Mass meeting and legal action plan as historic Scots paper mill goes bust after getting £12m in public money

Administrators have been appointed at the Arjowiggins Group mills at Stoneywood, as well as Chartham, Kent, with 368 of the group's 463 UK-based employees made redundant immediately.

A total of 301 out of 372 members of staff have been made redundant in Aberdeen.

Pat Rafferty, Scottish secretary of the Unite union,  said it is seeking to take legal action over the "lack of consultation" with trade unions.

Speaking about the situation at a Unite Scottish policy conference in Glasgow, Mr Rafferty said: “I just wanted to send a message of solidarity from this conference to our members at Stoneywood in Aberdeen who have just been told in the past couple of days the whole site is closing down.

“We will obviously fight against that as much as we can. We will be taking legal action against them for the lack of consultation with the union in that regard.”

His comments came two days after it was announced the mill in the north of the city was being placed in administration. The move saw nearly 400 employees lose their jobs immediately.

It is understood that workers with decades of services have been reduced to tears.

A management buy-out of the troubled mill three years ago was supported by £7m of funding from Scottish Enterprise, comprising of a £6.9m loan and £100,000 in equity investment.

A year after the initial cash bail-out was agreed, a further £3.5m loan was granted to Arjowiggins in July 2020.

In January 2022, an additional £1.6m loan was issued by Scottish Enterprise just months before the paper mill would enter administration.

Its demise would leave just the huge Caledonian Mill in Irvine, which was an inward investment project and opened in 1988, as the last remaining paper mill in the country, marking a sad demise for an industry which as recently as 1959 employed 17,000 across the country.

The industry is thought to have begun in Dalry, Edinburgh in 1590 with a large market for paper in government, publishing, commerce, the university and the law courts and soon there were dozens of mills along the Water of Leith.

By the 1830s, there were more than 70 paper mills in Scotland which was one-fifth of all the plants in Britain at the time. But the demise of Stoneywood follows a pattern of closures across the country as producers in countries such as China, India and Brazil undercut mills in the UK. 

Shauna Wright, industrial officer with the Unite union said a mass meeting for staff is being organised for Tuesday.

"This comes as a huge blow to our members who stood by The Mill through the last administration and welcomed the management buyout, which gave so much hope for the future.

"That hope has been shattered as we hear that with immediate effect, 400 staff have been made redundant.

"The admministrators have apparently taken charge of The Mill and will look to reduce the rest of the staff further in the coming days and weeks."

Ninety five members of staff have been retained by the administrators to assist them with the operation of limited activity across the two sites while they explore any possibility of a sale of the sites and assets.

Blair Nimmo, chief executive of Interpath Advisory and joint administrator, said: "Arjowiggins has a long and proud history dating back more than 260 years, so this is immensely troubling news for UK and Scottish manufacturing.

"Unfortunately, and following on from the severe challenges posed by the pandemic, the significant economic headwinds which have been impacting industrial manufacturing businesses up and down the country, including skyrocketing energy costs and spiralling input prices, have proved to be overwhelming for the group.

"The management team has asked that we pass on their sincere thanks to all employees, customers and suppliers, plus Scottish Enterprise, for their strong support during these very difficult times, and they would like to express their deep regret that there was unfortunately no other option available for this historic group."

Ms Wright said: "We will be there to support them and offern any legal support that is required for all our members and contacting them directly in the coming days with details of the venue for the meeting."

The mill, which is the last of its kind in Aberdeen, escaped administration just three years ago when the management buyout of the business was completed.

In September 2019, it was acquired by subsidiaries of a new venture, Creative Paper Holdings, which was formed specifically for the deal.

The business faced further difficulties during the Covid pandemic which led to 70 staff members being made redundant.

Stoneywood Mill, on the banks of the River Don near Aberdeen, Scotland, was built in 1770 by James Moir who owned the estate at that time.

The mill started the production of paper three years later. In 1800, it was acquired by Alexander Pirie who switched production from brown paper to fine papers.

Two years later the mill produced its first watermarked paper. Over the following decades the mill built an international reputation for high-quality papers, and by the late 1800s, its products were sold in most countries around the world.

The Scottish Government has said it will do “everything in its power” to support those who have lost their jobs as a result of the administration.

A spokesman said: “It is concerning that AW Creative Papers Group Ltd has entered into administration with the potential loss of around 360 jobs in Aberdeen.

Filmed at the Greenfield & Stoneywood Paper Mills, the video shows how Arjowiggins create their  fine papers.

“This will be a very uncertain time for the company’s staff, their families and the local areas, which will be affected by this decision.

“Scottish Enterprise has been working extensively with Arjowiggins and its partners to explore all possible options to support the business and its staff, including a sale of the business.

“Unfortunately, a solution could not be found to turn the company’s situation around. Scottish Enterprise will work with the administrators to understand the potential options for the business going forward and explore all possibilities to rescue the jobs.

“The individuals affected by this announcement are our immediate priority and we recognise the important role they play in our economy. The Scottish Government will do everything in our power to help those affected through our initiative for responding to redundancy situations, Partnership Action for Continuing Employment (Pace).

“This will include the issuing of Pace information to affected employees by the administrators and a Pace support event to be held during week commencing September 26.”

A Scottish Enterprise spokesman said: “Our interventions helped maintain an important employer’s presence in Aberdeen and protect the jobs of its employees since it first went into voluntary administration in January 2019, as well as leveraging private sector investment into the company.

“Our decisions to support Arjowiggins were based on a shared view, alongside private investors, that the company had a viable future.

“However, conditions deteriorated and despite the best efforts of everyone involved it was not possible to secure a sale of the business as a going concern.”