A 90-day consultation process will begin in the next week

South Wales Transformers, which moved to Blackwood in 1998, has announced that it is closing the site and will transfer the work to a plant at Loughborough in Leicestershire.

It is blaming the decision on over-supply of electric transformers in the world market.

Consultations have begun with employee representatives about the closure, which could come into effect over the next few months.

A spokesman for the union Amicus said: "We are shocked about this statement that was completely and totally unexpected."

A 90-day consultation process would begin in the next week.

Caerphilly Council's cabinet member for industrial development and regeneration Rob Gough said the decision to close the factory was a " real shock".

Before Christmas, he said, the council had been talking to the company about a possible move to a new factory in Oakdale.

Councillor Gough says many of the workforce have been there all their working lives and were now in their fifties.

He said he feared they would find it hard to get other jobs.