UK’s Imperial Tobacco to close factories in UK, France

The UK's Imperial Tobacco is closing cigarette factories in England and France with around  900 job losses as it struggles with declining European sales, Reuters reports.

The company blamed the closures on tough economic conditions, increased regulation and taxes and growth of the illicit tobacco trade.

Chief executive Alison Cooper said the projects were an essential part of securing the sustainable future of the business, the report said.

She called the job cuts regrettable and promised to ensure that employees were treated fairly and responsibly.

Public bans coupled with increasing health awareness and other measures have led to a decline in smoking in many countries.

The French cigarette market had almost halved since 2000, and in the UK it had fallen by per cent, although according to a company spokesman some consumers had switched to loose tobacco.

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

According to Imperial, the plants would close over the next two years and production would be relocated to factories in Germany and Poland. A distribution centre would also shut in Nottingham, central England, with the operations being outsourced.

The move marks a symbolic retreat in France by Seita, a unit of the UK's Imperial Tobacco Group Plc, which had been granted a license for tobacco manufacturing and distribution monopoly by Louis XIV's finance minister Jean-Baptiste Colbert in the 17th century, Bloomberg reported.

The company was privatised by the state in 1995. In 1999, it merged with its Spanish counterpart Tabacalera in 1999 to form Altadis and was bought by Imperial Tobacco in 2007.

According to Le Figaro newspaper, Seita still retained a 25.3 per cent share of the French cigarette market. It added that about 60 per cent of the output of the Nantes factory was destined for exports to the rest of Europe, Africa and the Middle East.

The plan for shifting production out of France comes with Imperial Tobacco targeting cost cuts of €385 million between now and 2018, according to the newspaper.

According to AFP, the company held an extraordinary meeting with its workers' council today, Bloomberg reported.