The Guardbridge, St Andrews-based company’s collapse follows that of M-real’s iconic Sittingbourne mill in Kent, three Stora Enso mills earlier this year and Germany’s Papierfabrik Scheufelen, which filed for insolvency in July.
Curtis’s fall into administration, with the pending redundancies of all 260 staff, has dealt a tough blow to the UK and European markets. Yet, surprisingly, its demise came at a time when, according to managing director Keith Chapman, the company was doing relatively well.
He says the independent manufacturer’s turnover was up 15% year-on-year, it had the “fullest order books ever seen for July” and, more importantly, it had reversed recent results to make a small net profit after payment of interest.
Financial issues
Ultimately, the decision by the company’s directors to call in the administrators hung on two issues.
Firstly, Curtis lost out on the sale of a £3.4m plot of land after the expected buyer, Barratt Homes, pulled out. Secondly, at the same time, its asset finance company made the decision to reduce its exposure.
This financial double-blow proved fatal for Curtis, which historically has had problems servicing its debt, which totals around £12m. When Chapman joined the company in 2005, it was losing money “quite heavily”. For the year ending December 2005, it made an operating loss of £1.5m on a turnover of around £30m.
In January 2007, the company restructured its management team following the completion of a secondary management buyout. The deal was led by Robin Paul, who then became the principle shareholder.
While its recent return to profit would suggest that the move had been a success and Curtis had weathered the storm, it has proved too little and too late to save the company from administration.
Many in the industry have argued that this is yet another sign of how tough papermaking now is and that the commodity markets have little room for small specialist players.
Tim Elliott, managing director of independent paper merchant Elliott Baxter, says: “It is all rather sad. But the bigger issue here is that paper mills are selling their paper at unsustainable prices.”
Malcolm Sinclair, marketing director at Scottish paper manufacturer Tullis Russell, says that, along with not being able to pass on the increased cost of pulp and other raw materials, the market “is now suffering additional pain from unprecedented high energy costs”.
Tough markets
He adds: “The reality is that, while costs remain at these levels, people will have to pay higher prices for paper or even more paper mills will run into the same difficulties in the months ahead.”
Fortunately for the sector, it is unlikely that the market will witness a drastically reduced demand for paper in the short term. Scottish Print Employers Federation (SPEF) director Simon Fairclough argues that Curtis’s collapse is nothing to do with demand, but instead “was yet another case of an organisation working desperately hard to catch up on efficiency to compete in an utterly unforgiving market”.
Whatever the reasons behind the sector’s ills, many feel the government should be doing more to help what is one of its core manufacturing industries. Terry O’Hare, managing director of printer Stewarts, based in Livingston, Edinburgh, says: “It is about time that the government recognised the sector’s contribution to the economy and in return supports it wherever possible.”
Helping hand?
The Scottish Government has recently said it is willing to support any development to continue the operation at Curtis. Also, John Swinney (MSP for North Tayside and cabinet secretary for finance and sustainable growth), has met with a number of local politicians to discuss the situation.
Meanwhile, eight different parties have been seeking information from administrator KPMG regarding Curtis and two have looked around the mill. Chapman, though, says it is too early to say whether they are realistic buyers.
Chapman, of course, has lost his job too and has been leading protests against the company’s move into administration. He led a brief sit-in period at the mill until staff were told they would be paid for the past month’s work and, last Saturday (2 August), he led around 400 Curtis staff and family members on a march in St Andrews.
Chapman argues that by keeping the issue alive, it won’t be forgotten. “The march will continue to give hope to the employees at Curtis,” he says.
The bigger question, though, is how the industry should change to give all paper workers the hope that they will not be next.
CURTIS FINE PAPERS FACTFILE
Managing director Keith Chapman
Turnover Dec 2005, £30m
Staff 260
Location Guardbridge, Fife, Scotland
Markets manufacture and supply of quality uncoated fine papers for graphical, converter, security and specialist publishing sectors
Tonnage 35,000 tonnes a year
