Wilgrove
27-06-2007, 03:54
Philip Morris to close Concord cigarette plant
Charlotte Business Journal - 2:53 PM EDT Tuesday, June 26, 2007
by Ken Elkins
Staff Writer
Philip Morris USA will close its 2,500-employee cigarette plant in Concord in three years, citing a decline in U.S. demand for cigarettes.
Most local production will move to the company's Richmond, Va., facility, where many of the Cabarrus County plant's workers would be offered jobs, the company announced Tuesday.
"It is my hope that the majority of the employees at Cabarrus will be able to relocate to Richmond," says Mike Szymanczyk, Philip Morris USA chairman and chief executive.
For employees who don't want to move to Richmond, a three- to 20-month severance package awaits, says Brendan McCormick, Philip Morris senior director of corporate communications. Employees with 30 years or more of service will get the largest package.
The decision to close the 2.4 million-square-foot Concord plant is part of a larger plan by the subsidiary of New York-based Altria Group Inc. (NYSE:MO) to consolidate its facilities and move more cigarette production to Europe, where smoking isn't taking such a large hit as in the United States.
The decision will leave the 1.6 million-square-foot Richmond facility as Philip Morris' only U.S. production plant.
While the Concord shutdown will hit the local economy hard, it won't have much of an effect statewide, says N.C. State University economist Mike Walden. "One silver lining to this is that the tobacco industry has shrunk so much in North Carolina that this is not as severe a blow as it would have been 25 years ago."
However, he says, there will be a clear impact on the Cabarrus economy.
Employees at cigarette companies are "the cream of the crop" when it comes to wages, Walden says. Cigarette companies are extremely profitable because they take an inexpensive product (raw tobacco) and sell it for a high price.
The key question, Walden says, is whether the Concord plant's workers can seamlessly move into jobs that pay as well.
The $1.5 billion N.C. Research Campus, under development in neighboring Kannapolis, is expected to ameliorate the economic impact of the collapse of textile manufacturer Pillowtex Corp., which closed in 2003.
"Now that project becomes critical," says Humpy Wheeler, president of Speedway Motorsports Inc. (NYSE:TRK), which operates Lowe's Motor Speedway south of Concord.
But that doesn't mean former Pillowtex or Philip Morris employees will end up with jobs there. Employees working in a cigarette plant may not have the skills to be retrained for work outside the manufacturing sector, Walden says. Typically, he notes, manufacturing workers move into service jobs if new manufacturing jobs are unavailable.
In the future, says John Cox, president and chief executive of Cabarrus Regional Partnership, the 2,000-acre Philip Morris site could be "the premier mega (industrial) site for the Southeast or perhaps the U.S."
Cabarrus County officials say the Philip Morris announcement is surprising but not unexpected.
"We've been saying for a long time that the economy of North Carolina has transitioned from textiles and tobacco to a more information-based economy," Cox says. "By 2011, we will have lost tobacco in Cabarrus County."
Doug Stafford, a partner in hotel development company Griffin Stafford, goes a step further, saying those jobs will soon be replaced by a vibrant local economy.
"The good news for Cabarrus County is it's a growing county," he says. "Its economy is resilient."
Still, news of the plant's pending closure sent ripples across the county Tuesday morning. At Lowe's Motor Speedway, track executive Wheeler says Philip Morris did not own a corporate suite, but many of the 2,500 workers are ticket buyers and NASCAR fans.
"This will have an impact," he says. "And it further strengthens the reasons for diversifying this county."
The announcement underscores how important industrial recruitment is to the Charlotte area, says Ronnie Bryant, president of the Charlotte Regional Partnership. "We have to ensure that we keep a pipeline of opportunities."
Philip Morris is Concord's top taxpayer. In 2006, the company paid nearly $5 million in total municipal taxes.
Cabarrus must work to attract industrial development to the Philip Morris site and not succumb to residential development, Wheeler says. The latter, he notes, would push Cabarrus closer to being a bedroom community for Charlotte and, in turn, push taxes higher for supporting services.
"There is no doubt that this is a real blow," says Concord Mayor Scott Padgett. "We will just have to work harder on our economic development initiatives."
But the county can't rely on another large-scale employer to come in and fill the void, says Pat Horton, chief executive of Cabarrus Bank & Trust and a native of Concord.
"It's going to be a huge challenge, I think, for our market to attract businesses such as a Phillip Morris," she says. "Our focus needs to be on growing our small businesses and helping them to be able to provide those jobs that are going to be missing in the market."
The immediate concern, Cox says, is for the Philip Morris employees and their families. "It's a very difficult time for us emotionally," he says, speaking from a cell phone outside the plant on U.S. Highway 29.
"We are saddened by the news that one of our most vital industries is closing its doors," Padgett says. "As with any industry closing, our first thoughts must be for the people who are losing their jobs."
Bonnie Silvers, owner of Sweet Pea Café on Union Street in Concord, says many Cabarrus-area families depend on income from the plant. "It's really sad for those people," she says. "It's going to be a detriment to the community."
Employees were told of the decision to close the plant at a 7:15 a.m. meeting at the Concord facility. Managers describe the reaction as "subdued."
Three events have severely cut jobs in Cabarrus -- the 2002 closing of the Midland plant for Corning Inc. that eliminated 800 jobs; the 2003 closing of Pillowtex, which cost 4,000 to 5,000 local jobs; and now the pending Philip Morris shutdown.
"It's a one-two-three punch for the county," Cox says.
Unemployment in Cabarrus trended upward to 4.5 percent in May, rising from 3.9 percent in March. The yearly average unemployment rate in 2006 was 4.1 percent.
Cox says he received an early-morning briefing from Philip Morris officials at the plant.
The reorganization will save the company about $335 million by 2011. But the severance packages and other expenses will be costly, estimated at $670 million.
For cigarette companies, it makes sense to move to high-growth markets in Asia and Eastern Europe, Walden says. The industry is no longer tied to domestically grown tobacco; less than half of the cigarettes made in United States are filled with domestic tobacco.
Cigarettes can be produced at a lower cost overseas and marketed to customers who are not as concerned about health issues as they are in the United States, where consumption has been on the decline since the 1960s.
"It is a disappointment that the company has chosen to move its production operations overseas especially after they worked so hard to have a state-of-the-art facility in Concord," Padgett says. "This shows that we cannot take anything for granted, and this demonstrates why cities have to continually work for small and large economic projects."
In May 2006, Philip Morris completed a $140 million expansion in Concord, which added 12 high-speed cigarette machines and an 11-story automated storage facility for packaging materials.
McCormick says Philip Morris considered keeping the Concord plant open while shuttering the Richmond operation, which has 5,800 employees. "This way delivered the most savings and the best opportunity for the total work force."
Former Concord Mayor George Liles recalls the situation in 1983, when Philip Morris opened the plant on former dairy farm land southwest of Concord. Since then, the company's local employment has expanded, and the plant has become a catalyst for the community's growth, he says. "They have been excellent corporate citizens."
Shares of Philip Morris parent Altria, which have traded between $66.91 and $90.50 over the last year, rose 1.4 percent in trading Tuesday afternoon to $69.73 per share.
Staff writers Roberta Fuchs, Katy Stafford, Erik Spanberg and Will Boye contributed to this report.
Link (http://www.bizjournals.com/charlotte/stories/2007/06/25/daily11.html?t=printable)
My dad is one of the shift manager at this plant and we got the news today. The good news is that we have until 2010 to get our stuff in order, that means to pay off the car, house, to get me out of grad school, have my dad find another job and finish grad school himself, and get our winery/vineyard started
The bad news is that we only have three years to get our stuff in order, which really is a short time considering how you look at it. Which means that I'd probably have to go ahead and get a master in occupational therapist instead of going to UNCC to get a Public History Masters and going to Greensboro to get a MILS, it's just shorter to get a Master in OT than it is to do all that other stuff. So this means that I will have to accept a job where I have to be *ugh* social, and I hate being social. Which is why I loved the idea of being an archivist, but what can you do, you got to do what you need to do in a given situation.
Also, this won't help the local economy either, this plant provided Cabarrus Co. 2,500 jobs, which will be moved to either Richmond, VA or China.
So we'll see how this unfolds for personal reason and for the city of Concord and Cabarrus Co.
Charlotte Business Journal - 2:53 PM EDT Tuesday, June 26, 2007
by Ken Elkins
Staff Writer
Philip Morris USA will close its 2,500-employee cigarette plant in Concord in three years, citing a decline in U.S. demand for cigarettes.
Most local production will move to the company's Richmond, Va., facility, where many of the Cabarrus County plant's workers would be offered jobs, the company announced Tuesday.
"It is my hope that the majority of the employees at Cabarrus will be able to relocate to Richmond," says Mike Szymanczyk, Philip Morris USA chairman and chief executive.
For employees who don't want to move to Richmond, a three- to 20-month severance package awaits, says Brendan McCormick, Philip Morris senior director of corporate communications. Employees with 30 years or more of service will get the largest package.
The decision to close the 2.4 million-square-foot Concord plant is part of a larger plan by the subsidiary of New York-based Altria Group Inc. (NYSE:MO) to consolidate its facilities and move more cigarette production to Europe, where smoking isn't taking such a large hit as in the United States.
The decision will leave the 1.6 million-square-foot Richmond facility as Philip Morris' only U.S. production plant.
While the Concord shutdown will hit the local economy hard, it won't have much of an effect statewide, says N.C. State University economist Mike Walden. "One silver lining to this is that the tobacco industry has shrunk so much in North Carolina that this is not as severe a blow as it would have been 25 years ago."
However, he says, there will be a clear impact on the Cabarrus economy.
Employees at cigarette companies are "the cream of the crop" when it comes to wages, Walden says. Cigarette companies are extremely profitable because they take an inexpensive product (raw tobacco) and sell it for a high price.
The key question, Walden says, is whether the Concord plant's workers can seamlessly move into jobs that pay as well.
The $1.5 billion N.C. Research Campus, under development in neighboring Kannapolis, is expected to ameliorate the economic impact of the collapse of textile manufacturer Pillowtex Corp., which closed in 2003.
"Now that project becomes critical," says Humpy Wheeler, president of Speedway Motorsports Inc. (NYSE:TRK), which operates Lowe's Motor Speedway south of Concord.
But that doesn't mean former Pillowtex or Philip Morris employees will end up with jobs there. Employees working in a cigarette plant may not have the skills to be retrained for work outside the manufacturing sector, Walden says. Typically, he notes, manufacturing workers move into service jobs if new manufacturing jobs are unavailable.
In the future, says John Cox, president and chief executive of Cabarrus Regional Partnership, the 2,000-acre Philip Morris site could be "the premier mega (industrial) site for the Southeast or perhaps the U.S."
Cabarrus County officials say the Philip Morris announcement is surprising but not unexpected.
"We've been saying for a long time that the economy of North Carolina has transitioned from textiles and tobacco to a more information-based economy," Cox says. "By 2011, we will have lost tobacco in Cabarrus County."
Doug Stafford, a partner in hotel development company Griffin Stafford, goes a step further, saying those jobs will soon be replaced by a vibrant local economy.
"The good news for Cabarrus County is it's a growing county," he says. "Its economy is resilient."
Still, news of the plant's pending closure sent ripples across the county Tuesday morning. At Lowe's Motor Speedway, track executive Wheeler says Philip Morris did not own a corporate suite, but many of the 2,500 workers are ticket buyers and NASCAR fans.
"This will have an impact," he says. "And it further strengthens the reasons for diversifying this county."
The announcement underscores how important industrial recruitment is to the Charlotte area, says Ronnie Bryant, president of the Charlotte Regional Partnership. "We have to ensure that we keep a pipeline of opportunities."
Philip Morris is Concord's top taxpayer. In 2006, the company paid nearly $5 million in total municipal taxes.
Cabarrus must work to attract industrial development to the Philip Morris site and not succumb to residential development, Wheeler says. The latter, he notes, would push Cabarrus closer to being a bedroom community for Charlotte and, in turn, push taxes higher for supporting services.
"There is no doubt that this is a real blow," says Concord Mayor Scott Padgett. "We will just have to work harder on our economic development initiatives."
But the county can't rely on another large-scale employer to come in and fill the void, says Pat Horton, chief executive of Cabarrus Bank & Trust and a native of Concord.
"It's going to be a huge challenge, I think, for our market to attract businesses such as a Phillip Morris," she says. "Our focus needs to be on growing our small businesses and helping them to be able to provide those jobs that are going to be missing in the market."
The immediate concern, Cox says, is for the Philip Morris employees and their families. "It's a very difficult time for us emotionally," he says, speaking from a cell phone outside the plant on U.S. Highway 29.
"We are saddened by the news that one of our most vital industries is closing its doors," Padgett says. "As with any industry closing, our first thoughts must be for the people who are losing their jobs."
Bonnie Silvers, owner of Sweet Pea Café on Union Street in Concord, says many Cabarrus-area families depend on income from the plant. "It's really sad for those people," she says. "It's going to be a detriment to the community."
Employees were told of the decision to close the plant at a 7:15 a.m. meeting at the Concord facility. Managers describe the reaction as "subdued."
Three events have severely cut jobs in Cabarrus -- the 2002 closing of the Midland plant for Corning Inc. that eliminated 800 jobs; the 2003 closing of Pillowtex, which cost 4,000 to 5,000 local jobs; and now the pending Philip Morris shutdown.
"It's a one-two-three punch for the county," Cox says.
Unemployment in Cabarrus trended upward to 4.5 percent in May, rising from 3.9 percent in March. The yearly average unemployment rate in 2006 was 4.1 percent.
Cox says he received an early-morning briefing from Philip Morris officials at the plant.
The reorganization will save the company about $335 million by 2011. But the severance packages and other expenses will be costly, estimated at $670 million.
For cigarette companies, it makes sense to move to high-growth markets in Asia and Eastern Europe, Walden says. The industry is no longer tied to domestically grown tobacco; less than half of the cigarettes made in United States are filled with domestic tobacco.
Cigarettes can be produced at a lower cost overseas and marketed to customers who are not as concerned about health issues as they are in the United States, where consumption has been on the decline since the 1960s.
"It is a disappointment that the company has chosen to move its production operations overseas especially after they worked so hard to have a state-of-the-art facility in Concord," Padgett says. "This shows that we cannot take anything for granted, and this demonstrates why cities have to continually work for small and large economic projects."
In May 2006, Philip Morris completed a $140 million expansion in Concord, which added 12 high-speed cigarette machines and an 11-story automated storage facility for packaging materials.
McCormick says Philip Morris considered keeping the Concord plant open while shuttering the Richmond operation, which has 5,800 employees. "This way delivered the most savings and the best opportunity for the total work force."
Former Concord Mayor George Liles recalls the situation in 1983, when Philip Morris opened the plant on former dairy farm land southwest of Concord. Since then, the company's local employment has expanded, and the plant has become a catalyst for the community's growth, he says. "They have been excellent corporate citizens."
Shares of Philip Morris parent Altria, which have traded between $66.91 and $90.50 over the last year, rose 1.4 percent in trading Tuesday afternoon to $69.73 per share.
Staff writers Roberta Fuchs, Katy Stafford, Erik Spanberg and Will Boye contributed to this report.
Link (http://www.bizjournals.com/charlotte/stories/2007/06/25/daily11.html?t=printable)
My dad is one of the shift manager at this plant and we got the news today. The good news is that we have until 2010 to get our stuff in order, that means to pay off the car, house, to get me out of grad school, have my dad find another job and finish grad school himself, and get our winery/vineyard started
The bad news is that we only have three years to get our stuff in order, which really is a short time considering how you look at it. Which means that I'd probably have to go ahead and get a master in occupational therapist instead of going to UNCC to get a Public History Masters and going to Greensboro to get a MILS, it's just shorter to get a Master in OT than it is to do all that other stuff. So this means that I will have to accept a job where I have to be *ugh* social, and I hate being social. Which is why I loved the idea of being an archivist, but what can you do, you got to do what you need to do in a given situation.
Also, this won't help the local economy either, this plant provided Cabarrus Co. 2,500 jobs, which will be moved to either Richmond, VA or China.
So we'll see how this unfolds for personal reason and for the city of Concord and Cabarrus Co.