Philip Morris International is closing two tobacco factories in Germany due to weak demand across Europe, reports Bloomberg.
The multinational said on Oct. 29 that demand for cigarettes had fallen significantly in recent years and that the trend is likely to continue. Demand for rolling tobacco, made at the company’s Dresden plant, is also in decline.
PMI employs 372 workers at its factories in Berlin and Dresden, which will close in the first half of next year. Philip Morris said it would begin consultations with employees and work councils, and seek “socially acceptable solutions” for its workforce.
According to Jan Otten, PMI’s managing director of operations in Germany, the company is constantly reviewing its business processes to ensure operational efficiency. “We are aware that difficult but necessary decisions have to be made in order to adapt to current market developments,” he was quoted as saying in a press note.
PMI has been working to transition its customers to alternative products such as vapes, heated tobacco and oral nicotine pouches. It has set a target of reaching two-thirds of sales from cigarette alternatives by 2030.
The announcement comes as Germany’s manufacturing sector is experiencing a prolonged period of weakness, bogged down by high energy costs, weak demand at home and abroad and increased foreign competition.
The downturn has fueled concern about Germany’s attractiveness as an industrial location.