Tullis Russell collapses with loss of 325 jobs

Tullis Russell Papermakers, based at Markinch in Fife, had been suffering a long-term decline in its markets and had racked up losses totalling £18.5 million over the last five years.

Steps began last year to find a buyer for the employee-owned business, which was founded 206 years ago, but these proved unsuccessful with more than 70 competitors rejecting opportunities to buy the firm.

Joint administrators Blair Nimmo and Tony Friar of KPMG concluded there was no option but to reduce the size of the workforce and 325 employees were axed “with immediate effect”. The remaining 149 workers have been retained to complete a number of orders.

A jobs taskforce announced yesterday by First Minister Nicola Sturgeon will be co-chaired by the Scottish Government and Fife Council. It will work with the administrators to try to secure an alternative owner and look to mitigate the effects of job losses by putting in place support for workers to help them back into new jobs and training.

Ms Sturgeon said it was a “deeply anxious time for the workers, their families and the local community”.

She added: “Scottish Enterprise officials are working with the company right now to explore all possible avenues for support.”

Only last month, the company opened a biomass plant, partly funded by an £8.1 million grant from the Scottish Government, which it said would secure jobs at the site. Mr Nimmo, head of restructuring for KPMG in Scotland, said: “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.”

Tullis Russell’s group chief executive Chris Parr said the directors of the paper-making business were faced with no other option than administration.

“Since the global recession in 2008, demand across the traditional markets for paper-maker’s products has fallen by 40 per cent; our primary raw material, wood pulp, is now trading at consistently higher price levels than ever before; and exchange rates have moved structurally against the business.”

Mr Parr said it had become clear that the business was not sustainable.

“The group engaged KPMG to run a comprehensive sell-off process and between October 2014 and March 2015 over 72 trade parties considered and subsequently rejected the opportunity to acquire the

business,” said Mr Parr. “This has unfortunately only confirmed the business is no longer viable.”

He added: “This difficult position finally became untenable with the paper-making company’s third largest and most profitable customer entering into an insolvency process on 1 April this year.”

David Ross, leader of Fife Council, described the news as a “devastating blow” for the workforce and the area.

“The massive paper mill at Markinch has been a feature of the local landscape and economy for generations and a pioneer of employee ownership.”

The company produces paper board for cards, covers and packaging. In the year to 31 March 2014, it sold 126,000 tonnes of paper and board. It recorded a turnover of £124.6m but suffered a pre-tax loss of £3.4m.

Mr Nimmo said KPMG would explore whether a sale can still be achieved and that any interested party should contact the administrators.