STEELMAKER Corus is to undergo a £130m restructuring that is expected to cost about 400 jobs.

The plans include improving one of its largest steelmaking plants, in Scunthorpe, where it will make structural sections, rail and wire rods.

The job cuts will not affect the Teesside Cast Products (TCP) division, which will operate as a stand-alone operation from next year.

Corus said the changes involved a net reduction of 161 jobs. Work will be transferred from Workington, in Cumbria, where the company employs 256 people in rail manufacturing.

The company said it would look for alternative uses for the Workington rail site, which is expected to end production next year.

Another 301 workers involved in process engineering at Workington are unaffected by the changes.

The £130m investment at Scunthorpe will lead to the installation of a steel casting machine and meet industry demand for longer sections of rail. It will also upgrade its rod mills.

Corus director Paul Lormor said the investment was part of a strategy to improve the competitiveness of the company's core products.

The Anglo-Dutch group has 48,500 employees in more than 40 countries, including 4,000 at Scunthorpe.

Michael Leahy, general secretary of Community, the union that represents steelworkers, said: "The investment announcement by Corus will ensure that the rail needs of the UK can be met within the UK.

"However, it is obviously disappointing news for our members at Workington, who will see Corus's rail production transferred to Scunthorpe by 2006, after over 100 years of production in the town.

"Corus and the trade unions have agreed to set up a joint working party to explore possible alternative options for the Workington plant.

"Community is committed to supporting our members in Workington, as well as those of the 161 who may become redundant in Scunthorpe."

The restructuring is designed to improve efficiency and product range.

Paul Lormor, executive director of Corus' long products division, said: "This major investment will significantly improve our long products manufacturing capabilities, providing world-class processes that enable us to meet customers' future expectations in the market place.

"The development represents a major step forward for the division and is part of Corus' long products strategy to improve the competitiveness of its core products, add value and provide a platform for future growth."