Chief executive Iganacio Sevillano said: “The last five years have seen
some of the worst trading years in living memory for the whole of the UK
paper industry and the management team have had to make some difficult
decisions.”
He added: “We have been reviewing all of our costs and this redundancy
exercise is just part of our programme to reduce our cost base. It is our
intention to improve profitability and thereby secure a long-term future
for the mill.”
This is the latest in a long line of mill capacity reductions in the UK paper and board sector that has taken place over the past few years and this announcement raises some important issues.
PRNs
Firstly, it is now clear that although companies obligated under Packaging Waste legislation are benefiting from the on-going low cost of PRNs, the additional much needed finance that should be generated from the system to support UK reprocessing capacity is just not available. The ability to subsidise and stimulate reprocessors on the back of environmental legislation is critical to remaining competitive when faced with the level of financial support being generated in other European countries.
And the on-going reduction in UK capacity will almost certainly lead to higher compliance costs in the future as alternative, less cost effective markets will have to be developed.
There is also growing unease within the paper and board sector that the recent announcement from WRAP, inviting expressions of interest for newsprint reprocessing capacity is excluding the packaging, fine papers and tissue sectors.
There has been more investment in UK newsprint reprocessing capacity in recent years than there has in other paper sectors and the announcement from Snodland will intensify the debate.
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