E-cig operation, 300 jobs could be headed to Forsyth Co.

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FORSYTH COUNTY, N.C. — Forsyth County could learn this week if it will be home for an electronic-cigarette production operation with about 300 employees, according to the Winston-Salem Journal. 

State Rep. Julia Howard, R-Davie, spoke Tuesday of an announcement “in the next two to three days” for the opening of a North Carolina factory making “a new and different product, a safer component of an electronic cigarette.”

Reynolds American Inc. said today it will hold a press conference “to announce news related to economic development issues” at 9:30 a.m. Friday at its Tobaccoville campus. Among scheduled officials at the event will be Gov. Pat McCrory and Susan Cameron, Reynolds’ chief executive and president.

E-cigs are battery-powered devices that heat a liquid nicotine solution in a disposable cartridge and create a vapor that is inhaled.

Howard mentioned the project at the General Assembly during a discussion of a proposed state excise tax on e-cigs and vapor products in the N.C. House omnibus tax bill.

Howard did not provide details about the project.

However, given the Reynolds press conference, it is likely the e-cig operation would involve R.J. Reynolds Vapor Co., its Vuse product and R.J. Reynolds Tobacco Co.’s 1 million-square-foot manufacturing plant in Tobaccoville.

Reynolds declined Tuesday to discuss Howard’s comments. Spokesman Richard Smith said that final packaging and assembly of Vuse takes place in Tobaccoville.

In June 2013, as Reynolds was introducing Vuse distribution in Colorado — its first statewide retail presence — the company said that the cartridges are made in Kansas and the nicotine liquid that produces the vapor is made at its Winston-Salem research and development facilities.

Reynolds said at the time that production could be added at Tobaccoville if warranted by consumer demand.

Vuse is sold statewide in Colorado and Utah, as well as in select Tarheel Tobacco shops in the Triad. The company plans to begin national distribution by late June.

Stephanie Cordisco, president of Reynolds Vapor, has said the subsidiary’s determination to tackle the challenge of converting more of those who try e-cigs into regular users is why the company chose to develop and assemble Vuse in the United States.

Most of the smaller marketers are selling their e-cigs through a licensing deal with a Chinese manufacturer.

Ronald Bannon, investor relations director for Lorillard Tobacco Co. of Greensboro, said the nicotine liquid for its blu eCigs product is made domestically by a third-party supplier, while the cartridges are made in China.

It’s not a certainty that the local community will have a net gain of 300 jobs with a potential Reynolds project.

Reynolds has been tight-lipped the past two years about its local workforce as consumer demand for traditional cigarettes continues to decline.

The company likely has between 1,100 and 1,200 manufacturing employees among its overall 2,000 to 2,200 workforce in Forsyth County.

It had 1,355 production jobs in March 2012 before it announced it would cut 540 positions, most of them local, in its latest consolidation effort. Some jobs were re-created through hiring workers back at a lower salary or by outsourcing some work.

According to Reynolds’ fiscal 2013 regulatory filing, there were 3,700 R.J. Reynolds Tobacco employees as of Dec. 31, 550 with its American Snuff Co. LLC subsidiary and 350 with its Santa Fe Natural Tobacco Co. subsidiary. Altogether, it reported 5,200 full-time and 90 part-time employees, counting salespeople.

Mayor Allen Joines said it “would be premature to comment” on any announcement described by Howard. “We would be very pleased to see Reynolds adding jobs,” he said.

Cordisco has called Vuse “a game-changing product in the e-cigarette category.”

Vuse contains sensors that communicate with a memory chip to monitor and regulate the power, heat and cartridge performance “to ensure a perfect puff first time, every time,” said Danny Herko, the company’s senior vice president for research and development.

A leading complaint of e-cig users is that they get an inconsistent inhaling experience, particularly toward the end of the cartridge. Herko said Vuse will let consumers know when its lithium battery is running down or when a cartridge needs to be replaced.

Bonnie Herzog, a Wells Fargo Securities analyst, estimated that overall industry e-cig revenue reached $2 billion in 2013. She projects it will increase up to $10 billion by 2017.

She predicts Reynolds will have $4 billion in revenue from e-cigs in 2021, compared with $3.9 billion from conventional cigarettes. That’s compared with minimal e-cig revenue and $6.4 billion in conventional cigarette revenue for 2013.

“The tobacco industry is embarking on a new era of growth, driven by technological innovation and potential harm reduction,” Herzog said.

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