Fife paper maker Tullis Russell in administration

A total of 149 staff have been retained to complete orders at the Tullis site in Markinch, Fife.

Fife-based paper maker Tullis Russell has gone into administration with the loss of 325 jobs, and putting a further 149 at risk.

The Markinch-based firm has seen European exports suffer from the value of sterling in relation to the euro.

It has also been hit by rising raw material costs and by a major customer becoming insolvent.

Only last month, a new biomass plant was officially opened at Tullis's Markinch site.

The £200m facility was built by German energy firm RWE and was designed to meet all of the paper maker's electricity and steam requirements.

RWE said in a statement that the power plant could run independently of Tullis Russell, and would continue to operate.

Administrators KPMG said 325 Tullis employees were being made redundant with immediate effect, while the remaining 149 have been retained to complete some orders.

Tullis Russell produced paper board for use in cards, covers and premium packaging

First Minister Nicola Sturgeon later announced a task force had been set up to look at ways of supporting the Fife economy and jobs, in the wake of the company's collapse.

The task force is being jointly chaired by Enterprise Secretary John Swinney and Fife Council leader David Ross.

Employee-owned Tullis was founded in 1809 and produced high quality paper board for use in cards, covers and premium packaging.

The paper maker has incurred cumulative losses of £18.5m over the last five years, largely as a result of weakening demand and pressure on its margins.

Tullis directors had sought a buyer for the company last autumn, but failed to find one.

'Sad day'

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."

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.

'Position untenable'

Tullis Russell Group said it was announcing the administration move "with great sadness".

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.'