Thursday, June 25, 2009

Hav-A-Tampa cigar closing

"TAMPA - The Tampa area will lose part of its cigar heritage in August when Hav-A-Tampa shuts its factory near Seffner and lays off about 495 employees, closing a factory that has been operating since 1902.
Company officials announced the closing Tuesday.

Many employees there make Hav-A-Tampa's iconic Jewels, inexpensive machine-made cigars known for their birchwood tips. Some workers have labored there for two decades or longer, including one who's been there for 50 years, said Richard McKenzie, a senior vice president of human resources for Altadis USA, which owns Hav-A-Tampa.

Altadis tried to keep the plant open by closing it for a week or two at a time and furloughing workers. Eventually, though, the company couldn't cope with a steep drop in consumer demand brought on by the recession and a large new tax on tobacco products, McKenzie said.

Work that had been done in Seffner will now be performed in an Altadis plant in Puerto Rico, where it has extra manufacturing capacity, McKenzie said.

The company is not closing its nearby distribution center off U.S. 301, where it employs about 150 people.

Employees on Tuesday were digesting how they would find work in an economy where more than one in 10 people in the area are unemployed.
"I've been here 12 years. I know someone who's been there 20 years, 22 years," said Denise Harrison, an office manager at Hav-A-Tampa. "I'm sure we'll all land on our feet, but it will be harder for some people other than me who may have done nothing else."

Altadis USA plans to begin laying off workers immediately and will continue until closing the plant in late August. Workers will receive their pay through August, even if they are let go before that, McKenzie said. Employees also are receiving severance packages and job placement assistance.

Several things conspired to hurt Altadis' sales, McKenzie said, including the recession and the growth of indoor smoking bans. The bans have especially hurt sales in cold-weather states, where it's impractical to smoke a cigar outdoors in the winter, he said.

However, the company attributed much of its trouble to the State Children's Health Insurance Program, or SCHIP, a federal program that provides health insurance to low-income children. It is funded in part by a new federal tax on cigars and cigarettes. McKenzie couldn't say how much sales of Hav-A-Tampa cigars had fallen off, but the numbers have dropped significantly, he said.

Previously, federal excise taxes on cigars were limited to no more than a nickel, said Norman Sharp, president of the Cigar Association of America trade group. The tax increase, which took effect April 1, raises the maximum tax on cigars to about 40 cents, Sharp said.

Before the increase was passed, the cigar industry warned that consumption of cigars could fall as much as 30 percent in the year after its passage. It's not clear yet how big of an impact the law is having on sales, Sharp said.

Harrison said she understands the company's predicament and that Altadis has tried to treat its employees fairly, including guaranteeing employees two months of pay. Like her employer, she put part of the blame on the SCHIP tax hike.
"We can't afford to make these cigars in the U.S. anymore," she said.
Unlike its more upscale rivals, which favored hand-rolling and unionized labor, Hav-A-Tampa turned to machines and nonunionized labor to mass produce cigars, said Gary Mormino, a history professor at the University of South Florida in St. Petersburg. Company founder Eli Witt also was a pioneer in the use of wood tips and wrapping cigars in cellophane - practices that are now standard in the machine-made cigar industry, Mormino said.
"Hav-a-Tampa has to be one of the greatest commercial names," he said. "It just seems right."

With the company now set to stop producing in Seffner, the last major cigar maker left in the Bay area will be J.C. Newman, which owns premium brands including Cuesta-Rey, Diamond Crown and La Unica. While those premium brands are made outside the United States, Newman still makes as many as 40,000 cigars a day in Tampa under its less-expensive brands, Rigoletto Black Jack, Factory No. 59 and Mexican Segundos, said company co-owner Bobby Newman.

When J.C. Newman moved from Cleveland in 1954, there were 10 large cigar factories here.
"It's a sad day," Newman said. "We are the last ones left out of those."