Imperial Brands

Restructuring Rizla's operations in France and Belgium

Imperial Tobacco Group (now Imperial Brands) - Balancing capacity in Europe, closing a long-established factory in France (Toulouse) and increasing output in Belgium

The Imperial Tobacco company's history dates back to 1901. Our relationship with the business started in the mid-1980s after Hanson PLC acquired it. Collinson Grant was an important part of the reorganisation team. Over the next ten years, profitability was improved dramatically, even though volumes were falling. Market value was stabilised and the Imperial brands strengthened. Financial performance, productivity and margins improved year-on-year.

After being demerged in 1996, Imperial embarked on a vigorous acquisition programme in Europe, and set out to establish itself in most international markets (except the USA). In this time Imperial's excellent growth in profits has been sustained. The company's organisational model is based on value-chain principles, flat structures, strong managerial controls and powerful incentives. It is designed to improve profits whilst managing declining volumes. More recently the approach has been adapted to cope with multi-national growth. We supported the directors in refining core organisational principles to meet new circumstances. As the company expanded, the logistical and performance controls were upgraded. Investment has centred on improving customer service, quality, productivity and the capabilities of employees.

Restructuring Rizla's operations in France and Belgium

After a review of the manufacturing capacity for Rizla cigarette papers in western Europe, ITG decided that production should be consolidated on fewer sites. A long-established paper mill in southern France was declared redundant. We planned how the closure could be achieved successfully, without disrupting production targets, at least cost, and in full compliance with complex French employment law. Overall capacity was maintained by increasing production at the Belgian factory. We managed the French mill for ten months and maintained its output. Meanwhile, we led sensitive negotiations with the unions, local political leaders and government officers. We drew up the Social Plan, got it accepted and reduced the company's legal and financial exposure. Considerable local opposition to the closure manifested itself in scurrilous publicity, lock-ins and more intimidating measures. But the factory was closed two months ahead of schedule. Two of our French consultants led our team. One acted as interim factory manager.

ITG's British managers acknowledged that they had underestimated the complexity of French legal requirements in restructuring, and the potential associated costs. They were relieved that we were able to realise the original plan and round off the closure without any serious hindrance.