THE carpet maker to the Queen has gone into administration again, putting up to 200 jobs at risk in Durham.

The news is another blow for the city following LG Philips' decision to end production there with the loss of 800 jobs last month.

Hugh Mackay has supplied carpets to Buckingham Palace, Kensington Palace, and the US Treasury Department in Washington DC, as well as the QE2.

The company went into a month-long period of administration last year but was saved by a deal with venture capitalists Epic Reconstruction.

It announced expansion plans and the creation of up to 120 jobs following a £240,000 grant from regional development agency One NorthEast earlier this month.

Neil Matthews, of Ernst & Young's Newcastle office, has been appointed as administrator but was unavailable for comment last night.

One member of staff said: "We've been told not to say anything but we are in administration."

The company has been unable to claw back some of the market share it lost in the face of cheap foreign imports and the rise in popularity of laminate flooring.

Last night Maureen Rigg, County Durham policy manager for the North East Chamber of Commerce, said: "It has probably been on the cards for quite some time. The last time they went into administration it was a real rescue but there probably wasn't much hope of it continuing.

"It is an internationally-recognised company from Durham, it dealt with royalty.

"This is another blow for the manufacturing sector, especially bearing in mind the recent announcement by LG Philips.

"It is a double whammy for Durham.

"They will probably look to sell it as a going concern but because it has been in administration before the difficulty is finding someone who is prepared to take it on.

"But we need to keep companies like Mackays in the region."

Hugh Mackay, which holds a royal warrant and has an international reputation, celebrated its 100th anniversary two years ago.

As well as carpeting royal palaces, its client list includes the Houses of Parliament and rock stars Elton John and Liam Gallagher. Other commissions range include Caesar's Palace casino in Las Vegas and a German brothel.