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PM to close Bergen op Zoom cigarette plant with loss of about 1,230 jobs

| April 7, 2014

Philip Morris Holland (PMH) has said it intends to end cigarette production at its factory at Bergen op Zoom, the Netherlands, with the loss of about 1,230 jobs.

The announcement of the proposed closure, which is due to happen by October, follows hard on the heels of Philip Morris Limited’s decision to stop cigarette manufacturing in Australia by the end of this year with the loss of about 180 jobs at its factory at Moorabbin, a suburb of Melbourne, Victoria.

In a note posted on Philip Morris International’s website, PMH’s board was said to have started consultations with employee representatives. “Depending on the outcome of the consultation process, and pending approval of the PMH Supervisory Board, the proposal could affect approximately 1,230 out of the current 1,371 employees at PMH,” the note said.

“Today’s very difficult announcement has been subject to deep reflections and thorough evaluation of all available options,” said Petr Karla, general manager of the Bergen op Zoom facility. “We have long been a member of the Bergen op Zoom community, and are aware of the impact that our contemplated decision would have on our employees and their families, as well as on the local community. Our focus is and will be on supporting our people through this difficult phase. We will immediately engage in a dialogue with our employees and their representatives to develop a social plan that will support those potentially impacted by this proposal. We are totally committed to a collaborative and constructive process.”

PMI cited falling sales as a reason for the closure.

“Over the past four years, total tax-paid industry volume in the European Union declined sharply as a result of persistent macroeconomic weakness, consumer down-trading to cheaper alternative products such as fine cut, societal trends and the growing prevalence of illicit trade,” the note said. “In this context PMI experienced cigarette sales volume decline of approximately 20 percent. Furthermore, exports from EU factories also decreased during the period. Even if legal cigarette industry volume rates of decline in the EU moderate to historical levels, volume recovery is highly unlikely.”

“The severe decline in the tax-paid EU cigarette market has led to today’s regretful announcement in Bergen op Zoom,” said Drago Azinovic, president, European Union, PMI. “While the decline is partially driven by societal and economic factors, PMI has consistently expressed its concern over the negative impact of excessive fiscal and regulatory policies, which create a prolific environment for the criminal organizations involved in the illegal cigarette trade. Unfortunately, new regulations affecting the industry such as the recently agreed EU Tobacco Products Directive do nothing to address this growing problem. We want to acknowledge our employees in Bergen op Zoom whose loyalty and long-standing service to the company deserve our respect and support in these difficult circumstances.”

The PMI note said that, under the terms of the proposal, PMH would stop the production of cigarettes at Bergen op Zoom, while its expanded tobacco plants and its Flavor Processing Center would continue to operate. ‘The proposal is subject to consultation with the PMH Works Council and approval by the PMH Supervisory Board. Consultation with the European Works Council is also required. PMH will work with the Trade Unions in the development of a social plan to provide support to all potentially impacted employees.

“The consultation will start immediately.

“Subject to the final outcome of the consultations and fulfillment of certain other conditions, PMH would expect to implement the contemplated decision by October 2014.

“During the consultation period, the company will not be providing information on the financial implications of this proposal.”

Study findings could be used further to denormalize New Zealand’s smokers

| April 7, 2014

The visibility of smokers in city streets has for the first time anywhere been mapped, according to a Eurek Alert story quoting the findings of a new study by the University of Otago, Wellington, New Zealand.

The study was published in the international journal BMC Public Health and was funded by the Cancer Society of New Zealand (Wellington branch).

The research found that up to 116 smokers outside bars and cafés could be seen from any one location in the outdoor public areas of downtown Wellington.

Of the 2,600 people observed in the outdoor areas of bars and cafés, 16 percent were said to be smoking, with a higher proportion than this occurring in the evenings.

There was no mention of whether it was known whether all of the people said to be smoking were consuming tobacco.

Data from observations across the downtown area were mapped by the researchers, producing a record of the street areas where the most smokers could be seen.

They used mapping methods previously used for landscape ecology and archeology.

Lead researcher Dr. Amber Pearson said, “The methods developed through this research will help policymakers demonstrate the visibility of smoking in different areas, and provide scientific evidence for local authorities to advance smoke-free outdoor policies.”

Another researcher, associate professor George Thomson, said the results showed the need for policies to reduce the normality of smoking:

“Smoke-free outdoor areas help smokers to quit, help those who have quit to stick with it, and reduce the normalization of smoking for children and youth,” he said. “They also reduce litter, water pollution and cleaning costs for local authorities and ratepayers.”

WTO challenges pose no threat to Australia’s plain packaging law

| April 7, 2014

Indonesia won’t win its case against Australia’s standardized tobacco packaging laws at the World Trade Organization, according to a story in the Herald Sun quoting Tanya Plibersek, who is the deputy leader of the opposition Labor party and who served in the government that introduced standardized packaging.

Indonesia recently became the fifth country after Cuba, the Dominican Republic, Honduras and Ukraine to take Australia to the WTO over its standardized packaging law.

Since Dec. 1, 2012, Australia has required that all tobacco products be sold in packaging designed on behalf of the previous Labor government to be as ugly as possible. Packs are hugely dominated by graphic health warnings, are otherwise a standard olive color, have no logos or other design features, and have brand and variant names in a standardized font and position.

Plibersek said she was confident the legislation would not be defeated at the WTO because Australia was not treating countries differently under trade rules. “[Indonesia's] issue might be one of intellectual property, and we’ve had plenty of legal advice to say we’re on strong grounds here,” she was reported to have told Sky News on Sunday.

Plibersek said the tobacco policy was “one of the best things we did in government.” And she added that she thought Indonesia’s objection was a clear indication it was worried that standardized packaging was having an effect.

“I would be delighted if it means that Indonesian tobacco products are selling less … because it means Indonesians are getting sicker and dying less,” she told Sky News.

U.K. ‘minded’ to introduce plain packaging

| April 4, 2014

Campaigners opposed to standardized packaging are urging the U.K. government to keep an “open mind” on the issue following a less-than-encouraging announcement by public health minister Jane Ellison.

According to the smokers’ group FOREST, Ellison said the government was currently minded to proceed with standardized packaging but would conduct a final short consultation.

“It makes sense for the government to take its time and consult further, but it seems perverse to commit to a policy before those discussions have taken place,” said Simon Clark, the director of FOREST, which runs the Hands Off Our Packs campaign.

“If further consultation is to have any meaning the government must keep an open mind.

“The final decision on standardized packaging must be based on hard evidence that it stops children smoking. Conjecture and subjective opinion are not enough.”

Clark urged the government not to forget the outcome of the public consultation on plain packaging. “A four-month consultation resulted in over 665,000 responses, two-thirds of them opposed to plain packaging,” he said.

“We urge government not to ignore those responses, which were submitted in good faith.

“Failure to take into account the result of a public consultation would leave a very bad taste and could alienate a large number of voters, many of whom could be driven to vote for Ukip in protest.”

Plain packs report finding ‘defies logic’

| April 4, 2014

British American Tobacco said yesterday it was disappointed to hear that Sir Cyril Chantler had concluded that standardized tobacco packaging could be an effective measure for public health in the U.K., despite recognizing “there are limitations to the evidence currently available.”

“Therefore, based on the evidence included in [Chantler]’s report, the conclusion that plain packaging is an effective measure for public health defies logic,” BAT said in a note posted on its website.

In November, Chantler, a pediatrician, chairman of University College London Partners and nonexecutive chairman of the Quality and Clinical Risk Committee of NHS (National Health Service) England, was asked by the government to undertake an independent review of the public health evidence for standardized tobacco packaging.

BAT urged the U.K. government to look at the data from Australia, where, it said, after one year it was clear the plain packaging experiment had failed.

“The data shows that plain packaging has not had a positive effect on public health in Australia,” BAT said. “What’s more, the government must consider the wider implications of this policy given the increase in the illicit tobacco market and A$1billion in lost taxes to the Australian government.

“Since plain packaging was introduced in Australia:

  • The amount of tobacco sold equated to an increase of 59 million cigarettes, the first increase in Australian tobacco volumes in over five years;
  • The 3.3 percent average annual decline in Australian smoking rates from 2008 to 2012 has eased, down to 1.4 percent in 2013;
  • Illicit trade in tobacco has increased from 11.8 percent to 13.3 percent, boosting profits for the black market and the criminals that run it.”

BAT said it believed plain packaging failed to respect its minimum guaranteed rights on trademark protection, contravened EU law, affected property rights under U.K. law and infringed the U.K.’s obligations under international law.

“We are clearly not alone in this view given five sovereign states are all at various stages of challenging Australia’s decision to introduce plain packaging via the World Trade Organization with 35 countries, the highest ever, expressing an interest to observe and potentially contribute,” BAT added.

“We support sound regulation that is consultative, evidence-based, delivers its policy aims and factors in potential unintended consequences providing it doesn’t infringe on our legal rights as a business.

“Given the evidence from Australia included in [Chantler]’s report shows plain packaging has failed, we don’t see how the U.K. government could justify implementing this policy.

“We hope the U.K. government continues its logical and pragmatic approach by dismissing plain packaging and looking at alternative tobacco control measures following the announced consultation.”

No robust evidence to back plain packs

| April 4, 2014

Imperial Tobacco said yesterday that it believed there was no robust evidence to support standardized packaging, though it promised to review the Chantler report.

In November, Sir Cyril Chantler, a pediatrician, chairman of University College London Partners and nonexecutive chairman of the Quality and Clinical Risk Committee of NHS (National Health Service) England, was asked by the U.K. government to undertake an independent review of the public health evidence for standardized tobacco packaging.

“The U.K. government has previously made it clear that any decision on plain packaging will be based on the ‘wide range of relevant considerations,’ including the public consultation last year in which two-thirds of respondents said that they were against plain packaging,” Imperial said in a note posted on its website.

“The evidence from Australia, the only country in the world to introduce plain packaging, is clear: There has been no impact on the level of tobacco consumption, but illicit trade has increased from 11.8 to 13.3 percent of total consumption. An updated KPMG report on illicit trade in Australia is due to be published later this month.

“The legislation in Australia remains subject to an ongoing legal challenge by a number of countries [that] have filed complaints with the World Trade Organization, stating that plain packaging violates international rules on intellectual property and international trade obligations.”

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