The papermaking firm is currently in a 30-day consultation with employees, and while managing director Cliff Barry said the company would retain its converting and finishing processes, production will transfer to its global sites situated in East Africa and India.

Barry said one of the main reasons for the decision was a 700% increase in water rates by Yorkshire Water, which would take its bill to over 1m per year.

This coupled with rising costs for raw materials, energy and environmental improvements meant the mill was not sustainable.
"All these costs add up and the market cannot sustain any price increases we could apply."

He said the current cost of production in the UK was too high, and although it was inevitable that there would be redundancies, Barry said no decision had been made on final numbers.

Demand from Europe had also suffered from a severe downturn, and Barry said the firm had also failed to see any benefit from the recent Finnish mill disputes that curtailed production for seven weeks.

The firm has made significant investment in its coating facilities and earlier this year installed a new gift wrapping machine, and Barry said the firm would still continue to develop new products in that range.

Although production would transfer outside the UK, he said quality would remain the same for its products, which include digital papers, packaging materials, coated papers and board, and corrugated products. Garnett's product ranges include Alchemy, Filemaster, Ecoline and Supra.

Story by Andy Scott