Reynolds American prepares for more job cuts

Another round of job cuts is hanging over Reynolds American Inc.

The Winston-Salem-based company confirmed Thursday that it is conducting its fourth business analysis in the past 3½ years.

The phrase likely is chilling to Reynolds employees, considering that a combined 2,705 local jobs were eliminated the last four times the company conducted such analyses.

Spokeswoman Maura Payne said the result of the analysis will be job cuts among the salaried and manufacturing workforce at the parent company, RAI Services and several departments of R.J. Reynolds Tobacco Co.

Payne said subsidiaries American Snuff and Santa Fe Tobacco are not involved in the analysis, as well as the R.J. Reynolds field trade marketing operations.

Although Reynolds has not determined a job-reduction goal, the company has told salaried employees it expects to conduct voluntary and involuntary job cuts, Payne said. It has not determined whether it will require involuntary manufacturing job cuts.

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

As Reynolds did with its four previous analyses, it is reviewing its programs, services and organizational structure. Payne said the company will complete the analysis and announce the number of affected employees by March 31.

"This analysis is about identifying resources and having the financial flexibility to take advantage of marketplace opportunities that may arise that we think will help us grow our business," Payne said.

"We are analyzing the programs, services and activities that the company feels will be important to its growth and the growth of our brands. Once those are determined, we will determine how many people it requires to support them."

Payne said salaried employees have been given the opportunity to take a volunteer departure in exchange for a severance package. They have until Monday to participate in a company survey.

The company will turn its focus to manufacturing workers in February, Payne said.

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.

A business analysis in April 2003 resulted in more than 2,600 jobs being eliminated — 40 percent of its workforce at that time — including about 1,700 locally. The company did add 800 to 1,200 local jobs as part of buying Brown & Williamson Corp. in July 2004.

The company eliminated 570 salaried jobs (320 involuntary and 250 voluntary) in September 2008, 400 manufacturing jobs (all voluntary) in December 2009, and 45 manufacturing jobs (all voluntary) in March 2011.

The last two manufacturing jobs cuts were related to plans for closing Whitaker Park, which was announced in May 2010. The company's latest goal is having the plant closed in the first half of this year.

John Price, an international representative of the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union, said he has received emails from Reynolds workers who unsuccessfully sought union representation last year.

Reynolds Tobacco's production and maintenance employees rejected union representation for the third time in 6½ years in October.

"This decision by Reynolds to cut more manufacturing jobs is what we warned the workers about," Price said. "The union supporters are very, very frustrated with the plans, especially considering Reynolds is likely to increase the use of contract workers at lower salaries as replacements."

Payne said the severance package remains the same — 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.

However, as of Jan. 1, 2010, the severance package is paid in a lump sum as soon as employment ends rather than as a "salary continuation" period.

Mayor Allen Joines said Reynolds employees affected by the job cuts would be entering "a tight but improving job market." He said one silver lining is that most of those employees are "likely not (to) be seeking immediate employment."

In the previous job cuts, most of the volunteers were at or close to retirement age by the time they departed the company.

For example, salaried employees eligible for retirement and retiree health benefits represent 90 percent of the 250 who volunteered to leave in September 2008.

Eligibility for retirement differs for some employees because their years of service include time spent with companies that Reynolds bought. Although the main criterion is being at least age 55 with 20 years of service, some employees are able to retire at 50.

Gayle Anderson, president and chief executive of the Winston-Salem Chamber of Commerce, said she was not surprised Reynolds is conducting another business analysis so soon.

"Without knowing the number of people or the types of positions, I could not speculate on whether they would be retiring or seeking other employment, so I cannot predict the effect on the local job market," Anderson said.