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    Fife-based paper bag manufacturer Smith Anderson Group has risen from the ashes. Its latest step, a move to new premises, sparks a return to better times.


    It’s quite an achievement. In 2006, bludgeoned by what Michael Longstaffe, CEO of Smith Anderson Group, refers to as ‘a meteoric rise in energy costs’, the Group’s paper mill went into receivership.

    “We’d been shoring up losses within the paper mill with profit from the packaging company,” admits Michael. “Following a successful sale of our envelope businesses in 2005, the cost of energy increased multi-fold. A paper mill is very energy hungry and we just couldn’t compete in the European market where gas prices were far lower.”

    Though a heavy blow to the business, the receivership was not fatal. Faced with a pensions deficit and receivership on the one hand, and an award-winning, consistently profitable  packaging company on the other, the business had to take stock.

    “The packaging company was hived up into the Group and we consolidated operations at our Falkland site,” says Teresa Thomson, Finance Director. “We appointed an Executive Chairman, who really helped us focus on reducing costs and we all pulled together.”

    Supporting the strategic direction of the business was critical to ensure its packaging subsidiary survived the aftershocks of the receivership. But a double-whammy to the Group’s financial future came when its incumbent bankers decided they could not support the business after the receivership.

    “We were clear on the process required to secure the future of the Group,” asserts Michael. “However our bankers at the time couldn’t support that, so the relationship ended amicably.”
     

    SUPPORT THAT COUNTS

    Though far from being in a perfect position to court a new financial institution, the integrity and commitment of the senior management team and the clear strategic vision they shared attracted several suitors.

    “We had an offer from Lloyds Bank that was particularly impressive. They were very supportive of the position we were in back in 2006, and have been very supportive ever since,” says Michael.

    Initially looked after by Lloyds Bank’s Business Support Unit, Michael is full of praise for the assistance the Group received. “The packaging side of the business had been profitable, year
    in year out, but external influences in the shape of the receivership and the pensions issue threw that into the red.

    “We were able to stabilise with the advice and support of the Business Support Unit. We were able to pull through. Profit has returned and we are now in a far more secure position. That support in partnership is respected and very much appreciated.”
     

    FACING THE FUTURE

    With the move to new premises due to be completed by the end of 2012, the future looks bright for Smith Anderson Group. “We will be fully operational from a brand new single storey site,” says Michael. “That will effectively transform us into a true market leader in the UK and, potentially, in Europe.

    “Last year our turnover increased by almost 10% with some significant growth in European markets. Our vision is to continue to differentiate through innovation and service. Having secured 150 years’ of experience, we can now move from strength to strength.”

9/17/2019 3:40:41 PM