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Philip Morris USA Announces Timing for Cabarrus Plant Closure
RICHMOND, VA (April 22, 2009) - Philip Morris USA announced today that it will cease production at its Cabarrus cigarette manufacturing facility and complete the consolidation of cigarette manufacturing capacity into its Richmond facility by the end of July 2009. PM USA first announced in June 2007 that it would be closing the Cabarrus facility. That decision was made to address manufacturing overcapacity resulting from ongoing declines in U.S. cigarette volume and reduced contract manufacturing. PM USA is taking this action to address ongoing cigarette volume declines, including the projected impact of the recently enacted federal excise tax increase. The federal excise tax on cigarettes increased by 158 percent or about 62 cents per pack on April 1, 2009.
PM USA has extended the opportunity to transfer to Richmond to more than 1,000 employees, since the June 2007 announcement. In total, 530 hourly and salaried employees have transferred to jobs in Richmond. Hundreds more employees have voluntarily left the company.
The majority of the 1,100 remaining Cabarrus employees will be laid off involuntarily by the end of July. Per union agreements, these hourly employees will be eligible to be recalled to fill cigarette manufacturing job openings with PM USA for up to three years from the date of layoff.
Hourly and salaried employees also will be eligible for between six and 20 months of severance pay and benefits, depending upon length of service. PM USA is working with state and private outplacement agencies to provide extensive outplacement services, including individualized career counseling, career information and guidance workshops, skills assessments and job search resources to further assist employees. These additional outplacement services complement PM USA's ongoing educational benefits and educational reimbursement program.
"I regret the impact of this closure to our employees and their families," said Craig Johnson, president, Philip Morris USA. "Since we announced in June of 2007 the difficult decision to close this facility, our employees have performed extraordinarily well under very difficult circumstances. We are very proud of their contributions to our company and the Cabarrus community over the past 25 years."
Philip Morris USA is an operating company of Altria Group, Inc. (NYSE: MO).
