1,000 jobs lost in Gallaher closure

Gallaher, the UK tobacco subsidiary of American Brands, is to shut its cigarette factory in Manchester with the loss of almost 1,000 jobs. Production is being transferred to its factory at Lisnafillan, Northern Ireland where around 300 new jobs will be created.

Local council leaders in Manchester and unions immediately condemned the decision. "This news has come as a complete bombshell to everyone and we are appalled by the timing of this decision just days before Christmas," the local council leader Roy Oldham said last night.

"I am left wondering whether this is a crude bribe by the Government to buy the Ulster Unionists' vote in its desperate attempts to cling on to power. I am struck by the coincidence that the news of this closure comes at the same time as the Government has given pounds 10m to Northern Ireland to help make this switch."

The closure is part of a streamlining drive by Gallaher, which closed its Belfast plant in 1988 and its Port Talbot cigar factory in Wales in 1994.

The firm has also reduced its distribution plants from eight to a single centre in Crewe.

Peter Wilson, chairman of Gallaher, said: "By now reducing from our two UK cigarette factories to one and investing in the latest generation of ultra-high speed cigarette manufacturing machinery, we will achieve significantly lower overhead costs and make an important improvement in production efficiency."

The Manchester factory, which manufactured Benson and Hedges and Silk Cut for the UK market, will take three to four years to close completely.

American Brands is taking a fourth-quarter pre-tax charge of approximately $80m to cover the closure, which will mostly be used to cover redundancy packages.

The firm said the factory in Ulster would have a capacity to make up to 50 billion cigarettes a year.