CIGAR-MAKER CIFUENTES Y Cia yesterday said it was closing its plant on Washington Boulevard, Kingston, with the loss of 225 jobs, as it shifts production to the Dominican Republic, where labour costs are an estimated 70 per cent cheaper.
At the height of production in 1997, the plant expanded rapidly, more than doubling in size to employ some 1,250 people, the company's parent, General Cigar Company Inc. said yesterday. However, a combination of factors including the downturn in demand for premium cigars since the expansion, relatively cheap labour and direct access to the large Dominican Republic tobacco farming industry led to the shut down of the Kingston operation.
General Cigar president Edgar Cullman Jr., said in a news release yesterday: "After analysing our competitive situation and our labour costs very carefully and over a long period of time, we have concluded that the Cifuentes operation cannot be operated profitably."
John Webber, vice-president of operations at General Cigar, estimated that labour costs were 70 per cent cheaper in the Dominican Republic, which has a thriving cigar and tobacco industry. During a conference call yesterday, he declined to say how much the final phase of the redundancies would cost, but said payments to the dislocated 225 people would start next week Friday, October 20.
The job losses are the latest in a spate of company closures that has seen thousands of people laid off at major local companies since January.
Two hundred workers were sent home by the cigar manufacturer in May and another 400 just over a year ago as part of what now appears to be a phased plant closure and transfer of production to the Dominican Republic.
The cigar-maker has been operating in Jamaica since 1968 and has had operations in the Dominican Republic since the early 1970s, according to Mr. Cullman Jr. Along with Honduras, the Dom. Rep. is a premium cigar powerhouse. It has abundant relatively cheap labour, along with good access to large tobacco farms. Labour costs in Jamaica are far higher and Cifuentes has had to import tobacco for years as local farmers, largely from Clarendon, switched to other crops looking for better returns.
General Cigar expressed sadness at the closure and thanked workers, unions and the Government for efforts to help keep the plant open including widescale cuts in salary, which were implemented last year in a bid to stave off closure.
Peter Brown, Cifuentes plant manager in Kingston, told workers of their fate yesterday detailing redundancy packages.
The company said it would meet all entitlements and the "redundancies will be calculated based on the rate of pay that preceded the 1999 roll-backs, as specified in the most recent round of labour negotiations. Workers will also be paid in lieu of notice, and for any unused vacation and sick leave for 2000".
"We owe a great debt of gratitude to these workers, many of whom have made tremendous sacrifices in the name of efficiency," said Edmund M. Cullman Sr., General Cigar chairman.
He said General Cigar has set up a retraining fund, where it will pay up to $25,000 to match former employees payments to an approved training programme to "invest in their own futures".
Colin Campbell, Minister of State for Industry, Commerce & Technology, said no final decision has been made as to the future of the plant but his department is to see if the 125,000-square foot factory is suitable as a structure for a local information technology venture.
For more business news see the Financial Gleaner.
