Nestle reported record net profits in 2005

A further 41 jobs are to go at a second manufacturing site in Fawdon, near Newcastle upon Tyne.

The company employs about 3,000 people at its Wiggington Road site in York. Manufacturing of the Munchies product is to be moved from there to Fawdon.

Top managers and union bosses met on Thursday to discuss the shake-up, which had been sparked by tough competition in the UK market, Nestle said.

'Transforming business'

The firm, behind brands including KitKat, Smarties and Aero, reported record net profits in 2005 thanks to price increases and sales of Nespresso coffee.

Its net profits increased 21% to 7.995bn Swiss francs ($6.11bn; �3.5bn).

Tony Bennett, assistant director for economic development at City of York Council, said the company was a "vital part" of the York economy and it would support staff and management following the decision.

Paul Grimwood, managing director of Nestle Rowntree, said: "Today's proposed changes are about transforming our confectionery business so that it is fit for the future and is best able to meet the demands and requirements of the market in the 21st century.

Double blow

"Our focus is firmly on reinvestment in the business and the continued drive for improved quality and marketing support for our brands."

The cuts will take place over a "phased period" following the announcement.

Last September, 316 people lost their jobs when Kraft Foods decided to switch production of Terry's All Gold and Chocolate Oranges from its Yorkshire site to Sweden, Poland and Slovakia.