August 27, 2010 - Memphis-based American Snuff Co. is laying off 45 of the 83 people who work in its home office, but no manufacturing employees, a spokesman confirmed Thursday, August 26th. (Effective January 1, 2010 Conwood maker of Grizzly to change name to American Snuff Company..)
The company, acquired four years ago by Reynolds American, still plans to invest $133 million in a new manufacturing facility at 5106 Tradeport in Southeast Memphis, spokesman David Howard said.
American Snuff makes moist smokeless tobacco products, or chewing tobacco, including the flagship brand Grizzly and premium brand Kodiak.
In the first half of this year, American Snuff generated adjusted operating income of $169 million. Shipment volume rose 7.1 percent in the first six months of the year. American Snuff's share of shipments for the second quarter 2010 was in line with the prior year quarter at 29.4%. Grizzly's second quarter shipment volume increased by 4.2%. For the first half, the brand continued to outpace industry consumption with a 7.6% increase. And Grizzly's share of shipments increased slightly to 25.5% in the quarter. (Highlights RAI q2 2010 Earnings Report..)
The move from the current plant at 46 Keel should be made by 2012, Howard said, adding, "We will have a little over 200 employees." The layoffs were reported Thursday by the Tennessee Department of Labor and Workforce Development.
The affected positions at the home office, 813 Ridgelake, include jobs in human resources, finance and trade marketing. "Because certain services like that are now being provided by affiliated companies" within Reynolds American, Howard said.
"What is important here is our plans for the new plant on Tradeport Drive have not changed," he said. "That is all moving forward."
But the layoffs are causing American Snuff to forgo an already-approved tax break that would have saved the company more than $6.7 million over nine years. The Memphis and Shelby County Industrial Development Board approved the payment-in-lieu-of-taxes (PILOT) in September. The tax break was to have taken effect once the company closed on its real and personal property. "They did not plan on pursuing at this time the closing of their PILOT," said Joann Massey, compliance officer for the industrial board. Under terms of the tax break, American Snuff committed to 25 new jobs for a total of 319 jobs.
The employees laid off will receive severance packages, including two weeks' pay for each year of service, and job-search support. Employees were told of the layoffs earlier this summer. Some will remain on the job through December 2011, Howard said.
The company bought the 787,500-square-foot Tradeport site last fall for $19.3 million.
Reference: Reynolds American cuts 45 jobs at American Snuff in Memphis by Tom Bailey Jr. (901-529-2388), The Commercial Appeal, 8/26/2010.