THE ailing US economy has cost about 80 jobs at a luxury coach builder.

Blue Bird UK designs and builds prototype buses for the US market, but a downturn in business means it will have to close later this year.

The announcement is a blow for the workforce at the company's Scarborough base. Some were laid off from another bus-building firm.

Scarborough was once one of the two British production centres of luxury coaches.

For more than 60 years Plaxton was, along with Duple of Blackpool, the country's biggest producer of holiday coaches, winning international awards.

But a decline in business saw the company drastically scaled down, and much of its surviving production was switched to Scotland.

Some of Plaxton's employees transferred to Blue Bird and so face the prospect of redundancy for a second time.

There were hopes that renewed optimism in the US might have led to a change of fortunes at Blue Bird, but any recovery has not filtered through to the bus manufacturing market.

Keith Foulds, engineering manager, said "We are all disappointed because we hoped for more projects with Blue Bird, but with the American economy as it is, that has become more difficult".

Blue Bird UK was established three years ago but, said Mr Foulds, it was always known that it had a limited life because the aim was to transfer technology to the US so that low-floor buses could be built in the US.

The firm's parent company, Henlys, has seen its share value halve in the past year.

Mr Foulds said: "We have produced far more vehicles than originally planned. We may try to attract somebody else to either take it on from a design point of view or see if there is any possibility of taking on refurbishments with bigger bus companies".

A spokesman for Henlys said: "It was always envisaged that Blue Bird would be a short-term issue. We are still in the final planning stages and there are on-going discussions between ourselves and Blue Bird. We are doing everything possible to find alternative employment for the staff".