(Updates with more detail on reason for closure, comment from
SYDNEY, April 2 American cigarette and tobacco
company Philip Morris International Inc plans to stop
manufacturing cigarettes in Australia by the end of the year,
citing government production regulations that restrict its
Philip Morris said it would shift manufacturing from
Victoria state to South Korea, where it would not be bound by
so-called "reduced-fire risk" laws which mean it must use
particular paper and construction methods.
"With any significant export opportunity restricted by
Australian government regulations, our Moorabbin factory is
significantly under-utilised, operating at less than half of its
currently installed capacity," John Gledhill, managing director
for Australia, New Zealand and Pacific Islands, said in a
The company had invested heavily in the factory from 2006 to
2009 to capitalise on increased demand in Asia. But it said the
introduction of the government's reduced-fire risk requirements
in 2010, which are designed to ensure a cigarette
self-extinguishes when dropped on the ground, led to taste
changes that did not match consumer preferences in Asia.
About 180 jobs will be cut at Moorabbin, which was the first
Philip Morris affiliate established outside the United States 60
The company will continue to employ around 550 people in
Australia in sales, finance and retail.
Gledhill said Philip Morris' sales and production volumes
were stable in 2013, despite the introduction of Australia's
plain packaging laws in December 2012.
Those laws, the most stringent in the world, require
standardised packaging on all tobacco products, forcing
companies to replace logos and branding with graphic images of
smoking-related diseases on a drab background.
Clayton Ford, a spokesman for Philip Morris, said the
factory closure was in no way related to the plain packaging
(Reporting by Thuy Ong and Jane Wardell; Editing by Stephen