SYDNEY--U.S. tobacco company Philip Morris International Inc.
(PM) said it would stop producing cigarettes in Australia by the
end of this year, in the latest blow to a manufacturing sector
already reeling from a stubbornly high Australian dollar and the
withdrawal of major automakers.
Philip Morris said the decision brings the curtain down on
nearly 60 years of manufacturing at Moorabbin in the Victoria state
capital of Melbourne, and could result in as many as 180 job
losses. Cigarette production would shift to facilities in South
Korea.
The company blamed tighter regulation of cigarette exports
imposed by the Australian government, saying its factory here was
now "significantly under-utilized, operating at less than half of
its currently installed capacity."
Australia's economy has slowed sharply in line with the end of a
decadelong mining investment boom, putting pressure on the other
sectors like manufacturing to pick-up the slack and rebalance
economic growth. The country's unemployment rate is currently at
6.0%, a ten-year high.
Toyota Motor Corp. (TM) last month signaled the death of
Australia's auto-making industry with plans to close its Melbourne
factory by 2017. Ford Motor Co. (F) and General Motors Co. (GM)
have also announced plans to halt maufacturing in Australian within
three years.
"This is an extremely difficult decision," said John Gledhill,
managing director of Philip Morris's Australia, New Zealand and
Pacific Islands unit. Phillip Morris's Australian business was its
first outside of the U.S.
Mr. Gledhill said the company would maintain a commercial
presence in Australia, where it will continue to sell its
cigarettes and other products. It will retain its Melbourne
headquarters and around 550 staff.
Write to Rhiannon Hoyle at rhiannon.hoyle@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires