BLACK & DECKER is set to cut more than half the workforce at its North-East plant and move production abroad, The Northern Echo can reveal.

The power tool company is looking at proposals to close manufacturing at its factory in Spennymoor, County Durham, with the loss of 169 jobs.

The review comes as another hammer blow to the area still reeling from a decision by Electrolux to close its cooker factory on the town's Merrington Lane Industrial Estate, which employs 500 staff.

The US power tool company's factory on the Green Lane Industrial Estate employs about 320 staff. Those working in manufacturing, finance, sourcing and human resources will be affected by the potential cuts.

It is understood the group's European design centre - which is based on the site - will be unaffected.

As recently as 2000, the plant employed 2,300 people, making 14 million tools a year. Three-quarters of production went abroad.

But the site has suffered annual losses of about £6.5m over recent years, and bosses want to transfer manufacturing overseas to plants in the US and the Czech Republic.

The company - founded in 1910 by S Duncan Black and Alonzo G Decker, in Baltimore, Maryland - said in a statement: "Ongoing cost pressures, a competitive environment and reductions in residential construction activity have lead to a reappraisal of the company's global manufacturing footprint.

"Operations in Spennymoor have contracted over the last few years and opportunity exists to consolidate the existing operations within other larger facilities that are more sustainable in the long-term."

Black & Decker shed almost 1,000 jobs at Spennymoor in 2003 to reduce costs by moving some production to Eastern Europe.

At the time, it secured a Government grant of £735,000 through development agency One NorthEast to stay in the area. It used £490,000 of that, and paid the money back in full in November 2006.

The company continued to make smaller redundancies in 2005 and 2006, blaming continuing global economic pressures for the cutbacks.

One employee said last night: "It has been like an axe hanging over our heads for years, but people are still shocked. It is going to devastate the local area, especially with Electrolux closing down as well."

The European design centre operations - which are based in County Durham and Idstein, in Germany, - will continue. Engineers at Spennymoor have been responsible for some of the company's best-selling products including the Mouse sander, Quattro power tool and Scorpion power handsaw.

The centre's most recent success was the Alligator - a safer outdoor saw - released in 2005.

The Spennymoor manufacturing facility was opened in 1965 and the design centre was established in 1974.

Stewart Watkins, the managing director of the County Durham Development Company (CDDC), said yesterday: "This is not a major surprise. However, following so hard on the heels of Electrolux's announced closure, it is a major blow to the town.

"CDDC will work with other agencies to mitigate the impact of this decision."

Managers at the Black & Decker site, which does not have union recognition, have begun a 90-day consultation with workers. As part of the proposals, it is considering restructuring its engineering groups, which could lead to four redundancies.

The factory will continue to employ more than 150 staff across a range of activities, including reconditioning, engineering innovation and design, finance, sourcing, supply chain and marketing.

Alan Hall, the director of manufacturers' organisation EEF Northern, said: "I am pleased that the company is still retaining some high-value operations like design and marketing."

Bishop Auckland MP, Helen Goodman, said: "I understand that any planned redundancies will be phased over a timescale stretching into 2009, and I will therefore be working with Job Centre North-East and all local agencies to ensure the alternative employment opportunities are in place."