KPMG take over at Fife papermill as 325 jobs go

Bosses speaking from the company’s Markinch base confirmed today that accountancy firm KPMG has been appointed as administrators.

The news comes after years of battling major losses at the business which was launched in 1809 and has a proud local history –of the 474 people employed by the company, 471 worked locally.

While 325 staff will be shed immediately, a remaining contingent of 149 staff are to stay on on site to process any outstanding orders.

The papermill had a turnover of £126m, but its market was in long-term decline as customers switched to digitally-based products.

Rumours of problems circulated over the weekend, but the scale of the job losses, and the speed of the axe falling has left many stunned.

With its markets in long-term decline, Tullis Russell suffered pre-tax losses of £3.4million in 2014, taking its cumulative losses to £18.5m in the past five years.

Attempts to find a buyer failed last October, and directors - said to be in talks all weekend before news of administration broke - decided this was the only route open to them.

Faced with over supply in a global market, Tullis Russell widen its product range and took steps to improve efficiency, but its losses continued to rise, putting severe pressure on cashflow.

It lost a major customer to insolvency, saw its main raw material, wood pulp, trade at consistently higher levels than previously experienced, and its European market was hit as Sterling strengthened against the Euro.

With losses predicted to continue, and no sign of a buyer, directors called in KPMG.

Tullis Russell Papermakers is a wholly-owned subsidiary of Tullis Russell Group Ltd.

The group’s Cheshire-based coating division and its image transfer business based in Ansan, Korea, are not affected by the administration and continue to trade as normal.

Group chief executive Chris Parr said: “It has become clear to the board that Papermakers is no longer a viable business.

“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.

“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 papermaking company’s third largest and most profitable customer entering into an insolvency process on Monday 1 April 2015.

“The directors of our Papermaking business were therefore faced with no other option than to place the business into administration.’

Joint administrator Blair Nimmo said: “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.”

Also commenting on the news, Grahame Smith, STUC General Secretary said: “This is a major blow for the Fife economy and Scottish manufacturing. Tullis Russell, a largely employee-owned firm, has a track record of providing quality employment. It is essential that the Scottish and UK Governments work with management and trade union representatives to try to save the company as a going concern and to provide effective support to the 325 workers made redundant today.”