WHEN Steve Balmer, managing director of the Balmer Group, decided to move part of the business to Newton Aycliffe in 2003, he admitted that a Government sweetener of £750,000 was an incentive.

Regional development agency One NorthEast offered the money over three years to tempt the company to set up in the former Sanyo factory, on Newton Aycliffe industrial estate.

But only two years later, the workforce is facing redundancies.

The threat of closure is a chilling echo of when Sanyo pulled out of the same factory in November, 2001, leaving 284 people out of work.

The microwave oven maker was one of a number of Far East companies lured to the region by grants in the late 1980s, and were seen as a tonic to the job losses in mining and steel.

But, like many other electronics companies, such as Fujitsu and Samsung, Sanyo eventually pulled the plug on its North-East operations.

Balmer arrived in the region with a fanfare in 2003, promising 200 jobs for workers made redundant from other factories, most notably Samsung and Black & Decker.

As well as financial help from One NorthEast, the County Durham Development Company (CDDC) and the nearby Sedgefield Borough Council Business Service were on hand for advice and assistance.

When Prime Minister Tony Blair opened the factory in January last year, he told Balmer bosses: "It is a fantastic job you are doing here, particularly with some of the other companies having suffered problems or laying people off.

"We need other employers coming in and making use of the skills we have."

During his trip to the factory, Mr Blair stood in some paint - red, as he was quick to point out.

But the mishap did not dampen his enthusiasm for Sanyo's replacement at the four-acre factory site.

Mr Balmer, speaking to The Northern Echo in September 2003, revealed that he had gambled his own pension on the outcome of the venture.

He said at the time: "I am so confident in the property I have paid for it personally. The business could not risk its money and so I have given the business the property for free for a year."

Transmission and Lighting spent £5m on redeveloping the factory with manufacturing equipment to make 18-metre columns for street lighting.

Mr Balmer said he was desperate to change the trend of redundancy-hit manufacturers in County Durham.

But this year, the list has grown steadily.

In July, television tube maker LG Philips closed its factory in Durham, with the loss of about 700 jobs.

In June, William Cook Defence, in Stanhope, in the County Durham Dales, shed 50 jobs - a major blow for such a rural area.

February saw Presswork Metals, also in the Prime Minister's constituency, close with the loss of about 95 jobs, after 200 jobs had already been lost.

And only last month, haulage company Dunns, in Shildon, shed 35 staff - nearly its whole workforce - as it plunged into administration. The future of the company is still unclear, but administrators Tait Walker are believed to be selling the company's assets rather than the business itself.

Newton Aycliffe car components company Tolwood Automotive went into adminstration in October, but was bought by an investor, saving all 120 jobs.

Also last month, more than 50 workers at the Electrolux factory in Spennymoor, were told they would lose their jobs. Its neighbour on the Merrington Lane industrial estate, Vetroprint Limited, had gone into receivership with the loss of 100 jobs only days earlier.

The Eliza Tinsley Group is in the process of making 60 workers redundant at its factory in Evenwood, near Bishop Auckland.

The British Chambers of Commerce believe the UK is facing a manufacturing recession. However, manufacturers' organisation the EEF has said that while North-East companies were struggling with increasing energy costs and tighter margins, it was not in recession.