Following the takeover of Rothmans, BAT said its three UK factories had a combined production capacity some 50 percent higher than demand in their UK and export markets.
BAT blamed economic difficulties in many parts of the world for the job losses, particularly Asia where there has been a trend towards local production, the loss of European Duty Free trade and a UK market affected by illegal imports.
The Spennymoor factory is expected to close by end 2000, with some staff transferring to Darlington which will itself see a reduction in numbers. The staff cuts at Southampton will take place over the next nine months.
BAT said that it was to focus on two UK sites at Darlington and Southampton, with the former handling specialised production, while Southampton will handle higher volume lines and a less complex mix of products.
The Southampton plant currently produces brands such as State Express 555, Benson & Hedges and John Player Gold Leaf solely for export, while the two former Rothmans plants produced Rothmans King Size, Dunhill International and Peter Stuyvesant.
In addition, BAT said its engineering workshop at Milton Keynes in southern England is to close with the loss of 40 staff, while supply chain and accounting activities across the country are to be consolidated at Southampton.
``We will now hold employee consultation on the best ways to minimise impacts. Final details will not be clear until later in the consultations, but we expect a total of around 550 job losses,'' said Tony Cain, BAT's head of manufacturing in a group statement.