The boss of a Fife firm that makes 2.5 billion paper bags a year says its sales have “flat-lined” as it invests millions of pounds in new machines.
Smith Anderson makes 70 million paper bags a week from its base in Kirkcaldy.
The company counts all the main fast food business in the UK including McDonald’s, Burger King and KFC as its customers. It is also the main supplier of pharmacy bags.
Managing director Keith Verden-Anderson took over the running of the company when chief executive Michael Longstaffe stepped down last year.
Smith Anderson’s new paper bag machines
He said Smith Anderson currently has 50 paper bag machines – each of which costs about £1 million.
Two new machines have already arrived, and a third its currently in transit from America.
That was due to arrive about six months ago but has been held up due to supply chain issues.
And at least another one will be making its way to the Fife business later this year.
“The new machines are great,” Mr Verden-Anderson said.
“Some of our machines are getting quite old – some still run well, but some are costing us too much money.
“The newer machines are so much more efficient, and they are easier to train people on.
“If our demand was growing and growing, our new machines would just fill that demand. Sales have flat-lined a bit and with our productivity running well, we’re managing to make the bags customers need us to make.
“The new machines will come in primarily to replace old ones – but in some cases they will increase our output.”
‘Volume steady’ for Fife company
Mr Verden-Anderson said the price of paper had increased by between 20 and 30%, which has presented challenges for the business.
“Turnover is up because we’ve had so many increases – everything from utilities to paper and our people.
“We’ve had to pass some of those on to our customers, so our volume is probably steady but the turnover has gone up because we’ve passed on some increases.”
Recently filed accounts for the Fife firm show sales of £40.5m for the year to September 2022. That is up from £36m the previous year.
It also reported a pre-tax profit of £3.5m, up from £2m the year before.
Mr Verden-Anderson said the results had been bolstered by the sale of a Polish-based joint venture it had entered with rival firm Huhtamaki.
The Smith Anderson boss – who is following in the footsteps of his father in running the 164-year-old company – said: “It was probably always going to be a short-term venture.
“We thought the time was right to pull away and we’ve made very good money from that.”
Rising bills and staffing issues
The Smith Anderson boss hopes the price of utilities is beginning to fall.
“We’re at the top part of the curve now and I think prices have got to be come back down.
“With energy prices going up – particularly with the war in Ukraine – that meant we were paying a lot more. They are coming down again.”
Mr Verden-Anderson said recruitment had been another issue for Smith Anderson this year.
He said: ”I think it’s just a lack of people available.
“The people who come tend to like it and stay, but I think it’s just down to the availability of good candidates.
“We’re not alone in that, though. I think it’s a problem for a lot of businesses.”
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