The company has suffered from Vauxhall closing Luton

The Valeo plant opened in Swansea in 1992. In March 1997, it announced a �14m investment creating 170 jobs.

At that time, the plant employed 470 workers.

But the pressures placed on the car components market led to the closure of its plant in Blyth in Northumberland last autumn, with 250 job losses.

The Swansea plant at Gorseinon will shut in July.

Managing director Harvey Preston said: "This extremely difficult decision is the result of the transformation under way in the automotive industry.

It will not be economically viable for us to continue production in the future

Managing director Harvey Preston

"A plan for factory closure has only been put forward to the workforce following a thorough assessment of our manufacturing facility here in Gorseinon.

"It is clear that with significant reductions in our planned workloads, it will not be economically viable for us to continue production in the future."

Welsh Economic Development Minister Michael German described the job losses as a "severe blow".

"This is very sad news indeed and my thoughts are very much with the workers and their families who will be affected by this announcement.

I can assure the workers that the National Assembly and its agencies will do everything possible to help them to find new jobs

Mke German, assembly economic development minister

"I very much hope that the plant can be sold as a going concern and I have asked the Welsh Development Agency to look urgently at marketing the site.

"I can assure the workers that the National Assembly and its agencies will do everything possible to help them to find new jobs and will provide a wide range of assistance and re-training."

The Welsh Development Agency - which supported the plant's expansion three years ago - said it was "extremely sad" to hear of the closure.

The loss of Valeo is the latest in a series of heavy blows to the industry in Wales.

Last year, the Neath Valley-based TRW plant told its 800 workers big cost savings were required to keep the plant viable.

TRW supplied components to Rover

The company produces steering systems for Ford, Rover, Volvo and Nissan and TRW has only recently expanded its operations in the Neath Valley.

The strong pound has made some goods made here much less competitive than those from overseas.

A further compounding factor is that there there are too many plants making car parts.

The area is still smarting from the loss of hundreds of jobs at Lucas Varity in the neighbouring Swansea Valley.

Like TRW, Lucas was a motor components manufacturer facing competition from low-wage countries.