A FIRM producing pipes for utility companies yesterday announced it intends to close its County Durham factory, employing 68.

Radius Systems said it planned to shut the Newton Aycliffe factory by the end of the year.

A factory in County Down, Northern Ireland, will also close under the proposals which would see all work transferred to the firms two remaining facilities in Derbyshire and County Armagh.

Although the company said it would look at opportunities for around 16 workers to transfer from Newton Aycliffe to its headquarters at Hilcote in Derbyshire, Radius Systems chief executive Stuart Godfrey admitted there would be job losses.

He said: "Whilst it is deeply regrettable that a restructuring of the business results in job losses, these changes are necessary to maintain our competitiveness, the key to ensuring we have a bright future in both the manufacturing and infrastructure sectors in the United Kingdom".

A 30 day consultation with staff affected by the proposals has already begun, with workers expected to leave through the year as contracts are completed, with production ceasing in October or November.

The firm said that although the plant had a record of excellence in production of large diameter polyethylene and PVC pipes for gas and water companies the UK market for them had declined, with no expectation it would recover, as firms moved to using smaller diameter tubes.

The company also paid tribute to the professionalism of the workforce, who were offered the chance to go home for the day after being told the news at 8am yesterday, but instead decided to work their shifts. Mr Godfrey added: "The decisions were not taken lightly, and only after very careful analysis of the current and future needs of the business."

The firm was previously owned by Finnish company Uponor until June 2008 when the business was sold in a 100m management buy-out, backed by private equity firm 3i, and renamed Radius Systems. Yesterday's announcement brings to an end almost 50 years of pipe manufacturing at the plant which was originally opened by Extrudex in 1963 before that company was bought by Uponor in 1984.

Bob Bolam, regional officer with the Unite union, which represents a number of workers at the site, said: "It came as a shock to the workforce that it was closing.

"There are people there with 30 to 35 years service who are seeing themselves being thrown on the scrapheap. It is a devastating blow to Newton Aycliffe, the workers and there families.

"It is a highly skilled workforce and I don't think the company has any problems with the quality of the work, these people are being punished because of the geography of the North-East, Derbyshire is in the centre of the country and you can distribute anywhere from there."