The announcement comes as part of a European-wide restructuring programme for UPM's labels division, which will affect around 340 jobs across the UK, France, Germany, Hungary and Finland.

Alan Wright, site director at Scarborough, said: "I am deeply sorry to say that up to 75 jobs are at risk of redundancy.

"This is by no means a reflection on our workforce whose commitment and approach have been exemplary during a very stressful period."

He added: "We will now go into consultation with the unions. We will certainly be looking for volunteers and are committed to looking after, and supporting, those that may have to leave us as best as we can."

A number of plants are expected to close in mainland Europe due to the restructuring, which should be completed by the end of 2009, while in the UK one line will be closed and slitting capacity will also be reduced.

"We have come under scrutiny as a site but have come through with a clear role in the future of the European operations. UPM Raflatac Ltd will continue to employ up to 185 people," said Wright.

According to the company, the reasons behind the restructure are the economic downturn, coupled with a decline in demand for coated label stock, which UPM does not expect to improve in the short term.

UPM is looking to save around €25m (£20m) a year in operating costs through the restructuring. The cost of the move is expected to be £20m, with a non-cash impairment charge on redundant assets of £7m.