Management at the Valeo auto climate control components plant at Gorseinon, near Swansea in Wales, today told 330 workers that the factory is closing at the end of July as a result of European cost cutting and realignment. The plant, opened in 1992 makes heater and air conditioner units.

Managing director Harvey Preston said: "This extremely difficult decision is the result of the transformation under way in the automotive industry.

"A plan for factory closure has only been put forward to the workforce following a thorough assessment of our manufacturing facility here in Gorseinon.

"It is clear that with significant reductions in our planned workloads, it will not be economically viable for us to continue production in the future."

Valeo's announcement was devastating news and came out of the blue, said the chief executive of the Welsh Automotive Forum, Tim Williams.

"It's a shame when companies have to do this because no one likes to see massive job losses coming through."

He added, "The Forum has a task force which will help those coming out of the business to retrain and assist them to get back into work as soon as possible and we will be working with the unions, agencies and government departments to achieve this goal."

Valeo is understood to have lost orders from General Motors, BMW, Land Rover and MG Rover, leading to the decision to close the plant.