- The Washington Times - Wednesday, September 17, 2003

CHARLOTTE, N.C. (AP) — R.J. Reynolds Tobacco is cutting about 2,600 jobs, or 40 percent of its work force, and will focus on promoting its promising Camel and Salem brands amid fierce competition from cheaper smokes, the nation’s No. 2 cigarette maker said yesterday.

Between 1,600 and 1,700 of the job losses will occur in the Winston-Salem, N.C., area, where RJR has its headquarters, and a massive factory in Tobaccoville,N.C.

As part of a massive restructuring, RJR said it will invest only enough in promoting the Winston and Doral brands to try to optimize profits. The company plans to cut costs by $1 billion by the end of next year, said Chairman and Chief Executive Andrew Schindler.

“Reynolds Tobacco is fundamentally changing the way it operates its business in order to deliver profit growth,” Mr. Schindler said.

The major American tobacco companies have been hit hard by higher taxes, settlement payments to state governments for health care costs of treating sick smokers and competition from deep discount brands.

RJR has had a particularly tough year, slashing profit forecasts and surrendering its title sponsorship of the Winston Cup stock car racing circuit as the company tries to trim costs.

Earlier this summer, published reports speculated on a merger involving R.J. Reynolds and British American Tobacco PLC.

Mr. Schindler insisted that the job eliminations were unrelated to any potential merger. “This has nothing to do at all with any deals in the future whatsoever,” he said.

Company spokesman Seth Moskowitz said the restructuring gives RJR a chance to focus on the Camel and Salem brands. Camel has been growing for more than 15 years and has spun off numerous niche brands while Salem, as a menthol cigarette, does not compete with Camel and has been repositioned with new branding.

“If we’re going to narrow it down to two brands to support, Camel is a no-brainer,” Mr. Moskowitz said.

Wall Street applauded the move, sending the company’s shares soaring by $4.67, or 13.7 percent, to close at $38.86 on the New York Stock Exchange.

The losses will hit the local area particularly hard — even factory workers at RJR typically make more than $50,000 annually.

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