Spanish Tissue Specialist CEL to Shut up Shop at Three Production Sites

The Spanish tissue specialist CEL Technologies & Systems (CEL) is in serious financial difficulty. The group’s management has submitted a redundancy scheme, a so-called expediente de regulación de empleo (ERE), which provides for the closure of three production sites and the elimination of more than 230 jobs.

According to the trade union Euskal Langileen Alkartasuna (ELA), the CEL management is seeking the closure of the group companies Ecofibras Aranguren, Celulosas Aranguren and CEL Technologies & Systems Issue. Only the group company Dermo Products Development is supposed to keep operating.

The origins of CEL date back to the creation of the company Sancel within the La Papelera Española group in 1975. In 1984 Sancel was acquired by Scott Paper which later merged with Kimberly-Clark (K-C).

In late 2012, the Spanish firm Indarkia and the Basque government’s venture capital fund Ezten took over K-C’s Aranguren and Arceniega tissue mills in northern Spain and the CEL group was established. The new owners committed to spending some Euro 20 million ($23.6 million) on the Aranguren and Arceniega sites over the next three years and signed an agreement that guaranteed the continuation of the sites’ production in order to supply K-C with the products for a period of five years.

Earlier this year, CEL reportedly stopped paying its energy supplier Acciona Energy. In late May, the CEL management informed the works committee that it was planning to apply for pre-insolvency proceedings due to its debts with Acciona Energy and said that it needed to cut salaries and wages by an average of 20%. At the same time, the worker representatives also learned that CEL’s majority shareholders had parted with their stakes in the company, leaving 100% of the share capital in the hands of Zurbost Gestion.

In early June, the energy supply was cut at almost all CEL sites, and on July 3, insolvency procedures were opened. Since then, two investors interested in taking over CEL reportedly have approached all parties involved in the proceedings. Still, the definitive closure of the three production sites and the loss of 230 out of 254 jobs at CEL seems to be imminent.

ELA has called on the Basque government to come to the rescue of CEL. "We denounce the fact that, if carried out, this ERE would mean the abandonment of 300 families even though there are investors interested in maintaining the industrial activity of CEL," the trade union said in a statement. "This is not a moment to present an ERE or to continue blackmailing the workforce with lower wages and layoffs. Instead, all parties should work together on a serious and transparent industrial project for all CEL workers and for a region that cannot afford the closure of one of its last big industrial companies," ELA added.