KOREAN electronics company Samsung will deliver a devastating blow to the regional economy today with the closure of its North-East plant and 420 job losses.

The company - second only to Nissan as the region's best-known inward investor - has decided to close its site at Wynyard, near Billingham.

Union officials at the Teesside plant warned last night that the total number of workers affected could be more than 1,000 - because the closure is expected to have a negative impact on suppliers.

Samsung's decision will fuel the debate over the policy of handing massive cash grants to foreign investors.

The Koreans received £58m in start-up grants for the development, which was opened by the Queen in 1995.

Samsung promised to create an "electronics city" churning out thousands of computer monitors, microwaves, TV tubes and microchips. The vast investment - amounting to £600m - was to create 3,200 high-quality jobs in a region crying out for employment. The reality was somewhat different.

Only weeks before the royal visit, bosses were forced to introduce modest pay rises when The Northern Echo revealed that wages were so low that workers were eligible for state top-up benefits.

The company also scrapped the second phase of its plans - although it insisted at the time it was "a delay not an abandonment" - in 1997.

In the end, the company created about 1,400 jobs and the British taxpayer paid £8,500 for each one.

Last night, Samsung refused to comment on the announcement. Human resources director Ken Donald said: "I'm in a meeting and cannot talk."

Workers said they had heard the news from journalists and claimed they had been kept in the dark.

One said: "We've known things were bad for a while, but everyone hoped the company would do right by us.

"Clearly, the loyalty of people working here doesn't count for much. We're disgusted."

Former Trade Secretary and Hartlepool MP Peter Mandelson told workers: "This is not the end of the road."

But he admitted that closure would be a huge blow and an enormous effort would be needed to fill the void.

The MP said he hoped regeneration agencies and officials would rally around to attract other investment to the site.

"It will be a very serious loss indeed," he said.

"This is a tremendous plant. It is no reflection on the quality of the workforce or investment. We will work hard to ensure it is not the end of the road."

The announcement will come as a shock to the employment market, which is still reeling from decisions by other major firms to close their North-East sites, including Rothmans, in Darlington, and Black and Decker, in Spennymoor, County Durham - a total loss of more than 1,500 jobs.

Gerry Hunter, of union Amicus, said he was shocked and appalled by Samsung's decision.

He said the firm should be made to pay back state grant aid if it left the area.

But the likelihood of that happening is remote. Samsung undoubtedly gave the Department of Trade and Industry guarantees about its tenure at Wynyard - and if, as seems likely, they have been met, then the company can walk away without paying a penny.

Mr Hunter said: "I am appalled. It is a huge blow to the North-East as yet another company chooses migration.

"Samsung was given millions in government grants and they repay the community on Teesside by closing the plant. It should be paid back."