A Dundee transformer manufacturing plant is to close at the end of the year with the loss of 21 jobs.
It is the second city employment setback this week after the announcement that 30 jobs are to go at furniture maker Samuel Bruce.
The threat of closure has hung over the Luna Place factory of Etal Ltd for more than a month but the operation’s Swedish parent company has confirmed production is to cease.
It comes amid claims that Estonian people have recently visited the factory, raising the prospect of Etal’s work in Dundee being transferred overseas.
However, spokesman Hakan Lundgren in Stockholm blamed the closure simply on a lack of orders.
Mr Lundgren, head of communications for parent company ElektronikGruppen, said, “I can confirm that we are planning to stop manufacturing at the Dundee plant at the end of this year and that employees have been informed of this.
“The reason is that we have had a shrinking order book for quite some time. It has, for some time, been a loss-making business to run this manufacturing plant.
“There are 21 jobs at risk and they will be handled according to UK law.”
Mr Lundgren said the company did have operations in Estonia and Sri Lanka but added, “I am not totally surprised that there are some relations between them and that they might exchange information. We are working for the same company.
“As far as I’m aware, there are no plans to transfer production from Dundee to either Estonia or Sri Lanka.”
With the Dundee factory being Etal’s sole UK operation, there is no chance for staff to relocate to other areas of the business.
Before taking the closure decision, Etal consulted its customers over their future ordering intentions but the feedback gave no cause for optimism.
Mr Lundgren said that was “regrettable” and added, “If they are unable to give any commitment that’s sufficient for the future, we see at this moment no other option.”
Etal makes components for the defence and aerospace industries and is understood to have been working on a contract to supply complex transformers for a Ministry of Defence contract.
The products are used in submarines and aircraft, as well as the automotive and electronic industries.
In addition to the 21 staff in Dundee, Etal is believed to support a number of outside contractors and other companies.
Last month, a source at the plant claimed staff had to take people from Estonia around the factory and show them how they operated.
The source said, “The work they do in there is pretty high-tech and the Estonians are all taking photos.”
Lord Provost John Letford said news of the closure was “really disappointing” but he questioned whether the firm had simply decided it would be cheaper to make the components elsewhere.
“Why were these Estonians there at all?” he asked.
“It’s surprising that there should be people visiting a high-tech factory from overseas and taking photographs.
“If the company had an MoD contract, it’s maybe ironic and cynical to think that it could end up being transferred to Estonia.
“There’s no doubt, though, that the Etal closure decision is really disappointing. It’s not a great number of people who will be losing their jobs but this was really important and high-tech work.
“This is more bad news and gives the impression that the city is on its uppers which isn’t the case at all. There are a lot of positive things happening in Dundee and a lot of investment taking place.
“I remain fairly upbeat in the sense that there is a lot going on in the city under difficult circumstances.”
The company was formerly known as Wound Magnetics before being taken over by its Swedish parent company.
Just three years ago, it employed more than 50 people at its Dundee Technology Park premises, supplying components for high-profile projects such as the Type 23 frigate, Hawk aircraft, Challenger tank and the Eurofighter 2000.
The following year, the workforce had been cut to 41 and that figure has been steadily eroded since then.
Alan Mitchell, chief executive of Dundee and Angus Chamber of Commerce, said Etal’s problems highlighted the need for targeted support from the government for business.
He said, “This is just an indication of how challenging the climate remains for everybody. Unfortunately, in difficult times, some businesses, despite the best efforts of management and the workforce, are just not able to come through it.
“It lends urgency to the government’s need to come up with the most effective strategy to assist business and maintain competitiveness across the UK whilst restoring some health to the public finances.
“If we don’t have a major, vibrant, productive business sector moving forward, we will never be able to address the challenges facing the country.”