Reynolds American Inc. (RAI) plans to consolidate more of its
cigarette manufacturing at its biggest North Carolina plant and
expand its smokeless-tobacco operations in Tennessee.
A plant in North Carolina and one in Puerto Rico will be closed
as a result.
Faced with a decline of cigarette sales, Reynolds is
transforming itself into a company that also offers an array of
smokeless alternatives--including strips, lozenges and snuff. Last
year, sales volumes for smokeless tobacco products rose about 7%,
while cigarette volumes fell about 9%, according to industry
estimates.
Chairman and Chief Executive Officer Susan Ivey said Friday that
Reynolds' moves increase efficiency as the U.S. cigarette industry
declines while smokeless tobacco sales are growing. The
consolidation into "fewer and newer facilities" also will
"facilitate cost-effective compliance with new federal regulation
of the tobacco industry."
About 60 manufacturing jobs in the Puerto Rico plant, set to
close in August, will disappear. Reynolds' distribution operations
in Puerto Rico aren't affected. Employees at the Whitaker Park,
N.C., plant, set to close in mid-2011, will be moved to Reynolds'
Tobaccoville, N.C., plant.
Reynolds' American Snuff Co. in Memphis plans to close its
current plant in 2012 and will move into a new facility by January
of that year. The company also is building a new plant in
Clarksville, Tenn., which is also set to open in early 2012.
Reynolds in April reported that first-quarter profit surged on
higher sales and steep prior-year write-downs, while smokeless
tobacco volume rose.
Shares recently were down 30 cents at $52.35.
-By Tess Stynes, Dow Jones Newswires; 212-416-2481;
Tess.Stynes@dowjones.com