PM to close Australian factory this year

// Philip Morris Limited (PML) said today that it was to stop cigarette manufacturing in Australia by the end of this year.

The manufacture of cigarettes for the Australian market will be moved to PML’s affiliate in South Korea.

Currently, about 180 people are employed at PML’s factory at Moorabbin, a suburb of Melbourne, Victoria.

“This is an extremely difficult decision, and devastating news for all of our employees,” said John Gledhill, managing director, Australia, New Zealand and Pacific Islands.

“Philip Morris Limited has a proud history of nearly 60 years of manufacturing in Moorabbin, being the first Philip Morris affiliate established outside of the United States, and many of our employees have been with the company for a significant part of that journey,” said Gledhill.

“With the Australian market in gradual decline over the last decade, in 2006–2009 PML substantially invested in the Moorabbin factory to capitalize on export opportunities across the region,” said a note posted on Philip Morris International’s website. “However, these forecast export opportunities have not been realized due to Australian government reduced-fire risk requirements introduced in 2010 on all locally manufactured cigarettes that do not match consumers’ preferences in other markets in our region.”

“Despite the introduction of plain packaging and the continued growth in illicit trade, PML’s volumes were stable in 2013,” said Gledhill. “However, with any significant export opportunity restricted by Australian government regulations, our Moorabbin factory is significantly under-utilized, operating at less than half of its currently installed capacity.

“Our operations team [has] led the PMI business in terms of quality, and set numerous records for productivity and performance. However, regrettably factors beyond our control prevent us from fully utilizing the facility, and accordingly it’s been identified for closure.”

Gledhill said about 180 employees directly involved in manufacturing would be impacted by the planned closure, and that extensive support would be provided to all employees, including redeployment where feasible, counseling and coaching, career transition and outplacement support, and financial and retirement advice.