Imperial Tobacco to shut factories in UK, France

LONDON Tue Apr 15, 2014 3:05pm BST

1 of 3. View of a sign outside the Imperial Tobacco Seita cigarette plant in Carquefou, near Nantes, April 15, 2014.

Credit: Reuters/Stephane Mahe

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LONDON (Reuters) - Britain's Imperial Tobacco (IMT.L) is shutting cigarette factories in England and France with the loss of about 900 jobs as it grapples with declining sales in Europe.

The maker of Gauloises and Davidoff cigarettes blamed the closures on tough economic conditions, increased regulation and taxes and growth in the illicit tobacco trade.

"These projects are an essential part of securing the sustainable future of the business," said Chief Executive Alison Cooper, calling the job cuts regrettable and promising to ensure that employees are treated fairly and responsibly.

Smoking has declined in many countries because of public bans, an increase in health awareness and plainer packaging.

France's cigarette market has almost halved since 2000. In Britain it has fallen by about 42 percent, although a company spokesman said some consumers had switched to loose tobacco.

Imperial, the world's fourth-largest international tobacco company by market share, aims to launch two electronic cigarettes this year. They are safer than traditional cigarettes but also face the prospect of additional government regulation.

Imperial said the plants would close over the next two years and production would be relocated to factories in Germany and Poland. In place of a distribution centre also being shut in Nottingham, central England, distribution will be outsourced.

Michel Laboureur of France's CGT union said there were no plans for a strike since that would only cause more losses and boost the case for closure.

The Nottingham factory and distribution centre employ 540 people but the factory is only expected to produce 17 billion cigarettes this year, or 47 percent of capacity. The Nantes factory in France employs 320 people and will produce about 43 percent of capacity.

There is also a proposal to close the company's Bergerac research and development facility in France and restructure its sales force and support function in Paris, which would affect 120 jobs, though the company said 80 new jobs could be created.

It is in the process of closing another factory in Cadiz, Spain.

The moves are part of Imperial Tobacco's wider plan to deliver annual savings of 300 million pounds ($502 million) a year from September 2018.

Consultations with employees, works councils and trade unions are under way, the company said.

Imperial shares were up 0.7 percent in afternoon trading. ($1 = 0.5976 British Pounds)

(Additional reporting by Guillaume Frouin in Nantes; editing by Tom Pfeiffer)

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