The Altria Group announced plans to close its Cabarrus plant in North Carolina by the end of 2010, transferring production for Philip Morris International (PMI) to facilities in Europe.

Due to declining U.S. cigarette volume, as well as PMI’s decision to re-source its production, Philip Morris USA will close its Cabarrus manufacturing facility and consolidate manufacturing for the U.S. market at its Richmond, Va, manufacturing centre.
Production for the non-US market will shift to Europe by the third quarter of 2008. Currently, Cabarrus produces about 57 billion cigarettes for Philip Morris International. The plant has about 2,500 employees, and as many as possible will be moved to another Philip Morris location in Richmond, Va, said the company.
The Altria Group, the holding company of PMI and PM USA, expects the program to generate pre-tax cost savings beginning in 2008, with total estimated annual cost savings of approximately USD 335 million by 2011, of which USD 179 million will be realised by PMI and USD 156 million by PM USA. Cumulative total expenses through 2011 are estimated at approximately USD 670 million, all of which will be at PM USA.
According to Altria, PM USA is expected to record an initial pre-tax charge of approximately USD 325 million or USD 0.10 per Altria share in the second quarter of 2007 for costs related to the program, primarily for employee separation, with additional estimated charges of approximately USD 50 million for the remainder of 2007.
Altria has not yet determined to which European facility the production is to be transferred.