Black & Decker's decision to slash its Spennymoor workforce will see production shifted to the Czech Republic. Stuart Arnold examines the move.

AS Spennymoor mourns, the town of Usti Nad Labem celebrates. Lying about 60 miles north-west of Prague, Usti - to use its shortened name - has one of the highest unemployment rates in the country.

An industrial town with a population of about 96,000, it will now be the focus of Black & Decker's European tool assembly operations.

Some 350 staff will be employed at a new plant on a brownfield site in a suburb called Trmice by the end of the year.

Eventually, once in full production, about 600 staff will work for the firm in Usti, a town which was severely hit by the floods which affected Eastern Europe recently.

Transfer of professional De Walt tool products from Spennymoor to Usti has already begun and will be complete by the end of 2003, say Black & Decker bosses.

De Walt cordless lines will be moved by Christmas and lines with cords moved between January and December.

The operation in the Czech Republic will focus on reducing manufacturing costs and will be able to do so thanks to cheap labour costs and heavy Government subsidies.

Workers can expect nothing like even the basic £4.50 an hour typically paid to the average temporary production operative at Spennymoor.

Durham Labour MEP Stephen Hughes said the Czech Republic's position outside the European Union meant it did not have to sign up to employment legislation covering work conditions.

This allowed employers to reduce their costs in comparison with EU member countries and offer much less money to workers as a result.

He said: "We really need to speed up the timetable for enlargement of the EU.

"Once we get countries like this in they will no longer be able to undercut in terms of labour costs and other social provisions."

Mr Hughes added that it "did not help" that the UK continued to remain outside the Euro.

Black & Decker has blamed its shifting of production away from Spennymoor on a flood of imports from the Far East which has made the market increasingly tough.

It says that in order for it to remain competitive and maintain "highest quality standards" it has to move the bulk of production to the Czech Republic.

But a key factor remains the Euro with Black & Decker European president Ian Carter complaining earlier this year to Prime Minister Tony Blair that the delay in joining a single currency was harming the firm's prospects.

Stewart Wingate, the manager of the Usti plant, said: "The strategic decision by Black & Decker to open the manufacturing plant and invest in the Czech Republic is key in ensuring that our competitive edge is maintained in the European marketplace.

"One of the decisive factors in choosing the Czech Republic were the good logistics links to the European Union."

Black & Decker has initially invested around $5m (£3.6m) in the plant in Usti and expects to export nearly 100 per cent of production.