Management at Circatext in South Shields blames falling sales for the move.

The former Viasystems plant was saved last year by a management buy-out.

Talks are under way with union officials in an effort to avoid further redundancies at the factory, which employs 820 people.

The plant has suffered falling sales

Officials at Circatex, which makes printed circuit boards, say they are revising shift patterns for the remaining workforce.

A company statement said although the company had met all its targets for winning new customers, sales in the telecommunications business had unexpectedly dipped further.

The company was saved from administrative receivership by a management buy-out in December 2001.

Chief executive Charles Brooks said the decision to cut staff was "unavoidable but bitterly disappointing".

He said: "The staff have been so solidly behind the new company.

Closed down

"However, this move will make the company stronger and better equipped to service existing and new customers.

"We hope that short-time working will end by the autumn. I deeply regret having to do this."

Receivers KPMG moved into the plant in October 2001 when Viasystems announced it was to quit South Shields.

On the same day the company also closed down its site at Longbenton in North Tyneside site with the loss of 850 jobs.

The firm blamed a massive downturn in the electronics market for the decision.