The administrator called in to offload Fife papermaker Tullis Russell has revealed the efforts the firm made to stay afloat.
The decision by directors to call in the administrators to one of Fife’s oldest firms was met with shock among employees, community representatives and politicians.
Scottish Parliament presiding officer Tricia Marwick, who represents Mid Fife and Glenrothes at Holyrood, said it was a “tragic day” for the region and the 206-year-old firm’s 471-strong workforce. It was confirmed 325 staff will lose their jobs with immediate effect.
Speaking to The Courier, joint administrator Blair Nimmo said the firm Scotland’s largest employee-owned business had tried hard to cut its cost base and increase competitiveness but it had been a case of “two steps forward, three steps back”.
He said the firm had achieved major savings on its energy bill by agreeing a heat and power deal with RWE Innogy’s neighbouring biomass plant.
However, increasing materials costs, the loss of its most profitable customer, a fiercely competitive marketplace and the strengthening of the pound against the euro had ultimately taken their toll.
“This is a sad day for the employees of Tullis Russell Papermakers, who have worked hard against the significant headwinds facing the global paper- making sector,” Mr Nimmo said.
“Whilst we will be exploring whether a sale of all or part of the business and assets of the company can be achieved, we have had to take steps to significantly reduce the company’s overheads.
“Unfortunately, with trading effectively ceasing, we have had no option but to reduce the size of the workforce.”
The Fife-based Papermakers business is a subsidiary of Tullis Russell Group, which also operates a coatings business in Cheshire and an image transfer unit in Korea which are unaffected.
Chief executive Chris Parr said the group had taken the decision to call in the administrators with “deep sadness”.
He said demand for the company’s products had fallen by 40% since 2008 and, while new revenue streams were explored, annual volumes had continued to decline and margins weaken.
Latest accounts for the year to March 31 2014 show the firm continued its loss-making run, plunging £3.4 million into the red from turnover of £124.6m.
Mr Parr said the group had made extensive efforts over recent months to find a buyer for the business but they had been to no avail.
“Recognising this situation the Group and Papermaking boards concluded that the best chance of protecting jobs would be through a trade sale of the papermaking company to a buyer capable of, and committed to developing the Markinch site,” Mr Parr said.
“The group engaged KPMG to run a comprehensive sales process and between October 2014 and March 2015 over 72 trade parties have considered and subsequently rejected the opportunity to acquire the business.
“This has unfortunately only confirmed that the business is no longer viable. This difficult position finally became untenable with the paper-making company’s third largest and most profitable customer entering into an insolvency process.
“The directors of our papermaking business were therefore faced with no other option than to place the business into administration.”