Reynolds confirms job cuts at Tobaccoville plant

Reynolds American Inc. confirmed Wednesday that it has cut an undisclosed number of production jobs at its Tobaccoville plant as part of a business analysis that began Jan. 26.

The company remains tight-lipped about which jobs were eliminated Tuesday and how it decided which employees were let go immediately and which would be offered the opportunity to stay on possibly into 2014.

Reynolds spokeswoman Maura Payne said "several factors were involved in assessing" the jobs that were eliminated Tuesday. She declined to provide details but said the workers whose jobs were cut "know the answer to that question."

John Price, an international representative of the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union, said he was told by employees that factory service workers whose jobs fall into certain labor grades had been let go, as well as some operators and mechanics.

"I'm hearing there are some people with 35 years seniority being let go," he said. "I guess Reynolds wants to win the race to the bottom" for wages.

Reynolds' fourth business analysis in the past 3½ years is expected to be completed by the end of the first quarter. It affects salaried and manufacturing workers at the parent company, RAI Services and several departments of R.J. Reynolds Tobacco Co.

The past three times the company did this type of analysis, a combined 2,715 local jobs were eliminated.

The primary reason for the downsizing remains the same — the continuing decline in demand for cigarettes nationwide.

"R.J. Reynolds remains focused on balancing volume, share and profitability over the long term," said Daniel Delen, the company's president and chief executive.

The company has about 2,500 local employees. The last available production workforce count from Reynolds was about 1,400. The company said it would not provide further updates by workforce categories.

Payne said the company has not set a workforce reduction goal. "We won't comment on a specific number until the analysis is done," she said.

The company told salaried employees in January that it expects to conduct voluntary and involuntary job cuts.

The lack of more public disclosure on the job cuts angered some employees and their family members who spoke with the Winston-Salem Journal. They declined to be identified for fear of losing their jobs and/or severance packages.

Some of their frustration was focused on reported comments by Price, who said he had been told by employees that some workers were let go based on their last evaluation. Those who contacted the Journal said they are concerned that future job opportunities could be limited if prospective employers question their job performance at Reynolds. Some employees said all of the workers in some categories were replaced, indicating that performance played no part in the decision.

The employees and families were also upset that Reynolds had already hired contract workers at lower wages to replace dismissed employees.

Pay rates are also being evaluated as part of the analysis, Payne said.

She said the average salary and bonus was $70,195 for the 1,320 production and maintenance employees who were eligible to vote on union representation in October.

"If the company pursues that course, it is likely the revised target rates would be more in line with average manufacturing salaries in the Southeast," Payne said. "However, if the company sets new target pay rates for future hires, it will not reduce the salaries of the current employees."

The employees and family members were also disturbed that the employees let go Tuesday were not offered a severance package enhanced from Reynolds' typical offer. The past offers have been for two weeks of pay for every year of service, with a minimum of 13 weeks of pay regardless of years of service, and a maximum of 78 weeks, along with benefits and outplacement help.

Payne confirmed the company is offering an enhanced "special, one-time" severance package to remaining employees.

"Some of the highlights include the fact that employees who permit the company to select their exit date will receive a special monthly cash supplement after their severance period," Payne said. "During the time they are on severance, that will count toward their age and service for pension calculation purposes."

Price said he expects the one-time severance offer will find plenty of takers.

"I believe a good number of them are seeing the writing on the wall in terms of production jobs and will choose to jump on the severance package and move on," he said.

He said the fourth business analysis is part of a "long-term program" that is "focused on productivity and efficiencies." The analyses began shortly after Reynolds bought Brown & Williamson Tobacco Co. in July 2004.

"We believe it is prudent to once again review key activities and resources to ensure they are aligned with today's economic and competitive landscape," Delen said.

Delen said the analyses have three main focuses: workforce and production reductions; internal processes that have included recent outsourcing initiatives; and simplifying price and promotional programs.

Since 1983, Reynolds American and its subsidiaries have eliminated at least 84 percent of their local workforce through at least 19 job-cut announcements, going from 15,500 full-time workers to about 2,500 now.