Sonae Industria UK, an indirect affiliated company of Portugal-based Sonae Indústria, will enter into consultations with employee and trade union representatives in regards to job losses the future of its operations in Knowsley, Merseyside.
The particle board plant has been based at Knowsley Industrial Park for 12 years and has a production capacity of 500,000 m³ a year.
There have been long delays to the reconstruction programme of the plant due to difficulties obtaining the necessary planning approvals, following the fire that occurred in June 2011.
The company has spent £32m rebuilding the site since the fire, which led to questions over health and safety regulations at the company.
Reconstruction is almost complete with the site returning to production, but planning permission is yet to be approved. The site is not operating to full capacity at present due to the remainder of the build still to take place.
Sonae Industria UK has said that this, coupled with the current economic climate and the downturn in the construction industry, no longer makes the plant commercially viable.
Nigel Graham, managing director at Sonae Industria UK said: “It is with great sadness and regret that consultation will commence on the future of this factory.”
Up to 500 indirect jobs will be lost with £15m spend with supply chain companies in the north west set to go if the site closes.
George Howarth, Labour MP for Knowsley, has been a long-standing critic of the company and has led calls for the site to close after a number of fatalities.
The plant has received fines over tens of thousands of pounds. James Dennis Kay, working for the sub-contractor Andrew Connolly Demolition, died while demolishing part of the site damaged by the fire. Two workers died after falling into a silo at the plant in December 2010.
The closure of the site would also leave 400,000 tonnes of waste wood that Sonae Industria recycles each year uncertain.
Sonae Indústria plan to continue supplying the UK market from manufacturing sites elsewhere in Europe.