Philip Morris to close Australia cigarette factory

  • 2 April 2014
  • From the section Business
Cigarettes in a store
Image caption Philip Morris produces cigarette brands like Marlboro

Tobacco giant Philip Morris says it will cease production of cigarettes at its factory in Moorabbin, Australia.

The closure of the factory, which has been in operation for nearly 60 years, will lead to a loss of 180 jobs.

The company said Australia's regulation regarding cigarette production was a factor in its decision.

Philip Morris said all cigarette production for the Australian market would be moved to its plant in South Korea.

"This is an extremely difficult decision, and devastating news for all of our employees," said John Gledhill, Philip Morris's managing director for Australia, New Zealand, and the Pacific Islands, in a statement.

The company said that it had been unable to increase exports as the domestic demand for cigarettes in Australia gradually declined over the past few years.

It blamed the export difficulties on the introduction of fire safety requirements for Australian-made cigarettes in 2010, which forced the plant to make cigarettes that didn't match consumer preferences elsewhere.

"With any significant export opportunity restricted by Australian government regulations, our Moorabbin factory is significantly underutilised, operating at less than half of its currently installed capacity," said Mr Gledhill.

"Regrettably, factors beyond our control prevent us from fully utilising the facility, and accordingly it's been identified for closure."

In 2012, Australia became the first country in the world to introduce "plain packs", which bans all company logos and colours from packets, which must instead display graphic health warnings.

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