Reynolds American Restructures, Cuts Jobs
Earlier this week, Reynolds American Inc. and its largest subsidiary, R.J. Reynolds Tobacco Company, announced plans to streamline non-core business processes and programs to allocate additional resources to strategic growth initiatives.
Through a business analysis in August 2008, Reynolds American and Reynolds Tobacco identified various ways to simplify programs and processes, reduce complexity and improve productivity across their organizations.
"Continued success demands that we fully align our plans, programs and people behind the things that matter most to our future performance," says Daniel M. Delen, chairman, president and chief executive officer of R.J. Reynolds. "The steps we are taking support R.J. Reynolds' ongoing evolution to a 'total tobacco' business model that includes both cigarettes and innovative smokeless tobacco products."
The following changes are designed to enhance growth and efficiency at Reynolds American operating companies:
> The creation of a new growth and innovations organization, which will focus on innovation, consumer and market insights, competitive assessment and maximizing trademark equity across Reynolds American's operating companies.
> The R.J. Reynolds Global Products Inc. (GPI) subsidiary of Reynolds American was not part of the business analysis, but separately undertook a review of its strategic focus and resource allocation. As a result, several of GPI's current activities will be reassigned to other Reynolds American operating companies by year end.
> A modified portfolio strategy designates the premium menthol Kool brand from a growth brand to a support brand.
> R.J. Reynolds is refocusing its investment in the premium menthol category on the Camel brand, which today is primarily known for its non-menthol styles.
> R.J. Reynolds launched other cost and complexity reduction initiatives that include supply-chain efficiencies, streamlining of processes and support functions, and additional outsourcing of non-core activities.
Simplifying and discontinuing activities will result in the elimination of approximately 570 full-time jobs within Reynolds American and R.J. Reynolds, which represents about 16 percent of those two companies' Winston-Salem-based workforce and about 10 percent of the two companies' U.S. workforce. About 44 percent of those job eliminations were matched with employees who had expressed interest in leaving the companies through a survey. The majority of the job eliminations will occur between third quarter 2008 and year-end 2009, with a few transitions extending into 2010. Reductions in the RAI and R.J. Reynolds Tobacco workforces will generate savings of about $100 million by year-end 2010, with annualized savings of about $55 million thereafter.
Reynolds American will record a pretax third-quarter restructuring charge of approximately $90 million, or about $55 million after tax. The $90 million charge represents severance, benefits and related costs.
Through a business analysis in August 2008, Reynolds American and Reynolds Tobacco identified various ways to simplify programs and processes, reduce complexity and improve productivity across their organizations.
"Continued success demands that we fully align our plans, programs and people behind the things that matter most to our future performance," says Daniel M. Delen, chairman, president and chief executive officer of R.J. Reynolds. "The steps we are taking support R.J. Reynolds' ongoing evolution to a 'total tobacco' business model that includes both cigarettes and innovative smokeless tobacco products."
The following changes are designed to enhance growth and efficiency at Reynolds American operating companies:
> The creation of a new growth and innovations organization, which will focus on innovation, consumer and market insights, competitive assessment and maximizing trademark equity across Reynolds American's operating companies.
> The R.J. Reynolds Global Products Inc. (GPI) subsidiary of Reynolds American was not part of the business analysis, but separately undertook a review of its strategic focus and resource allocation. As a result, several of GPI's current activities will be reassigned to other Reynolds American operating companies by year end.
> A modified portfolio strategy designates the premium menthol Kool brand from a growth brand to a support brand.
> R.J. Reynolds is refocusing its investment in the premium menthol category on the Camel brand, which today is primarily known for its non-menthol styles.
> R.J. Reynolds launched other cost and complexity reduction initiatives that include supply-chain efficiencies, streamlining of processes and support functions, and additional outsourcing of non-core activities.
Simplifying and discontinuing activities will result in the elimination of approximately 570 full-time jobs within Reynolds American and R.J. Reynolds, which represents about 16 percent of those two companies' Winston-Salem-based workforce and about 10 percent of the two companies' U.S. workforce. About 44 percent of those job eliminations were matched with employees who had expressed interest in leaving the companies through a survey. The majority of the job eliminations will occur between third quarter 2008 and year-end 2009, with a few transitions extending into 2010. Reductions in the RAI and R.J. Reynolds Tobacco workforces will generate savings of about $100 million by year-end 2010, with annualized savings of about $55 million thereafter.
Reynolds American will record a pretax third-quarter restructuring charge of approximately $90 million, or about $55 million after tax. The $90 million charge represents severance, benefits and related costs.