North Shields-based Elmwood Sensors, which makes thermostats, is moving production to China.

Almost 160 people will lose their jobs in the move, which will save the company wages and production costs.

About 70 sales and customer services staff will remain.

'Declining sales'

The plant, owned by multinational engineering giant Honeywell, has seen declining sales since a major fire in 1999.

A spokesman for Honeywell said: "This restructuring is necessary to lower manufacturing costs.

"The North Shields plant has suffered from declining sales since the 1999 fire and employees have worked to try and remain competitive.

"But an ongoing cost-cutting programme and productivity improvements have not been enough.

"This is all set against a background of intense global competition, a severe economic climate and increasing customer demands for value, quality and delivery."

In November 2002 textile firm Dewhirst axed 400 jobs from its Ashington factory in Northumberland as it switched production to Morocco.

A month earlier a baby products firm in nearby Cramlington moved its production to China for similar reasons, with the loss of 100 jobs.