Paperlinx announces cost cutting, slammed for extravagance

Paperlinx announced it would be closing its global headquarters in Milton Keynes, UK, and disbanding its global marketing and global human resources departments. The company also promised a 35% year-on-year reduction in corporate costs for the 2012-13 financial year.

The paper merchant has also laid off executive general manager of corporate affairs, James Orr.

Chief executive Toby Marchant said “minimising corporate overheads” was “a key element” of the paper giant’s ongoing strategic review.

Andrew Price, who narrowly failed to unseat chairman Harry Boon at an extraordinary general meeting (EGM) in March, said Paperlinx had stolen his ideas, but still wasn’t doing enough.

Price told ProPrint that he had argued with Boon at the EGM for Milton Keynes to close and the two global departments to be disbanded.

He welcomed those moves, but said the 35% reduction in corporate costs was insufficient.

Price predicted Paperlinx would follow its $61 million half-yearly loss with a $100 million annual loss and said it was, therefore, essential to find at least that amount of savings.

“Paperlinx need to cut their costs so they can get back to being profitable,” he said.

“It’s obvious there has been lots of fat in the business, but they’ve been too lazy or didn’t care or didn’t have the ability until I came along to start this cost cutting.”

Marchant told ProPrint in April that Paperlinx was on track to return to profitability by 2014.

Price said it had made no sense to have global marketing and human resources departments as both were localised functions.

He also slammed Milton Keynes as an “obscenely expensive” site that had kept senior staff isolated from day-to-day business. He welcomed the relocation to Northampton on the grounds it would place head office near an operating centre and send a message to all employees about the importance of restraining costs.

Orr, who remains as corporate affairs head until the end of June, told ProPrint he was unable to comment on head office affairs.

Paperlinx also announced the appointment of Richard Barfield as group chief financial officer effective 1 June.

Marchant said: “Richard is a highly experienced and well respected chief financial officer who has recently completed the turnaround and sale of Bezier Group in the UK.”

Prominent hybrid security holder Graham Critchley welcomed the appointment of Barfield given his “track record of corporate turnarounds”.

However, he said 1,200 jobs needed to be cut as “only harsh medicine can now save Paperlinx”.

Price told ProPrint he was continuing to give deep thought to calling another EGM.

“Depending on how quickly they can move in cost cutting will determine when the next EGM is coming. They’re still moving too slowly. If they don’t pick up the pace soon, the only thing that will save this company is another EGM,” he said.

Price is travelling to the UK on 13 June on a “one-way ticket” to set up camp near the Paperlinx offices as he plans his next move. He told ProPrint he already had more than 20 meetings organised.

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