HUNDREDS of workers were last night facing the threat of redundancy for the second time in three years after a North-East firm was put into administration.

The blow to 520 staff at circuit board manufacturer Circatex is the latest in a long line of failed ventures attracted to the region by millions of pounds worth of taxpayers' money.

The workers have already suffered one period of administration under previous owner Viasystems.

More than 800 jobs were rescued by a management buyout which led to the firm being renamed Circatex.

But, plummeting orders and cheaper rival products have once again caused the company's downfall.

Administrators Tenon Recovery will now be expected to try and sell the South Shields business as a going concern.

Ian Kings, Tenon director, said: "In recent months the company has been working with its creditors to try and find a solution to its problems.

"However, the expected level of future orders has not been achieved and consequently the directors feel that they are left with no alternative but to seek the protection afforded by an administration order."

Circatex's predecessor, US electronics firm Viasystems, was attracted to the region by £17m government aid in 1997. By 2002, it had folded its operations north and south of the Tyne, leaving 1,100 workers out of work.

Government grants totalling £25m attracted Siemens in 1996, but it only stayed for 18 months.

Fujitsu received £17m but still ended up pulling the plug on its Newton Aycliffe factory in 1998 after seven years.

Samsung, left 450 workers unemployed after its £10.5m grant-funded vision for an electronic city in Billingham floundered and died in January of this year.

Viasystems's former company accountant Charles Brookes led the management buyout which received a £3.75m grant in December 2001.

Staff accepted a 25 per cent pay cut to ensure the buyout succeeded in exchange for a 30 per cent share option in the new firm.

Worse was to come as Circatex was forced to lay off staff and impose further wage cuts as initial demand for its products dried up.

Mel Barras, regional organiser of Amicus union, described last night's news as a bombshell, adding that the management had fallen victim to a false picture of the strength of the order book.

"When Viasystems went into administration, customers thought they had better order as much as they could before it went out of business," he said. "The order level shot up, which was false. It rose suddenly, but now it has dropped back. The management has been caught in a vicious cycle.

"Everybody has given it a good go but the company is strapped for cash."

Patricia Hewitt, Trade and Industry Secretary, said: "I understand that this is a difficult time and an administration order brings great uncertainty to the Circatex management and workforce who worked hard and made sacrifices to try to make a success of a highly skilled venture in a very difficult global market."

Various agencies including One NorthEast, JobCentre Plus, South Tyneside Council and Government Office for the North East are expected to work together to try to cushion the blow.

Alan Clarke, chief executive of One NorthEast, said the administration announcement was a major blow.

He added: "One NorthEast will work with its partners in anyway it can to assist the company and workforce.

"We hope that the business can be sold as a going concern to protect as many jobs as possible."