Impending job losses 'shock' Concord

Philip Morris plant will close in late 2010 as jobs move to Richmond, Va.

CHARLOTTE -- The blow of losing 2,500 jobs at the Philip Morris cigarette plant in Concord was cushioned Tuesday. The plant won't close right away, and most affected employees will be offered positions elsewhere, company officials said.

"This one is not as much of a crisis as some others," Gov. Mike Easley said. "This is not one where they have announced today that they are closing down 500 jobs this week."

As part of moving its cigarette production for non-U.S. markets to Europe, Philip Morris parent Altria Group said it will transfer all production from the North Carolina plant to its Richmond, Va., production center. That plant will become the company's sole U.S. manufacturing plant by 2011.

In the past decade as an increasing number of states have restricted smoking in public places, cigarette consumption has declined about 2 percent a year in the United States.

"I think it's just a matter of economics," Easley said. "Smoking is declining, and that's good for our citizens. ... We knew this was going to occur if we did our job in public health, and that's part of it."

Philip Morris USA declined to discuss specific numbers when asked precisely how many employees will be asked to make the move north, saying only that most hourly and many salaried employees will be offered positions in Richmond. Others will be eligible for three to 20 months of severance pay and benefits, depending on length of service, plus outplacement counseling.

Philip Morris USA employs 6,300 in Virginia, primarily at its Richmond cigarette plant. Spokesman David Sylvia said the decision to close the North Carolina plant, in Cabarrus County near Charlotte, will bring "several hundred" jobs to Richmond.

"We will continue to produce the cigarettes in both the Cabarrus and Richmond facilities for Philip Morris International through the fall of 2008," Sylvia said. "The Cabarrus facility will also continue to produce cigarettes for us in the U.S. through 2010."

That made the Tuesday announcement much different than the sudden collapse of Pillowtex, the one-time textile giant based in nearby Kannapolis. About 4,000 people in two counties lost their jobs in July 2003 when Pillowtex filed for bankruptcy and shuttered its plants -- the largest mass layoff in North Carolina history.

Even so, Concord City Manager Brian Hiatt called Tuesday's news "quite a shock."

"Philip Morris has invested in their facilities even recently in Concord, so to announce ... a facility that employs 2,500 that is our largest taxpayer will be gone in three to four years, obviously, is a great concern to us," Hiatt said.

Hiatt said Philip Morris paid about $4.8 million in taxes last year, which is about 13 percent of the tax base in Concord, a city of about 70,000 residents. Philip Morris accounted for about 23 percent of Concord's tax base a decade ago.

"We have worked hard the last 10 years to diversify our economy, so we have some other areas that we're developing that we can build on, hopefully to replace the jobs and tax base," Hiatt said. "But industrial jobs that pay those kind of wages are very difficult to find in this economy."

Wages at the plant typically run from $17 to $29 an hour, workers said.

John Cox, chief executive officer of the Cabarrus Regional Chamber of Commerce, said the 2,100-acre Philip Morris site -- with 2.4 million square feet of space -- could be promoted as a headquarters for another company or could become another manufacturing operation.

"Depending on how all this shakes out over the next four years, I see this potentially becoming a premier megasite for North Carolina and the South," Cox said.

(The Charlotte Observer contributed to this report.)