WORKERS were dealt a blow last night when a company that manufactures cardboard announced the loss of 175 jobs.

SCA Packaging, which has two neighbouring factories on Darlington's Faverdale industrial estate, announced it is closing a plant that manufactures corrugated cardboard by next September.

The other Faverdale plant is said to be unaffected by the cuts.

The Darlington factories make up one of the packaging operation's largest UK sites.

Tony Atherton, the company's human resources director, said there would be investment at SCA's other North-East factories in Peterlee, Hartlepool and York, but declined to rule out further job cuts in the region.

The Darlington workforce was called into a meeting yesterday to be told the news.

Some of the workers are believed to have been in the same job at the factory for more than 20 years.

SCA owner Svenska Cellulose warned earlier this year that its UK workforce could bear the brunt of a restructuring operation that would cost 3,600 jobs across Europe.

It said: "SCA Packaging has undertaken an extensive review of its existing asset base in the north of England.

"As a result of this, the company is proposing to reduce fixed costs by regrouping its corrugated production at three main sites instead of four.

"SCA Darlington has seen a significant migration of its traditional industrial and consumer electronics customers to low-cost manufacturing countries over the last five years."

SCA, which also makes toilet tissue, said it was cutting costs after being affected by tough market conditions.

Margins in the packaging industry, particularly in corrugated cardboard, are being squeezed because of intense competition.

Another cost-saving programme by SCA, implemented last year, led to 1,200 job cuts across its group in Europe.

Jackie Woodall, regional organiser for the GMB union, last night confirmed she had been informed of the cuts and said she would be speaking to the company next week.

National GMB officials have been concerned for some time at the scale of the job cuts, and the lack of communication about where they would take place.

The cuts are part of a drive by Svenska to phase out about seven per cent of its tissue production and 17 per cent of its cardboard liner capacity - which it makes at all its North-East sites.

SCA Packaging made 45 redundancies last year at the affected Darlington plant. Unions said the workers were replaced by temporary agency staff.

Svenska also has a forest products division, which makes the pulp used in products such as nappies and incontinence pads.

Only three of its 44 UK and Ireland factories are involved in forest products, with the remainder in packaging and hygiene.