To the great regret of everyone involved, Tullis Russell’s papermaking operation at Markinch in Fife, Scotland, is today going into receivership. This mill was the company’s original home, where it made paper continually for over 200 years, from 1809. The crisis was precipitated by the recent bankruptcy of its largest customer, whose orders underpinned the mill’s profitability.
Tullis Russell is employee owned, and has been since 1994. It is worth making four points about that.
1. Employee ownership is not the cause of this closure. When a conventionally structured company fails, economists regard that as evidence of the vigour of the capitalist system; by contrast, when an employee-owned company fails, doubts tend to be raised about employee ownership as a system. All the empirical academic evidence points to extra productivity, innovation and longevity being characteristic of employee owned companies. This has certainly been true in the papermakers at Markinch, and is true of the continuing Tullis Russell operations, in Bollington, England and Ansan, Korea.
2. International pressures have caused the closure of pretty well the whole UK printing-paper manufacturing industry. No ownership system can save a business that is undermined by global competition from better placed competitors. For decades Tullis Russell was, like all UK and European manufacturers of printing paper, under considerable pressure from companies in more favourable global locations. The ability of large international competitors to build $ billion mills in the middle of cloned eucalyptus forests in Brazil, for example, gave them really significant cost advantages. European production of printing paper shrank between 2005 and 2015 from 40 million to 29 million tonnes – there have been large numbers of mill closures all over Europe. In the UK, tissue and packaging mills remain viable but printing-paper mills have closed.
3. In employee ownership the performance of Tullis Russell papermakers has been stellar. All other UK printing paper mills but two have closed. One, Stoneywood in Aberdeen, is sustained only by its global corporate owners transferring into it products from mills they have closed elsewhere; the other, James Cropper in the Lake District, has been kept going by the technical specialties it produces. Only Tullis Russell, because of the productivity and committed cooperation of its employee-owners, stayed viable on its own feet as a paper mill focused on printing grades.
4. Tullis Russell will continue. The Tullis Russell Group has over the years developed operations in specialist coating of paper and other substrates. Its other two sites will continue in operation, both of them consistently profitable and successful in employee ownership, with a turnover of some £30 million. These operations will actually be stronger without the papermaking, which has in recent years sometimes been a financial drain.
Everyone is deeply saddened that after over two centuries pressures outside anyone’s control have ended an operation employing some 480 people, whose committed cooperation and hard work as joint owners kept this business more successful for longer than any comparable mill.