CHEMICALS group Huntsman was poised to pull out of Teesside if it did not receive Government support for its plans to build a £200m polyethylene plant, The Northern Echo can reveal.

The US company yesterday announced plans to build the world's largest polyethylene plant at Wilton - a move that has saved 800 jobs at Huntsman's aromatics business north of the Tees and secured between 4,000 and 8,000 jobs across the sector in the region.

Nearly 120 skilled jobs for engineers and technicians will be created at the plant, as well as 1,000 construction jobs during the building phase, which is expected to last two-and-a-half years.

The investment also has a knock-on effect, helping to secure nearly 30,000 jobs across the UK that depend on the petrochemical industry.

Yesterday, Kevin Ninow, president of Huntsman's chemical and polymers business, told The Northern Echo: "As part of the package deal when we bought the site from ICI, there was included a recognition that certain facilities would be shut down and there was provision made for that.

"My job was to determine whether we could salvage these businesses.

"This investment came at a crossroads of either these businesses going down in the next few years, or we make a major investment and make all our operations on Teesside not only sustainable, but competitive.

"We haven't shut down any of the businesses that we bought, and on top of that, this new plant will be competitive on a global scale."

If Huntsman had pulled out, the knock-on effect on other companies in Teesside's chemical cluster could have meant the end for the region's petrochemical industry - which contributes £3.5bn a year to the national economy.

Huntsman's latest investment in Teesside will bring the level of money they have ploughed into the area up to £0.5bn.

Redcar MP Vera Baird, along with regional development agency One NorthEast, was instrumental in convincing the Department of Trade and Industry to give Huntsman a grant.

Most regional selective assistance grants are made on the basis of how many jobs the recipient would directly create, and civil servants were understood to have been reluctant to give a multi-million pound grant to a facility that would create only 117 jobs directly.

But lobbying by Teesside MPs, unions and One NorthEast convinced the DTI of the importance of the investment to the national and regional petrochemical industry and it agreed to back Huntsman with a £16.5m grant.

Huntsman president and chief executive Peter Huntsman was on Teesside to make the announcement yesterday.

The plant will produce 400,000 tonnes of low-density polyethylene a year, and will safeguard the future of Huntsman Olefins Cracker plant at Wilton International.

The plant will be operational by the end of 2007 and will offer the lowest cost low-density polyethylene in the world, apart from plants in the Middle East which have a price advantage on raw materials.

Customers of Huntsman's first venture into the European polyethylene market will include the packaging, aerospace, automotive and technology industries.

David Allison, director of business and industry at One NorthEast, said: "At the moment, the Teesside petrochemical cluster employs about 3,600 directly, but about 12,000 jobs are dependent on the cluster.

"This spreads to as many as 29,000 jobs nationally dependent on it - there is a significant supply chain.

"The operations at Wilton are all integrated from the days of ICI.

"The investment by Huntsman not only protects its own operation, but really strengthens the whole infrastructure.

"If Huntsman hadn't gone ahead with this project, others would have had to consider their future as well.

"This sends a message out to all the other companies that says you should consider the North-East as a good place to invest.

"This will also help other companies, providers of cables, training companies, administration support, the list goes on and on with companies to benefit.

"Because these products are used in the packaging, aerospace and automotive sectors, we may also be attracting these companies to the region on the back of this."

Subject to the signing of a technology license agreement, the company hopes to begin construction next year.

Neil Etherington, investment director of Tees Valley Regeneration, said: "This investment will be the glue that secured the whole of our petrochemical complex."

The new plant will reduce the UK's need to import polyethylene and will turn the country into a net exporter of the product.

It will be an important consumer of the ethylene made at Huntsman's Cracker manufacturing facility at Wilton