Hydro Aluminium Motorcasts, which has been based in Leeds for more than 60 years, has said it can no longer continue in the face of cheap foreign competition, reports the BBC. The firm produces cast aluminium engine blocks and cylinder heads for a number of carmakers including General Motors and Ford.

The company began consulting the 612 staff at its Clarence Road site about redundancies on Thursday. If the proposals are accepted all employees, including local directors, will be made redundant with half leaving by next summer and the remainder leaving by spring 2005.

The firm has recorded losses every year since 1997 and has failed to win a new order for five years.

Operations director Steve Watson said: "It is extremely saddening to have to deliver news of this nature to employees.

"Our workforce has demonstrated unswerving loyalty over many years and has done its best to help the company try to meet the challenge of competing against cheaper foreign-made products.

"The simple truth is that there is global over-capacity in the automotive components industry and we simply cannot compete against cheaper competitors based abroad.

"We have not won any new orders for five years or reported a profit since 1997."