TOKYO: Japan Tobacco said it may close two European factories and cut production at a third in a move that could see about 1,100 layoffs, citing a “challenging operating environment.”
The company plans to hold talks with unions representing workers in Lisnafillan, Northern Ireland, and Wervik, Belgium about shutting the sites, while some production at its Trier plant in Germany will be relocated, it added.
“[JT] will undertake appropriate consultations with employees’ representatives and the European Works Council on the proposal to change its product sourcing, which could lead to the closure of some of its manufacturing sites,” said a statement issued late Tuesday.
The firm—one of the world’s biggest tobacco companies whose international brands include Winston and Camel—said some production could be moved to other sites, including in Poland and Romania.
If the plan goes ahead, Japan Tobacco said it expected the factory closures to be completed between 2016 and 2018.
While it has a strong overseas business, JT said the business environment was getting tough in the European Union, including taxes and tougher restrictions on packaging.
“The prolonged challenging economic environment and excise tax pressure has triggered industry volume contraction in a number of key European countries,” it said.
The company has 25 manufacturing sites overseas, including seven in Europe.
In Japan, the firm has said it will close four out of nine factories by early 2016.