British Polythene Industries (BPI) is to close its manufacturing facilities in Stockton-on-Tees and transfer production to other BPI sites. Up to to 165 jobs will be lost in the move.
The Stockton facility is part of BPI's industrial division and produces heavy-duty sacks, and industrial and agricultural films.
More than 40 per cent of the output from the site is supplied to the construction industry, but during the last six months demand from that sector has reduced dramatically, and the company expects little prospect for improvement as the UK economy enters recession.
The Stockton site made losses in 2006 and 2007 and, despite initiatives to reduce costs and increase efficiencies over the past two years, the company says that the economic downturn will result in a more significant loss at the site of £2.5m in 2008.
Given these losses, BPI proposes to transfer production from the site to other sites within the BPI Group, including Ardeer and Greenock.
The company plans to gradually scale down its operations at Stockton-on-Tees to avoid any disruption to its customers.