Philip Morris to Close Plant in July

Source from:  Independent Tribune 04/23/2009

Philip Morris said it would close the Concord cigarette manufacturing plant by the end of July. That is more than a year ahead of its original deadline of the end of 2010. The Richmond-based tobacco company released the information in its first quarter earnings report. About 1,100 employees still work at the plant off Concord Parkway. They will be involuntarily laid off at the end of July and eligible for between six and 20 months, depending on length of service. Paige Magness, communications manager for Philip Morris' parent company, Altria Group, said company officials began notifying employees at 7 a.m. and will continue face-to-face conversations throughout the day. A "vast majority" of the employees would be notified of involuntary layoffs effective in late July, she said. Some would be retained to help decommission the property, a project that could last into 2010. "This is a process we began almost two years ago," Magness said, alluding to the company's original closing announcement in 2007. In a release, the company said it is ramping up its consolidation efforts because of "ongoing cigarette volume declines, including the projected impact of the recently enacted federal excise tax increase. " Cabarrus County Commission chairman Jay White said he learned of the announcement early this morning, and said, despite the earlier timetable for closure, he believes the county will make every effort to serve the needs of those impacted by the closing. "Philip Morris, all along the way, has been telling us what they can as best they can," he said. "We've been preparing for it, albeit for 2010. "When Pillowtex closed, it was really quick. We were able to turn on a dime. I can't imagine that the collaboration in this county won't be able to turn things around when need be." From an economic standpoint, White said the county has been preparing for Philip Morris' closing since the original announcement of the closing in 2007. "Years ago, they (Philip Morris) were a large part of the tax base," he said. "Through the efforts of the board, we've been able to diversify and bring in different business so now they are a smaller part of the tax base." Cabarrus Chamber CEO John Cox said the news wasn't "a complete shock." "Philip Morris told us they were going to shut down production in 2009 and close the plant in 2010. This is coming a year earlier. It's going to drive our unemployment rate up quicker," he said, adding that local officials have 90 days before the plant totally shuts down. Cox said no one knew about this until 7 a.m. Wednesday, when Philip Morris posted the quarterly results. He also would not comment on any potential buyers or proposed projects for the 2,000-acre property. Last month, Lt. Gov. Walter Dalton and Secretary of Commerce Keith Crisco took a thorough tour with Concord and county officials of the plant and property on Concord Parkway. Charles Winkler, spokesman for the N.C. Department of Commerce, said commerce representatives are working with the company and local officials on workforce development assistance. Concord Mayor Scott Padgett said he feels for the 1,100 workers that will lose their jobs in July. "They made plans based on what Philip Morris told them -- that they had another year," Padgett said. "Their personal lives are upside down now." Philip Morris is the city's largest taxpayer. Last year, it paid about $5 million in property taxes to Concord, Padgett said. He said the city would take a hit on property taxes and on water and sewer fees. "We've already cut $9 million in spending out of this year's budget," he said. "We are anticipating the 2009-2010 budget to be very tight. This just adds more pressure." Philip Morris announced in 2007 that it would close the cigarette manufacturing facility by 2010 and move operations to its headquarters in Richmond. Right before that announcement, Concord, Cabarrus County and the state gave Philip Morris $4.6 million in tax incentives in exchange for investing $138 million in upgrading machinery. The state grant of $1 million came from the One North Carolina Fund and $3.6 million came in property tax incentives from Cabarrus County and Concord. Padgett said Philip Morris has paid back all the incentive money it received from the state, county and city. Philip Morris laid off 140 workers on Jan. 30 in preparation for the consolidation. Hourly employees received a benefits package that included nine to 20 months of pay depending on their years of service. About 1,000 employees were offered jobs in Richmond and 530 employees have accepted offers to move to Virginia. Another 500 have left or are retiring from the company. Altria Group's profits were down 76 percent in the first quarter due to spinning off its international tobacco businesses. The tobacco company earned $589 million, or 28 cents per share, in the first quarter, compared with $2.45 billion, or $1.16 per share, a year ago. The 2008 figure included the results of Philip Morris International, which was spun off last year. Despite the loss, Altria still beat the estimates made by market analysts. Enditem