The decision to close the factory was taken after a consultation that began in September failed to find a viable solution to the division's troubles.

Communisis group human resources director Tony Commons said: "It's a shame. The general view of the union and the employees was that they fully understood that it's had a difficult time for a number of years." He said a conclusion had been reached "which was in no way acrimonious" that there was no way that Gateshead's fortunes could be reversed.

Commons blamed pricing pressures, resulting from overcapacity and the growth of imports in the label sector, for the plant's demise. The 90-day consultation period began when the GPMU was called in two months ago.

Production at the plant, which produces labels for the packaging sector, will be phased out and contracts passed to other printers. No work will be taken into other Communisis divisions. Gateshead, which previously named Waddingtons Labels, has had a troubled history.

In August last year the company faced industrial action over pay (PrintWeek, 28 August 2003).

Story by Josh Brooks