The news comes just days after supermarket trolley maker Buko announced it is to close with the loss of 90 jobs.

Smith Anderson told workforce representatives it planned to mothball one of its three paper-making machines in a bid to secure the future of the Fettykil mill.

The machine to be closed produces paper for brown corrugated case boxes.

The firm says there’s an excess supply in this market that has led to a dramatic fall in prices. It says there is no sign of improvement for the foreseeable future.

The move takes effect immediately and production will be concentrated on the other two machines, which produce a range of papers for a variety of uses including bags, packaging and envelopes — an area in which the company has a significantly larger market share.

Smith Anderson’s commercial director, Stephen Hutt, said today, “The proposed changes we’re announcing today are necessary if we are to remain competitive in the European and UK machine-glazed paper market.

“They are the first step of a longer-term recovery plan that will involve negotiations on a number of issues with the remaining workforce, including possible alterations to current shift patterns.

“We will also be seeking meetings with the Executive, Fife Council and Scottish Water to discuss with them ways in which they can assist us.”

Today’s announcement affects only the papermaking division of Smith Anderson’s operations.

The business of Smith Anderson Packaging, with sites in Leslie and Falkland, is unaffected.

Securecycle, a waste collection and management service, will also continue as normal on the Fettykil site. The collection and recycling of a wide range of paper waste is a growing business, as is the partnership with a number of local authorities.

Securecyle also provides a confidential waste destruction service for the banking, legal and financial services sectors. It is anticipated this business will continue to expand.

Smith Anderson is one of Scotland’s oldest manufacturing companies and has been producing paper from the site on the banks of the River Leven in Leslie for 145 years.

It is the last mill in Scotland using waste paper as raw material, and makes a major contribution to the Government’s national waste strategy.

The company currently has a total workforce of around 800 employees, 240 of those working in the papermaking division.

Local MSP Christine May said the news was a devastating blow.

“I am seeking an urgent meeting with Alan Wilson, the deputy minister for enterprise and lifelong learning, and have asked for a meeting with Smith Anderson management and union representatives beforehand to get a thorough briefing,” she said.

“The priority is to minimise job losses and to ensure the remainder of the business can be sustained.”