PRIME Minister Tony Blair last night described as "a harsh blow" news that hundreds of North-East jobs are to go with the closure of two Sanyo factories in the region.

Weeks of talks have taken place to finalise a management buy out the Sanyo microwave oven plant at Newton Aycliffe, County Durham, to run the plant, which employs 284 staff, as a going concern.

But management at Aycliffe yesterday admitted that the buy-out bid had collapsed.

They said that plans to launch a new business aimed at the higher niche end of the microwave oven market - which could have saved up to 140 jobs - were not viable and had failed to attract support.

The Prime Minister, whose Sedgefield constituency includes the Aycliffe plant, had asked to be kept informed of developments.

Last night, Mr Blair told The Northern Echo: "I am very disappointed to hear this news which is a harsh blow to the workers and the families involved.

"I know the employment service and other agencies in the region will be making every effort to support those who are losing their jobs."

Sanyo announced in June that it was closing the loss-making Newton Aycliffe factory and its sister plant in Thornaby, Teesside, where 31 staff work, following a global review of operations.

The Japanese electronics company has been hit hard by cheap exports from South Korea and China and said it was pulling out of manufacturing in the UK as it was not sustainable.

Hopes were then raised that a management buy-out at Aycliffe, which was being backed by the unions, could save jobs with a deadline being set for the end of August.

It was expected to seek help from venture capitalists to fund the new business.

David Simpson, general manager at Aycliffe, who was part of the buy-out team, said: "It is horribly disappointing as we have put a lot of effort into this.

"We went to the people who we thought we could get business from, but when we added up the sums it was not a profitable venture.

"The customer base was not there and it was becoming increasingly obvious that things were not going to work."

The Aycliffe and Thornaby operations will now close on November 30.

Aycliffe - thought to be valued at about £3m - is expected to be put up for sale by Sanyo Japan in the next fortnight, while the Thornaby plant, which is rented, will be vacated.

Jeff Morland, of the Amalgamated Electrical and Engineering Union, said he was angered by Sanyo Japan's stance over Aycliffe.

He said: "The workforce has hit every single target the company has set, and when they needed flexibility they provided it without any smell of a dispute.

"The employees have been living under a cloud but have worked together with the union and the management so well.

"We are hopeful now that the vast majority of people will find jobs and that is our next task."

Mr Morland, who said staff had been offered "good" redundancy packages, said he now believed Sanyo would source its products from China.

A job shop is being set up at Aycliffe from Monday to help staff find work and give them access to careers advice.

Help is also expected to be provided by agencies such as One NorthEast in exploring alternative uses for the Aycliffe and Thornaby sites.

A spokesman for Durham County Council said: "We are very sad at the way things have turned out and will be doing what we can to help market the plant and support the workforce.