A TRUCK building firm, which received flagship Government cash to fund an expansion, is cutting more than 100 North-East jobs – just months after axing 300 posts.

Caterpillar, in Peterlee, east Durham, says about 70 production workers and 45 office staff could lose their jobs.

Bosses say the articulated truck maker is struggling against a marked drop in demand, and were last week forced to release a further 70 agency workers.

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It is now consulting with workers over redundancies across a number of positions, including welders, painters, inspectors, and management roles, with a decision expected next month.

Last year, the firm cut 300 jobs at Peterlee, citing a weak order book caused by fewer deals in the US and Eurozone, but a month later received cash from the Government's £120m Regional Growth Fund to expand.

However, the latest job cuts would mean the plant has moved from employing 1,000 staff to 620 workers in just 12 months.

The company says its sister Stockton factory, which makes parts for loaders and excavators, and was last year expanded to meet demand for earthmovers in South America, Asia and the US, will not be affected by the announcement.

Easington MP Grahame Morris said the news was a major blow for workers ahead of the Christmas period, and hoped Caterpillar could bolster its order book and re-employ staff.

He said: “I'm very disappointed because Caterpillar is one of the region's flagship companies and its continued success is very important to the manufacturing employment sector in east Durham.

“It also supports a lot of local businesses who supply parts for their machines.

“They are mitigating this by saying some of the people are agency workers, but I don't differentiate between agency staff and core workers.

“They are all jobs and this is a real blow for them and their families, especially as we start the run up to Christmas.

“It is a fantastic plant in Peterlee and I hope its order book picks up so we see these people re-employed.”

A Caterpillar spokeswoman said the company was faced with making difficult decisions due to the fall in demand.

She said: “We are considering redundancies at Peterlee, and the intention is to consider volunteers through the voluntary severance programme.

“We value our employees’ contributions, and these actions are not a reflection of them, but rather of the business climate.

“As a consequence of the market conditions, the plant is operating at less than capacity and we expect demand will remain relatively flat year on year.

“We intend to reduce the plant to reflect industry demand and compete in the long-term.”

Last year, Business Secretary Vince Cable visited the Peterlee plant to launch the Energy Technologies Institute's £40m programme to improve vehicle efficiency, in which Caterpillar carried out a £3m project to reduce CO2 emissions from heavy duty vehicles.