When I worked in Petersburg at The Progress-Index, one of the perennial topics of conversation among the public was the departure of Brown & Williamson, one of the Big Six tobacco companies, from the city in 1986. Petersburg, despite not being considered a tobacco locality by the Virginia Tobacco Commission (another story for another day), has historically been a tobacco town, with tobacco manufacturing making up the major part of its economy.
With the utter breakdown of the city's finances in 2015–16, the 20-year conversation of who was to blame for Brown & Williamson's departure was once again revived. Many people still hold the view that the city was responsible for the exit because of concessions that it failed to make to the corporation—such as its supposed refusal to allow B&W to expand. But a look through the tobacco industry papers that the companies were forced to make public as part of the 1998 Master Settlement Agreement with 46 states reveals that the city in fact had nothing to do with the decision.
Brown & Williamson laid the groundwork for its Petersburg closure early, in the late 1970s. B&W's VP for personnel and labor relations Carroll H. Teague outlined the company's situation before the Senate Committee on Labor & Human Resources in September 1980:
In the 1960s, Brown & Williamson was growing at a rate twice that of our industry average. Moving into the 1970s, all indications were that this fantastic growth would continue. Our two major plants—in Louisville and Petersburg—had been expanded to the bursting point. Based on the company's projections, additional plant capacity was an absolute necessity.
In the early 70s, a Macon, Georgia plant was conceived and funded as an investment in the future. Then came the downturn. In 1973, our rate of growth declined. By 1975, our market share was decreasing at an accelerating rate. But substantial investments had been made in land, and construction had already begun on the Macon plant. That construction was continued with high hopes of rapidly turning the sales decline around, thus permitting the use of all three major manufacturing plants.
In January, 1977, the Macon plant was opened with a nucleus of employees transferred from Louisville and Petersburg. By 1978, however, the company's sales position had not improved; decline was continuing. Furthermore, total U.S. industry sales were leveling off. We had built beyond our needs. We had two multi-floor plants that were some 40 years old, and subject to all the problems of such facilities. We had one single-floor, ultra-modern operation with unparalleled production capabilities. For many reasons, some of which are technological, it became clear that Macon's production efficiency and output could provide the immediate economic stability as well as the growth potential that the company required. Macon had to become Brown & Williamson's primary manufacturing facility. Louisville operations would have to be phased out, Petersburg's reduced.
The Petersburg plant's labor force was subsequently cut by one-third beginning in 1979–1980. As late as the end of 1982, the company appears to have still hoped that it could preserve the Virginia plant: the 1982–1986 five-year program slated "$62.6 million to begin a modernization of the Petersburg plant and $50.6 million for a reconstituted tobacco plant" and observed that "by 1983 the latter will be economically attractive." However, even that plan offered a caution, declaring: "The currently envisioned improvements at Petersburg ... are contingent on the sales outlook. A significant shift in production volume up from the plan could require a major modernization at Petersburg, or the construction of a new plant. A significant shift down from the plan could require the movement of a major portion of export volume to Macon." By January 1983, a manufacturing, planning and engineering report had found that "a major renovation [at Petersburg or elsewhere] does not seem justifiable."
Three years later, in November 1983, a secret draft memo noted:
In the face of declining volumes, B&W has established that substantial savings in manufacturing costs can be made by transferring export cigarette manufacture from Petersburg to Macon ... Combined B&W and export sales for 1983 and 1984 are estimated at just under 80 billion cigarettes a year, as compared with the Macon capacity of 90 billion units. Thus there is sufficient capacity at Macon to service all B&W's cigarette sales with sufficient spare capacity to cover volume growth should it materialise ... Production at the new Macon plant will be considerably cheaper than at Petersburg because of lower overheads and manning levels. Export production at Macon will only require 396 hourly and salaried employees as compared with 751 at Petersburg.
About two weeks later, another secret memo reinforced the earlier document's points and further declared that "there are currently 1,243 employees at Petersburg, but of these 112 have already been informed of redundancy and a further 173 will have to go because of declining export volumes irrespective of the proposed move to Macon."
Nowhere in my searches of the Brown & Williamson tobacco documents did I find any allusions to the city's actions being a factor in the plant closure.