Based in Fife, the employee-owned company was founded in 1809 and produces high quality paper board for use in cards, covers and premium packaging.  It has 474 employees, of whom 325 have been made redundant following the administration. The remaining 149 have been retained to complete some orders.

Turnover for the year to 31 March 2014 was £124.6m, but Tullis Russell suffered a pre-tax loss of £3.4m. The company has incurred cumulative losses of £18.5m over the last five years, largely as a result of weakening demand and pressure on its margins.

Its traditional market is in decline as media and other outlets move from paper to digitally-based products, resulting in worldwide oversupply and price competition. In addition, sales to Europe have been adversely impact by the strength of sterling against the euro, while the cost of raw materials are at a historic high and the company also lost a major customer due to insolvency proceedings.

Attempts to improve efficiency by opening a biomass plant on site to reduce energy costs, and efforts to widen its product and customer base have not prevented Tullis Russell from making substantial losses, which are projected to continue, resulting in severe cashflow issues.  The directors began looking for a buyer for the business last October, but have not been successful.

Blair Nimmo, joint administrator and head of restructuring for KPMG in Scotland, said: ‘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.’

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

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