2007: Back to the future (1)

As the year winds down I wanted to look back at what, for me, where the 3 major local news events of 2007. They all seem to have one thing in common; we will still hear plenty about them in 2008.

So without further ado, part one of my 2007 review trilogy:
Philip Morris closes it's Concord manufacturing plant.

On June 26, 2007, Altria, The parent company of cigarette-maker Philip Morris, announced it will close its Cabarrus County factory by 2010. The production of 57 billion cigarettes will already be moved out of Concord by the end of 2008.
The 2.4-million square foot plant is the County’s third largest employer with about 2,500 workers.
Philip Morris paid nearly $5 million in taxes to Concord in 2006, so besides the massive loss of jobs in our area there will also be a significant impact on the city’s budget. Philip Morris is also a big contributor to local charities and arts projects.

The chance of finding another manufacturer that employs upward of 2,500-2,600 people paying the kind of wage that people at the cigarette plant are currently earning, apparently about about $29 per hour on average, is almost non-existent.
An idea that you often hear is that the site, instead of having one big factory on it, might be home to a future business park with a big group of small to medium size businesses. There don't seem to be any concrete plans yet that I know of.

Altria plans to get $174 million for the sale of their buildings and huge parcels of land on both sides of Highway 29. I'm hoping that they don't sell off every square foot of the massive 2,000-acre Philip Morris site for future development, but that the County and/or City manage to reserve part of the space for a big public park or nature preserve on this huge piece of land. But with our local crop of politicians who seem to only worship the almighty growth I might be hoping for a bit too much.

You don't have to worry about Philip Morris. Don't believe for a minute that they had to close the Concord plant because they're in some financial trouble or they're losing a lot of business.
Philip Morris USA made $4.6 billion in profits in 2005 alone.
The CEO of Altria Group makes $37 million a year.

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The real reason Philip Morris is closing.

It seems there's a lot of people that think the one reason the Philip Morris plant in Concord is closing is because people smoke less. I think that's BS.

Of course the company wants you to believe that's the main reason and states it in their press release that announces the closure of the Concord plant.

But something doesn't add up...

From the same press release:

"It is my hope that the majority of employees at Cabarrus will be able to relocate to Richmond.", said Mike Szymanczyk, chairman and chief executive officer of PM USA.

As a result of increased production requirements at its operations in Richmond, coupled with ongoing retirements of current Richmond-based employees, PM USA expects to be able to offer positions in Richmond to most North Carolina-based hourly employees and many salaried employees.

If they want to move the majority of employees to Richmond and there are increased production requirements there, don't you think that the demand for cigarettes isn't shrinking that much? Or are they saying that they have 2000 people in Richmond waiting to retire?

The cigarettes that were made for export in Concord are now going to be made in Europe.
Philip Morris can produce cigarettes cheaper in eastern Europe due to much lower wages and closeness to an expanding market.

Which brings us to the real reason for the Concord plant closure:

Total annual pre-tax cost savings of approximately $335 million by 2011

Translation: We want to close our Concord plant so we can start saving $335 million every single year even though Philip Morris USA made $4.6 billion in profits in 2005 alone.
Did you really expect anything else?

Of course Altria (parent company of Philip Morris USA) isn't going to say "hey, we want to close our plant in Concord so we can save a a few hundred million $ every year, screw the workers.", no they rather wrap that decision in some (mostly) phony reason that everyone will immediately believe.
On top of that they abuse the loss of 2500 jobs for another snipe at all those anti-smoking groups and people that sued them because they're dying from smoking Philip Morris products.

But why close Concord and not Richmond? The company expects it can sell the Concord property for more than the Richmond site.

If you still believe that a multinational corporation like Altria cares about some workers in Cabarrus County, I'd like to sell you a bridge in Alaska.

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Dark day for Cabarrus County

It's a dark day for the economy here in Cabarrus County.

The parent of the Philip Morris cigarette companies (Altria) said Tuesday it will close a Concord manufacturing plant that employs 2,500 people off U.S. 29 as it moves cigarette production for non-U.S. markets to Europe.

Philip Morris contributes an estimated $200 million to the N.C. economy each year through its payroll and benefits in Cabarrus County.
Besides the huge loss in jobs I'm guessing this will also mean a big blow to the County budget since the Phillip Morris plant brought in a huge amount of taxes.

The company said it expects cost savings of about $335 million by 2011.
Louis C. Camilleri has been CEO of Altria Group for 5 years and makes $37 million a year.
He ranks #32 on this years list of most highly compensated executives.
I'm pretty sure he won't sleep any worse tonight.

No job is safe anymore and that is exactly how big business likes it. They want that added pressure to drive wages down and have us depend on cheap imports made with slave and child labor. They value offshoring since it helps lower the bottom line. Shareholders support it since it increase the value of their portfolios. Altria shares rose 50 cents to $69.25 in premarket trading.

Meanwhile, every county in our area is outbidding each other with incentives to attract the few businesses that still bring in a few jobs. And after the incentives run out they can start looking for another place where they get even bigger incentives. I'm not totally against offering business incentives but right now there doesn't seem to be and end to how far counties are willing to outbid each other. I'm hoping we can put a national cap on how high incentives can go and level the playing field that way.

At the same time we have the guy that's supposed to represent us, republican congressman Robin Hayes, stand idly by and vote for one free trade agreement after another (nafta, cafta, ...) to make it easier for companies to send our jobs elsewhere.
Fortunately, he's the one guy the people of Cabarrus County themselves will outsource in 2008 and bring in a real representative instead.

Update 6 pm:

North Carolina Congressman Robin Hayes is calling today's announcement that AltriaGroup is closing its Concord plant "a punch in the stomach."

Hayes issued a statement saying the tobacco industry has been under attack for years from groups that try to bankrupt it in court and governments that try to hit it with higher excise taxes. He says interest groups who have led the fight against tobacco never talk about the workers who make their living in the industry.

Apparently Mr. Hayes can't read.
He's trying to blame anti-smoking groups in the US for the closing of this plant. Too bad the statement from Altria says that they want to close the plant to move cigarette production for non-U.S. markets to Europe. The cigarettes they make there aren't meant for US consumption. So nice try dumb ass.
Furthermore, Last year, Philip Morris USA alone made $4.6 billion in profits. Not exactly bankrupt now is it?
Maybe Mr. Hayes might be trying to come up with an excuse so he can hide the fact that he has consistently voted for Free(read shipping off jobs) trade agreements?

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