Tobacco company Philip Morris International plans to cease manufacturing cigarettes in Australia by the end of the year, blaming government production regulations for restricting the company’s export opportunities.
“With any significant export opportunity restricted by Australian government regulations, our Moorabbin factory is significantly under-utilized, operating at less than half of its currently installed capacity,” John Gledhill, managing director for Australia, New Zealand and Pacific Islands, said in a statement.
The decision will affect 180 jobs Moorabbin, which was the first Philip Morris affiliate established outside the United States 60 years ago, according to the report on Reuters.
Philip Morris will be moving its manufacturing from Victoria to South Korea, where it will not be restricted by “reduced-fire risk” laws that require use of certain paper and construction methods. Reduced-fire risk requirements which were introduced in 2010 are designed to ensure a cigarette self-extinguishes when dropped on the ground. The company said this has led to taste changes that did not match consumer preferences in Asia.
Australia has also been implementing the plain packaging law for cigarettes since December 2012, which require standardized packaging on all tobacco products. These laws, considered the most stringent in the world, forced companies to replace logos and branding with graphic images of smoking-related diseases. Despite this, Philip Morris said sales and production volumes were stable in 2013 and the company made it clear that the factory closure was in no way related to the plain packaging laws.
