72 possible buyers, no takers - Tullis Russell ‘no longer viable’ says CEO

Chris Parr, Tullis Russell, Markinch
Chris Parr, Tullis Russell, Markinch

Management at Tullis Russell have spoken of their sorrow at today’s massive job losses and move into administration.

The directors confirmed the employee-owned business was ‘‘no longer viable’’ - and the chances of finding a buyer appear to be almost nil.

Chris Parr, Group CEO, issued a statement just hours after confirming 325 jobs had been axed immediately, leaving just 149 staff to tidy outstanding orders at the once busy 100-acre Markinch plant.

Formed in 1809, Tullis Russell has been a bedrock of the community and a source of work for generations of Fifers

Mr 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. ‘‘

He outlined the growing problems facing the plant as it tried to cut costs and stay competitive in a rapidly changing market.

‘‘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,’’ he said.

‘‘The company has been able to generate new business within luxury packaging and certain digital applications over this time, but annual volume is currently 14 per cent lower than 2008 levels and the profit margin achieved is substantially weaker.’’

In 2009 Tullis Russell successfully negotiated a pioneering scheme with RWE Npower which built and, since 2014, have operated a biomass plant on its site - a development which initially reducing annual energy costs by 50 per cent.

It has improved its efficiencies year on year and stripped out cost from the business - but those moves came against a backdrop of over supply in the global paper market and continuing falling demand.

Added Mr Parr: 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.’’

Between October 2014 and last month, it tasked KPMG with finding a buyer. Over 72 possible buyers were contacted between October 2014 and March 2015 - all rejected the opportunity to take it on.

‘‘This has unfortunately only confirmed that the business is no longer viable,’’ he added.

‘‘This difficult position finally became untenable with the papermaking company’s third largest and most profitable customer entering into an insolvency process on April 1. The directors of our Papermaking business were therefore faced with no other option than to place the business into Administration.’

Tricia Marwick MSP described ‘‘a tragic day for Markinch and Glenrothes’’ and added: ‘‘ Tullis Russell has been at the heart of our community for more than 200 years and there is hardly a family which has not had a relative or friend employed there. I am devastated by the news.

I will be seeking an urgent meeting with ministers and Fife Council to discuss what support can be given to the workers who face an uncertain future and to discuss what support can be given to help the town and the immediate area recover.

‘‘The paper industry had a difficult time some years ago and we were so pleased that Tullis Russell survived through the worst of it. The provision of the Biomass plant to provide cheaper energy was to reduce their operating costs and give the plant and the workers a secure future. It seems it has not been enough.’’