Japan Tobacco Closes Several Factories

Published on February 5th, 2014 00:00

Japan Tobacco is reducing 1,600 jobs and shutting four factories in the country as part of its program to increase national competitiveness and productivity.

The job cuts, or around 18 % of the company’s employees, will be made by means of a voluntary retirement plan that will be given to qualified workers in the Japanese local tobacco business, the company representative stated these days. The majority of these staff will abandon the company already at the end of March 2015.  “Our Japanese local tobacco business functions in a significantly difficult environment, mostly because of constant tobacco tax boosts, shrinking of smoking associated polices and increasing health awareness,” declared the Tokyo-based company in a declaration to the Tokyo Stock Exchange.

Japan Tobacco, Asia’s major cigarette manufacturer, deals with decreasing demand in its local market despite a diminishing population and has been extending its overseas business to compensate the deterioration home market. The rate of smokers in Japan dropped by 20.9 % within the last four years, in accordance with the company’s official website. The cost reductions will begin demonstrating their effect starting April 2015, Akira Saeki, an executive deputy president who leads the tobacco business, reported at a press conference.

Japan Tobacco shares increased 3.65 % to close at 3,550 yen. The job reductions and factory closures were first revealed by NHK a week ago. The owner of the Camel, Glamour and some other best selling cigarette brands is closing two cigarette producing factories, two tobacco plants and also a unit that produces and sells cigarette vending machines by March 2015, it explained. The manufacturer will also cease leaf processing actions at its enterprise in Fukushima, it added. “It will enhance the production proficiency,” stated Hiroshi Saji, an expert at Mizuho Securities Company. “Local production had been decreasing, and documented steps are along the lines of the dropping demand.” He is expecting that the job reductions will increase the company’s operating revenue by about $173 million annually. Japan’s government intends to boost the sales tax up to 8 % in April.

The company intends to extend its collection of smokeless tobacco products as the percentage of cigarette consumers decreases in Japan, its largest market, Saeki mentioned then. More rigid laws on the sale and use of tobacco products internationally have led to this trend, the company representative mentioned. Japan Tobacco encounters more growing options in such places as Africa, South America and several Asian regions and wants to broaden in Indonesia, Southern Asia probably through acquisitions or investment strategies with regional businesses, the executive reported.