Japan Tobacco Inc. is to cut its domestic workforce by about 1,600 people and close factories, sales offices and its vending machine division.
The announcement of the retrenchments comes seven months after the Japanese government reduced its share in JT from just over 50 percent to about 33 percent (with 37 percent voting rights).
One local report earlier this year had it that at least some of JT’s managers had been keen for the government to sell all of its shares because the company felt that this would remove certain management constraints.
The retrenchments, which are being made for reasons of competitiveness and profitability, come at a time when JT says the domestic business is operating in an “increasingly challenging environment.”
They will involve the replacement by April 1, 2015, of 25 area branch sales offices with 15 regional sales headquarters.
By the end of March 2015, JT will close two of its cigarette manufacturing factories: the Koriyama factory in Koriyama City, Fukushima, and the Hamamatsu factory in Hamamatsu City, Shizuoka.
It will close two other tobacco-related factories: the Hiratsuka leaf processing factory at Hiratsuka City, Kanagawa, by the end of March 2016; and the Okayama printing factory at Okayama City, Okayama, by the end of March 2015.
And the vending machine division in Akashi City, Hyogo, will be closed by the end of March 2015.
Meanwhile, though JT’s East-Japan regional leaf tobacco headquarters at Sukagawa City, Fukushima, will cease its leaf-processing operations at the end of March 2015, it will continue its leaf-buying operations.
What is described as a “voluntary retirement program” will be offered to eligible employees so as to “rightsize the workforce”—cut it down by about 1,600 people, most of whom will leave at the end of March 2015 but some of whom will leave at the end of March 2016.
“We believe that adaptability to a changing environment is critical to achieving sustainable profit growth in the mid- to long term,” said President and CEO Mitsuomi Koizumi in announcing the changes.
“The measures that we announced today aim to proactively address anticipated future challenges. By implementing these measures, the Japanese domestic tobacco business will further enhance its competitiveness and profitability, thus continuing to make significant contributions to the profit growth of the JT group.
“The Japanese domestic tobacco business remains one of the most important markets for the JT group and a highly competitive platform of the group’s profitability.”