Analysis at RJR Indicates Job Cuts

Source from:  By Richard Craver Journal Reporter August 6, 2008 08/07/2008

A self-examination of business practices at Reynolds American Inc. and its top subsidiary is likely to lead to job cuts, officials said yesterday. The analysis of Reynolds and R.J. Reynolds Tobacco Co., announced to employees yesterday, is expected to be concluded by Sept. 30, said Jan Smith, a senior director of communications for Reynolds. The review affects just salaried employees, she said. "We won't know how many jobs will be impacted until the analysis is completed," Smith said. She said that Reynolds has been conducting periodic analyses of its operations for years. "This time, we're doing them across all functions at one time," she said. Smith said that Reynolds American has 140 employees, most of them salaried. Reynolds Tobacco has about 5,650 employees, of which about 1,650 are salaried employees. The company also has about 1,900 production employees and about 2,100 field-trade marketing employees. Altogether, Reynolds American and R.J. Reynolds have about 3,700 employees in Forsyth County. Smith said that all nonproduction and nonfield-sales activities are being reviewed "to determine if there is anything the company wants to change to better compete in the current and future tobacco environment, to become more flexible and operate and grow as efficiently as possible." "Once the programs and activities are reviewed, the next step will be deciding which jobs are affected that support those programs and activities." Many of the employees leaving Reynolds' downtown operations yesterday afternoon were holding manila envelopes stamped "confidential" in red ink. They declined to comment about the announcement, saying they didn't know enough about the analysis yet or weren't interested in talking to the media. Smith said that employees were told to let the company know by Friday if they were interested in leaving voluntarily and taking a severance package that typically contains at least two weeks of pay for every year of service. "We usually get a number of employees, some long-term at or near retirement age, to raise their hands when these opportunities come up," Smith said. Gayle Anderson, the president and chief executive of the Greater Winston-Salem Chamber of Commerce, said she was not surprised to learn of more potential job cuts at the company. "To be competitive in a global economy, Reynolds must continually look for improvements," Anderson said. "While this may result in employment changes, it is imperative that the company remain a dominant player in a challenging environment to enable it to keep its headquarters and operations here," she said. Smith said that there is no one factor behind the timing of the analysis. She said that Reynolds is being affected by the economic squeeze on most consumers; fewer places to smoke publicly; more competition, particularly from discount manufacturers; potential increases in state and federal excise taxes; and potential regulation of the tobacco industry by the Food and Drug Administration. Allen Joines, the mayor of Winston-Salem, said that Reynolds' officials called him yesterday morning about the announcement. He said that it is common for any of the city's large companies to assess how many employees they have, and whether they are using them in the most effective way. "When we adopted the (city) budget a while ago, we did a similar thing ourselves," Joines said. The history of Reynolds is tightly wound with the fortunes of Winston-Salem. But as large companies become smaller out of competitive necessity, the city has to work to replace those jobs with a range of growing industries, he said. The announcement of likely job cuts is the fourth by Reynolds in less than two years. In December 2006, R.J. Reynolds said it would eliminate 80 salaried management positions at its Winston-Salem operations. R.J. Reynolds announced in November 2007 that it would cut up to 700 jobs in its retail-representative unit by the time the unit is shut down in December 2009. At least 300 of those jobs were eliminated in 2007. R.J. Reynolds announced in January that it had signed a contract with EDS of Plano, Texas, to manage its information-technology infrastructure services. The contract was scheduled to begin this month. Those services include R.J. Reynolds' in-house mainframes computers, midrange servers, databases and data centers. It also will provide field-level and help-desk support for Reynolds' network and computing services, and enhance information-technology security. R.J. Reynolds said in January that the information-technology infrastructure group has about 100 employees. Smith said yesterday that more than 60 percent of the Reynolds employees who applied to work for EDS were hired, but she didn't know the exact number. Reynolds had about 145 information-technology employees who were not be affected by the EDS contract. Enditem