The Worcestershire firm warned of a shake-up in its vehicle parts manufacturing operation, Driveline, which employs about 1,000 people in Birmingham and more globally.

It plans to move 20% of production to cheaper economies in the next three years.

GKN refused to detail the affect this will have until staff are consulted.

Emerging markets

The Redditch-based group, which also has a site in Hadley Castle in Telford, Shropshire and one in Cowes on the Isle of Wight, blamed the dive in profits on a �17m pound increase in its pension deficit charges.

GKN, which makes car components, aero engines and components for helicopters, saw underlying pre-tax profits fall to �246m in the year to 31 December, 2003.

It said it was focusing on emerging markets in South America, Asia and Eastern Europe after Driveline had seen little growth in major western markets.

John Rowse, national officer of the Transport and General Workers Union, said: "Our first reaction is that the continued flow of jobs out of the country, especially in the hard pressed manufacturing sector, cannot do much for confidence.

"We'll want to see the details in the promised consultation but this is not a good news day for jobs, skills and manufacturing."