Sturgeon announces task force for area
Fife paper maker Tullis Russell folds with loss of 325 jobs
The employee-owned company, founded in 1809, admitted it had amassed accumulated losses of £18.5 million in the past five years.
It has 474 employees, including 471 at its base in Markinch, Fife, producing high quality paper board for use in cards, covers and premium packaging.
Blair Nimmo and Tony Friar of KPMG have been appointed as joint administrators.
The company KPMG said in a statement: “Given the very difficult trading conditions and that a sale process to seek a buyer for the company had not been successful, the administrators have taken steps to significantly reduce the company’s cost base whilst all options are considered.
“Unfortunately, this has resulted in 325 employees being made redundant with immediate effect. The remaining 149 have been retained to complete some orders.”
The business has been on sale since last October but the lack of buyers is thought to be at least partly due to the market move from paper to digital publishing.
It also blamed the strength of sterling and high raw material costs. Last year the company unveiled a £200 million biomass facility on site in partnership with RWE Npower in an effort to reduce running costs.
In the year to 31 March 2014, the company sold 126,000 tonnes of paper and board. It recorded a turnover of £124.6m, but suffered a pre-tax loss of £3.4m taking cumulative losses to £18.5 million over the last five years, largely as a result of weakening demand and pressure on its margins.
The administrators said: “Recognising the structural changes in the industry and the need for consolidation, the directors took steps in October 2014 to seek a buyer for the business.
“This process continued until this month, but ultimately no party was found.
“The directors therefore concluded that they must act in the best interests of the company’s creditors and take steps to appoint administrators.”
Mr Nimmo, who is also head of restructuring for KPMG in Scotland, added: “This is a sad day for the employees of Tullis Russell Papermakers, who have worked hard against the significant headwinds facing the global papermaking sector.
“Whilst we will be exploring whether a sale of all or part of the business and asset 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.
“We will be working with government agencies to minimise the impact on employees.
“We would encourage any party with an interest in acquiring all, or parts, of the business to make contact with us as soon as possible.”
Tullis Russell Papermakers is a wholly owned subsidiary of Tullis Russell Group.
The group’s coating business based in Bollington, Cheshire and its image transfer business based in Ansan, Korea are not affected by the administration and continue to trade as normal.
First Minister Nicola Sturgeon unveiled a task force to be chaired jointly by the Scottish government and Fife Council.
“It will work with the administrators to try to secure an alternative owner and it will look for ways to help mitigate the effects of job losses by putting in place appropriate support for workers to help them back into new jobs and training,” she said.
“I know that people in Markinch and across central Fife will be worried tonight. I would like to assure them that the Scottish Government stands ready to help in any way we can and that is exactly what we will do.”
David Ross, leader of Fife Council, said: “We are really saddened to hear today that Tullis Russell has gone into administration. This is a devastating blow, not only for the workforce and their families but also the communities of Markinch, Glenrothes and mid–Fife.
“Tullis Russell has been a great company with a history stretching back over 200 years. It has always been one of the major employers in the area, with over 400 people working there. We will be doing all we can to help those who have lost their jobs today and will be putting measures in place to help support them and their families.”
Lena Wilson, chief executive, Scottish Enterprise said; “We have been working very hard with Tullis Russell in recent months and are extremely disappointed that the company have had to go into administration. It will be an anxious time for employees. We will work closely with the administrators to explore all possible options for the future and will, of course, fully support the work of the taskforce.”