JTI International Bhd (JTI Malaysia) announced the closing of its plant in Shah Alam, Selangor, by the end of December 2017. This move is expected bring an end to its manufacturing operations in Malaysia.
According to JTI Malaysia’s Annual Report 2013, the Shah Alam factory manufactures products for JTI’s Asian markets. Its production volume of cigarettes rose to 22.4% in 2013 over the previous year due to higher demand from export markets.
The closure will see about 270 staff laid off and outsourced to other JTI production facilities. This news came right after JTI’s rival British American Tobacco (M) Bhd (BAT Malaysia) announced in March 2016 that it would be closing its cigarette-making facility in Petaling Jaya, Selangor, by the second half of 2017, affecting 230 employees.
In a statement to , JTI Malaysia said the “extremely challenging” operating environment in Malaysia is one of the main reasons behind the group’s decision to close its plant.
It added that the decision was taken after an extensive review of how it supplies its products to its consumers and the operating environment in Malaysia.
“To ensure consistency in the supply of our quality products to our consumers in Malaysia, we will now source products, for the Malaysian and other Asian markets where we operate, from other JTI production facilities,” it explained.
The operational limitations significantly hinder the sustainability of our current manufacturing operations in Malaysia and further development of our business in the country, the company added.
“As a result of these challenges, new initiatives are necessary to ensure overall business sustainability, including exploring different supply alternatives. The decision to change the way we operate will enable us to improve operational efficiencies, and meet the business needs — particularly with regard to increased production capacity and enhanced export potential — and the challenges ahead,” said JTI Malaysia.
Meanwhile, the group said, the lay-offs will take place in phases.
More details will be made available very shortly to those concerned. “The loss of jobs is regrettable, particularly when our employees [have] contributed so much in the past. Their departure does not in any way reflect upon the performance of individual employees,” it added.
JTI Malaysia said following the communication of the closure, consultation will take place with each individual affected. “All employees will be provided with a severance package in line with or exceeding statutory requirements. Details of the package will be discussed with each individual,” it noted.