The struggling Whalsay Fish Processors factory at Symbister has been placed in administration after failing to turn round its dwindling fortunes.
The company, known for processing frozen salmon mainly for the European market, had been pinning its hopes on new products based on raw material to bring it back to prosperity.
However, these aspirations failed to materialise, and the firm has succumbed to pressures brought on by the high price of salmon.
Whalsay Fish had received a £725,000 loan from Shetland Islands Council’s economic development unit in July last year.
Some repayments had been made to the council but the firm, owned by four fishing industry figures including Framgord’s Frank Johnson, still has a substantial sum outstanding.
Management have been in talks with the council over its difficulties for several months.
In June the company was given a stay of execution to enable it to launch a new product range. Those products, however, have failed to come to the market.
After the SIC development committee went into private yesterday, chairman Josie Simpson said they had decided to let the company go.
The decision was taken to let Whalsay go into administration. “The problem has been getting raw material to the factory. The price of salmon has been going through the roof, and he [Mr Johnson] wasn’t able to get the raw material at the price he could afford,” said Mr Simpson.
A statement from Mr Johnson yesterday read: “In June last year Whalsay Fish Processors would have closed. A new business plan on the basis of using frozen whole fish was considered a solution to the historical dependence of chilled whole salmon, with intermittent supply and volatile prices.
“The council backed the plan and the company changed ownership in September 2009. Prudently the council took all of the company’s assets as security in exchange for this loan.
“The specialised equipment was installed and proved successful. The new business plan had worked and the company was profitable for the first few months. However, the untypically harsh, cold winter reduced biomass and salmon growth across Europe.
“This is really regrettable after all the positive effort by so many to see the business through to a new future.”