J L French is the town's major employer

J L French, which makes parts for the motor industry in Presteigne, went into administration after its US parent company announced restructuring plans.

Local people expressed hopes the plant would survive for the good of the "thriving" market town.

They said they had been spared the sort of job losses that had made other communities in Powys "ghost towns".

Under changing ownership, there has been a factory in Harper's Street Presteigne, where J L French is based, for about 40 years.

Many of the people who work for the company have been there 20 or 30 years Jennifer Simpson

Generations of families have worked at the plant making die-cast aluminium car components for the motor industry.

The small town has a population of just 2,500.

Many of its homes surround the J L French factory and shops benefit from the workers and their families' trade.

This scene of rural harmony is practically unique, say townspeople. They said Presteigne was thriving while many other small market towns in Powys were suffering.

Chair of the town's chamber of trade Jennifer Simpson, 37, described the community as "tight" and "close-knit".

Other shopkeepers described how locals refused to use supermarkets nearby, choosing instead to support the town's shops.

The town needs J L French, says deputy mayor Mr Kirkby

In fact, the community spirit seemed so strong on Wednesday that some shop owners had hung signs, asking people to put their money "through the letterbox" if they wanted to purchase goods on show on the pavement.

Mrs Simpson, who moved to Presteigne with her family from Cardiff two years ago to run Emily's Tea Room, said businesses were "thriving".

She said: "The announcement by J L French has been a shock to everyone.

"Many of the people who work for the company have been there 20 or 30 years."

Mrs Simpson claims were backed up by the local estate agents. The average price of a three-bedroom, semi-detached home in the town is about �170,000.

A spokeswoman for the agents said the market was "buoyant" and many people from outside the area were buying homes in the town.

The plant's closure would impact on business, said florist Cynthia Hughes

The town's deputy mayor Colin Kirkby said other town's in Powys had seen problems.

"The KTH factory in Llanidloes closed with the loss of jobs [250 in 2003] and two firms closed in Knighton in the last few years, but Presteigne has been spared and has continued to thrive," he said.

"As well as J L French, we have three other major employers but I hope J L French's survives - we need it."