However, the company, which is one of the largest in the printing sector, intends to transfer its business to other BPI sites, including Greenock and Adeer.

The Stockton plant, which produces heavy-duty sacks and industrial and agricultural films as part of BPI's industrial division, lost money in 2006 and 2007.

More than 40% of the facility's product goes into the construction industry, which has been hard hit by the economic climate in the last six months.

A statement from the company said: "We expect little prospect for improvement as the UK economy enters recession.

"Despite initiatives to reduce costs and increase efficiencies over the past two years, the impact of the construction and broader economic downturn will result in a more significant loss at this site of £2.5m in 2008.

"Given the losses, the reduced demand in the market place, the requirement to reduce operating costs, and the spare capacity available elsewhere within BPI Industrial, we believe that continued manufacturing at Stockton is no longer viable."

At this stage, the BPI was unable to say when the consultation would come to an end, or when, if the consultation found no other options, the site would be closed.

However, it added that a gradual scale down of operations was likely.

The estimated closure costs, including asset write downs and equipment relocation costs, will be around £5m, of which £3.5m will be in cash.