Romania - PMI suspends cigarette production for two-weeks starting February 19th....

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February 8, 2010 - Cigarette maker Philip Morris (PMI) Romania will shut down its factory in Otopeni near capital Bucharest for two weeks as of February 19, the company said yesterday, Tuesday, January 26th. It added that it would put the factory’s 450 employees on furlough.

The company said it had decided to suspend production because of a continued decline in legal cigarette sales in the local market following a sharp hike in excise duties as of 1 January and an increase in cigarette smuggling. (Romania to increase excise tax on cigarettes April 1, 2009..)

That trend has accelerated over the past ten months, following a 48 percent increase in excise duties to 50 Euros per 1,000 cigarettes in April 2009 and to 74 Euros per 1,000 cigarettes in January 2010.

Andrei Vasilescu, corporate affairs director at Philip Morris for Romania and Bulgaria, said: "Our estimates show one in four packs of cigarettes is being sold illegally, so no taxes are paid to the state.

"Our employees are not the only ones who are suffering because of contraband. The black market causes a drop in sales, which also leads to job losses among distributors and retailers."

The temporary shutdown will affect the company's 450 employees, who will be put on furlough and receive 75 percent of their wages during the suspension of production.
According to union leader Cornel Serbanescu, the cigarette maker's sales dropped 30 percent last year compared to projected sales.

Philip Morris is one of three large cigarette makers in Romania, along with Japan Tobacco International and British American Tobacco.

Tobacco in Romania..

Reference: Philip Morris to suspend production for two weeks, Mediafax, 1/27/2010.