Philip Morris cuts 640 jobs as market shares fall

MANILA, Philippines – Philip Morris Fortune Tobacco Corp. (PMFTC), the country’s largest cigarette manufacturer, announced on Tuesday that it has decided to lay off 640 employees in its Marikina plant amid declining market share.

“This was a very difficult decision to make but in order to maintain a viable operation and to safeguard the future of our business in Marikina, it was necessary to take this step,” PMFTC president Paul Riley said in an interview.

He also mentioned that its affected employees were already given notices of termination last Monday.

“We always treat our employees with the utmost respect, and all affected employees were given very generous separation packages, well in excess of legal requirements,” Riley said.

According to a source, operations at the manufacturing facility in Marikina will be restructured and its workforce will be reduced to 1,000 workers once the cut in jobs start on February 15.

“[PMFTC would] continue to offer highly competitive salary and conditions for all our employees, as a committed long-term investor, employer and major taxpayer in the Philippines,” Riley added.

PMFTC, a joint venture between Philip Morris and Fortune Tobacco Corp., has more than 5,000 employees in the country. It also has another cigarette manufacturing plant located in Tanauan City, Batangas.

PMFTC is the producer of brands Champion, Fortune, Hope, L&M, Marlboro and Philip Morris.

Declining market share

PMFTC’s latest industry data showed that its market share was dragged down to 70.9 percent in June 2014 from 76.7 percent in the same month the previous year.

The company claimed that the decline was due to unfavorable market conditions in the past two years.

According to PMFTC, rival Mighty Tobacco Corp. was able to corner a large portion from their previous share due to questionable business practices.  Mighty Corp. has allegedly engaged in systematic and endemic fraud that enabled it to sell at relatively cheaper prices.

PMFTC also said that higher tobacco taxes that were passed in January 2013 also took its toll. In 2013 alone, the company paid more than P73 billion in taxes and duties to the government while it contracted over 50,000 local farmers the same year and bought 16 million kilograms of native tobacco the next year.

Riley feared that if the current market conditions prevail, it will not only impact legitimate taxpaying cigarette manufacturers like them but beneficiaries of the sin tax law as well.

With report from Cyra Moraleda