facility in Nash County, N.C. That site has been more efficient than expected and will now handle the work previously done in Danville. Southside has lost thousands of textile- and tobacco-related jobs in recent years. Sen. Charles R. Hawkins, R-Pittsylvania, said the closing of the Danville processing plant shows how dependent the region remains on its long-standing staple industries, and how much the region needs to move its economy from old-line industries to businesses that will provide new and innovative jobs. "One step forward, two steps back," sighed Hawkins, whose 19th district includes Danville and Pittsylvania County. "I feel for them," he said of the displaced workers. "It could not be a worse time of the year." Haymore said the company is offering salaried workers severance packages. Seasonal workers are represented by a union and have a contract with severance pay provisions. Universal said it expects to take a restructuring charge for the closing and severance costs during the fiscal quarter ending Dec. 31, but it did not disclose an amount. The company said the closing will reduce costs by about $10 million, before taxes. Enditem