RAI Takes Charge for Workforce Reduction

Source from:  Tobacco Reporter 12/17/2009

Reynolds American Inc. plans to take a charge of approximately $47 million in the fourth quarter of 2009 in connection with severance and related costs for about 400 R.J. Reynolds Tobacco Co. employees who will be leaving the company by 2011. All employees who will be leaving the company are production associates who had asked that their job be considered for elimination. R.J. Reynolds last offered production associates the opportunity to express interest in receiving a severance package in 2003. Job eliminations will begin in January, and most will be completed during 2010; a few employees will have release dates in early 2011. "This is a win-win situation for both employees and the company," said Tommy L. Hickman, senior vice president of operations for R.J. Reynolds. "No jobs were eliminated unless an employee asked that they be considered for elimination, and we were able to accommodate the wishes of every employee who asked to be considered. Actual release dates for each individual will be determined based on both the needs of the business and any milestones the employee needs to reach in order to be eligible for retirement or other benefits. "The company benefits from additional streamlining that will better align our staffing level with business requirements and enable our manufacturing operations to phase in new productivity programs over time," said Hickman. R.J. Reynolds expects to achieve cost savings of approximately $17 million in 2010, which will increase to approximately $30 million in 2011, as a result of the headcount reduction. Hickman said employees leaving the company will receive two weeks of pay for every year of service, up to a maximum of 78 weeks, along with other retirement-and benefits-related payments. Enditem