The receivers at a south Wales steel plant have defended their decision to lay off 800 workers, following criticism by the union which represents the staff.

The Iron and Steel Trades Confederation (ISTC) claimed that Allied Steel and Wire (ASW) in Cardiff could have made a profit over the next two months at least, and that the decision to close was premature.

ASW specialised in wire products

But receivers KPMG, who were called to the troubled firm on 10 July, said that commercial reasons were to blame for the job cuts.

KPMG has also been criticised after 70 workers were kept on to complete vital orders.

But a spokeswoman said it had always been their intention to complete any unfinished work, and that these workers were not 'coming back'.

The 70 staff were dealing with routine maintenance, despatching finished products and administrative duties.

Within two weeks of being called into ASW - the second largest steel plant in the UK - KPMG announced that production would not recommence at the plant after its summer break, which began last Friday.

Around 800 redundancy notices were handed out to staff.

Following the case, ISTC called for a review of the role of receivers by the government.

But the KPMG spokeswoman argued that the government had already reviewed the role of receivers in the Enterprise Bill which was proceeding through Parliament.

The spokeswoman suggested that the ISTC "should look at the bill themselves."

Welsh Assembly Economic Minister Andrew Davies has said that the assembly would take the matter up with the UK Government if there were any concerns after he had spoken to the unions and to the receivers.

Harsh conditions

After being called in, KPMG revealed it hoped to sell at least some of the business to new owners.

Spokesman Richard Hall said that a decision on whether or not to continue trading would depend on "the response from customers, suppliers, and level of investment from potential purchasers".

Rhodri Morgan spoke to workers

More than 100 workers at the Castle Nails plant - which is on the same site - will keep their jobs, following interest from other firms.

ASW has blamed harsh trading conditions for its downturn, with the influx of cheap European imports and increasing costs of raw materials.

The company issued warnings last month of "significant pressure" on its cash flow, leading to urgent talks with bankers.

KPMG said the firm's history of trading at a loss meant it could not allow ASW to continue trading.

ISTC general secretary Michael Leahy said it was "devastating news" for workers.

Pension deficit

Laid-off workers have been promised the same kind of support as was given to axed Corus staff.

First Minister Rhodri Morgan gave the assurance on Saturday as staff held talks about a major shortfall in the company's pension scheme.

Staff were already reeling from the shock of being laid off received more bad news when they heard that the pension fund - which showed a �21m deficit on 31 December last year - had worsened with the continuing fall of the stock market.

The BBC's personal finance correspondent, Andrew Verity, said existing ASW pensioners would be the first in the queue to receive whatever funds existed.

That would prove a big drain on the scheme leaving not much for the remaining workers.