Published: 09:00, 30 March 2015
| Updated: 09:12, 30 March 2015
With his 17-year career in manufacturing paper at an end, ex-Aylesford Newsprint worker Kevin Fosberry has been booking himself on courses at the Jobcentre.
“People don’t buy newspapers as much as they used to – everyone knows that,” said the former process manager, who is now looking for a career in construction.
“We know the industry is not doing well. It was not just us doing badly. We knew the company was in difficulty.”
The worst thing for many was the speed of the decline.
Administrators at KPMG wasted no time in making 233 workers redundant just a day after the company, formerly known as Aylesford Paper Mills, told staff it was closing.
This was just a month after workers were given a pay rise of 2.4%, either as a smoke screen or to increase the amount of redundancy money employees could claim.
“They couldn’t stress it enough that we were having bad times but they gave us the impression we were safe,” said Mr Fosberry, a father-of-four from Barming.
“If we could get through to 2016 when they could have bought the power plant next door, then they would have become profitable and it would have saved us.”
Ownership of the neighbouring power plant would have helped Aylesford Newsprint twofold. Firstly, it would no longer have had to pay for electricity from npower, who built the facility. Secondly, it would have been able to sell electricity back to the National Grid.
“The long-term survivors in the paper industry will likely be those who have the best energy solutions,” said Craig Nichol, general manager at Kemsley paper mill near Sittingbourne, owned by DS Smith. “We are an energy-intensive industry so being efficient in generation and consumption is vital.”
Aylesford Newsprint had been making paper on its current site since 1922 and formerly produced newsprint for The Times, Mirror and The Observer. It made a 100% recycled product and owned the largest paper recycling factory in Europe.
However, Palm Paper in Norfolk opened the world’s largest newsprint machine in 2009 at a time when there was already too much newsprint being made.
Rumours abounded it was struggling but its multi-national owner had deep pockets to keep the business funded until one of its competitors went under.
There was hope Aylesford might hang on when its rival UPM near Liverpool closed its newsprint machine in November, costing more than 121 jobs.
Now just 65 staff remain at Aylesford as they help KPMG sell assets and decommission the plant, which was bought by US private equity firm Martland Holdings from joint owners SCA and Mondi in 2012.
“When we were backed by SCA, they bailed us out in the bad times,” said Mr Fosberry.
“Once they pulled out we didn’t have that support.
“The biggest mistake Aylesford Newsprint made was they didn’t build two machines at the same time when SCA were joint owners.
“If they had done that, Palm wouldn’t have been built because there wouldn’t have been the capacity for them.”
Unlike Aylesford Newsprint, the mill owned by DS Smith at Kemsley produces paper for the more lucrative packaging market, as consumers buy more goods online which need to be posted to them.
It would have cost about £35m to convert the machine at Aylesford Newsprint to handle brown paper and cardboard, money the firm didn’t have.
Kemsley general manager Craig Nichol said: “Less and less people are buying newspapers as they turn to social media and phones to access information.
“There has been a decline in consumption of newsprint and an increase in capacity. It is a terrible situation to find yourself in.
“The recent investment by Palm Paper in Norfolk, with a large machine, has made it a tough market. By comparison, packaging grows in line with GDP. Lots of people order things over the internet now which comes in boxes.”
Cheap imports and the strengthening pound were also a problem. “Paper has become an international market,” said Mr Nichol.
“One of the issues is the changing exchange rate with the euro, which makes the pound stronger for buying paper imported into the UK.”
Even if different decisions had been made, the writing may well have been on the wall for Aylesford Newsprint.
Its latest accounts show the firm made a loss of more than £32 million in 2013, having made a profit of £56 million a year earlier.
However, those profits in 2012 were the result of a cash injection of £78m to the business, possibly after loans from its parent company were written off. That same year, the company was sold to Martland Holdings.
In real terms, the firm was making an operating loss of nearly £20m in 2012, which grew by another £12m a year later. The company had been unprofitable for some time.
Administrator Allan Graham, at KPMG, said: “Significant overcapacity in the newsprint market, coupled with rise of digital media, has created challenging operating conditions for Aylesford Newsprint.
“The business has been loss-making for a number of years and was unable to be maintained as a going concern.”
“The biggest mistake Aylesford Newsprint made was they didn’t build two machines at the same time when SCA were joint owners. If they had done that, Palm wouldn’t have been built because there wouldn’t have been the capacity for them...” - Kevin Fosberry, former worker
Meanwhile, the closure of Aylesford Newsprint will cause “chaos” in the recycled paper industry as businesses and councils look for new buyers for their waste.
The company bought 500,000 tonnes of recycled waste fibre each year to make 400,000 tonnes of recycled newsprint annually.
Tonbridge and Malling Council had two paper recycling contracts with the firm to take its kerbside collection and waste from its paper banks near supermarkets and leisure centres.
The council’s street scene and leisure director Robert Styles said: “We have made contingency arrangements to ensure that both services can continue in the short-term while we continue to investigate longer-term solutions.”
The disruption could also put pressure on companies selling waste.
Kemsley mill general manager Craig Nichol said: “I would expect a drop in the price of the recycled material. Locally, the lanes for waste paper to be distributed go into disarray when somewhere like Aylesford Newsprint closes.”