Tullis Russell Group has announced that its papermaking subsidiary, Tullis Russell Papermakers Limited, has been placed into administration by its directors.
The employee-owned Tullis Russell Group’s two other operating subsidiaries, Tullis Russell Security & Speciality Coating, based in Cheshire, England, and Tullis Russell Image Transfer, based in Ansan, South Korea, are unaffected by this move and continue to trade normally.
The Papermakers branch of the company was founded in 1809 and has operated from a 100-acre site in Markinch, Scotland, since then. The company manufactures board for use in the cards, covers and premium packaging sectors.
Group CEO, Chris Parr, said: “This is a terribly sad day for employees and their families, the local community and everyone else associated with the business and its proud 206 year history.
“Since the global recession in 2008, demand across the traditional markets for papermaker’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. The company has been able to generate new business within luxury packaging and certain digital applications over this time, however annual volume is currently 14 per cent lower than 2008 levels and the profit margin achieved is substantially weaker.
“In 2009 we successfully negotiated a pioneering scheme with RWE Npower, who built, and since 2014 has operated, a biomass plant on our site, initially reducing our annual energy costs by 50 per cent,” Parr continued. “We have also continued to improve year on year efficiencies and remove cost from our business. Despite these efforts there remains over supply in the global paper market and demand continues to fall. It has become clear 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 difficult position finally became untenable with the papermaking company’s third largest and most profitable customer entering into an insolvency process on April 1st. The directors of our papermaking business were therefore faced with no other option than to place the business into administration.”