640 workers to be laid off from Philip Morris-Lucio Tan cigarette firm

Lucio Tan. INQUIRER FILE PHOTO

MANILA, Philippines – The cigarette manufacturing unit of the joint venture between global tobacco giant Philip Morris and the Lucio Tan group announced on Tuesday that it has decided to slash 640 jobs due to slower sales.

In a statement, PMFTC Inc. said it already informed its employees that it would “restructure” the operations at its factory in Marikina City, as its production volume has been “impacted by the market conditions over the last two years.”

“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,” according to PMFTC president Paul Riley.

“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 sources, the 640 regular employees would be let go starting Feb. 15. Despite the cut in jobs, more than 1,000 would continue to be employed at the Marikina factory.

As for the over 5,000 employees it has retained, PMFTC said it would “continue to offer highly competitive salary and conditions… as a committed long-term investor, employer and major taxpayer in the Philippines.”

The Marikina facility is one of the two manufacturing plants of PMFTC—the other is in Tanauan City, Batangas. It should be noted that the Marikina plant is the one originally operated by the Tan family’s Fortune Tobacco Corp., hence churns out the cheaper brands.

Once a virtual monopoly when Philip Morris merged its Philippine operations with Fortune Tobacco in 2010, PMFTC’s market share slid to 70.9 percent in June 2014 from 76.7 percent in the same month the previous year, the latest industry data showed. PMFTC is behind the global brands Marlboro, L&M and Philip Morris as well as homegrown Fortune, Champion and Hope.

PMFTC has been blaming its declining market share to the stiffer competition from homegrown manufacturer Mighty Corp., which the PMFTC has been alleging as engaging in “systematic and endemic” fraud these past few years to keep prices very low.

The share of the Wongchuking family-owned Mighty in local cigarette sales jumped from 17.9 percent in June 2013 to 23.9 percent in June 2014, as its products remained relatively cheaper.