TEREX has announced plans to close Fermec's Manchester factory and move its backhoe production to another facility. The company has informed unions at the Barton Dock Road factory of the closure, which could cost up to 270 shop floor jobs.
Local union officials are negotiating terms and conditions and attempting to save the factory, but Terex Construction chief executive Colin Robertson concedes there is little economic benefit in staying in Manchester.
He said: 'The facility is far too big for the backhoe production and the small tractor line also produced there is shortly to be phased out.'
The move is part of a major restructuring at Terex, as the plant giant continues to consolidate its acquisitions and looks to reduce the effect of poor construction demand, particularly in the US.
Terex plans to make a further 335 job cuts, largely by scaling back one of its Demag crane factories and rationalising poorer performing product lines.
The intended home for the backhoe production line has not been disclosed but the logical destination would be Terex's new factory in Coventry, where much of the compact division's products are built. This would allow Terex to share production facilities and reduce costs.
It would also enable the manufacturer to retain more jobs in the UK, although it is thought that the majority of the shop floor workforce will take redundancy rather than relocate. Most of the sales and marketing team is likely to move with the product.
The proposed closure is likely to take place in the first half of the year, but it is dependent on demand for the product. Mr Robertson said: 'If production takes off, it may not move till the end of the year.'
Redundancies and closure costs in Manchester will cost Terex £5.5 million.
The Barton Dock Road site has been marked by uncertainty since Fermec was bought by Terex in January 2001. It has always been viewed as too big for a single brand but a proposed move of the Benford site dumper production line to Manchester last year met with the disagreement of the unions, resulting in Mr Robertson calling off the move at the last minute.
Terex president Ron de Feo said the current restructuring had been prompted by 'flat to negative' global economic climate, with expected profit at Mr Robertson's Terex Construction division expected to be down 4 per cent on its 10 per cent target.
However, Mr Robertson said the changes would put the company in a good position to expand when the economic situation improved. He said: 'At the moment it is the uncertainty about war which is causing low confidence.
'When there is more clarity about what to expect, we can plan more confidently for the future. We are in the right position for when it starts to pick up.'