Van Nelle Canada Ltd. plant closing
Published Wednesday November 18th, 2009
Industry: Weak market forces Imperial Tobacco to move manufacturing to U.S.
A Woodstock manufacturer of cigarette filter tubes will be closing up shop due to a decision made by its parent firm Imperial Tobacco Group PLC in reaction to local markets it has deemed poor.
The 47 employees at Van Nelle Canada Ltd.'s New Brunswick plant will be out of work next April, when Imperial Tobacco relocates equipment to its Reidsville, N.C., operations where the firm produces Commonwealth Brands Inc. cigarettes.
"It's very much a case of the decline we're seeing in the Canadian market," said Imperial Tobacco spokesman Simon Evans in a phone interview Tuesday from the company's Bristol, U.K., headquarters.
"The U.S. market is and has been for several years, growing," he said. "It just makes sense from a logistical point of view to move our manufacturing to the U.S., to Reidsville."
A statement released by the company said there may be some relocation opportunities within Imperial Tobacco for suitably skilled workers.
"That would be something that we would discuss with interested employees going forward," Evans said.
Imperial Tobacco says the Canadian market has seen a reduction in filter tube production of about 75 per cent since 2006. Volumes in the United States have increased by 50 per cent in the same period, the company says.
To blame is the wide availability of contraband tobacco products, as well as the increasing popularity of discount-priced cigarettes, the firm argues.
"Smokers are looking to find greater value," Evans said. "They may look to trade to a cheaper smoke."
The Woodstock facility, which was built in 1988, produces about three billion filter tubes per year, Evans said.
The tubes, which are marketed under the brand Premier, are stuffed with tobacco by smokers who roll their own cigarettes, often to save on costs associated with buying pre-packaged products.
The Woodstock plant came under Imperial Tobacco ownership in 2000 after the U.K. firm bought Rotterdam's Van Nelle in 1998; the New Brunswick plant was known as Efka, previously.
Imperial Tobacco Group has a small hold on the Canadian tobacco market through its Davidoff cigarettes and Rizla rolling papers, Evans said.
The firm is not related to Imperial Tobacco Canada.
Imperial Tobacco Group has products in more than 160 countries worldwide with 33 cigarette factories, 20 facilities that process tobacco and other products and three paper and tube plants.
The company says it has nine per cent of the global tobacco market.
In 2008, Imperial Tobacco acquired Altadis, formerly the fifth-largest company in the industry.
Management at the Woodstock facility declined comment about the planned factory closure when reached Tuesday.
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