Papierfabrik Scheufelen has become the second German paper mill to file for insolvency in the last week.
The business, a producer of coated woodfree fine papers and packaging board based in Lenningen, initiated insolvency proceedings yesterday (30 January) at the local court of Esslingen.
The 340-staff company, which achieved sales of €83m (£73m) in 2017 and produced 104,000 tonnes of paper, said it has been operating in a market “facing dramatic overcapacities and margin pressures”.
The news comes less than a week after Feldmuehle Uetersen, based just outside Hamburg, initiated its own insolvency proceedings.
In 2016, the same year it was acquired by German investment firm Schaeff Group, Scheufelen launched Phoenolux, a high white SBS board for premium and luxury packaging applications.
The company said it had reported major losses in the years preceding the acquisition but that its situation had “improved significantly” since, as a result of numerous restructuring measures and the strategic reorientation to the packaging sector.
The business also recently introduced the fresh fibre product Grasspaper, which it said “laid promising ground for a sustainable future”.
“Losses and negative cashflows were reduced substantially. However, massive price increases for pulp as well as chemicals in 2017 made it impossible to achieve the turnaround,” said the company in a statement.
“The promising high margin packaging product lines Phoenolux and Grasspaper, together with the stable market share and leadership position in coated fine paper products – in particular Heaven 42 – were not yet able to sufficiently compensate the current cost situation under the existing product mix.”
The development and market launch of Grasspaper was accompanied by Packaging Campus Lenningen, which is not impacted by these proceedings.
Scheufelen said its production and sales will carry on for now and staff will continue to be paid through to March 2018, with their salaries covered by the Federal Employment Agency’s insolvency allowance.
“Given the close and continuing cooperation with longstanding partner Igepa Group for sales of Heaven 42 and Phoenolux, as well as the massive market and investor interest in Grasspaper – which will relieve the company from the dependency on pulp markets and prices – management is confident that the Scheufelen future can be secured,” the company’s statement said.
Various Scheufelen grades are stocked in the UK by suppliers including GF Smith and Ovenden Papers, with the former stocking Heaven 42 and Phoenixmotion and the latter supplying the BVS range.
GF Smith managing director John Haslam told PrintWeek: “We saw this coming for a few months in many ways so we pre-ordered six months’ worth of stock.
“We’ve got plenty of stock of Heaven 42 and we’ve got a working relationship with another big customer of Scheufelen and we’re confident that we can have alternate supply moving forward in the next couple of months.
“And there’s another group we’re talking with which we can have the paper made for continual supply. Scheufelen might rise out of the ashes, but if they aren’t going to produce Heaven 42, we’re very confident that there’s alternate supply, which is being tested at the moment and is very good.”
He added: “We also have plenty of stock of Phoenixmotion but we’re not sure about the future of that grade, it’s slightly more complicated.
“If we haven’t got the stock of Phoenixmotion [in future], we’ve got Heaven 42 and some other sheets that are similar, like Naturalis, which is not coated but offers a good alternative.”