A paper tiger on the Don

FORGET the romance of the paperback; just stick with the romance of

paper, the commodity in your hands right now, this ingeniously-created

product which plays such a vital part in modern living.

A great deal of it is produced here in Scotland and none of better

quality than in the outskirts of Aberdeen, by the banks of Dee and Don,

where the rush of water has been a traditional accompaniment to the

making of paper.

We are sometimes remarkably ill-informed on what lies on our own

doorstep and I must confess to much ignorance of that industry which

touched the fringe of my childhood.

Thanks to John Fedo's book, Mill On The Don, I have now shared in a

true story which has no shortage of drama. It is the centenary story of

the Donside Paper Company, now a member of the world's elite in the

production of high quality.

If the curve is currently upwards, the over-all picture is one of

peaks and troughs, joy and disaster, and an almost bewildering array of

ownerships.

It all began rather modestly 300 years ago when Patrick Sandilands, an

elder of Old Machar Church in Aberdeen, started making paper by hand,

just four years after the Massacre of Glencoe.

At Gordon's Mill on the River Don, Sandilands used rags as the fibrous

material, to be cleaned, pulped, diluted, and processed quite

ingeniously till there was just wet paper, ready to be dried in a loft.

But his venture failed and the mill went over to cloth-making,

eventually bringing in names like Crombie of Grandholm, whose famous

coat was among the woollen garments to gain international fame. Wool and

cotton later hit hard times and, in the fluctuating fortunes, paper made

a comeback.

The Donside Paper Company was formed in 1893, in conditions vastly

different from Sandilands's time. Poverty and ignorance had been

tackled, estate owners had built model villages, and roads and transport

had improved. A continuous paper-making machine had been invented and

the rotary printing press was introduced in 1863 by an engineer at The

Times.

With better schooling creating a demand for cheap printing paper,

mills were set up all over the country, concentrating on river systems.

Aberdeen was well placed, not only with its two rivers but with an

excellent seaport and a proximity to woodpulp sources in Scandinavia.

In the 90 years from 1801, Aberdeen's population had also grown from

27,000 to 125,000. Paper mills were well established by then, at

Peterculter and Stoneywood, both on the outskirts of the Granite City.

The Pirie family of Stoneywood became a famous name in the industry,

introducing white paper made from bleached rags. That company

amalgamated with Wiggins Teape in 1922 and has more recently become Arjo

WT Appleton.

From another of the families, George Davidson invented a

paper-bag-making machine which revolutionised that trade, maintaining

the Aberdonian's reputation for invention.

Yet another of those enterprising families, the Taits of Inverurie,

had extended from granite and grain -- they also helped to build the

Inverurie-Aberdeen Canal -- and opened a paper mill by the Don, an

operation which lasted through five generations till it was acquired in

1989 by the Federal Paper Co. of New Jersey.

But John Fedo's book naturally concentrates on the Donside Paper

Company founded in 1893 under the chairmanship of Sir John Leng, the

Dundee newspaper publisher who later merged with the D. C. Thomson

empire, a connection which exists to this day.

They produced newsprint, paid manager Charles Pattullo #5 a week, and

prospered in the early part of this century when Donside went public.

Chairman Frederick Becker came up from Yorkshire and so liked the

Aberdeen area that he settled there and moved to

Ellon Castle on receiving his knighthood.

Newspapers were much in demand in the First World War but prosperous

times were followed by a slump and many mills closed or merged. Donside

was running into debt and was under the supervision of creditors when

the Inveresk Paper Group appeared on the scene to gain control.

Having risen from a single mill at Musselburgh, Inveresk thus became

the biggest paper producer in Scotland, with other mills along the Forth

and Clyde valleys.

After the turmoil of the Second World War, recovery was slow and

Donside's machines became obsolete for the production of newsprint.

Survival would need a move into the higher quality grades, which took

place alongside a contractual requirement to supply newsprint for papers

like the Herald.

That ended in 1955 and glossy paper became the product. With the

development of new machinery in America, Inveresk decided on its

biggest-ever capital expenditure which would give Donside a capacity of

46,000 tons a year, more than twice the previous output.

All this was based on information bought in from the United States --

new technology upon which the whole future of the group now depended.

Princess Alexandra came to perform the opening in September 1967.

But within 15 months the group's finances were in disarray and the

mill was on the point of closure. The bankers were demanding action.

What went wrong? The new technology brought its own problems, with an

output barely reaching 20,000 tons, never mind the expected 46,000. In

addition, American standards of smoothness and gloss didn't meet

European requirements.

Donside's losses threatened to ruin the Inveresk Group, which offered

the Aberdeen mill to the two giants of paper, Bowater and Reed

International. Both declined, saying Aberdeen was too far from their

plants in the south of England.

That was when the Government stepped in to persuade the two companies

to enter into a joint ownership at a cost of #2m, with a monopolies

waiver despite their dominant position.

While Inveresk licked its wounds, Bowater took over production and

management and Reed looked after sales and marketing. Visiting firemen

made such drastic changes that the new permanent manager was to reflect:

''It was akin to a serious accident where the paramedics have to work

fast to stabilise the patient who would otherwise die.''

That new manager was none other than John Fedo, author of the book,

who went north from Bowater's Mersey newsprint mill to restore

confidence in a shell-shocked workforce.

He gathered around him a solid team, including Ian Lakin, who would

eventually succeed him as manager, facing a period of boom-and-bust

economics in which the Aberdeen mill would tend to suffer in bad times

while the southern mills were hardly affected.

Donside products were at least given their own distinctive brand name

of Consort and labelling for cans and bottles became a significant

development, along with good-quality art paper.

But changes were never far away. In 1977 Reed International decided to

sell its half share to Bowater, part of its plan

to get out of papermaking altogether.

Now going for the higher quality of value-added grades, manager Ian

Lakin and sales director Andrew Findlay explored the American market and

found outlets under the appealing brand name of Gleneagle. By 1984 they

were turning in a profit of #2.5m on a turnover of #32.7m.

Real Art paper became a speciality and the mill entered its centenary

year with a profitable niche among the elite of the industry.

But more change. Now Bowater had become disenchanted with paper-making

and, in 1986, was offering its three remaining sites, Donside and two in

Kent, as a management buy-out. Seventy senior managers responded and the

purchase price was #38.7m.

After a public issue in 1988, the value shot up to #107.6m. The

managers had done well. But the chairman was telling journalists that

the shares were still too low and within weeks a Finnish company made a

bid. That was overtaken by an offer from New Zealand's biggest

industrial company, Fletcher Challenge, whose winning bid put the

company at a value of #298m.

Today, Donside produces upwards of 80,000 tonnes of high-quality paper

with 545 employees. In 1968, that was 20,000 tonnes from 629 people. It

has been a workforce of good quality and good sense in adapting to the

new techniques.

So Aberdeen holds its place, with the advantage of Robert Gordon's

University being a centre of paper technology. Ian Lakin is a governor

of the university as his Donside mill reaches for new heights.

And John Fedo's book, needless to say, is printed on a magnificent

quality of Donside paper!

* Mill On The Don, from James and James at #9.95.